Competitive Intelligence (CI)

05/11/2009


Business Intelligence Doesn’t Mean Spying on the Competition

Competitive Intelligence (CI) only employs public information sources to build the foundations of business strategy

by Antonello Garzoni, Director of the Master in Entrepreneurship and Business Strategy, Università Bocconi


published at the Bocconi online newsmagazine

Following the example of North America and other Western economies, large and medium-sized firms in Italy are starting to establish offices of Competitive Intelligence (CI). According to a recent study, almost 30% of companies employing over 1,000 employees have teams devoted to analyzing the competition.

What do these people do? Are they business spooks or specialized professionals? Although many of its techniques of analysis were refined in the context of the Cold War, business intelligence exclusively relies on public sources. The Society of Competitive Intelligence Professionals, the biggest association in the field, has long given itself a strong ethical code to prevent industrial espionage and/or illicit ways of procuring information. To the contrary, CI is about making the most of all possible information sources (data banks, Internet, personal contacts, information from clients etc.) to construct working hypotheses on competitors and their potential competitive moves. CI is about a systematic process of information gathering, analysis and dissemination on competitors and the competitive environment.

CI not only monitors current business performance (market share, balance-sheets, launch of new products) but interprets the strategic trajectory of the competition. When the competitor’s product is already on the market, it means you got there too late, so you need to guess prospective moves. In order to identify the fucure actions of competitors, you need to look at investment processes, such as the building of a new plant, the hiring of specialized personnel, the registration of a new brand or a new patent. Or it could be an acquisition of a company operating in another industry, signaling diversification and entry into a new sector. Alternatively, CI looks at business alliances and joint-ventures, in order to uncover the desire of building networks and bridgeheads for future expansion. A systematic and well-conducted analysis of the competition enables companies to remain up-to-date on industry trends and stay on profitable growth paths.

CI forces CEOs to base their decisions on more objective evaluations. For instance, if we find out that a competitor, a textile multinational, has closed a plant and laid off many employees in Germany, this could lead us to infer an imminent crisis is looming. But if the competitor has made an agreement with an Asian giant, this could just be a prelude to corporate reorganization. As Jim Williams, a well-known CI consultant, says: “Good intelligence with bad strategy produces mediocre results. Bad intelligence with good strategy can be catastrophic.” These explains why major corporations are internalizing business intelligence, in order to integrate it with strategic planning.


Translated by Alex Foti



Giannis Giataganas
IT related