Competitive intelligence is sometimes a similarly difficult topic for some businesses.

Competitive intelligence does three things that can be painful.

1. It forces an organization to look externally. Indeed, in my experience, most organizations admit that their focus is intensely inward. They are concerned about operations, execution and tactics. The more experienced people sheepishly concede that their balance is out-of-whack. The pain comes from admitting that they have been missing important information from the competitive environment.
2. It asks why an organization is getting the results it sees. Every company that I talk with wants to improve. Either they want to turnaround a mediocre (or failing) business or they want more growth. Hence, the management creates strategies to improve the results. Competitive intelligence methodically puts those strategy decisions in a competitive context. The pain comes from exposing the leaders’ decision-making thought processes.
3. It requires new approaches. Especially for companies that have not done competitive intelligence, starting CI will change them. The changes include new allocations of time, augmented strategy decision-making processes and a shift in the culture. These are not trivial changes. The pain comes from seeing that the solution requires long-term changes.

I suppose that there are other real and imagined barriers to competitive intelligence.

Commonly, people that recognize that there is a deficiency do not know where to start to improve. They need guidance and are unsure where they can get it. A lack of support within the organization sometimes stymies even motivated people. They feel that they do not have the latitude to begin competitive intelligence. I have also seen that there is a shock for some when confronted by the difference between what they are doing and what they might be doing (or their competitors are doing). Actions that follow shock are rarely bold. Rather, as with a serious medical diagnosis, the first reaction is often to become more conservative (i.e., avoid starting new things).

If any of this is true for you, your company or your clients, there are some common sense ways to decrease the fear.

1. Realize that you probably have some time. Medically speaking, only a few conditions are extremely time-critical. For instance, heart attack victims must get immediate attention. For most conditions, however, the time criticality is different. It is acceptable to proceed more methodically. Similarly, a lack of effective competitive intelligence does not happen in one day nor is it “cured” in one day. If you have an on-going business, you probably have some time to reflect on what to do before action becomes essential.
2. Even a few actions can be beneficial. It is easy to become overwhelmed. When confronted by a new and uncomfortable reality, the complete solution to “make the problem go away” may seem beyond reach and that belief leads to decision paralysis. Overcoming paralysis is simple – you simply move. Practically speaking, “moving” means that you identify a small number of useful actions. Think of this as your “top 3” list of competitive intelligence priorities. The truth is that once you are moving, your mindset will shift from feeling overwhelmed to problem solving.
3. There are many people with experience available. There is a unique vocabulary for every medical condition. The practitioners (i.e., doctors, researchers, insurance companies) use the terminology to communicate. Until you master the lingo, important concepts, possibilities and applications remain elusive. The good news is that there is little new under the sun. Many people and resources exist to educate and guide someone through most every complicated topic including competitive intelligence. There are training classes, many consultants and several organizations that can educate an organization.
4. If you are improving, you are likely ahead of most competitors. Sadly, most people do not change. That is why you see overweight people continuing to overeat despite serious medical issues. Smokers continue smoking despite ample evidence of the risk of cancer. However, a few people do confront their lifestyle habits effectively. They standout even when they are simply making progress. Likewise, a company’s cultural habits are hard to change. Because a great number of companies do not include competitive intelligence as an integral part of their culture, any steps that you take will make you standout. Overtime, with persistence, your advantages will increase.

Fundamentally, for medical conditions, the tests do not cause the disease. Rather, they help pinpoint what the current state is and how it should be addressed to improve the patient’s condition. Fearing the tests or the testing process is misplaced fear.

Competitive intelligence is a bit like those medical tests. It highlights the company’s competitive condition and shines a light on possible treatments. Instead of being feared, it should be recognized as an incredibly useful diagnostic tool essential for good performance. When there is fear, thankfully, there are simple steps to ensure that the focus gets past the fear and back on the strategic problem solving that is so important for long term health.

A small-to-medium size business (SMB) is different from a large corporation in many ways (I don’t think that I am breaking any news by this statement). An SMB views the world differently.

Aside from the obvious facts that an SMB has smaller revenues, fewer people and (probably) a narrow product or service scope, there are other less obvious differences in strategy issues. Here are a five common strategy differences.

1. Strategy Responsibility: The responsibility for strategy is often shared among a small number of senior managers rather than vested in a named function (e.g., vice president of strategy). It is a part-time, diffuse task.
2. Strategy Definition: The company completes few formal strategy exercises. Emergent strategy is assigned much greater value. That is, strategy is “recognized” rather than prescribed.
3. Decision-Making: Decision-making speed is valued over reflection. Rapid adaptation and reaction are the currency of the day.
4. Tactical Activities: Day-to-day pursuit of customers, creating products, closing deals and operations consumes management’s time. In short, tactics dominate strategy.
5. Internal Focus: Attention to the external environment is narrowed to match the SMBs near-term customers and prospects. There is less attention paid to broad trends, unexpected competitive threats and tangent opportunities.

All right, what about the SMBs that do think that strategy and competitive intelligence are (or might be) important? What is a feasible set of practices for them to initiate and sustain over time?  For whatever stage of strategy and competitive intelligence maturity they find themselves, how do they move to the next stage?

Before talking about the stages, there are four meta-principles for SMB competitive intelligence practices.

I. Use a constrained, systematic development of competitive intelligence to support strategy decisions.

Why constrained – simply because every SMB deals with resource limitations. Typically, money is tight and management attention is precious.  The systematic approach identifies the important fundamentals and suggests an order for their development. Do certain things first and move to the next steps when you are ready is the key. Add to the ordered steps a sense of accountability. Accountability sets the bar for competitive intelligence to affecting important strategy decisions. Otherwise, why do it when there are so many other things to do?

