What should be expected of an “orthodox” competitive intelligence professional? Should they be in the prediction business?

Some will tell you that predictions have no place in competitive intelligence. Competitive intelligence professionals should limit themselves to analysis of what has happened. When talking about the future, the most that should be done is to delimit possibilities and probabilities. That equips others (e.g., senior management) to make the critical decisions that are required for the business.

There are two big reasons for this opinion. Some believe that it is simply inappropriate for competitive intelligence to move beyond a support role into advocacy. What gives a competitive intelligence professional the right (or the knowledge) to presume a decision-making capability? Another reason is that it is difficult to predict anything accurately. In fact, there is a wish fulfillment for failure when one attempts future gazing. Thus, it is appropriate, safe and expected to refrain from predictions except those couched carefully as scenarios, risk assessments and options.

Poppycock.

Predictions are essential for effective competitive intelligence. Without them, competitive intelligence is “dead.”

No competitive intelligence professional is worth their salt (in the long term) if they take timid stances about what might happen or are unwilling to share this directly with their customer or client. Obviously, the past cannot be changed (admittedly, explaining the past or present can be illuminating for many). Thus, the greatest impact for effective competitive intelligence is improving the likelihood of more positive future outcomes for the client or company. How can this be done if competitive intelligence professionals shy away from making testable statements about the future? It cannot. Hence, in my opinion, effective competitive intelligence must lead to predictions about what will happen and how to exploit the likely future states.

There are some “prediction” caveats to respect.

First, predictions are vitally important because they reflect thinking. Or, at least, they should reflect rigorous thinking about an important subject. When this is true, the prediction statement becomes a proxy for that thoughtful analysis. A customer or client “tests” the prediction by examining the thinking and assigning a risk that reflects the measure of agreement with the prediction. Certainly, competitive intelligence professionals may assign their own risk value to the prediction. However, this is far less important than the decision-maker’s assigned value.

Second, there are predictions and there are “predictions.” Some people count as predictions only those precise, measurable statements of fact. For instance, a good prediction might be, “Competitor X will introduce a competing product with certain features for a specific market segment in the third quarter of 2010.” If a company believed that prediction (with the detailed filled in), they could prepare an effective counter attack. This is an actionable, factually testable prediction. Continually monitoring evidence might increase (or decrease) confidence in the prediction as new information was gathered.  This is the most common type of competitive intelligence prediction and is highly useful.

Other predictions are not actionable as stated. For instance, extrapolating a broad demographic trend is a prediction but usually is too general to merit specific company action.  The challenge for futurists is interpreting broad trends for specific understandings leading to possible actions for near term business.

During my MBA studies, I had a professor that I thought was crazy. He was always spouting off about what a company was going to do or the inevitable (to him) changes in the market. He felt no trepidation about being wrong or controversial. Indeed, he seemed to revel in the stimulating conversations about his predictions. I remember arguing with him for the fun of it just to show him the holes in his analysis. He had a lot of nerve to say that we should always make predictions especially when so many of his were wrong.

Later, with a little accumulated wisdom, I realized that making predictions forces someone to take and defend a stand. Exposed thinking is thinking that improves over time. Conversely, hidden or wishy-washy thinking inhibits learning. Rather than embarrassment, his approach guaranteed engagement among interested people. This is a great value in competitive intelligence.

It is less important for our predictions to be believed without question (I have never experienced such belief) than for the same predictions to represent thoughtful analysis and conviction that can be tested through discussion and debate.

Competitive intelligence is “alive” when it does the following three things.

1. It addresses an issue of strategic significance to the customer or client.
2. It gathers, organizes and interprets information from the competitive environment affecting that strategic issue.
3. It offers a prediction derived from that competitive analysis that stimulates, informs and equips the customer to make a meaningful decision.

We should make predictions.

Beware of consultants (like me) that tell you that they know what to deliver and how to deliver it to your organization. Be especially cautious when the consultant knows a lot about competitive intelligence but only a little about your situation. Maybe, after you have talked with them awhile, it is more reasonable to accept the opinions of an outsider but only after they have demonstrated knowledge about your competitive challenges.

