Competitive intelligence, in its modern form, has been in existence since the 1980s. It’s far too young to have an entire mythology surrounding it, but that does not stop outside consultants from telling tall tales that have little to do with true competitive intelligence.
Here are some of these far-fetched tales:
Tale 1: The most important job of competitive intelligence is to drive action.
Some experts define competitive intelligence as actionable information. Action by whom? Short answer: The amorphous user. Hopefully. Not sure who the users are or how they use competitive intelligence. Let us pray they do something with it. Long answer: We have no idea how the intelligence is used and therefore “actionable” is a misconception. Action often takes a long time to occur. Management may have other considerations not communicated to the competitive intelligence analyst. Action is often independent of information despite another popular myth of “data-driven decisions”.
What is the most vital role of intelligence and the analyst? Short answer: Change users’ perspectives. Long answer: Make sure each decision made involves understanding its impact on other parties. The understanding of other parties’ perspectives should create opportunities and point to some risks. This understanding is a precursor to strategy at any level (e.g., business, marketing, market, or product).
Tale 2: Information and intelligence are similar; the difference is just semantics.
No. It’s not the same! Information is factual. Intelligence is an insight into the future. There are no facts about the future. One cannot derive strategic insights from existing facts without analytical frameworks. Many information professionals just draw ad hoc “implications” based on their tactical understanding of the market. By necessity, these are reactive. The most important insight for management, however, is where the market is heading before it had already changed.
To understand market shifts one doesn’t need gobs of data (contrary to what big data vendors say), but an understanding of 1) the principles of how markets evolve, 2) a vision of how it may look in the future (no data about that, ever), and 3) how disruptions occur and which ones are truly disruptive.
Above all: Management needs an insight into how market dynamics – the interactions of high- impact players with the company determines final outcomes. This insight comes from creating an industry structural analysis framework through applying Michael Porter’s Five Forces model. The result allows for seeing the “big picture”. This is not something you get from the graphic-intensive, 24x7 slides created by management consulting companies.
Tale 3: Strategy is anything we label as “strategy”.
Marketers tend to ignore the “big picture” and focus on tactical, immediate market realities. When one loses sight of the big picture, small tactical moves and even smaller victories do not matter much. The essence of strategic positioning means seeing the market shifts just a bit earlier than others and taking a risk on shaping it. All the marketing in the world will not do a thing unless marketers use competitive insights as a guide in shaping the market.
War game after war game, I watch how brilliant technical and marketing teams struggle to devise a distinct strategy. Instead they fall back on the easy path of quick imitation or tactical adjustments. Left to their own devices, marketers find themselves exactly at the same place where they started, in an arms race. If the market is rapidly growing, competitive convergence (major players that all look alike) is masks glorious numbers (think SAP/Oracle and AWS/Azure.) However, when markets mature, that convergence turns into a blood bath through price wars.
Tale 4: Economics always favors the largest players.
The most notable change for marketers in high-tech companies is that the network effect replaces the economies of scale (EOS) associated with production. Network effects do not lower costs, like EOS does; however, everything else being equal, larger networks have more value to those who join. Prime examples are social media, e-commerce, and telecom networks. The warning is with “everything else being equal”.
While network effects still favor the larger players, they do not disadvantage the smaller players who, in turn, have smaller networks. As with manufacturing-intensive industries, EOS favored the larger players. If these smaller players focus on distinct, unmet needs as a strategy, they can compete effectively. That’s how Snapchat grew against the social media behemoth of Facebook, and that’s how small, specialized consulting firms compete and win against the behemoths of McKinsey, Deloitte, Accenture, and others.
Tale 5: The intelligence provider must be an expert in collecting information.
No, he/she does not need to be a human search engine. Instead, they need to be memorable. Memorable means telling a narrative that is intriguing, fresh, unfamiliar to executives, and makes executives go, “Hmmm…interesting. What do you think happens next?” If you distribute information (just the facts) out, you get garbage in. Good luck being stuck as an archivist or librarian.
Read Benjamin Gilad’s new book, The NEW Employee Manual: A No-Holds-Barred Look at Corporate Life, (co-authored with Mark Chussil). [March 2019; Entrepreneur Press].
For more than 30 years, Benjamin Gilad ran war games for market-leading Fortune 500 firms in a variety of industries and on all five continents. He is a former associate professor of strategy at Rutgers University's School of Management and the founder and president of The Academy of Competitive Intelligence. A pioneer of competitive intelligence theory and practice in the United States, he has been called "our CI guru" by the Society of Competitive Intelligence Professionals. He holds a PhD in economics, an MBA, and BA in psychology and philosophy. He can be reached through his site, www.GiladWarGames.com.