II. Employ the power of a shared visual focus.

“Shared visual focus” means that it is incredibly useful to capture important thoughts in a manner that they can be seen and shared by many people. Then, those people have the chance to challenge, improve and adopt the ideas. This is essential for an SMB since there is a high cost for inefficient strategy. Many times the strategy inefficiencies could have been avoided with simple communication approaches.

III.  Avoid the perfection standard.

It is admirable to have high standards until those standards prevent you from starting something important. For instance, if you need “perfect” intelligence and nothing else will do, you are unlikely to get started when intelligence will only be “good.” An SMB might want to know everything, to never make a mistake and to eliminate all risk. These are lofty aspirations but the vast majority of competitive intelligence will fall short. It is far better to start moving with something “good enough” so that you can get to the “improving” part sooner.

IV. Be succinct.

Verbosity is not a virtue for an SMB.

In fact, an SMB seldom uses “heavy” processes (when there is a choice) or exhaustive documentation. These are luxuries (burdens?) that cost too much and deliver too little value. Instead, a short, to-the-point summary of critical information is preferred. Hence, when I talk about specific competitive intelligence practices, each can be done by hand (i.e., requires no tools or automation) and completely represented on a single sheet of paper. Ideally, a wall or whiteboard can hold all of the competitive intelligence information derived from the practices.

Five Practice Stages of Competitive Intelligence for SMBs

If you are already doing the first one or two steps, move to the next higher step to receive more value from competitive intelligence.

Step 1: Know Yourself

Perhaps this is an odd way to start thinking about competitive intelligence. After all, is not competitive intelligence about the environment? Are we not supposed to look at our competitors? The answer is “yes” to both of those questions. However, an SMB will soon discover that much competitive intelligence is relative. That is, the way to interpret the environment depends, in part, on comparison to a fixed position. For an SMB, the fixed position is their company. To the extent that the company, its vision, capabilities, plans, products, etc., are well understood, better lessons can be drawn about the environment and competitors.

Here are five questions to answer that will help an SMP “know itself.” (Remember that the answer to each question should require no more than one page.)

Step 2: Identify Competitors

There are two negative answers to “who are your competitors?” One negative, usually unhelpful   answer is to say that there are no competitors. The other negative answer is “I don’t know.” On the other hand, it is extremely positive to know how customers contemplate spending their money when they decide not to buy your products or services. The customer makes a financial choice that affects the SMB directly and knowing why can lead to changing a future customer decision. An SMB should start with their direct competitors. A direct competitor sells a similar product or service. “Alternatives” or substitutes are a little less obvious. They are choices that can be made instead of a product or service. For instance, two airlines are direct competitors. However, video conferencing over the internet to connect friends and family may obviate the need for travel for some people. Create one page for each of the following.

Step 3: Compare Strategies

One of the three fundamental competitive intelligence questions is “so what?” (The other two questions are “what?” and “now what?”) That is, having answered (at least partially) the “what is happening?” question, it is critical to move to the meaning of what is happening. Interpretation lays the groundwork for action (see the next step). One type of interpretation deals with the strategies of competitors and an in-depth comparison with the SMB’s strategies.  Here is what you do. Pick the most important competitors that represent the biggest threats to your success. For each competitor, complete a one-page summary of their strategy that covers four points. Do the same for your company. Review the strategy descriptions with the results from Step 2. This exercise helps refine the SMB’s value proposition and competitive positioning. It sets the stage for deciding what to do (better).

• Drivers: What are the goals, values and needs of the company?
• Assumptions: What does the company assume to be true about the industry, competition and its own capabilities?
• Capabilities: What resources, assets and talents does the company possess to allow it to win?
• Strategies: How is a company actually competing to win?

Step 4: Develop Options

Understanding leads to options. Options are the basis for decisions and good competitive intelligence is a key foundation for a variety of decisions. In fact, though competitive intelligence may not be a separate function or a named assignment, it is hard to imagine an important decision being made without competitive intelligence (even if it is the ad hoc type). While there are many kinds of decisions, three types are particularly important.

• Defensive Tasks: The comparative nature of competitive intelligence helps the SMB to understand both its competitors’ value and its own value. The latter realization makes clear what assets need protection. An SMB needs to know explicitly what to protect and how to protect it. There are many protection methods and each incurs costs. Thus, an SMB needs to choose the right methods to protect what is most valuable.
• Monitoring: Some SMBs are satisfied with a competitive intelligence snapshot. While this may be valuable, it relevancy diminishes as changes occur in the environment. It is better to think in terms of an ongoing competitive intelligence “video.” A video captures the story and the changes. Investing in monitoring need not be expensive. Simple methods exist to watch for key competitive events. An SMB needs to decide what to watch for, when to make observations and how to review it over time.
• Gaps Closure: Sometimes an SMB leads, sometimes it follows. “Following” implies that one or more competitors have distinct advantages. For instance, the competitive products may be cheaper, more powerful, easier to use, etc. These advantages are “gaps.” An SMB needs to know which gaps are significant barriers to its success. That knowledge is the basis for intentionally devoting resources to close the gap. Competitive intelligence provides excellent insight into identifying gaps, their significance and the priorities for their closure.

Step 5: Measure Results

There are two categories of results attributed to effective competitive intelligence. First, there are quantitative financial results. For instance, revenues, profits or market share may increase due to competitive intelligence insights. Though this is an excellent outcome, it is sometimes an elusive goal to attribute all such improvements to a specific competitive intelligence insight. After all, even when competitive intelligence improves a strategic decision, there are many operational issues to resolve to realize the benefit of the insight. A second measure is qualitative. Has competitive intelligence improved the decision-making confidence of senior management? Did the competitive intelligence decrease important execution or resource allocation risks? How did focused competitive intelligence efforts improve the strategic alignment within the SMB? A positive answer for any of these questions is an endorsement for the value of competitive intelligence.