And what are your competitive challenges? Who cares most about these challenges?

Common challenges are growing the business, reacting to a competitors’ initiatives, clarifying a product or market strategy, deciding a business strategy question and cutting costs effectively. In many organizations, strategists of one type or another are the decision-makers. They are responsible for overcoming these important challenges and, thus, are the customers of the related competitive intelligence.

Competitive intelligence has a significant role in addressing all of these challenges.

Whether or not an organization recognizes or values a distinct competitive intelligence person or group, they still must consider competitive intelligence issues. Of course, this often happens in an opaque, ad hoc fashion in the decision-maker’s mind. This can be quite effective or disastrous depending on the expertise of the strategy decision-maker and the complexity of the challenge.

Which leads me to the fundamental response taught to me many years ago by my graduate school marketing professor.

His answer in response to any question we asked was, “it depends.” You might ask him how to create a new product line. His answer, “it depends” rather than “apply these five steps to succeed.” How do we select the right pricing strategy – it depends. We suspected that he gave this answer so that he could appear to be knowledgeable about any question. Indeed, this was a disorienting answer for most of us and we did not know how to respond to him effectively. Later, we understood that the key was to simply say, “it depends on what and to whom?”

The answer to that question unleashed a series of relevant dependencies that taught a superior lesson versus the simple recitation of some magical five-step formula. (Maybe he was smarter than we thought at the time.)

Effective competitive intelligence is similar. Understanding and responding credibly to dependencies is the great value to CI customers. Furthermore, describing, delivering and contextualizing the information in the right way for each customer determines how successfully the information is used. Because good competitive intelligence helps decision-makers make better decisions, the customization skills are essential for successful CI practitioners.

Consider first the case when little or no customization occurs. A CI practitioner may employ prescribed approaches for many problems. Having trouble with a competitor, take two SWOTs and call me in the morning. Trying to understand the industry, cite Michael Porter and all is well. Need to monitor the news, nothing is better than filtered RSS feeds. While there are many standard and helpful solutions (and each has its place in a comprehensive CI toolkit), rote problem solving approaches consistently are not nuanced enough for complex business decisions.

The problem comes because no dependencies are considered and insufficient customizations occur.

Imagine that you (or a consultant) attempts to complete a CI project without knowing the answer to one or more of the following questions (there are many more questions like these).

• What puzzles them about the competitive environment?
• How does the customer like to receive information?
• What has worked (or not worked) for them in the past?
• What analytical techniques do they know and trust?
• What is their decision-making style?
• Whom do they trust (and not trust)?
• What information do they already have?
• What decision are they trying to make?
• What constitutes personal success for them?

Which answers seem optional to you? Would having all of the answers be useful in organizing and executing the CI project? Assuredly, they would be useful because they would help customize everything you do to make success more likely.

There is no substitute for understanding the CI customer intimately.

Mounds of data, pretty slides, impeccable theory, automated tools and common solutions are profoundly less important than understanding and reacting to the critical dependencies of the customer. His or her biases, needs and challenges ought to drive how we provide competitive intelligence. All of that gives us the opportunity to customize competitive intelligence for the decision-maker and their challenges.

Customization makes it more likely that the CI is used to decide strategic questions.

(See my article “The First, Best Competitive Intelligence Project” for more information about how to understand what to do.)

Is “always” too strong a word for this subject?

A General Manager must decide the complete range of activities to implement to enter a new market segment. Does she need competitive intelligence?

The Marketing vice president struggles to clarify the winning proposition for the key brand of the company. Does his organization need competitive intelligence?

It is easy to answer “yes” to these scenarios. Each decision-maker faces choices that affect their organizations and, ultimately, influence their chances for success. However, the choices are rarely simple. For example, favoring one approach means that another must be deemphasized leading to disruptions in the organizational roles and responsibilities. Changes often imply new investments, processes and skills. These things cost precious money, time and energy that must be deducted from a finite “bank” within the company. Moreover, other stakeholders assert their importance along vectors independent of competition. For instance, owners, regulatory agencies, communities and others regularly inject their priorities into the mix considered by senior managers.

