5
Overview of Best Practices in Competitive
Intelligence
JULIA MADDEN
INTRODUCTION
Many companies realize, or are beginning to realize the potential and benefits of
competitive intelligence (CI). The Society of Competitive Intelligence Professionals
(SCIP) defines CI as “the process of monitoring the competitive environment" that
"enables senior managers in companies of all sizes to make informed decisions" (SCIP).
Like any other process or function, CI has methods and techniques for improving its
effectiveness. Like any other function it also has best practices. Although measuring the
effectiveness of CI is difficult, best practices in CI have been identified in companies that
are perceived by expert observers to be performing CI better than anyone else.
What is a best practice? The American Product and Quality Center (APQC), a
resource for process and performance improvement for organizations, defines a best
practice as "a practice that has been shown to produce superior results, selected by a
systematic process and judged as exemplary, good or successfully demonstrated"
(American Product and Quality Center). Best practices are not the ‘best’ because they are
Frontiers in Competitive Intelligence
Edited by Craig S. Fleisher and David L. Blenkhorn
Copyright  2000
92 Overview of Best Practices in Competitive Intelligence
for everyone. They must be adapted to fit each specific organization. Several studies,
models and speculative theories have evolved around best practices in CI, but a greater
understanding of CI is still needed.
By looking at several different studies, models and current best practices, several
common or similar factors should appear to be crucial to effective CI regardless of the
organization, size of organization or industry. Each organization should look at these
similarities as the foundation on which to base its efforts in adapting CI practices.
CURRENT BEST PRACTICES
American Product and Quality Center (APQC) Consortium Study
In 1996, International Benchmarking Clearinghouse (IBC), a service of APQC,
performed a "best practices" business and competitive intelligence study across several
industries (O’Dell, C. and C.J.Jr. Grayson, 1996). Twenty-two companies participated in
the study of which seven were selected as best practice companies. The seven companies
were used as benchmarks with which the other companies could compare themselves.
From this study seven findings were identified as components to best practices in
competitive intelligence. Companies considered having best practices in CI included Bell
Atlantic, Eastman Kodak, Fidelity Investments, Ford Motor Company, Merck and
Company, Pacific Enterprises and Xerox Corporation. The seven key findings from the
study of these best practice companies are:

Evolving, stable CI infrastructures: Best practice companies have CI mechanisms
and structures in place that have evolved over time. The stability of these
structures is usually held together by key people who have experience in their
Frontiers in Competitive Intelligence 93
respective industries and the development of networks. Key people or champions
ensure there is continuity and that the CI function is maintained. For example, in
the APQC study, the Merck and Fidelity corporations were revealed to have
personnel with long term experience and certain personality traits. Where
champions are not available to drive CI, best practice organizations have
developed policies, mission statements or other means of substituting these
individuals and integrating CI into the organization. Best practice organizations
also plan for the evolution of their CI to continually adjust to new trends and
industry changes.

Decentralized, coordinated networks: The study determined that decentralized
networks have to develop for several reasons. They:

Better address the company's diverse intelligence needs

Capture the realization that all employees are not knowledgeable about
every area of the business

Allow for use of resources and personnel that exist throughout the
company
Various methods are used for forming networks. Some develop from grassroots
while others are more formal. Kodak, for example, has a matrix of different
groups performing CI in different areas such as manufacturing, competitors, and
technology. When information is needed it can be drawn from any of these
sources by either individuals or groups. Best practice companies developed their
networks slowly. Because of the length of time required for effective CI
94 Overview of Best Practices in Competitive Intelligence
functional development, companies starting CI and adapting best practices should
focus on areas where there is the greatest competitive threat and build from there.

Responsive information technology systems: For best practice companies
information technology (IT) usually makes the transfer and sharing of information
more effective and efficient. The platforms used in best practice companies
provide databases that catalogue studies and other information already owned by
the company, while easy to use discussion forums allow the organization to get
rid of unwanted data and coordinate diverse information systems. Topics are
added and taken out as necessary, which allows individuals to share their
knowledge with others in the organization. IT helps organizations deal with
information in a timely manner, and keep up with the changing competitive
environment. It may be wise for companies to develop the CI program with
existing IT first, and then determine what is needed to make the system better and
more flexible to accommodate CI and information sharing across the company.