Conclusion

There you have it – an ordered set of competitive intelligence practices for an SMB. Doing all of them at once is a mistake when an SMB is beginning its competitive intelligence efforts. Start from a foundation and build up. Make sure that everyone in the company is aware. Evaluate the success by how competitive intelligence affects important decisions. And, whatever else you do, get started. If you do not, know that your competitors may be ahead of you because of the insights that they have gained.

The key is to recognize that SMB’s already are doing competitive intelligence whether this is recognized or not by management.

Their competitive intelligence efforts may be ad hoc, incomplete or ineffective. Nevertheless, competitive assumptions are made and used.

Could it be done better?

From this point, things move faster. It is easy to talk about the important questions that every SMB must answer. (My post “Competitive Intelligence Value for SMB’s” identifies these questions.) “Wouldn’t you like timely, credible information that helps you improve your results and decrease your risks?” I ask. That is easy for them to answer. “Of course,” they reply though there is some mystery about how such information can be obtained within their budget and capabilities.

“Not to worry,” I tell them. “Once you know your competitive intelligence priorities, you can allocate your time and resources according. Then, for the priorities that you act on, there are specific approaches that you can tailor to your budget.” (more about this in a later post)

I have their attention now. Before I suggest priorities, I set the context with some questions.

“Is your industry competitive? Does knowing about competitors and the environment help you decide your strategies? Assuming you had valuable information, would you use it?”

Again, it is easy to answer “yes” to these questions. Now the issue becomes how to apply limited resources more effectively. Hence, I have developed my Top 10 list of priorities for SMB’s. Competitive intelligence supports each one.

1. Know your customers. Miss this and you will “wander in the wilderness” for a long time. Nothing is more important. Competitive intelligence clarifies what customers care about, how they make decisions and where to find them.
2. Establish a viable business model. One success is difficult enough. Sustained success is much more so. The business model is about enabling long-term success. Competitive intelligence characterizes possible models, establishes way to measure success versus the competition and helps manage threats to the chosen approach.
3. Create your product and/or services. An SMB makes big bets on their offerings. If chosen wisely, they fill a valuable customer and market need. Otherwise, a good idea may languish due to its poor fit or uncertain use. Competitive intelligence compares what is possible with what exists. A methodical analysis then points toward valuable differentiation.
4. Identify the current competitors. Customers have choices. Sometimes they chose a similar offering from another company. Other times, they have alternative ways to spend money to accomplish what they want. Competitive intelligence explains why customers chose competitors and suggest ways to overcome their advantages.
5. Find new opportunities. A big part of new opportunities is finding new customers for the existing offerings. After that, the challenge is to find new markets for the offerings. Competitive intelligence maps adjacencies and shows how they are being served today. Next steps for the SMB emerge as gaps are identified.
6. Test your strategies. Being right in every decision seems impossible. Given the likelihood of mistakes, it is important to recognize them as soon as possible and make a new decision. Competitive intelligence suggests external measures of success for strategic decisions by observing customer and marketplace reactions.
7. Align the organization. When people have the same vision, understanding and goals, they work together better. Since, by definition, SMB’s are smaller than large companies are, effective alignment of every person is more critical to survival, never mind success. Competitive intelligence describes competitive challenges succinctly, explains how employees must be involved in data collection and highlights measures of competitive success.
8. Balance your approaches. SMB’s have an overwhelming operational challenge. Their challenges force them to be tactical, internal and short term in focus. Therein a considerable danger exists. That is, the company may ignore or devalue the external environment. Competitive intelligence counters this tendency by asserting that the external environment must be understood, explaining how the company can do so and suggesting models that can be maintained describing the competitive environment.
9. Map your industry. One day the SMB broadens its ambitions. The focus shifts from a small number of competitors to a larger set. Furthermore, other factors become important including trends, suppliers, substitute products and channel partners. Competitive intelligence frameworks put these industry factors into context in a way that makes confident decisions possible.
10. Track important changes. Most people recognize that changes occur constantly. Indeed, it is the successful responses to change that distinguish successful SMB’s from the unsuccessful ones. Even better, those SMB’s that anticipate change and/or react fastest gain great advantages. Competitive intelligence tracks environmental changes, emerging threats and competitive gaps to give management the maximum time to adapt.

My suggestion to SMB’s is to define a list of priorities similar to this Top 10 list. Then, as their resources permit, they should address them (starting from their first priority) sequentially.

SMB’s need competitive intelligence. Far from being something to be feared or avoided, it is a critical component for their continued success. It is not spying. It is not something just for large companies. And it is not optional.

What do you think?

There is another world that is quite different.

Lately, I have spent more time with small-to-medium size businesses. These companies have emerged from the start-up phase and may have revenues between $10M-$100M. Their issues are different from the conglomerates. Typically, the product line scope is narrower. The markets served are fewer. Access to capital is sometimes difficult. While some business processes are beginning to emerge, they remain less important than the leadership’s intuition. There is an ever-present sense of vulnerability to competitors. Employees are stretched to perform multiple roles. Documentation, standards and overhead are minimized whenever possible.

Though they are different from large companies, SMB’s face challenges that require an understanding of the competitive environment. Competitive intelligence is important for SMB leaders.

Commonly, there are five critical strategic imperatives for SMB’s. Competitive intelligence, properly tailored, provides value for each imperative.

