BEST PRACTICES IN MANAGING A CI FUNCTION June 6, 2007 GOALS AND OBJECTIVES • Provide an overview of competitive intelligence, what it is and what it is not • Description of how competitive intelligence is used within an organization • Competitive Intelligence Usage Survey Results • Instruction on the basics of a competitive intelligence process • Overview of best practices from our experiences with clients in managing a competitive intelligence function www.outwardinsights.com 2 AGENDA What is Competitive Intelligence The Uses of Competitive Intelligence Competitive Intelligence Usage Survey Findings The Competitive Intelligence Process Best Practices in Managing the Function www.outwardinsights.com 3 WHAT IS COMPETITIVE INTELLIGENCE? Competitive Intelligence: Knowledge and foreknowledge of the competitive environment — the prelude to decision and action. Competitive Intelligence Process: The organizational means by which information is systematically collected, analyzed, processed and disseminated as intelligence to managers who can act on it. www.outwardinsights.com 4 WHAT COMPETITIVE INTELLIGENCE IS NOT • Traditional competitive studies • News clipping service • Databases / data warehouses • Market research • Knowledge Management • Unconnected pieces of data www.outwardinsights.com 5 CHALLENGES IN CI “ We are drowning in information but starved for knowledge. ” – John Naisbitt www.outwardinsights.com 6 CI TRANSFORMS DATA/INFO INTO INTELLIGENCE Data Employment at the site dropped from 1100 to 950 Unconnected Bits Knowledge build by Information looking at several data points They implemented new labor -saving technology The implications of Intelligence the organized information This gives them th e ability to ノ www.outwardinsights.com 7 INTELLIGENCE IS EXTERNAL “(I)t can be argued that the information revolution has caused managements to be less well informed than they were before . . . (T)he most important changes affecting an institution today are likely to be the outside ones, about which present information systems offer few clues.” — Peter Drucker, “A Survey of the Next Future,” The Economist, 11/3/01 www.outwardinsights.com 8 COMPETITIVE INTELLIGENCE IS NOT LIMITED TO COMPETITORS Competitor Capabilities, Plans, & Intentions Corporate Security Threats Industry Structure & Trends CI Group Political, Economic, & Social Forces Technology Developments & Sources Markets & Customers www.outwardinsights.com 9 AGENDA What is Competitive Intelligence The Uses of Competitive Intelligence Competitive Intelligence Usage Survey Findings The Competitive Intelligence Process Best Practices in Managing the Function www.outwardinsights.com 10 USES OF COMPETITIVE INTELLIGENCE Defensive • To provide early warning of new competitors or disruptive technologies Offensive • To spot new markets or opportunities ahead of competitors Short-Term • To determine how a key competitor will price or position a new product or service Long-Term • To forecast the viability and attractiveness of a future market Intelligence is forward-looking, predictive, and actionable www.outwardinsights.com 11 INTELLIGENCE IS ANTICIPATORY “ On the ice, everyone goes to where the puck is. Me? I go to where the puck is going to be. ” – Wayne Gretzky www.outwardinsights.com 12 AGENDA What is Competitive Intelligence The Uses of Competitive Intelligence Competitive Intelligence Usage Survey Findings The Competitive Intelligence Process Best Practices in Managing the Function www.outwardinsights.com 13 SURVEY SAYS… More than 7 our of 10 companies claim to have an organized CI function . . . CI in US Companies 29% Have an organized CI process 71% Do not have an organized CI process . . . But most say they do not have the means, interest, or understanding to use it properly. 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Support sales Support new product launches Strategic alliances, JVs and licensing R&D planning Tactical Uses Strategic Uses Source: Ostriches and Eagles: Competitive Intelligence Usage and Understanding in US Companies, Outward Insights, February 2005 www.outwardinsights.com 14 ROADBLOCKS TO EFFECTIVE CI 100% 80% Insufficient Funding 60% Internal Bureaucracy CI Team Lacks Clout 40% 20% 38% 33% 28% 20% Executives Don't See Value in CI 0% Source: Ostriches and Eagles: Competitive Intelligence Usage and Understanding in US Companies, Outward Insights, February 2005 www.outwardinsights.com 15 AGENDA What is Competitive Intelligence The Uses of Competitive Intelligence Competitive Intelligence Usage Survey Findings The Competitive Intelligence Process Best Practices in Managing the Function www.outwardinsights.com 16 HOW TO CREATE INTELLIGENCE: THE CI CYCLE Most corporate intelligence programs consist of four broad functions: • Planning and direction: management and oversight of intelligence to ensure a demand-driven, needs-based program. Planning & Direction Decision Makers • Information collection: exploiting secondary and primary (human) sources for information, observations, and insights. • Analysis: interpreting information, drawing conclusions, identifying implications, and making strategic recommendations. • Reporting: disseminating finished intelligence products, in time, to those managers with the responsibility and authority to act on the information. Informati on Collectio n Report & Inform Other Users Analysis The Intelligence Cycle: Each step is necessary and adds value www.outwardinsights.com 17 KEY INTELLIGENCE TOPICS FOCUS THE CI GROUP TO DELIVER THE HIGHEST VALUE INTELLIGENCE Definition Management Role Purpose Benefit • KITs are high-level business concerns upon which management must take action • Define KITs based on the critical decisions that must be made • Provide direction to the competitive intelligence effort and overall strategy • Improve the quality and timeliness of decisions; prevent surprise through early warning www.outwardinsights.com 18 SAMPLE KEY INTELLIGENCE TOPICS What are the strengths, weaknesses, and future strategic intentions of our major competitors? What new, or non-traditional, competitors could enter our key markets? What new technologies are emerging that could impact our business? What are the emerging legislative or regulatory changes that could have a significant impact on our customers, products, and services? What M&A or JV activity might be on the horizon and what are its implications for our company’s products and services? www.outwardinsights.com 19 INVESTING IN DEVELOPING ESSENTIAL CI FUNCTIONS YIELDS COMPETITIVE BENEFITS Essential Functions Primary Benefits Provides Early Warning of Opportunities & Threats Collect Data Analyze & Forecast Supports Strategic DecisionMaking Process Supports Tactical and Operations Decisions Prepare Report & Disseminate Assesses and Monitors Competitors Supports Strategic Planning & Strategy Processes www.outwardinsights.com 20 RECOMMENDED CI SKILLSETS Communications Leadership & People Management • Verbal • Strategic Thinking • Written • Coaching • Presentation • Team Building Project Management • Planning • Implementation • Monitoring CI Specific • Ethics and Legal Guidelines • Research Planning • Tradeshow Management • Analysis Techniques www.outwardinsights.com 21 CHECKLIST OF SUGGESTED ANALYTICAL TECHNIQUES USED BY CI TEAM Competitor and Industry Analysis SWOT Analysis Porter’s 5 Forces Model Four Corners Analysis Competitor Benchmarking Competitor Response Modelling Forecasting Early Warning Indicator Development Hypothesis-based Tools War Gaming Scenario Planning Financial Financial Forensics WIN/LOSS Analysis Value Chain Analysis www.outwardinsights.com 22 AGENDA What is Competitive Intelligence The Uses of Competitive Intelligence Competitive Intelligence Usage Survey Findings The Competitive Intelligence Process Best Practices in Managing the Function www.outwardinsights.com 23 BEST PRACTICE #1: COMPETITIVE INTELLIGENCE IS ALWAYS LEGAL AND ETHICAL Exploit new employees for proprietary information Misrepresent ourselves Use illegal methods We will not ... Conduct false job interviews Compromise customer proprietary information Misuse consultants or agents www.outwardinsights.com 24 BEST PRACTICE #2: IDENTIFYING USER NEEDS IS CRITICAL TO THE OVERALL SUCCESS OF PROGRAM • CI users are engaged regularly to understand their intelligence requirements • These requirements are used to focus CI efforts and resources • Efforts are focused primarily on issues management has identified as threatening • But, CI has an obligation to alert management to emerging issues • Management regularly shares its actions and decisions with CI producers www.outwardinsights.com 25 THE FLIP SIDE OF BEST PRACTICES: COMMON MISSTEPS TO AVOID 1. Failure to focus – “Get me everything you can on our competitors.” 2. Not linking CI to decisions 3. Placing the CI team too far from decision makers 4. Focusing only on competitors 5. Neglecting early warning 6. Letting ad hoc tactical requests overwhelm the CI effort 7. Confusing the intelligence function with market research or knowledge management www.outwardinsights.com 26 TO SUM UP • Competitive intelligence is about providing actionable intelligence, not repackaged data • Competitive intelligence is successful when it is driven by management’s top business needs and decisions • While all organizations are different, there are some common elements to successful CI programs including: ongoing dialogue with management, a focus on Key Intelligence Topics and adherence to ethical and legal guidelines • The competitive intelligence process should be structured around the intelligence life cycle: planning and direction, information collection, analysis and reporting www.outwardinsights.com 27 The Intelligence to Anticipate. The Strategy to Lead. TM Karen Rothwell, Director krothwell@outwardinsights.com 1-888-447-5501 www.outwardinsights.com info@outwardinsights.com www.outwardinsights.com 28 KEY FINDINGS FROM OSTRICHES AND EAGLES SURVEY (CONT.) Insurance differed from the survey norms in the following areas: 1. Most likely to make intelligence an integral part of its strategic planning process (100% vs. 85% norm), the best of all industry groups. 2. More likely to make CI an integral part of operational or tactical decisions such as business development/sales (86% vs. 78% norm) and strategic decisions such as R&D planning and execution ( 71% vs. 55%). 3. More likely to use CI to anticipate and thwart competitor strategies (71% vs. 64% norm). 4. Most likely to integrate likely competition reactions into plans for launching new products and services most of the time (72% vs. 40% norm), the highest of all the industry groups. www.outwardinsights.com 29