Linkage between strategic and tactical intelligence: Tactical intelligence comes
from the day-to-day operation of an organization. Operational level employees
see trends, new technology, and have personal contact with suppliers and
customers. Information gathered at this level of the operation must flow upward
to be incorporated into the strategic level of the organization, and be examined for
future strategic decisions. Strategic decisions must flow downward and have
support at the tactical level. The two types of intelligence rely on each other and
must be linked. Strategic intelligence looks at how the organization can change
and respond to changes in the industry and environment. There should be a link
Frontiers in Competitive Intelligence 95
between these two types of intelligence because they feed into and augment each
other. Best practice companies realize the tradeoff between the two types of
intelligence and work to keep them in balance. Often, strategic intelligence is
overemphasized to the detriment of tactical intelligence or vice versa. Companies
need to keep up with current strategy but allow for new information to affect
future strategic direction.

Customer feedback and implementation link: Best practice CI programs ensure
that there is feedback and dialogue with the customer. The customer refers to the
requester of information within the organization. Competitive intelligence
requests must be well defined and re-defined until the request is actionable. For
CI to be of value to the customer it must be in a form that can be used and ideally
is measurable. For example, at Bell Atlantic the CI project is only considered
complete when management uses the information. Feedback from the customer
also allows CI to develop better services and products that are useful to the
decision-maker. Measurement of CI is still very difficult; however with clearer
defined deliverables, CI projects may be measured more effectively. Customer/CI
feedback is two-way and hopefully nearly symmetric in volume. The customer
should be able to determine what specifically they require of CI, and CI must be
able to determine what it can provide in return.

Hypothesis driven recommendations: Competitive intelligence programs (CIP)
should add value to the company. They should generate a positive return on the
resources invested in developing it. The information should be infused with some
analytical insight or strategic direction to assist managers in making decisions.
96 Overview of Best Practices in Competitive Intelligence
Analytical thinking is critical for best practice companies. From the APQC study
very few of the studied companies could explain how they perform analytical
thinking, but stated that it was important. In other words, analysis has the classic
elements of tacit knowledge. Competitive intelligence products and services in an
organization should answer questions or provide information to an executive that
helps them make better decisions. Many best practice companies analyze their CI
findings relevant to their current strategic position to determine if change is
needed.

Institutionalizing intelligence cultures: Best practice companies develop ways to
make CI a part of everyone's job. The top managers need to be involved and drive
the organization's culture to institutionalize CI into the company's culture. This
process takes time and commitment on the part of senior managers, but is
necessary for the continuous implementation of CI. This area is where the most
resistance and difficulty of instituting CI is found.
THE NEXT PHASE OF BEST PRACTICES UNDERSTANDING
In 1997-98, a follow up study, Managing Competitive Intelligence Knowledge in a
Global Economy (American Product and Quality Center, 1998), was conducted. Again
the study used twenty-two companies with seven chosen as best practice partner
companies with which to benchmark. From this second APQC study an enhanced model
was developed to demonstrate the best practice CI process.
Five Steps of the FIICH Model

Focus: Develop a clear set of goals and objectives for CI knowledge activities.
Frontiers in Competitive Intelligence 97

Implement: Create an organizational culture conducive to implementing
actionable CI knowledge.

Institutionalize: Incorporate CI knowledge management practices into the daily
activities of managers.

Change: Modify thought processes, behaviors, and performance in ways that help
achieve organizational goals and objectives.

Hone: Make the CI knowledge management process a dynamic, evolving activity
with a bias toward continuous improvement.
In this study, researchers were interested in what "attributes of CI were most valued by
managers" (American Product and Quality Center, 1998). Different findings were
determined for best practice companies under each step of the FIICH model’s framework.