Since competitive intelligence is only one of the voices in the mix, how can it be effective (and not be unwisely drowned out)?

Here are three ideas to consider.

1. Identify with the decision maker. This means that all of the competitive analysis activity should be focused on the values, terminology, models and methods used by the person making the ultimate strategy decision. Commonly that implies that the analysis be multi-variant (i.e., considers the many dimensions important for making the decision versus simple analysis), the presentation be “big number” focused (i.e., large impact versus details) and the overall process be tailored to what the decision maker is prepared to support (i.e., centered on effectiveness versus elegant but unused analysis).
2. Master strategy models. While it is true that many decisions are made independent of formal models, knowing those models sensitizes the competitive intelligence professional to critical strategy issues. For instance, understanding Clayton Christiansen’s resources, process and values characterization of an organization’s capabilities gives both a framework and a readymade set of examples to explain the range of possible responses from a competitor. Kaplan and Norton’s Balanced Scorecard is an excellent way to visualize and represent the critical dimensions of successful strategy implementation. The list goes on.
3. Embrace the politics. Many people will disagree with this point. For them, the primary role of competitive intelligence is probably analysis and presentation. That is, figure out what is happening and clearly express that to someone. My view is that these steps alone are insufficient to enable meaningful change or decisions. However, that is exactly what is needed in most strategy discussions. The politics are important because the decision-maker does not exist in a vacuum. His or her decisions are complex precisely because they must balance so many factors including internal winners and losers. Of course, the competitive intelligence person does not make those decisions yet considering that the issues are present in the decision-maker’s mind can increase the effectiveness and richness of the information supplied to him or her.

The CEO, General Manager and Marketing Vice President need help to make good decisions on difficult strategy topics. Competitive intelligence can be quite helpful to them when framed appropriately. A first step is for the Competitive Intelligence person to make some fundamental decisions about how to approach and support the decision-makers.

Do you agree? What other key ideas are important in your experience?

These days, when the economic conditions are so difficult, may seem like the wrong time to some to get started. The other view (and one that I agree with) is that competitive intelligence is more important in hard times though the methods employed may be different. So, what is the absolute first step that is critical for the eventual success of a CI program?

Simply put, the first step is to “find the pain.”

By pain, I mean the obvious, significant and personalized need for competitive intelligence felt by someone that is in a senior position in the company.

Their pain can be caused by many things. Here are some common examples.

• They have been asked by their manager to present an overview of the competitive environment and realize that they only have the barest understanding summarized.
• Their business results are being directly and obviously affected by a competitor move that blindsided the organization.
• Multiple competitors are repeatedly introducing better products and services and the manager does not know how they can do it.
• A key customer is contemplating a switch to a rival and tells them that their offerings (which they assumed were the best) are not competitive.
• The manager’s goal to increase sales and profits has stalled and no one can explain why this is true.

Whenever something like one of the examples occurs, there is a manager that feels responsible.

Or, if you rather, they are held accountable. They will literally pay for useful, credible and timely information that helps them. This is the prime moment for a competitive intelligence activity and a magic time to get started. If you attempt to get started without identifying a senior manager sponsor that has a “pain”, you will risk engaging in an academic exercise that is unlikely to have an impact no matter how insightful your analyses prove to be.

Perhaps it goes without saying that it is also a high risk time for competitive intelligence.

If you offer to help with the manager’s pain and yet cause more pain, your CI career will be short. Nevertheless, without the pain, few managers seem willing to sponsor competitive intelligence activities and fewer still support them over time.

Fortunately (from a getting started on CI perspective) there is abundant pain evident today.

