THE DATA ADMINISTRATION NEWSLETTER – TDAN.com
ROBERT S. SEINER – PUBLISHER

Published in TDAN.com January 2002

The Internet and web search technologies are bringing competitive intelligence processes into mainstream business operations. This article provides an overview of the scope and process of the intelligence process, and the advantages to be gained. The motivations and influences that are driving companies to implement Internet based competitive intelligence are also described.

To look into the future is to look into an almost endless variety of possibilities. To practice foresight is to reduce that endless variety of possibilities to a manageable range of probabilities, and then to be as prepared as possible to deal with actual events and developments when they occur. The practice of tactical foresight is the very core of intelligence practice.

Until recently business intelligence activities were more likely to be implicit and unstructured rather than explicit and highly structured. Managers and executives maintained a wide range of contacts, and ‘kept an ear close to the ground’. Formal intelligence processes were rare and euphemistically hidden in “planning” organizations. As information technology advanced Executive Information System (EIS) and Decision Support System (DSS) software provided some support. Superficially “Keeping an ear close to the ground” became ‘Networking’, but intelligence activities remained scarce and in the background. Today, the world-wide-web has broken that mold and is forcing intelligence into the mainstream. What could be done previously in days, weeks, or even months is now done in seconds and minutes. The Internet means ‘immediacy’, what has just happened, what is happening right now, and what is about to happen. This immediacy combined with the increasing amount and quality of information available on the Internet, and the development of powerful search technology has transformed the Internet into a major competitive weapon.

Competitive Intelligence or Real-time Knowledge Management?

To date much of Knowledge Management (KM) has focused on learning and deep knowledge acquisition, the preservation and availability of essential knowledge, and the promotion and assistance of learning. Peter Senge in his book "The Fifth Discipline", describes the KM culture well and coined the term "the learning organization". The scope of Knowledge Management continues to expand. Internet portal developers use the term “Content Management” to distinguish the particular processes that are required to arrange and manage knowledge within Internet portals. Similarly, the term “Intelligence Practice” (IP) is used here to distinguish and emphasize the unique character and immediacy of deliberate surveillance and foresight processing. By their nature Intelligence Practice and Competitive Intelligence in particular are ‘real time or, near real-time Knowledge Management’. Whichever terminology you prefer mainstream intelligence processing has arrived.

The Intelligence Process

The Internet enables intelligence practitioners to do minute-to-minute foresight. Search technologies quickly and repeatedly gather news of events, developments, shifts, and changes. It is now practical to maintain a state of tentative readiness in which intelligence workers constantly sift through news and then revise and gradually reduce the range of probable outcomes. Simultaneously, tentative options (decisions) are determined and resources are deployed and re-deployed to make initial preparations for anticipated outcomes. As a consequence, intelligence-active companies have more advance notice and are better prepared than inactive competitors when actual events occur.

While others are in various states of surprise and reaction, intelligence practitioners hold positions of advantage, are decision-ready and already on the move. Major downside impacts have been offset and actions are in progress while the opportunity window remains open. More proactive than covering risks, pre-empting losses, and ensuring health and growth, practitioners are launching new products and services, extending their reach through partnerships, staking out market territory, and seizing customers and market share that competitors have left unprotected.

The overall process of gathering and assimilating news is vital to IP. However, news operations are not the whole picture. Information flows in many directions and proactive IP operations include activities to compose assemble and distribute information, often about company operations, products, services, financial health, and strategies. Information is broadcast widely to capture opportunity and carve out unique recognition in industries and marketplaces. Announcements of research or technological breakthroughs boost status, as does the wide distribution of news of excellent financial health, acquisitions of competitors, and sector leading stock market performance. Conversely, information is broadcast to nullify, or mitigate the negative or undesirable effects of public misinformation. Negative product or service claims made by competitors are an example. Other examples include claims made by disgruntled customers or former employees in Internet 'chat rooms'. Both are examples of information that must be countered before it grows beyond the level where damage can be controlled.

The Scope of Intelligence Practice and Competitive Intelligence

As the following figure suggests an Intelligence Practice needs to manage many components or sectors. It is important to note that IP takes into account both External and Internal news and developments.

Internal IP captures the news and implications about the operational performance of a business, and keeps the business informed of needs and opportunities for internal improvement, growth, and change. Internal IP depends on the knowledge of business dimensions and the measurement of business volumes, error rates, quality levels, and all operational information that a company requires to manage performance and optimize operational efficiency.

External IP operates across the company’s value and supply chains, and all external areas that have potential to reduce or improve the company’s chances for success. External IP encompasses Industry Surveillance (e.g., Gartner) and Competitive Intelligence to keep the business up-to-the-minute on shifts and changes in industry benchmarks, practices, technologies, and competitor offerings, tactics, wins, losses, acquisitions, spin-offs, market share, etc. External IP also keeps the company apprised of where it and other players stand in all areas of industry and markets and keeps the company positioned (decision ready) to change strategies and make timely and informed decisions to drive achievement of goals and overall business success.

Competitive Intelligence:

When adapted for the purpose of managing competitive opportunities and risks IP becomes Competitive Intelligence. Companies with large research operations use competitive intelligence to monitor research progress of competitors. Companies that are losing market share monitor competitor operations to learn the techniques and strategies that competitors are using to advantage, and companies in sectors like banking monitor the financial strengths and weaknesses of all participants to predict who will acquire or be acquired by whom.

Competitive Intelligence is perhaps, the most critical sector of IP.

Companies with active competitive intelligence practices:

1. Define market spaces and establish presence before their competitors
2. Provide industry leading products and services because they learn what customers need and want
3. Learn where competitors are vulnerable and how to gain the advantage.
4. Compete to win and do not waste resources competing where they have low chances of success.
5. Grow and protect advantages they possess and nullify competitor actions.

Benefits of Competitive Intelligence

The benefits of a competitive intelligence practice can be significant. Intelligence-active companies are decision-ready and respond early and effectively to events and opportunities. By maintaining a higher level of awareness, a sustained state of readiness to make decisions and commit to action, companies are able to plan and make strong moves that address both strategic and tactical goals and attain industry leadership. They are not limited to face-saving tactical re-actions and relegation to the ranks of ‘also-rans’. By setting ‘intelligent' goals and by factoring 'probability of success' into their actions, competitive-intelligence companies and their shareholders are rewarded with higher investment returns.

• A major research company closely monitors the progress of competitor’s projects to guide management of their own research investing. By measuring the progress of their own research projects against those of competitors they are able to quickly divert research investments from unproductive projects to research that is more probable to take the lead on competitors. Savings can amount to $1Million/day/project.
• A national brand company was steadily losing market share to competitors and was confused about root causes. By closely monitoring competitor operations they were able to learn that their own operations had fallen behind and then make the changes to stem the loss of market share and become competitive again.
• A national information technology services company constantly monitors the business volumes, resources, financial health and stock prices of its close competitors. It grows in size, market coverage, and value through selective acquisitions of (former) competitors.
• A global tire manufacturer and a major automaker ignored the chat room information about failures of their products. They lost market share, their stock prices plummeted, and they are now settling a long string of lawsuits.

Whether you prefer “Competitive Intelligence” or “Real-time Knowledge Management” the competitive reality is here and it is time to assess needs and setup practice.