By Leigh Howe
“Bond, James Bond.” Competitive Intelligence (CI) has the mystique of espionage. But it is neither mysterious nor even illegal, for that matter. According to the Society of Competitive Intelligence Professionals (SCIP), CI can be defined as a systematic and ethical program for gathering, analyzing, and managing external information that can affect your organization’s plans, decisions, and operations. CI is a crucial part of the emerging knowledge economy and can be important to any entity, public or private. By analyzing rivals’ moves and many other external factors, CI allows organizations to anticipate market developments rather than merely react to them.
How to Begin. The first step to CI is to identify your competition. The major challenge in some cases is judging your industry boundaries. For example, is Pepsi’s market the soft drink market or the bottled drink market? There’s a big difference. The next step is to develop a good understanding of your industry and how it functions. The five forces model (pictured below) developed by Michael E. Porter can guide your analysis of your organization’s environment and the attractiveness of the industry. These five external forces include the risk of new competitors entering the industry, the threat of potential substitutes, the bargaining power of buyers, the bargaining power of suppliers, and the degree of rivalry between existing competitors. Can you identify all the forces affecting your industry?
Sources for Competitive Intelligence. Sources of information about your industry can be gathered in a variety of ways. Primary sources may include industry consultants, trade shows, and customers. And don’t forget your own staff – they gather a wealth of information every day, but do they have a way to share it with top management? Secondary sources can include government documents, financial reports, newspapers, trade journals, industry reports, and company directories. However, it does take some careful evaluation to determine which secondary sources are worth the time and effort. Visit the resources page on our website (www.whittakerassociates.com) for some recommendations.
Applying Competitive Intelligence. Whether you are tracking your competition in the plastic industry, the software industry, the real estate industry, or the economic development community, you can benefit from competitive intelligence. You can identify your competitors’ strengths and weaknesses, see how you stack up against these competitors, learn the best practices of the industry, and predict your competitors’ moves. Your ultimate goal: identify and exploit your competitive advantage in the marketplace!
For more information on competitive intelligence, visit www.scip.org or read the presentation on CI we gave at Grand Valley State University at our website, www.whittakerassociates.com.