Competitive Intelligence: the benefits of understanding your playing field

“It is more important to out-think your enemy than to outfight him” –  Sun Tzu

The quote above is from Sun Tzu, who lived in ancient China from 544 BC to 496 BC. Although Sun Tzu’s ‘The Art of War’ is already quite dated, it still offers a lot of valuable insights which are directly applicable to the field of Competitive Intelligence (CI). As today’s world is shaped by global developments and- increasing competition, companies need to be prepared for rapid changes in their business environment. CI supports companies in order to get grip on the world of tomorrow and is imperative to ensure survival in highly competitive markets. In this blog we will discuss the relevance of CI and illustrate the phases in the process of scoping, collecting and analyzing information.

Increased importance of CI in today’s world ‍

The need for CI increased over the past decades, mainly fueled by the strong pace in which markets are moving nowadays. Traditional entry barriers fade, companies quickly expand their product or service portfolio to other segments and easily enter new geographical markets due to globalization. The combination of these factors leads to a constantly evolving competitive playing field.

CI allows your organization to remain competitive by improving strategic decisions. It is a process of giving insight into what might happen in the future. If used in the right way, CI will lead to better strategic agility: an organization’s ability to adapt to changing market conditions.

Scoping and questions to tackle with CI  

The first phase of a solid CI project is scoping. Before spending valuable hours collecting data on different competitors, make sure that the intelligence requirements are clearly defined and prioritized. What is your intended use with the final intelligence? Which questions do you want answered? Examples of questions to address with the use of CI are: 

• How is competitor X able to grow and capture market share?
• Are there signals that competitor Y will expand production capacity?
• How likely is it that competitor Z will diversify its product portfolio in the near future?
• What are the core competences of competitor Y? How do they affect the positioning of our main product?

Subsequently, it is essential to look at the stakeholders you are collecting the intelligence for. What does your stakeholder want to do with the insight? Stakeholder goals can strongly vary, even within the same company. Whereas a sales representative may want to use CI to win deals by understanding their point of differentiation from competitors, marketeers and product managers might be more interested in using it for the creation of new propositions and product roadmaps. Executives, alternatively, may want to use CI as a foundation to craft growth strategies, and build long-term competitive advantage. This diversity in goals illustrated, highlight how stakeholder goals can differ.

Collecting the right pieces of information

The second phase of CI is data collection. In this phase, pieces of information and data are collected to serve as input to be analyzed. These pieces can be found through a large variety of sources. We distinguish the following two: open-source intelligence (OSINT) and human-intelligence (HUMINT) sources.

OSINT covers publicly available data. Relevant OSINT sources for CI data collection phase can be press releases, new product launches, management changes, interview with executives, awards won, partnership announcements, annual reports, trade journals, transcripts, public records or social media posts. Some real-life examples in which OSINT sources prove their value for CI:  

• Vacancies and job postings from competitors can be an incredible source of information. Imagine your main competitor starts hiring engineers with a specific skill - this could be an indication of a sudden change in product strategy. Or take a competitor that is rapidly looking for employees for a new, not even publicly announced, production plant.
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• Glassdoor is another example of an insightful open source. Take a former employee from your biggest competitor who recently left the company and left a negative review on Glassdoor. Analyzing these reviews can offer insight into what challenges an organization faces. For example, internal management might be a mess, general working conditions could be very bad, or your competitor might be right in the middle of a ruthless restructuring.
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• Published interviews with upper management are a last example. Some executives are so eager to be interviewed and get in the spotlight, that when the moment arises, they share all kind of information that can be used to get a grasp on the future strategy of their business. Does the CEO mention that he or she would like to take business abroad? Do they specifically mention a growing product segment? Do they indicate that they have funds available for M&A activities?

Beside the information collected through OSINT sources, there is another stream of sources we distinguish: HUMINT. This category covers intelligence obtained by interpersonal contact. The value of interpersonal contact is enormous, as information can specifically be tailored to the question at hand. Two illustrations of relevant HUMINT sources for CI: 

• There can be untapped potential in collecting intelligence from stakeholders within your company. Take some experienced sales representatives, active in the field. These people visit exhibitions and talk to customers and competitors on a daily basis. Therefore, they can be a tremendous source of competitive intelligence. Unfortunately, in most cases, this intelligence is shattered around the organization, and the opportunity is neglected to organize them in a framework/structure. As a result, it is difficult to make this intelligence actionable and reveal its real value.
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• Intelligence can also be collected from clients, as part of a win/loss analysis: why are you losing or winning certain deals or tenders? To gather this type of HUMINT, you can call a client you lost a deal from and ask why he or she went through with your competitor instead of you. Through the analysis of your customers’ and prospects’ feedback, you’ll be able to capitalize on some highly valuable intelligence, especially relevant for your sales and marketing stakeholders.

From knowledge and information to actionable intelligence

The third and final step is analyzing the collected data. After clear scoping and data collection, it is time to transform the gathered pieces of knowledge to information and finally to (actionable) intelligence. There is a thin line between information, knowledge and intelligence. In other words, unless someone can take some form of action from the knowledge presented, you have not produced intelligence.

“If you know the enemy and know yourself, you need not fear the results of a hundred battles.”  –  Sun Tzu

A good start in making knowledge and information actionable is combining all the gathered pieces of knowledge and information about your competitors in extensive competitor profiles. You can gather a huge array of pieces of information, but the real value only will be unlocked when bringing the pieces of the puzzle together. With a competitor profile, all relevant information is gathered in a consistent way. A competitor profile can contain (but is not limited to) the following intelligence topics:  

Organization

• Workforce
• Executive profiles
• Locations, business unit structure
• Suppliers, distributors & partnerships  

Strategy

• Positioning
• Route-to-market
• Core competences

Portfolio

• Product range
• Target markets
• Key customers
• Packaging and pricing

Financial position  

• Ratio's
• Revenue per segment, region
• Expenditure profile
• Asset composition
• Capital structure

Depending on the intended use of the competitive intelligence, some topics might be more relevant than others, and the list could be expanded. Do you want to benchmark your company with peers? Then financial ratios are relevant input. Do you want to reveal your competitors next move in a specific market? In that case you should re-construct their strategy, based on gathered pieces of information about their positioning and portfolio. It is also important to stress that the profiles are dynamic, as companies constantly change.

When ready, competitor profiles can serve as input for e.g. competitor mapping, which will eventually lead to new insights and better understanding of the complete competitive playing field. In this way you take individual profiles to arrive at an integral overview.

As we learned in this blog, scoping, collecting and analyzing data are all crucial phases in order to execute a solid CI project. Having access to reliable competitive intelligence is vital for ensuring a company’s success and offers support in making better operational, tactical and strategic decisions.