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?

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?

For example, take the recent New York Times article, “Apple Buys Intrinsity, a Maker of Fast Chips” at http://www.nytimes.com/2010/04/28/technology/28apple.html, about Apple. Apple, flush with cash and the serial hits of the iPod, iPhone and iPad, purchased a chip design company. What does this mean? How does it fit with previous Apple moves? How does it confirm or change Apple’s perceived strategy? What might their next move be?

These questions are fundamental questions for someone competing with Apple and the core domain of competitive intelligence professionals.

To answer the questions, start with some background observations.

1. Apple processor choices are strategic decisions. Remember when Macs used Motorola (and then IBM) processors. As Intel processors began to outpace PowerPC in price/performance tradeoffs, Apple switched. The impact has been significant for Apple and its products. For the iPhone, Apple chose an ARM-based design (manufactured by Samsung). This was also strategic (but not differentiated) because the low power ARM architecture is the de facto standard for low powered, wireless devices.
2. Apple prefers to control design. Indeed, it is easy to argue that attention to design issues primarily differentiates Apple. This shows up in everything that Apple does from software to packaging. Related to design, Apple prefers a high degree of vertical integration. That control allows for specific performance and functional capabilities that are difficult for less integrated companies.
3. Apple has mastered media commerce. Starting with the iPod and music, now continuing with the iPhone (apps, video) and through to the iPad (eBooks), Apple uses the iTunes model to aggregate content, simplify the consumer experience and enable developers. Along the way, Apple takes its share of each transaction while driving sales of its own devices. The next logical expansion of selling ads to the captive Apple audience has already been announced.

What does all of this have to do with Intrinsity?

In 2008, Apple purchased PA Semiconductor. Even though PA Semiconductor specialized in PowerPC architectures, it was thought that Apple wanted their low power design expertise for future wireless device processors. Also in 2008, Apple purchased an architecture license from ARM. This meant that Apple has the rights to the internal design information for specific ARM cores and had the right to extend or modify those designs. (Others companies such as Texas Instruments and Qualcomm have architectural licenses for some ARM cores.)

Fast forward to 2010 when the new iPad included an Apple-labeled A4 processor. It all makes sense. The PA Semiconductor team must have designed an ARM based processor for Apple. (Technical Intelligence, Product Teardowns, M&A Activity)

The people familiar with Apple’s situation say that efforts to create a new chip for mobile devices from the ground up are stalling. In 2008, Apple purchased another chip maker, called PA Semi, for $278 million. That start-up also specialized in making fast, low-power chips.

But wait. Maybe all things are not well for the PA team at Apple. (Key People Tracking, M&A Activity, Competitor Strategy)

But a number of the PA Semi employees have left Apple — many of them disgruntled about their compensation, according to people with knowledge of the situation who were not authorized to speak publicly. Google, in fact, bought a start-up called Agnilux earlier this month filled with PA Semi engineers.

And how did outsiders first notice that Apple might be doing something new or different? (Key People Tracking, News Tracking, Primary Source Relationships)

Word of the acquisition began to leak out after technology trade publications noticed earlier this month that a number of Intrinsity employees had started to list Apple as their employer on the social networking Web site LinkedIn. Neither company, however, would discuss their relationship.

Now things get a little clearer and two things become apparent.

First, it is important to realize that although Apple has marketplace momentum and popularity, they are not infallible. It appears that they have the common difficulty of integrating acquired companies successfully into their strong culture. A strong counter move for its competitors is to attract the key leaders of the acquired companies. Who is good at doing this? Google. Google does many more acquisitions than Apple and has a more open culture.

Second, Apple has shown a willingness to spend money to increase its vertical integration in ways that similar companies do not. For instance, RIM, arguably Apple’s biggest smartphone competitor, does not have chip design capabilities. Buying Intrinsity means that their technology is no longer available to Apple competitors. Locking competitors out of performance enhancing technology gives Apple a competitive advantage. The Intrinsity resources also may mitigate the people moves from the PA Semiconductor group.

What is next?

Remembering that Apple is a media company, look for them to purchase companies that enhance media delivery or performance. For instance, a prime target for Apple would be the vendor of the graphics acceleration core in the A4. Acquiring Imagination Technologies would have a profound impact in the mobile space since many other semiconductor vendors rely on their accelerators. (Technology Trends, Early Warning, Scenario Analysis)

The story goes on and on. Apple, Google, RIM, Samsung, TI, Qualcomm and others are engaged in a fascinating commercial contest in the Wireless business. Each makes moves and the others counter. All have patterns, capabilities and limitations. Wrestling with each results (hopefully) in a winning formula.

