Category: Blog

Business is hard work. You need to stay on top your game if you want to be ahead of your competitors. But even with experience and passion, the business game can be a nasty race—one day you’re the best, the next day you’re slipping down the ladder. The next thing you know, you’re not number one anymore.

Business is all about strategy. You need to play well to win. Part of this never-ending game is preventing threats, anticipating obstacles and generating solutions to problems. To do this, you need to know what you’re up against. You need knowledge, you need information.

And how do you gather information to stay on top? In business, there’s a process called competitive intelligence. Unfortunately, there are still some key people in business groups who don’t make this a habit. If you’re one of the non-believers, perhaps now is the time to learn more about competitive intelligence, and how it can be of benefit to your business.

What is Competitive Intelligence?

Competitive intelligence or CI is the ethical and collaborative process of gathering, analyzing and disseminating information about the competition and its environment, including the market, customers and competitors, to support strategic planning and decision-making of any organization.

Now, let’s debunk some of the most common myths about competitive intelligence and reveal the truth about what it really is.

MYTH: Competitive intelligence is espionage.
FACT: Competitive intelligence is a legal business practice.

Time and again, analysts emphasize the ethics in competitive intelligence, and this is what sets it apart from industrial espionage.

While espionage agents or spies use blackmail and theft to steal a competitor’s ideas and trade secrets for competitive gain, competitive intelligence analysts use publicly available sources about the market, products and competitors.

Professional providers of CI don’t condone the use of illegal means to gather information, as integrity and transparency are of utmost importance in this practice. Spying is absolutely not tolerated.

MYTH: Competitive intelligence revolves around the competitor.
FACT: Competitive intelligence involves the entire competitive environment.

You don’t just focus on the competitor. CI is not to be confused with competitor analysis, a different process that involves profiling the competitor’s strength and weaknesses to formulate an effective strategy.

Rather, competitive intelligence embraces the entire competitive environment outside your own business. You don’t take out any of these from the equation: products, customers, distributors, partners and stakeholders. Depending on the extent of your business, you can involve more people, entities or phenomena as you conduct competitive intelligence.

According to the 18th Annual Global CEO Survey by PricewaterhouseCoopers on 2015, 56% of CEOs intend to venture into a new market in the next three years, seeing a tighter competition. The world of business is so dynamic that you have to keep an eye on other factors that influence the industry such as technology, economy and political climate. With competitive intelligence, you can navigate your way through many changes while keeping up with your competitors.

MYTH: Competitive intelligence is mere information gathering.
FACT: Competitive intelligence is a systematic process.

CI involves planning, gathering, analyzing and executing. As you go through each step, some of these questions may be relevant:

● Planning
○ What is your objective?
○ How do you access data about the competition?

● Gathering
○ How much information do you have?
○ How do you organize and utilize resources?
○ What past experiences do you have to help determine relevant vs. irrelevant information?

● Analyzing
○ What techniques do you use for data analysis and interpretation?
○ What are the findings in your SWOT (strengths, weaknesses, opportunities, threats) analysis?

● Executing
○ How do you present your intelligence findings to the head of your organization or team?
○ What do you recommend to formulate an effective strategy?

Remember that data, information and intelligence are three different concepts.

Picture the following scenario:

The product you’re selling has a profit margin of 45%.
This is data—raw, discrete and without much relevance, but still a fact nonetheless.

Your product has a profit margin of 35%, while your top competitor’s is at 60%.
This is information—data when taken into context, which becomes more interesting and relevant.
Your product’s supplier charges almost twice as much as your competitor’s supplier. Consider looking for another supplier who can deliver the same quality at a lesser wholesale price.
This is intelligence—analyzed information that gives insight and supports decision-making and strategy-building.

MYTH: Competitive intelligence is expensive.
FACT: Competitive intelligence is a wise investment.

You don’t want to see your company at a devastating loss—only to realize that you could have done something at the outset to prevent problems or at least mitigate risks.

There is no fixed rate for competitive intelligence services—analysts provide a quote specifically for your business or company after careful discussion of your goals and expectations. You may the find the rate steep, but what’s new? Business is all about money, too, and everything has a price tag. The good thing is that you get what you pay for.

According to Forbes, about 73% of companies invest more than 20% of their respective budgets on competitive intelligence. Do you think your competitors use CI as a routine procedure in strategic planning? Most likely, they do—but for the best reasons. Information is crucial to intelligence gathering, intelligence is key to decision-making, and sound decisions magnify profit.

