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?
