Used properly, competitive intelligence can be a powerful business tool for dealmakers as well as executives. But it’s easy to do it poorly or unethically.
That was a key conclusion at ACG-Boston’s recent Tech Forum on competitive intelligence, attended by a strong contingent of corporate development chiefs from Boston-area technology companies – all of them experienced CI practitioners. Here are some of the takeaways:
Lessons learned
Crucial reminder: the goal of CI is to try to anticipate and forecast likely competitive moves. A good CI resource does not engage in actual spying or "dumpster diving," but he or she will use all public and ethical means available to better understand the competition.
If you don’t understand why a competitor behaves a certain way, you’ll either be spending a lot of time trying to make sense of large amounts of data or looking for an elusive "smoking gun." It’s important to stay focused on strategic issues, and try to better understand both your competition and your market. Like a good mystery novel, the most important clues are often in full view, but it takes patience and skill to find the key points in a business plan or go-to-market strategy.
Yet it’s very tempting to use CI as a tactical sales tool. Your company should institutionalize its use of CI reports, market analyses, win/loss analyses and prospect interviews, and creation of CI sales guides. It’s not easy to collect and sift all the necessary information; it calls for specific search and analysis skills and resources. And it takes hard work and commitment -- and a logical knowledge management process -- to do it right. Yet most of the important differentiators already exist in your company – if you know where and how to look.
CI also stands for "customer intelligence" and as such, it can be a very useful technique for dealmakers. The methodologies that apply to competitors can be used to look at business partnerships as well.
Tips for those considering CI
It's important to "read between the lines" when assessing a competitor’s positioning, listening to its earnings calls, or attending conferences. Typically, things not said will hint at areas of weakness or potential concern. Conversely, the company’s statements about its areas of focus point to the areas it doesn’t emphasize. Another point: a company’s short-run competitive moves almost always reflect its longer-term beliefs, assumptions, and strategies.
Formal training with groups such as the Academy of Competitive intelligence (www.academyci.com) and the Society of Competitive Intelligence Professionals (www.scip.org ) gives a good basis for what it takes to create a robust CI initiative.
Use "four corners analysis"
A four corners analysis is useful for predicting competitors’ future behavior. Derived from management strategist Michael Porter’s work on competitive forces, the technique looks at the factors that drive senior management, their assumptions about the market, the company’s capabilities, and current strategy. If you don’t have a good understanding of your competitors’ views of these areas, you’ll never be able to see the forest for the trees.
Potential pitfalls
CI is not just another sales tool. Yet it’s often seen by field personnel as a one-way conduit to be used on the way to a meeting with a prospect. You must educate your sales force (and other stakeholders) about what CI is – and what it isn’t. You’ve got to set appropriate expectations to truly focus on the important projects and primary research. If CI is used to merely regurgitate known competitive positioning, the opportunity cost is huge.
Also, few businesses effectively use CI to leverage the support of their senior executives in visits to customers and prospects.
Common sources of information
SEC filings are extremely valuable. So are analyst calls, where senior managers take questions – often very pointed ones that reveal a lot. There are also several powerful desktop resources – among them Factiva, Hoover’s, OneSource, and Thomson’s Dialog or InSite 2.