MYTH: Competitive intelligence is for large companies.
FACT: Competitive intelligence works even for small and medium enterprises.

If you’re an aspiring businessman, competitive intelligence may seem intimidating. However, you will realize how much information there is—public or otherwise—that holds a lot of relevance.

Why do you think Fortune 500 companies are successful? According to Benjamin Gilad, a pioneer of competitive intelligence and the President of the Academy of Competitive Intelligence, more than 90% of these big-time organizations use CI in formulating their businesses strategies.

As a business owner or head of the company, there’s a lot to know to gain a competitive edge, and even a lot more to understand. No matter how small or big your organization is, information becomes useless without the application of analysis and dissemination. The ultimate goal of competitive intelligence is to transform raw information to valuable intelligence in aid of strategic planning and decision-making.

Competitive intelligence is so effective that based on The Economist, 69% of businesses tapped the services of CI professionals to do it for them, and gained positive results from it. You don’t need to perform competitive intelligence on your own, especially if your company lacks resources in executing it. The good thing is that analysts or professional CI providers can do it for you, in accordance to your objective.

PricewaterhouseCoopers said that only 35% of CEOs admit they are confident with their future business prospects. Can you say the same for yourself? How confident are you?

Why Big Companies Use Business Intelligence

And Why You Should, Too

Kickstarting a business is hard work, and seeing a good launch uplifts your morale. But the challenge is not in the beginning—you have to keep improving and innovating to stay afloat, otherwise, you will sink slowly while your competitors rise on top.

This is where business intelligence comes useful.

Business intelligence or BI is the process of transforming raw data into useful information to derive intelligence that aids in decision-making. It comprises methods, strategies, and technologies for data analysis. This is not just a software or application to extract big data; it is a broad concept that encompasses tools, technology, software, and business practices to promote sound decision-making.

Compared to competitive intelligence which focuses on the external competitive environment, business intelligence is all about the internal dealings of the organization.

The goal of business intelligence is to interpret big data within the organization into readable, understandable information that will help key people in business to make decisions for the betterment of the whole organization.

Let’s get to know how big companies benefit from business intelligence, and why you should follow suit.

1. Business intelligence enhances productivity and efficiency.

Hospital administration is more complex than office administration due to the higher degree of medical and legal risks embedded in its practice. One common challenge in hospital administrators is improving the efficiency of patient referral systems. Have you observed how time-consuming it is for some hospitals to retrieve patient data? Many hospital managers scratch their head, not knowing where the problem is.

It is even more challenging for Mayo Clinic, both a medical facility and an academic organization. Business intelligence gives valuable insight to the company through the application of data and analytics. This supports the complex 24/7 operations and identifies the problems that hinder productivity and efficiency.

Once you pinpoint where the problem is, business intelligence can help you formulate a solution specific to it. Everything else will follow—high client satisfaction, excellent sales, and a positive reputation.

2. Business intelligence cuts costs.

With the constant fluctuation of gas prices, how does the oil industry continue to be a booming business? Take petroleum giant Saudi Aramco, for example, which generated a revenue of almost $500 billion in 2017.

Because petrol companies like Saudi Aramco do not have a hold on the price of crude oil, they focus on the distribution and marketing of oil instead. For instance, once they gather information on the price increase of crude oil, they can compensate by finding solutions to generate sales. But what about the price decrease of crude oil? They can take advantage of it through price rollbacks, attracting customers and still increasing sales. In both scenarios, the industry is able to meet their goals.

Who doesn’t want to cut back on costs and raise profits at the same time? You don’t have to own a large company to perform business intelligence. Even as an aspiring businessman, you can use BI to make cost-saving decisions with confidence.

3. Business intelligence aids in decision-making.

Jeff Bezos founded Amazon 24 years ago. Until now, it remains one of the most sought-after online selling platforms by entrepreneurs. It revolutionized e-commerce to one of the most lucrative industries of the century. More than two decades after, how is it still so successful?

Amazon invests on business intelligence in its vast operations. If you want to build a successful business, you have to brush up on your decision-making skills. And to make sound decisions, you need the right intelligence as a basis. You don’t just make a decision at the last minute; oftentimes it involves days of analysis and round-table discussions.

You can take a page from Jeff Bezos’ book by using business intelligence and taking advantage of the dynamics of the Internet, which powers e-commerce. Remember that BI has a heavy reliance on technology and computer software—proper use of automation armed with your critical thinking skills will help you arrive at the best decisions.