1. How to connect to customers. This is the most important task for an SMB. Often the first set of customers is the most difficult since there is no well-known brand backing the first products. Finding a customer and closing a sale dominates management thinking. Competitive intelligence helps to clarify a market need and determine how that need is presently being served. In practical terms, this means understanding how existing and potential customers perceive the currently available products and/or services. With that understanding, an SMB may refine their own offering to provide something valuable to customers.
2. How to focus to resources. Smart, motivated people run SMB’s. They are capable of doing many things and serving many types of customers. However, unchecked, that versatility is often a trap. The temptations to do more, expand quickly, address multiple markets prematurely – spread the company too thinly – have sunk many businesses. Competitive intelligence helps to determine the right ways to focus and the right time to grow. For focus, determining and refining the SMB’s value proposition and all that flows from it is critical. Equally important, is illustrating the market potential of focus. CI analysis can analyze profit pools and suggest how to exploit competitor vulnerabilities that justify patient focus.
3. How to grow to the next stage. On the other hand, the impulse to grow is powerful and, at the right time, is appropriate. The question is not whether to grow. Rather, the key questions are when and how. Extending the core capabilities, customers and values of the SMB by choosing the right timing and strategy to build on what already is established is key. Competitive intelligence can support growth plans through examination of adjacencies. Finding the right adjacencies to the company’s core is a fundamental principle for successful growth. This involves characterizing the existing business and comparing it thoroughly to markets, customers, products, services, etc., that are related but different. Identifying and assigning relative risks to each growth possibility is a critical CI service to SMB management.
4. How to protect current business. Conditions change rapidly. Competitors offer alternatives regularly to existing SMB customers. Customers, for their own reasons, constantly seek better terms and value from suppliers. Meanwhile, an SMB yearns for revenue and profit stability. Growth feels like a luxury when the current business is being attacked and retaining hard-won customers is essential. Competitive intelligence helps by identifying and describing competitive threats. Knowing the significance and likelihood of a each threat is invaluable since it allows an SMB to defend its business across a narrower front. Concentrated defense is far more effective and, in reality, is the only practical approach for an SMB.
5. How to prosper the business. At the end of the day, most SMB’s are concerned with cash flow and profit. After all, without adequate cash flow, it is impossible to meet the payroll. Without profit, an SMB cannot survive for long. This concern is different from the one about growth. Many SMB’s fail when they pursue growth without profit. Competitive intelligence is used to benchmark business models. Understanding how similar competitors are profitable can be instructive for an SMB. More fundamentally, competitive intelligence helps determine effective strategy. The classic determination of low cost versus differentiated is informed, in part, by an understanding of the competitive landscape. An SMB with a clear understanding is more likely to make the right choice.

I admire people that run SMB’s. This task is not one for the faint of heart. It is complex, risky and requires more personal growth than most corporate jobs. However, few things are as invigorating as creating something from scratch and making it successful.

Competitive intelligence is useful for SMBs. Later I will talk specifically how an SMB might do competitive intelligence within their financial, time and resource constraints.

What do you think?

It is the way of the world, at least in knowledge positions within today’s economy.

There is another side, of course. Some people are completely convincing without the knowledge or experience to support what they advocate. Their self-confidence radiates within a room and casts a spell. People agree with this kind of person implicitly and are willing to follow him or her. Later, it may be clear that their confidence was misplaced. Then, a sense of betrayal replaces the false confidence. Convincing, yes, but (in the long term) they are not credible.

Competitive intelligence professionals routinely deal with knowledge. There are facts about the competitive environment, advanced data collection tools, powerful analytical models and insightful interviewing approaches. Awash with information, a competitive intelligence project usually ends with some type of report or presentation. Then, the facts, interpretations and recommendations are displayed for a sometimes-skeptical senior management audience. Attitudes of “convince me” and “prove it” often challenge the competitive intelligence professional’s performance and credibility. The obvious temptation is to emphasize expertise and exclude doubts, right? After all, is not humility a sign of weakness?

Unsurprisingly, there should be a balance between honest humility and expressed expertise. This balance is not contrived. Rather, it reflects what is true for most people. That is, the more that we know, the more we realize that we do not know. Put another way, whatever we know today, it will not be enough for tomorrow. Hence, we need a way to live with ourselves while delivering valuable services to others. We need to be able to explain what we do not know with as much credibility as we covey our certainties. (See my article on “The Right Answer to the Trap Question” for one approach.)

How do we do that? Here are seven guidelines that I use to balance my expertise and my humility.

1. Know a Lot – This may seem like an odd way to start the guidelines but there is no way to dance around the simple fact that you must know a lot about your business, customers and competitive intelligence. Knowledge is essential for long-term survival and you should set specific objectives for acquiring it over time. Complacent ignorance will not work.
2. Learning Disposition –For the many things that you do not yet know, you should demonstrate a ready willingness to learn. Insecure people are embarrassed when others point out their ignorance. Instead of blushing, practice sincerely thanking people that identify gaps in your knowledge. Follow the thanks with a request for them to help you learn about what is missing and then commit to integrate the new information as soon as is possible.
3. Discover Boundaries – This might sound a little defensive and it is surely a sensitive task to execute. Simply, find out what others do not know. Gently compare their knowledge gaps with your own. Offer to help them gain important knowledge with the implicit thought that they can return the favor. In short, build a relationship that focuses on moving forward together.
4. Assess Confidence – I have heard it said that we are only certain about the past. That is not true. You need only read competing histories of some major personality or event to understand that even reputable historians cannot agree on one account. Even more, the future is unclear. Therefore, practice succinct assumption summaries for each communication. Then, give a confidence assessment for each major analysis and recommendation. These steps will relieve you from mistakenly asserting certainty and involve others in richer discussions of meaning and trustworthiness.
5. Convey Proactively – I know from watching courtroom dramas that the smart lawyer anticipates the toughest questions for his or her client and intentionally asks them first. That approach blunts the dramatic confrontation and shifts attention to the rest of the story. In competitive intelligence, why not feature first what we might fear most. That is, convey proactively the weaknesses of the analysis or recommendations. This only works when there is a concomitant plan to remedy the weaknesses.
6. Live for the Long Term – It is easier to think of a question that has no current answer than to have answers for every possible query. Thus, everyone will experience the moment when a good question is asked but no good answer is known. Take a long-term view and do not dwell on the incident. If you are adhering to the other guidelines, you either have or will build the personal credibility that makes survival possible. Understand that sustained performance usually trumps an awkward moment.
7. Accept Limitations – Finally, feeling peace in your role means that you accept that satisfying all customers is unlikely. Most people and organizations have finite resources and bandwidth. One customer’s priorities may be mysterious or unwise to other equally high-ranking people. When appropriate, appeal to common values of the organization and express interest in working with others later. Be sure to keep open communication because today’s critic may be tomorrow’s funding customer.