Competitive intelligence is critical throughout the process. It helps weave a story through the seemingly random events over time. It helps explain what is happening, why it matters and what counter moves are possible. It helps leaders lessen surprises, gain confidence in decisions and get better results for their companies.

Although competitive intelligence might help with cost saving decisions, its better use is to support strategic growth decisions. After all, strategy is forward-looking, intimately concerned with competitiveness and inseparable from significant risk/reward decisions.

It is easy to find books on growth strategy -many more, in fact, than for competitive intelligence. However, this disparity in academic or executive treatment does not obviate or lessen the need for competitive intelligence. Indeed, strategy books are replete with references to the role of competitive intelligence in strategic decision-makings.

Take an example from Chris Zook’s series of books on growth strategy. In three books – Profit from the Core, Beyond the Core and Unstoppable – Zook synthesizes ten principles of core growth and redefinition.

1. Start by Defining the Core
2. Obsess on the Full Potential of the Core
3. Fully Value Leadership Economics
4. Map Out Adjacencies to the Core
5. Recognize the Power of Repeatability in the Core
6. When Lost, Return to the Core Customer
7. Remember the Focus-Expand-Redefine Cycle of Growth
8. Exploit the Power of Hidden Assets
9. Think of Capabilities as the Building Blocks of Renewal
10. Don’t Underestimate the Power of Focus

Clearly, some of his principles have an inward focus. For instance, defining the core is self-examination of what a company fundamentally does best. Note that Zook expands the notion of core competencies to include the basis for strategic differentiation, the sustainable economic model and the boundaries of the core.

However, most of the principles include (at least implicitly) a requirement to understand the competitive environment. For example, understanding the full potential of the core requires an assessment of the commercial prospects of the core business. This is impossible in isolation. Thus, competitive intelligence can contribute essential understanding of the competitive environment to scope the opportunity. This is more than a total available market calculation since it includes an overlay of other forces that affect potential success.

In almost every principle, understanding the competitive environment adds confidence to the strategic decisions made by management.

How does a competitive intelligence person or group contribute this value? Here are three important steps.

1. Relationships. There is no substitute for knowing the strategy decision-makers and being trusted by them. If either of these conditions is not true, stop reading and start working to remedy the problem.
2. Context. Make sure that you understand the same strategic context as management. Services offered in the shared context are valued. Similarly, brilliant but unlinked analysis is not tolerated by busy managers. It wastes their time and damages your credibility.
3. Models. Competitive intelligence professionals have a rich set of models that aid in understanding the competitive environment. Study and apply the tools described in the Bensoussan and Fleischer books. Whenever you can bring clarity and insight to the decision-maker, your input will be valued.

When there is not a formal competitive intelligence input for strategy, it means that the decision-makers are doing competitive intelligence informally. It is possible that they are doing a great job. In my experience, it more likely means that they are missing valuable insights. Competitive intelligence, well practiced, can be incredibly helpful to them.

What do you think?

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?

Companies experience distress.

You do not have to look far to see signs of that distress. Talk with people that have survived a series of layoffs and reorganizations. Ask them about the constant worry of losing their jobs while coping with a series of changed assignments. Question them about the difficulty of trying to do ordinary business when management has severely reduced their flexibility to spend money or take risks. Watch how people talk about the future and their hopes. When you do these things, you begin to see severe distress.

Strategy and competitive intelligence organizations are suffering.

Within companies today, the current priority for many is simple survival. There is no shame, of course, with this objective. It does force hard decisions. One decision is to focus maniacally on preserving cash. That means two things – reduce expenses to the barebones and pursue short-term sales. Consequently, other things suffer. For example, many curtail or deemphasize strategy and competitive intelligence. This produces a specific kind of distress.

Here are five signs of business strategy or competitive intelligence distress.