4. Business intelligence improves sales.

Since brewing its first cup of coffee in 1971, Starbucks is now operating 28, 218 locations all around the world. The popular coffee chain utilizes business intelligence to gather purchase data from the millions of individuals who buy coffee. They used the intelligence gathered from their data pool to launch their Loyalty Card program, which can predict what variants sell the most to different consumers. In turn, they post their offers and promotions through email marketing, social media, and other web-based platforms.

This is how Starbucks attracts loyal customers, consequently boosting sales to record-breaking heights.

If this is something you would like to do, business intelligence is key to improve your sales. The right information will drive you to build the right strategy to magnify your profit.

5. Business intelligence reduces theft.

Many retail stores face inventory shrinkage. Shrinkage happens when a certain product somehow gets lost anytime between order-taking and point of sale. Can you imagine how much profit is lost because of this?

Lowe’s, one of America’s biggest home improvement stores, uses business intelligence to enhance supply chain and decrease, if not eradicate, fraudulent returns. In fact, it has a separate data center focusing on business intelligence for its operations.

Even for small and medium enterprises, business intelligence does a good job of tracking the number of lost products, identifying the specific department with the most shrinkage and determining the types of products that usually get lost. Knowing all these information helps you to come up with policies that hinder shrinkage.

It’s astonishing how so many companies from different industries use business intelligence. What do all these successful companies have in common? Consistency. They don’t just use business intelligence at one time, then do it some other time when they see a threat. As a business owner, you can benefit by using business intelligence in all aspects of your operations—at the right time and using the right information.

Business intelligence is a process done through a collective effort. CEOs, managers, team leaders—all employees within the organization play a crucial role in gathering data, collecting information and presenting intelligence to key people who make strategies and decisions.

Does your business hold massive amounts of data, but unable to take advantage of it to increase profitability? It’s never too late to invest in the right business intelligence tools. You don’t have to do it yourself—business intelligence analysts can do all the work for you to help you achieve your business goals, ultimately moving your entire organization forward.

There is nothing worse than falling victim to fraud. When you learn that an employee or close associate is behind the crime, the disbelief may be overwhelming. Seeing your profits dwindle, losing your hard-earned money and realizing that your reputation is permanently tainted—all these paint the worst case scenario.

Fraud is so destructive that around $50 billion is lost annually because of it, a survey by Static Brain states.

Fraud investigations are now becoming common due to the surge in fraudulent activities within companies. The goal of a fraud investigation is to recover all, or at least a part of, stolen finances or inventory, and avoid damage to reputation and relationships with clients, vendors and investors.

No matter how brilliant your security intelligence approach is, fraudsters are always one, two or several steps ahead of you. Know the common signs that you have been deceived—before it’s too late.

1. Unexplained records and transactions

An unusual change in bookkeeping records is a warning sign, especially if they happen more than once, and at certain patterns. Do you notice an unjustified change when the profits peak? Is there a correlation between missing records and an increase in sales? Do you see an unexplained decrease in revenue despite a complete payment record from clients and vendors? Are invoices detailed in rounded amounts, without pennies?

All these are indicators that someone may be behind the scheme, putting money into another pocket. Conducting a fraud investigation can identify all missing records, unexplained transactions and other unusual details to help you analyze the situation, calculate how much losses have been incurred, and pinpoint the culprit.

2. Complaints

As a CEO, director, manager, supervisor or employee—you receive complaints all the time, either about you or someone else within the same organization you’re in. But complaints shouldn’t be dismissed as nonsense ranting by a disgruntled employee.

There are two ways to handle employee complaints—you either shrug them off or dig deeper to find out the real issue. As far as fraud is concerned, investigating the complaint will help you speak with the people involved and see a clear picture of the grievance. The community of employees is a house full of secrets. You’ll be surprised to discover hidden information once you connect the dots.

But what about complaints from vendors or clients? This is something you must not ignore, especially when you belong to an industry focusing on customer service like F&B, retail and tourism. Every customer complaint should be dealt with accordingly, and more so if the situation in question involves loss of money, inventory and your own employee.

Fraud investigations can help you come up with strategies to combat employee fraud, such as completing purchase orders, controlling cash receipts, and installing surveillance measures.

3. Shrinkage

Shrinkage is inventory loss that happens anytime during storage, transit or the actual point of purchase by the customer. This is common in retail stores where the loss is so huge—amounting to losses worth over $49 billion in 2016, according to the National Retail Security Survey.

Shrinkage is also attributed to consumer-related causes like shoplifting. In this case, a fraud investigation can help by identifying the shoplifter and to return and compensate any loss in favor of the affected business.