Humility and expertise are not opposites. Both exist in a competent competitive intelligence professional. When demonstrated appropriately, they signal an authenticity to customers that they trust and value. On the other hand, overemphasizing one to the detriment of the other actually signals weakness.

Keep them in balance and prosper.

This article was originally published in the Intelligence Insights May 2010 newsletter of the Special Libraries Association – Competitive Intelligence Division.

I remember standing next to my fellow student as we both stared at the teacher in the front of the classroom. Fourth grade rarely got as intense as when we were competing to give the right answer to the teacher’s flash card question. The teacher would wait until we ready and then quickly display the card with a math problem. What was the answer to “8 times 7?” We rushed to raise our hands. It was not a small matter to master multiplication and we were proud when we did (especially when we won the competition).

In math (as in most subjects), we learn the basics first. Complex problems remain a mystery until a solid foundation of principles and techniques is established. We first learn to add, subtract, multiple and divide. Later, we learn about fractions, percentages, geometric shapes and trigonometry. Each topic builds on established foundations and represents significant learning.

About the time that we were satisfied with what we knew, our math teachers introduced a new challenge – word problems.

Bill owned a company that grew and sold tomatoes and other vegetables. Each pound of tomatoes cost $1.75 to produce and was sold for $3. The average margin of the other vegetable products was $2 but the production risks (i.e., pests, weather damage) were twenty percent higher than for tomatoes. Bill had to repay a $7000 farm loan after the current growing season and had $10,000 in cash to invest. How much should he invest in tomatoes and the other vegetables? Why?

The bane of many math students is word problems.  Why? Because word problems force them to deal with the messiness of real situations. Extra information is often included which means they have to sort out what is important versus what is extraneous. Moreover, unlike many of the early math drills when we knew the “shape” (units) of the answer, word problems give less information about the expected answer. In addition, word problems often require the student to use multiple techniques or approaches to solve the problem. They must state assumptions and employ risk measures to produce the needed solutions.  Real life problems are complex and require a different level of thinking.

Competitive intelligence is a lot like math. Early on, we have to understand the basics. For instance, a common way to think about competitors is to summarize their strengths and weaknesses and compare them to our own. This understanding opens the way for capitalizing on the differences. Often we use the Strength-Weaknesses-Opportunities-Threats (SWOT) analytic technique for this problem.

Another example is a simple product or service comparison. In this case, we learn to identify key factors that characterize the product or service and then show how two or more offerings fare in each comparative category. The significant differences (positive or negative) indicate a competitive advantage for some company. This is a relatively simple and effective technique.

There are other important fundamentals to learn in competitive intelligence. For example, there are good things to know about collecting information from primary sources. Knowledge management professionals are especially well aware of excellent methods to find, organize and use information from secondary sources. There are established ways to define the scope of the competitive intelligence project with key intelligence topics. A list of fundamental competitive intelligence skills is long and every competitive intelligence practitioner should learn these basic techniques. Avoiding or shortcutting this learning is unwise and professionally limiting.

However, is it enough to master the fundamentals? That is, do the fundamentals alone make competitive intelligence effective? Would a more complex view of competitive intelligence problem-solving yield richer answers?

The simple answer to the last question is “yes” because effective competitive intelligence deals with valuable and complex questions. Competitive intelligence is like, well, a word problem.

By that, I mean that competitive intelligence is a messy set of activities involving difficult information sourcing, complex analyses and, importantly, an unpredictable mix of people and politics. Someone that understands and applies only the fundamentals risks oversimplifying the competitive intelligence challenge. Competitive intelligence “word problems” represent the complexity of real life.

Mastering “word problems” requires moving from a technique focus to a solution focus. Since good competitive intelligence solutions can affect important decisions, they are immensely valuable to the customer. However, it takes practice to provide such solutions. How would you proceed if you were “Tim” in the following situation?

Janet Simpson gazed at the stacks of paper on her desk. It was a little overwhelming to imagine that as the new Vice President of Strategy for the Bluesin Technology Company she was expected to recommend a growth strategy at the next Board of Directors meeting. After all, she had only been on the job for two months. Reflecting on the harried set of meetings, reports and discussions from the last eight weeks, Janet realized that the job was bigger than she thought. Maybe the right approach, some within Bluesin argued, was to refocus on higher margin products and abandon the segments that were under pressure from the new competitors. Others maintained that Bluesin should fight the competitors for every bit of business at existing competitors. The third predominant group said that moving to an entirely new business model was the best course of action. Janet’s analysis and recommendation were intended to indicate decisively the best direction. Early on, Janet decided to engage with Tim Sanders, a competitive intelligence consultant that she had worked with before.