Companies are relentlessly buffeted by competitive pressures caused by the macroeconomic environment. The need is great to operate efficiently, retain customers and survive until more general prosperity returns. People that can help their organization’s leaders navigate through the times will be highly valued for their contribution. Business leaders are looking for people to help ease their pain. If you are one of those people and can provide “pain relief” through effective competitive intelligence, then you may just be successful in starting a long lasting service.

But first, you have to get the job.

And that is the subject of my next post.

The Human Side of Competitive Intelligence

1. Find The Pain
2. Get The Job
3. Tease The Vision
4. Frame The Foundation
5. Setting Some Standards
6. Introduce The Brand
7. Accumulate The Tools
8. Back To The Vision
9. Secure The Budget
10. Build The Presence
11. Expand the Brand
12. Go For the Value
13. Recruit A Staff
14. Go On The Offense
15. Evangelize The Mission

The vast majority of information is not written down.

It is communicated verbally or nonverbally between individuals. We are conditioned as social animals to use this method most frequently. The advantage is that it is often quick. The disadvantage is the intended message can easily get lost somewhere between the speaker’s words and the listener’s interpretation.

Meanwhile, many businesses are great fans of PowerPoint. Someone somewhere carefully (or sloppily) crafts a message that is presented. Much of the time there is one active presenter and multiple passive listeners. This can work but sadly it often doesn’t because the listeners are not engaged when they accept that the presenter is responsible for the communication.

There is a better way.

Why not draw pictures together?

Pictures are powerful ways to represent information. Much better than phrases on a PowerPoint slide, pictures can show relationships, sequences and other interactions. And when they are created by multiple people together, they can embody the collective wisdom of the group. If this is done appropriately, the resulting picture includes both the understandings and agreements among the people. How powerful is that!

The Grove Consultants International is a company that teaches graphical facilitation. The concepts are simple to grasp. Significantly, they all are aimed at graphically documenting what is most important. This works for topics like strategy, visions, value propositions, industry overviews and other similar things. The facilitation skills include the use of templates, creatively drawing to represent concepts and coordinating the discussions.

Here is an example where a Grove template was used to create an industry overview.

Pictures sometimes are a means to an end such as a specific decision. I have found that Sam Kaner’s book “Facilitator’s Guide to Participatory Decision-Making” is an excellent resource to help a leader understand how to reach a decision. Kaner’s techniques work well with the graphical facilitation techniques used by Grove.

Another excellent example of the powerful impact of drawing a picture together can come from a project retrospective. Norm Kerth’s book “Project Retrospectives: A Handbook for Team Reviews” is a valuable resource to describe how “looking back to move forward” is critical. His website at http://www.retrospectives.com/ explains the prime directive for retrospectives and more.

One of the exercises in a retrospective is the project timeline. A long piece of butcher block paper is tacked to a wall. Then, all members of the team the document the project by adding their recollections to the timeline. The ups and downs, deliveries, significant meetings, personal events, etc., are all added to the group picture. When everyone is finished, the whole team examines the completed picture to answer four questions.

• What did we do well, that if we don’t discuss we might forget?
• What did we learn?
• What should we do differently next time?
• What still puzzles us?

The actual format of the retrospective timeline is less important than the fact that the team creates it together. Here is an example from http://www.thekua.com/rant/category/retrospective-exercises/.

The impact of this exercise can be profound. Team members can literally see the entire project and what others considered important. They can understand more about what frustrated them, the problems that they faced together and overcame and the things that led to disappointments. Later, when they have digested the personal messages, they can use the picture to extract lessons and explain to others what went on and why. (Esther Derby is a great resource for teaching others how to conduct retrospectives. Esther and Diana Larsen have written “Agile Retrospectives: Making Good Teams Great” to show how to architect, design and run retrospectives.)

Maybe the pictures we create together aren’t as pretty as the PowerPoint masterpieces. Maybe they cannot be fit into the company template. And maybe they don’t have transitions, animations, embedded videos and other special effects which would impress Hollywood producers.

But what they do have is the powerful message created, owned and understood by a team.

Later, if you feel like it, you can always make a version for PowerPoint (with the approved company template). <g>