Internal shrinkage happens every once in a while, too, as there is always a margin of error. However, excessive internal shrinkage is a red flag of employee theft. Since fraud-related modi operandi are becoming more sophisticated, even employees and customers connive with each other.

Through fraud investigations, analysts can see patterns and relationships. Once they assess the severity of the shrinkage, they can correlate this with other information to determine the extent of the fraud.

4. Doubtful vendor information

Have you noticed how businesses rely on the Internet? Even small and medium enterprises, in the absence of an official website, build their own social media pages to establish their online presence.

Have you received an e-mail about a business proposal from an unfamiliar vendor? Does the message sound too promising? Were you asked to pay a certain amount of money via an unusual payment platform?

A quick search can give you a vendor’s contact details and address, but even these details—or the absence thereof—can tell a lot. Is the address non-existent? Are the phone numbers unreachable? Does the e-mail domain seem suspicious? Inconsistencies in the most basic details are warning signs, and you should take these with a grain of salt.

Depending on where the vendor is located or operating, you can do further investigation by checking with state-maintained databases such as the Better Business Bureau for US vendors and Corporations Canada for Canadian vendors. Other states, cities or provinces have their own databases as well.

However, a fraud investigator can do more than just searching on the Internet. There’s no harm if you inspect yourself, but you may not find the right information. If you employ an expert in fraud investigations, you can expect a more in-depth investigation. In this case, the investigator actually goes to the declared address and may even look into other databases that you have no access to.

5. Unusual employee behavior

Once fraud is confirmed, monitoring the behaviors of your employees is imperative. But how does behavioral profiling work? Simply observing them reveals a lot of clues that will help you determine who did what.

Personal circumstances
Is any of your employees going through a rough time, such as divorce or sudden death in the family? Does the employee have a high outstanding debt? Is the employee a gambler known to “splurge”?

Over-efficiency
Is the employee holding a sensitive position? Does the employee refuse to take leaves? Do you notice unusual working patterns, such as staying late in the office even after office hours or refusing to share duties with other employees? Does the employee ocntinually refuse a lucrative promotion or transfer?

Lifestyle changes
Does your employee have a new property? Have you heard of high-value purchases such as vehicles, jewelry or luxury items? Is the employee on frequent overseas trips? Can the employee’s income compensate for the expensive lifestyle?

Close associations
Does the employee have an unusually close relationship with a certain vendor, while not showing the same for others? Does the employee seem to gain the trust or confidence of an auditor or manager?

Conducting interviews is part of fraud investigations. Eliciting answers from the interviewee can give a lot of clues that aid in behavioral profiling. Experienced and qualified investigators are the best people to do this in a professional, non-compromising manner.

The very moment that fraud is suspected, an internal investigation conducted by the company is always the first step. If you feel that you need a more structured, expert approach in investigation, fraud analysts do the job well. The cost of fraud investigations may go very high if you want a full-scale scrutiny of all internal dealings within your company, but you will be as content as you will be shocked with the results.

Remember that these warning signs should not be the made as the sole basis for pinpointing the fraudster. Assessing the totality of circumstances is key. After all, fraud investigations can establish the facts of the crime—the who’s, what’s, where’s, when’s and why’s—in an objective manner.

Once you get the results of your investigation, you gain insight as to how the fraud occurred, allowing you to assess the effectiveness of control systems and to fix any weaknesses. Ultimately, fraud investigations help to strengthen your anti-fraud measures to ensure your organization doesn’t fall victim again.

The world of business is so complex that no single phenomenon remains unchanged for a long time. As you gain momentum, you need to keep on innovating—or you get left behind. We all witness milestones from big companies such as joint ventures, mergers and acquisitions, financings and other major investments. How do these businesses thrive? How do they satisfy the dynamics of the competition?

One key standard by which companies follow before a major investment is due diligence investigation. This is the process of researching and analyzing an individual or organization before a business transaction. This helps in assessing the practicality and profitability of a transaction or investment.

A — ASSESSMENT

Do I need a a due diligence investigation?

Assess yourself. Do you run a business? Are you stockholder of a big corporation? Are you about to accept a top-ranking position? Do you plan to enter a joint venture? All these entail due diligence investigations to give you a clearer picture of the company you are about to do business with.

The concept of due diligence is simple: it revolves around reasonable care or “required carefulness”. In simple terms, due diligence is studying for a major exam. In business, due diligence investigation is done in preparation for a major transaction.

B — BENEFITS

How can a due diligence investigation benefit my business?