One thing that you would not likely do is to list for Janet all of the competitive intelligence techniques that you had mastered. A more successful approach is probably for you to listen intently to Janet’s challenges, hopes and biases. Using that information, you might construct a customized, nuanced solution for Janet. Janet (like most competitive intelligence customers) needs and wants that kind of help. Babette Bensoussan, a well-known competitive intelligence consultant and author from Australia offered the following (summarized) solution.

I would suggest that Janet address parallel steps in her assignment with Tim’s assistance.  The first series of steps is an analytical piece delivering a current baseline picture of the existing industry. A second series of steps relates to the stakeholders.  That is, the competitive baseline needs to be unfolded to align key decision-makers and influencers in the organization. While there are competing influencers within Bluesin, the CEO is in fact Janet’s champion and Janet needs to work with the CEO to ensure he is on board with any baseline picture, action plan, or strategy outcomes.  They need to work together to convince the Board and the CEO’s management team to adopt any identified new strategies for growth.

(The complete case study for Bluesin Technology and Ms. Bensoussan’s response is at http://blog.cicases.com.)

How does a competitive intelligence person get experience with “word problems?”

Aside from long-term practical experience, the best way is to learn through case studies. Case studies have the unique advantage of explaining realistic stories succinctly. Each story contains important and unimportant information (just like real life). In each case, someone (e.g., senior management) has a need for a solution. Note that they rarely care about specific competitive intelligence techniques or approaches. In fact, they focus on one or more key questions stated in terms of value to their job. This means that they want answers to their questions and need help from someone (e.g. the competitive intelligence practitioner) that has a sympathetic understanding of the issues. With that sympathetic understanding, the competitive intelligence person extracts and employs a variety of skills and knowledge from their “tool bag” to add value to the decision-making process. Here is a smattering of common high value questions.

• How will our new product compare to our competitors’ products?
• What key factors influence customers’ decisions to buy from our competitors or us?
• What competitive strategies are our customers using and how will each affect our success?
• What competitive factors affect our growth strategy?
• How can I train, align and motivate my company to observe, understand and respond to the competitive environment better?

What do you do when faced by one of these challenging questions?

Here are eight basic and useful steps for solving competitive intelligence problems. Each step promotes a customer-centric, solution-oriented view. Further, these steps intentionally broaden the view of the competitive intelligence professional. Importantly, case studies provide a safe environment to practice.

1. Start with the end in mind. View the competitive intelligence challenge as answering a key question for your customer rather than as a competitive intelligence technique issue. Align the success criteria for your services with the expected and needed benefit to the customer.
2. Consider the people. Perhaps the biggest determinant of success is not performing the right analysis (though, of course, analysis is important). Rather, what is most important is dealing with the people affected directly and indirectly by the competitive intelligence. They have pressures, histories, ambitions, goals and more that affect their reception and use of competitive intelligence.
3. Clarify the customer’s key questions. The key questions, clearly defined, point to the value needed by the customer. After isolating the questions, work backwards to determine what analytical techniques or solution methods are appropriate.
4. Calculate risks. By definition, the future is uncertain. Therefore, a standard practice for competitive intelligence is to define and quantify the risks associated with recommendations or conclusions. Focus on explaining risks and assumptions.
5. Cooperate with the change. Assuming that the competitive intelligence indicates a needed change, identify material, arguments and information that enable the change. It is a higher standard to provide change-enabling information versus documenting interesting (but not actionable) analysis results.
6. Practice with existing competitive intelligence case studies. Many consultants post case studies. My site for Competitive Intelligence Case Studies (www.cicases.com) has case studies and commentaries from CI professionals. You can compare your answers to theirs to improve your skill in providing solutions.
7. Find cases stated in terms of your customers’ issues. Read what your customers read. If your customer is a lawyer, read a selection of legal journals. If your customer is a financial strategist, read the Wall Street Journal. In every case, examine problem-solving stories for that profession and then deduce what competitive information helped (or could have helped) solve the problems.
8. Share and compare solutions with others. Find ways to share your stories with others so that you can learn to improve your skills. Of course, there are limits to sharing confidential details. However, by sharing and reflecting on your broad problem solving challenges and solutions, you can increase your awareness of issues and creativity for new solutions.

Case studies are an excellent way to improve competitive intelligence skills. Case studies (like math word problems) serve as proxies for the common problems in life. Though we may prefer simplicity and unambiguous problem statements, addressing complex issues is more valuable to our customers. Fortunately, building on the basics that we have learned, we can also learn how to deal with competitive intelligence “word problems.” It takes practice, sensitivity, and, most importantly, a focused perspective on solutions.

In the end, a competitive intelligence professionals gains personal credibility and improves their capabilities when they demonstrate competence in solving complex problems.

Competitive intelligence is indeed a “word problem.” We would not want it any other way.

A casual perusal of many websites such as Gizmondo and Engadget highlights many similar leaks. These sites routinely report pre-launch information about new products. Sometimes the information sources are clear. In many cases, the sources are unnamed. Sometimes the information is detailed. Often, the details are sketchy.

How should competitive intelligence people deal with leaks?

Here are five important principles and cautions.