Focus of CI Efforts. Best practice CI organizations:

Focus their CI efforts on decision-making areas that are critical to their
business

Have actively involved senior management in CI rather than just asking for
moral support of CI

Allow the critical intelligence needs (CIN) focus to drive the output of CI
products and services

Implementation of CI. Best practice CI organizations:

Establish a systematic, documented process that clearly defines roles and
responsibilities for those involved with CI
98 Overview of Best Practices in Competitive Intelligence

Follow practices that include a sensible approach, built-in redundancies,
future orientation, global perspective, integration of informal and formal
networks, and a concern for ethics

Institutionalize CI Knowledge. Best practice CI organizations:

Spread CI by providing a variety of products, services and practices
throughout the organization

Change. Best practice CI organizations:

Provide training in information technology (IT) and human networks

Encourage managers to make more decisions using CI knowledge and embed
CI processes in the organization culture

Hone. Best practice CI organizations:

Coordinate and strive for continuous improvement across diverse business
units

Measure, or attempt to measure, the economic impact of CI
In a recent study in the United Kingdom, researchers found from their survey of firms
and competitive intelligence professionals that there is a "scarcity of models of CI in
action" and that “there is a problem of knowing what was needed for the CI unit."
(Wright, Callow and Pickton, 1999). The FIICH model simplifies the approach to CI;
however it does not express how to apply this knowledge to actual decisions. This model
has been added as an item to the seven key findings of the 1996 APQC study (Wyckoff,
1999). However, tacking the model on to this list does little to provide a clearer
understanding of best practices in CI and the adaptation of these best practices in
organizations. The first study explains seven significant components to CI in best practice
Frontiers in Competitive Intelligence 99
companies. In combining the seven components into the FIICH five-step model, a more
detailed process identifies how each component fits into the process.
The detailed
combination may help organizations better determine how they can incorporate a best
practice into their business (Figure 1).
DIFFICULTIES IN IMPLEMENTING BEST PRACTICES FOR CI
One difficulty with transferring best practices in CI is that the best practice for one
company may not become a best practice in another company (if any of the seven
elements described above are missing). There are several problems and difficulties in
establishing and adapting best practices in CI to businesses.
100 Overview of Best Practices in Competitive Intelligence
Figure 1:Combining the 1996 APQC Study (7 components that make a good
competitive intelligence program) with the FIICH Model


FOCUS
Hypothesis development link to
strategy. What do you want to
know or learn?
Customer feedback to clearly
define CI deliverables
HONE
 Customer feedback to CI
 Are the IT systems supportive?
 How can CI be improved?
 Adjust to new trends
IMPLEMENTATION
 Place or empower champions
throughout the organization to drive CI
 Use of IT system to make process
efficient and effective. Support storage
and transfer of information
 Create formal and informal networks
CHANGE
 Champions have role to influence and
incorporate change, but maintain
stability
 Culture must evolve and change to
accommodate CI
 Senior managers must demonstrate the
value of CI and commitment to
institutionalizing it
INSTITUTIONALIZATION
 Incorporate CI into policy and mission
 Link tactical intelligence to strategic
intelligence
 Make CI part of strategic decision making
 Decentralized networks sharing across
business units
Companies must recognize their limitations and be prepared for the length of time
it takes to develop the necessary components for a successful CI program. Time is
required for CI to become institutionalized and integrated into a company's culture to
allow the processes and practices to be adopted and incorporated. For companies just
getting into CI this time element may be discouraging and detrimental to the development
Frontiers in Competitive Intelligence 101
of a CI program. If results from CI are not visible a CI program may lose its credibility
before it has a chance to become established in a company.
The lack of key people or champions to carry the momentum for a CI program
may also be a difficulty. Best practice companies have large established networks with
experienced CI champions. Companies new to CI may not have people with the
necessary qualities to execute an effective CI program or carry the momentum.
The difficulty of measuring the economic benefits of CI is another problem of
transferring best practices in CI. How should a company determine which best practice
will suit them if measurement of CI is illusive? To get CI started there must be some
tangible results and definite benefits derived from the intelligence collected, or the CI
program will lose credibility and acceptance in an organization. Well-defined CI needs,
deliverables, and goals will help determine whether the CI product/service provided was
actionable and/or useful in making a decision.
Organizational structure and culture need to be arranged so that communication
occurs across business units. If an organization is not already communicating crossfunctionally it will be more difficult to implement an effective CI program.
It is much more difficult to identify and transfer tacit knowledge rather than
explicit knowledge. Tacit knowledge, as defined here, tends to be the intuition and
experience combination that leads to useful CI analysis. In best practice companies this
tacit knowledge is there but how it is passed on and used is not clear (Prescott, Herring
and Panfely, 1998). This element of a best practice is difficult to adapt, and must be
discovered by each company individually.
102 Overview of Best Practices in Competitive Intelligence
In the studies conducted it was evident that active involvement by senior
management is a strong key to the success of a good CI program. Senior management
must commit to, see the value of, and integrate CI into the company's decision-making
process.
OPPORTUNITIES AND BENEFITS
Companies can learn a great deal from other companies with well-developed and defined
CI programs. Organizations must remember that no individual best practice is suitable for
everyone, and needs to be evaluated within the firm planning to implement it. From the
APQC Best Practices White Paper Report (O’Dell, and Grayson, 1996) on identifying
and transferring internal best practices, four expectations of networks should be
addressed. These expectations can be applied to the transfer and adaptation of best CI
practices.