The goal of due diligence investigation is to provide you with information, hidden or otherwise, to help you make an informed decision. Would you enter a battlefield unprepared? Certainly not.

By conducting a due diligence investigation, you can figure out what a company is going through. It is typical for the larger business to conduct this due to their large assets. If there is even just a small risk of failure, wouldn’t you want to discover it? A due diligence investigation does just that—because once problems start, they become difficult to fix. Even in business, prevention is a lot better than damage-control.

However, due diligence is not limited to investigate hidden information or analyze risks. It can also determine opportunities when the acquisition or venture starts. If it’s for the betterment of both parties, why not? Let’s say, for instance, the potential partner has a strong chance of winning bids in future contracts—your business can definitely benefit from this strength.

Remember that both risk and opportunity are two sides of the same coin—but you don’t have to flip it. Running a due diligence investigation can identify the risks and opportunities that will help you arrive at the best decision.

C — COMPLIANCE

What is the basis of due diligence investigations?

Due diligence investigation did not become a practice if it weren’t for the laws that emphasize on checking companies out of prudent and careful practice.

The use of due diligence rose due to the US Securities Act of 1933, originally referring to the process as “reasonable investigation”. Though every country practices their own laws and policies, here are the most common legal bases for investigative due diligence:

US Foreign Corrupt Practices Act

One strategy of the FCPA compliance program done by corporations is to tap into due diligence providers. They perform this as a precautionary yet sincere measure by identifying public officials associated with foreign companies.

US Patriot Act

The Act orders all financial institutions in the US to conduct due diligence in accounts established or maintained for foreign individuals or institutions. This is done as a means to combat money laundering.

UK Bribery Act

When the Act was still in the works, the Secretary of State published a Guidance outlining six principles followed in business. One of the principles, as stated in the Guidance, is due diligence, which is done in compliance with a code of conduct.

Non-compliance to these laws results in serious legal ramifications, ultimately damaging the reputation of the affected companies. Due diligence investigations are almost always called for in states, cities or areas where corruption is rampant.

D — DUE DILIGENCE PROCESS
How is a due diligence investigation conducted?

The due diligence investigation is an exploratory process and uses different styles to gather information. It encompasses person background checks, company background checks, mystery shopping, surveillance, and financial investigations.

The typical areas an investigator looks into are:

Company history and overview
Who founded the company? What is the vision-mission?

Employees

What benefits does the company offer to their employees? What is the dynamics of their workforce? Is there an existing association or union of their employees?

Financial record

How much is the monthly revenue of the company? Do they have a good credit history?

Audits

How does the company fare in marketing audits? Do they routinely perform IT audits?

Inventory management

What approach does the company use to manage their materials? How do they deal with issues concerning inventory?

Depending on the depth of the search, due diligence investigators can dig deeper. They can review public records, contact foreign offices and talk to actual individuals like customers to gather more information.

It is possible to perform a due diligence investigation on your own, but it might not be very effective. Investigators are experienced and wise, and they know what kind of information to look for and how to obtain it. They know how to acquire records legally and have authorized access to data that are not accessible to you or to the public. It is crucial to employ the service of an investigator to get hold of accurate and relevant information without compromising other precious resources like time and money, which you can use elsewhere.

E — EXAMPLES

What are the types of due diligence investigations?

Because there are various aspects in business, there are also many types of investigative due diligence that can cater to each area:

Legal due diligence

Does the company own rights to intellectual properties? Do they have contracts with all their partnerships? Do they have previous or current litigations in court?

Financial due diligence

How does the company deal with their finances? Is there a declaration of assets and liabilities?

Commercial due diligence

Does the company have a business plan in force? Do they have a pool of regular clients? Who are their competitors?

HR due diligence

Does the company’s human resource department conduct pre-employment screenings? What is the recruitment process? How do they handle employee grievances?

IT due diligence

Does the company utilize effective data-gathering tools? How do they analyze information? Do they act on intelligence to make business decisions?

Before any big change, it’s all about verifying if the company in question is indeed what they are showing to you. If the other party presents you with their own facts, a due diligence investigation can show you another aspect. Even if you practice integrity and professionalism in all your business dealings, there are still companies that may not mirror your own values.

How willing are you to risk your own business? Due diligence may cost your company a certain amount, but think of it is as a lifetime investment. Not doing a due diligence investigation prior to a major change is like entering into a battle blindfolded—you don’t know what you’re up against.

With due diligence investigations, your company can analyze all the aspects of the other party—allowing you to see the bigger picture. Once it’s clear, you will have the confidence to make informed decisions that will benefit your company without compromise.