1. All organizations (especially public ones) leak information. Most of the time, they try to control or hide the leaks. This makes it harder for outsiders to draw definitive conclusions. Nevertheless, the interpretation of leaks is the bread-and-butter of a competitive intelligence person’s role. For instance, look for mandated leaks (e.g., financial reports), social leaks (e.g., social media activity of employees) and nuanced leaks (e.g., executive calls with analysts) to discover clues about a company’s strategy and direction.
2. Not all leaks are equal. In sports, it is very valuable to know your opponents plays. If you knew their plays a month in advance of the competition, you would orient your defense to thwart their specific goals. On the other hand, knowing a play moments before it occurs is less valuable. Timing is only one factor that determines the value of a leak. Other factors include the relevance of the leak to your plans, the degree to which the leak reflects board strategy and your ability to translate the knowledge of the leak into useful action.
3. Most leaked information is not surprising. This is true especially when a competitive intelligence person is already tracking the competitor. Take the Apple example, should any competitor be surprised with the recent revelations. No, because Apple is continuing a pattern established three years ago in their smartphone product and they are responding to easily discerned competitive pressures (i.e., need for better display, forward facing camera, faster processor). That is why most leaks should be confirmatory rather than revelatory for a prepared competitive intelligence professional.
4. Leaks are not always leaks. This point is less of a principle and more of a caution. A skeptical competitive intelligence person should always ask how and why the leaked information became available. There are multiple reasons for these questions. One, competitors can use leaks for distractions. You are looking one way while their main thrust is actually from another direction. Two, companies (and politicians) leak information to test concepts. Your response (if it is obvious) gives them information that you may not want them to have. Three, sometimes the leak is designed to drive interest (could Apple be doing this?) in something new. It is prudent to understand the possibilities to avoid over reactions or misinterpretations.
5. Counting on unusual leaks is a trap. It is spectacular when a bombshell leak concerning a competitor leads to a great competitive advantage for a company. That situation is akin to breaking the enemy’s secret codes in wartime and using the information to win a great battle. Sometimes it happens. Usually, it does not. The fundamental approaches to effective competitive intelligence are not spectacular, sexy or splashy. Instead, they are rooted in solid analytical models and techniques, effective primary research and trusted relationships with decision-makers.

The recent Apple iPhone revelations are a good lead story for Apple fans or casual business followers. However, they are not very useful for competitive intelligence purposes. The core value from competitive intelligence comes from less glamorous detailed work rooted in strong CI fundamentals.

Do you agree? How have you dealt with leaks?

Pop quiz – What does a soldier spend most of his time doing?

Someone might correctly point out that a soldier’s job is to defend his or her country by being ready to fight. So, do they spend most of their time fighting? In most armies, the answer is “no,” even when their country is at war. Soldiers spend most of their time waiting, practicing and preparing for the (relatively) brief times that they are in combat.

Military leaders know this, of course, and therefore create activities, training, simulations and duties to occupy the downtime between combat circumstances. Thus, when combat does occur, their troops are well prepared to win.

What about competitive intelligence professionals? What do you spend most of your time doing?

Many might guess that you and I are constantly engaged in projects for internal (or, for consultants, external) clients. That might be true for some people but my experience is that there can be significant downtime for most. By “downtime,” I mean that there is time when there is not a specific pressing project or task to complete. Maybe the management focus is on another issue or leaders are reacting to other problems. This time is a breathing spell that may be short or long. However, we know that it will end, perhaps abruptly when a new request for urgent competitive intelligence arrives.

How can the time between competitive intelligence projects be used productively?

(I have a short survey at http://jthawes.limequery.com/17155/lang-en on Competitive Intelligence Monitoring. Please add your opinion.)

I think that there are five R’s to remember to make this time useful.

1. Rest: Competitive intelligence projects are demanding. They require intense, time constrained, high impact analysis. They force practitioners to explore what they do not know, explain what is complex and risk recommendations to experienced, skeptical people. This is draining. Thus, simply recharging is often the best downtime activity for many people.
2. Relationships: It is easier to approach people and develop working relationships without the high pressure of a critical competitive intelligence project. Between projects is a good time to thank the people that have helped you, introduce yourself to those that you might help in the future and repair the strains that have developed through the organization. Successful relationships will pay back many times over and is a wise investment for you.
3. Recruiting: No network is big enough for competitive intelligence. Adding internal or external contacts to a network is a never-ending process but may be neglected in the hurriedness of a project. Downtime between projects is a good time to extend your networks by introducing the value of competitive intelligence, by emphasizing your role in the organization and by highlighting the benefits of competitive intelligence to others. When done well, those benefits attract others to consume or contribute competitive intelligence. This helps you.
4. Research: Of course, you do research for each competitive intelligence project. What you may not do enough of is the broader type of monitoring of the competitive environment not specifically directed through a project. However, that type of research is critical to provide greater context to management. It helps competitive intelligence serve not only as an “after the fact” analysis function but also as an anticipatory service. This kind of research allows you to suggest competitiveness issues to management.
5. Reflection: In surveys that I have conducted, many competitive intelligence professionals report that they receive little direct feedback about their work. Part of the reason seems to be the pace of the projects and the short attention span of management. Whatever the causes, they do not obviate the need for meaningful reflection about what is working and what is not working. A competitive intelligence professional is well served to ask and answer basic questions periodically. How am I delivering value? How are my contributions affecting important decisions? How is my positive impact increasing? What improvements would increase my value?

Downtime is not idle time. Just like for a good soldier in the Army, what happens between the projects determines the outcome of the projects. It is the “in between” time that distinguishes the amateur from the professional. Using the five R’s helps make downtime productive for the competitive intelligence professional.

What do you think?

ReThink Marketing

I met someone recently that is a successful marketing consultant. Her website has a graphic that asks the simple question:  Why do you need a marketing consultant? She goes on to give ten reasons why someone might be wise to engage with her to further their business. It all makes perfect sense and it prompts me to ask (and answer) a similar question for competitive intelligence. Why should someone bother with competitive intelligence? Why invest time, energy and resources to commission someone internally or externally to work on competitive intelligence? What reasons might make sense to someone that had to approve the budget?