The really important and useful tacit information is passed on through human
contact and face-to-face information sharing. Information technology systems can
be used to assist in this information exchange. For example, the AMP Inc.
database system identifies the source of information, name and brief description
of the information entered, when it was entered, who entered it, and a person to
contact for more information. This type of system points people in the right
direction to obtain needed information. The IT in this case supports the various
people talking to each other.

A framework for classifying information should be established. A framework
helps with the process of collecting, sharing and adapting CI best practices. Each
Frontiers in Competitive Intelligence 103
company may have its own classification system that feeds into their specific
structure or industry.

Entering information into the system must be part of everyone's job, whether they
work in CI or not, if CI is to be institutionalized throughout the organization.
Anyone who enters information should be responsible for ensuring that the
information is accurate and credible. Unchecked information can potentially lead
to poor decision-making.

Culture and behaviors can be difficult inhibitors or drivers of information sharing
in a company. For example, at Chevron teams were formed to work on adopting
best practices and benchmarking. The teams had a difficult time explaining to coworkers the time they were spending on these projects. Management had to
communicate the investment of time that these teams were spending on
information-sharing processes.
Involvement
of
senior
management
and
commitment assists with a company's overall adoption of CI and the sharing of
information.
SUMMARY
Like any other functional adaptation of best practices, the adoption of CI best practices is
tricky. No one best practice is suitable for every organization. Each practice must be
modified and changed to suit an organization's industry, culture, and level of diversity.
Several studies and models have been developed to determine some of the best practices
in CI. The studies indicate that developing and institutionalizing good CI programs takes
time and commitment to build into the organization. This time commitment, combined
104 Overview of Best Practices in Competitive Intelligence
with weak measurement of the economic benefits of CI, makes it difficult to justify
resource allocation to CI. However, best practice companies have demonstrated that CI
programs produce actionable intelligence that leads to competitive advantage.
Companies embarking on CI programs should realize that the long-term benefits of a
good CI program can keep the company in tune with the competitive environment and
changes that may affect business strategy.
REFERENCES
American Product and Quality Center (APQC), Consortium Report, (1998). Managing
Competitive Intelligence Knowledge in a Global Economy.
http://www.apcq.org/
American Product and Quality Center (APQC), APQC Benchmarking Terms
http://www.apcq.org/free/terms
O'Dell, C. and C.J.Jr. Grayson, (1996). Identifying and Transferring Internal Best
Practices. American Product and Quality Center (APQC) Best Practices White
Paper Report.
http://www.store.apqc.org/cgi-bin/vsc.exe/Jacket/cmifwp.htm?E+BookStore
Society of Competitive Intelligence Professionals (SCIP), What is CI?
http://www.scip.org/ci/
Prescott, J., Herring, J., and P. Panfely (1998). "Leveraging Information for Action: A
Look into the Competitive and Business Intelligence Consortium Benchmarking
Study,” Competitive Intelligence Review, 9(1), 4-12.
Frontiers in Competitive Intelligence 105
Wright, S., Callow, J., and D. Pickton (1999). Competitive Intelligence in Action.
Competitive Marketing Practice Research Group, Leicester, UK: DeMontforte
University. .
Wyckoff, T. (1999). Benchmarking Competitive Intelligence. Washington, DC: Special
Libraries Association.