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
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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
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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.
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WHAT COMPETITIVE INTELLIGENCE IS NOT
• Traditional competitive studies
• News clipping service
• Databases / data warehouses
• Market research
• Knowledge Management
• Unconnected pieces of data
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CHALLENGES IN CI
“ We are drowning
in information
but starved for
knowledge.
”
– John Naisbitt
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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?
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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.
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