There could be many reasons given. Many would be contextual. For example, in your firm, competitive intelligence might be important because of a person, a specific incident or the history of the company. Still, there are some very common and powerful reasons what any company would benefit from competitive intelligence.

Here are my top five reasons.

1. It overcomes isolation. By that, I mean that all companies operate in an environment that affects their success. In competitive situations, others are trying to take away customers, revenues and market share. Even in non-profit circles, other organizations are competing for attention, donations and awareness. There is simply too much information and influences to ignore. Competitive intelligence helps a company think about the environment.
2. It forces an external view. In my experience, most companies are drawn toward the operational issues. It seems as if there is an “attention magnet” that pulls (and then retains) the people toward an internal focus. Even though designated functions (think, marketing and sales) are charged with observing and interacting with the outside, how much more powerful it can be when the entire organization has some awareness of the customers, competitors and environment? Competitive intelligence, appropriately distributed and communicated in the organization, promotes a more balanced view of the world.
3. It organizes complexity. There is a natural urge for humans to seek simplicity. For people (never mind companies), the challenge is to sift through a myriad of everyday information to determine what is important and, then, what to do about it. For companies, many more factors must be considered. What models, frameworks and approaches help with this mind numbing complexity? Competitive intelligence provides analytical models to organize information, to present it effectively and to permit valuable interpretations.
4. It challenges assumptions. Nothing is more dangerous that unchallenged certainty. Even when something has been decided and is successful, the same decision may eventually lead to ruin when the competitive environment changes – which, of course, it always does. Many sacred ideas contain the germs of failure when they are not retested periodically for their appropriateness. Competitive intelligence gives ways to identify and methodically recheck the core assumptions driving a business.
5. It improves decisions. It is difficult to estimate how many decisions a company makes each day. Even though not all decisions are equally important, the cumulative impact of bad decisions is considerable. At the highest strategy levels, the impacts are amplified. When decision-makers have more relevant and timely information, it makes sense that they will make better decisions. Competitive intelligence provides such value to support decision-makers at all levels in a company.

There are many more reasons why a company should consider competitive intelligence. What would you add to this list?

So, we mourn the passing of Palm- subsumed into the HP technology behemoth. How did this happen? What are the implications for HP? How does it affect others? Competitive intelligence plays a role in answering such questions.

HP’s Palm Plans May Leave Microsoft Out in the Cold

There are many reasons to acquire a company. It could be that the target company has many desirable customers, unique access to certain market segments or a valuable brand in a specific customer demographic. Who tracks such things about competitors or potential acquisitions? Apparently, HP does. (Asset Tracking, Four Corners Analysis, Intellectual Property Evaluations)

“We looked to acquire them for the WebOS” and Palm’s portfolio of patents, Todd Bradley, the executive vice-president in charge of HP’s personal systems group, told Bloomberg News the day the acquisition was announced. HP has said it wants to make Palm’s WebOS, which has been praised for its intuitive user interface and ability to run several applications simultaneously, the basis for a new generation of smartphones and tablet computers that would compete with Apple’s (AAPL) iPhone and iPad, as well as smartphones from Research In Motion (RIMM) and Nokia (NOK).

Suppose you were an HP partner, would you care about this acquisition? Microsoft and others should care. (M&A Analysis, Key Personnel Tracking, Executive Relationships)

HP’s acquisition of Palm is the latest speed bump in the complicated relationship between Microsoft, the No. 1 PC software maker, and HP, the world’s largest computer maker. HP has developed its own user interface technology for desktops and laptops that run Windows, in a bid to make computers easier for consumers to navigate. Now it’s poised to pursue its own direction in the smartphone and tablet markets at a time when Microsoft is trying to gain share in the growing categories.

Why buy and maintain their own OS instead of using something like Android? HP-Palm buy FAQ

According to HP’s Todd Bradley, Executive VP of the Personal Systems Group, HP believes that webOS will be the basis of several classes of mobile devices — smartphones, touch tablets and potentially netbooks all of which are generating big consumer demand. HP thinks it can offer a unique HP experience across all of them, tied into emerging cloud-based services.

Was this acquisition foreseeable? There are several reasons why this might have been forecasted.

1. Palm declining fortunes has been obvious for some time. Their market share has been eroding since the heyday of the Palm Treo. With a declining market share and the ascendency of Apple, Palm had very little space to operate. They had to do something. (Five Forces Analysis)
2. Palm’s carrier relationships (very critical to market success in the US) were weak. The launch on Sprint of their latest smartphones was a sign of weakness. Even though Verizon eventually offered the Palm smartphones, it was too little too late. (Ecosystem Map)
3. Palm continued to innovate despite its poor financial performance. The WebOS product and multitouch display technology (fielded despite patent threats from Apple) are valuable. (Financial Analysis, Patent Portfolio Tracking)
4. Many key people at HP have Palm roots. Never underestimate the importance of relationships since deep relationships often lead to new business opportunities. (Relationships Map)
5. HP had a need. Despite a history of Microsoft-based phones, it does not have a very successful smartphone strategy. Consider how Android-based products (not just phones) are emerging, the sputtering Microsoft mobile products and it becomes apparent that HP either had to make a move to own its destiny or move lock-stock-and-barrel to Google’s camp (i.e., Android). (Five Forces Analysis, Scenario Planning, Strategy Map)

What is next? Look for Dell to make a move. Since their acquisition of Perot Systems, Dell is starting to act more like HP though they do not yet have the scale or scope of products enjoyed by HP. Also, watch what HP does around an online store (a la iTunes). They risk marginalization by Apple, RIM and Google without a convincing applications strategy for consumers.

What do you think?