The most critical strategic issue for any business is its competitiveness. No one would disagree with this yet few companies really spend time and effort to deeply understand and manage their future competitiveness.
I am always amazed at how many organisations and businesses claim growth as one of their key strategic endeavours. So here is an interesting point – Growth comes from outside your business, from your marketplace – so the risk of not understanding that competitive environment and how one should compete, we would all agree, is critical to any success.
Most executives monitor their competitiveness through market share and as we all know that indicator is historical and is in no way predictive. Neither is historical tracking of past revenue trends, nor is monitoring competitor’s web sites or doing a google search.
So how do you monitor your competitiveness, identify potential new entrants, disruptors, understand the intentions of customers, and identify your ability to grow? How do you manage the risks involved in being in a competitive market?
While generally the CEO and their team are the ones responsible for the competitive ability of any business, they are often lacking the right insights to make the best decisions. And while most businesses have plenty of information and plenty of know-how they have very little Competitive Intelligence (CI). One reason — there is no tie between business strategy and future competitiveness, and business systems and processes.
I have spoken and written about this many times over the past 25 years and as we are learning, with more information abounding than ever before, we are not making better decisions nor minimising risks.
Competitive Intelligence (CI) is concerned with the methods, systems and processes that a business uses to monitor its competition, any potential industry disruption, identify market drivers, and to improve its competitiveness overall. It is about the techniques used to select and filter information, to interpret and analyse it, to communicate it to the right people, and to use it effectively.
Although most executives seem to carry out some form of CI – generally in an ad-hoc way – the overwhelming data that is available, rapidly changing technology, and increasing global competitive pressures mean that there is an increasing need to develop more systematic ways of doing CI.
The keys to the future are not found through extrapolations, predictions or media gurus, but through patient, careful strategic work. Operational risks are minimised and the quality of executive decisions is improved.
There are a number of key steps that will ensure the success of a good CI process and hopefully improved decision making. These include:
Define your target
Far too often, businesses make decisions too quickly and without a strategic context — it is a case of ‘ready, fire, aim’. The internet has not helped this mindset, as the speed to market has become a more critical factor. In the end, we are left with a smoking gun, but where did the bullet go?
To start with identify what area you want to focus on. What are you looking to find? What are you concerned about?
Ask the right question
Experience has shown that ‘asking the right question’ is one of the hardest steps for any executive. The key is to understand how your business really needs to grow, and how the intelligence will directly relate to a management decision or course of action.
Ask yourself, what decision will you be making? Be very clear about the decision you are looking to make. Too general and you will drown in the information you will need to collect. Too specific and you may miss out on some information that could be critical in its influence on your decision.
Manage information effectively
Following are four main sources of information — each validates the other in some way, and when combined provide a basis not only for organisational knowledge but for business learning.
Human sources: oral information which can be obtained from business networks, meetings, seminars, friends and experts. In this regard your company’s greatest asset are the employees at all levels of the business as they are constantly interacting with the firm’s external environment.
Economic and financial sources: annual reports, trade publications, industry reports, economic analyses and the general media.
Corporate sources: customers, suppliers, company brochures, and advertising. Marketing and sales employees should be gathering this information as part of their everyday activities.
Technical sources: technical reports, journals, academic papers, and product manuals.
Remember the internet is not going to give you the most reliable information – think these days of misinformation, disinformation and lies.
So while there is no shortage of “information”, it is not insightful or actionable per se. The collection of information needs to be put into context, analysed and subjected to interpretation to derive some meaning and value. This requires the introduction of thought and analysis.
Analyse for insight and intelligence
To start the thinking process, ask yourself so what does all the information tell me? What is not being said? What am I not seeing? How does this address the decision question?
Analytical tools are the key component here as they provide a framework for sorting out the information, highlighting what is known and unknown, identifying patterns, and addressing possible outcomes.
This is also where the value of a trained CI practitioner comes to the fore as there are numerous analytical tools in business management. Picking the appropriate one may be critical to delivering value.
In the end, any strategy or business plan that doesn’t include insight about the near future is truly next to useless. Decisions are about managing the future.
Yesterday’s information and methods are increasingly ineffective for making decisions in a VUCA world – volatile, uncertain, complex, ambiguous — and even less effective for identifying tomorrow’s opportunities, problems and unknown competitors.
The value of insight is early awareness, as it enables you to recognise and monitor the future as it unfolds, thereby reducing risk and minimising mistakes.
Today, business executives are faced with many pressures — they may sometimes seek only short-term gains — but costly mistakes from making uninformed decisions are no longer an option. The risks are too high.
Competitive Intelligence is an integral part of making business decisions. The data and information gathering and evaluating process can identify and project strategies that current or emerging customers and competitors might pursue, and provides an assessment of the implication of these strategies on your company’s future competitiveness.
Success has always come from hard work and careful planning, and does not come overnight. We need to understand the competitive landscape before we take aim, and we need to incorporate our understanding into the future direction of the business. How your business prepares for tomorrow will provide you with either a strategic advantage — or the demise of your business.
Babette Bensoussan is a world-renowned expert in the field of Competitive Intelligence (CI) and Strategy. Her credentials are built upon a long-standing series of outstanding achievements, both business and academic. She is Australia’s only awarded CI professional and is one of the most published business authors in her field.
Throughout her career Babette has excelled as an entrepreneur, a consultant, a company director, a board member, an author, an academic and a business coach. Her commanding personal presence and impressive communication skills, in addition to her other accomplishments, award her the status of being one of the most internationally sought after corporate speakers on CI and Strategy.