1. It is unfashionable to be identified with strategy. Employees understand what is valued. Often they use self-descriptions that align with what is in vogue. In stressful times, those with an obvious “strategy” moniker will decrease. Alternatively, they will say “strategy” and then quickly explain how this means their plan for the next 30 days.
2. “Strategy” is equated only to cost savings. Even in tough times there is business spending. In stressful times, there is a disproportionate concern for reducing costs. Thus, projects or initiatives that deliver such savings are “strategic.” Revenue increasing projects tend to receive less support.
3. Competitive intelligence is stopped. Distressed companies turn inward to preserve jobs by increasing efficiency. Externally focused analysis seems like a luxury especially when it means having someone dedicated to the task. Companies fall back on distributing competitive intelligence responsibilities or simply ignoring the discipline. Given the crush of additional work, most busy people simply let it drop.
4. Common arguments do not work. In normal times, a strategist views the competitive environment looking for ways to win. That means doing a better job of developing and delivering products that customers want than competitors do. Investments are justified based on perceived advantages, competitor positions and customer needs. In stressful times, this currency is devalued. Arguments that work are internal, tactical and designed to minimize risk (versus maximize return).
5. There is an unsatisfied, pent up energy for the future. Stressful times, by definition, eventually end. Even now, in the companies that I talk with, strategists are beginning to emerge from this recessionary hibernation.  There is a desire for action, competitive initiative and a reawakened curiosity about what is possible. The stress shows up because it is not immediately clear how to get moving again in their company culture traumatized by the past year’s climate.

These five observations are not prescriptive. However, they do help point toward concrete steps for a business strategist or competitive intelligence professional to switch their personal and professional focus from distress back to success. My next post will cover some thoughts about what to do.

Have you seen distress signals for strategy and competitive intelligence people lately?

What happens next?

You probably have been in these situations when seemingly the only resort is to use sign language. Our hands start waving and fingers start pointing. Occasionally, accompanying the gestures, we speak slower and louder as if that makes the language clearer. Through the pantomime, amazingly, we often get enough information to take our next step. Inefficient and fraught with negative possibilities, nevertheless it sometimes works.

How valuable would a translator be at those times?

Pretty valuable, because their expert services would significantly reduce the risk of misunderstanding. Both parties would walk away more confident that they have been understood. Whatever the next steps, they would not be left hanging with a question of whether or not they had made the best choice based on the clearest information (something that a good translation could have easily provided).

Business communications and its issues are not much different.

Every business has specialists with their own expertise and lingo. This is natural and presents no problem. No problem, that is, until communication is attempted across group boundaries. This, of course, is fundamentally necessary and tried many times each day. Yet, without good translators or people that are “multi-lingual”, many easily resolved communication gaps occur.

For example, finance does not speak or think the same way as marketing. Marketing has an entirely different vocabulary than engineering. Engineering uses terms and concepts differently from project management. Project management often has great difficulty in deciphering the business strategist’s ideas. Despite their differences, the fact that they are all in the same company and tied to its fate means that they must exchange information successfully. Otherwise, the possibility of failure increases for everyone.

There is much to cover on “business translations.” Let just start with explaining the strategist’s “language.” Here are 10 hints that may help you. Notice what they say and what it may mean to the rest of us. There are always questions to ask to get clarifications and avoid misunderstandings.

1. We are working on a plan. No, they are not. At least not the way most people understand. Their “plan” is something longer term and far larger than what most consider a plan. Try asking them how much of their plan will complete in the next 12 months.
2. We have a strategy. The key word is “we” and they are not (yet) including you. It usually means that something was put together for review. There is no operational buy-in but maybe you will agree to the strategy (sight unseen). Ask them about the review and approval process.
3. Everyone knows our strategy. Again, this means that few people know the strategy but that a communications campaign is probably planned. Ask what actual changes have occurred based on the strategy.
4. Our strategy is well established. This probably means that there have been no official changes to what was done last year. This could signal a successfully focused strategy or a stale strategy process. Ask what measures indicate success and what would cause a strategy change to occur.
5. Top management sets our strategy. Maybe this is true. If so, it signals a discounting of emergent strategy ideas from within the organization. Ask how management keeps aware of all significant issues and how the strategists consider ideas from within the organization.
6. Our strategy is clear. This means that you are supposed to understand the strategist’s strategy. It is possible that you are expected to conform (now!) to the new strategy direction. Test the clarity by asking for a succinct explanation (distrust long or incomprehensible ones) of the strategy.
7. We have the winning strategy. This means that someone has approved the strategy and the organizational selling process has begun. It may mean that financial results confirm the strategy and requisite investments are approved. In competitive markets (most of them), ask how results compare to the competitors’ results.
8. We need your help. This could be humility. On the other hand, it simply could be a sly way to involve you to help sell the strategy-making results. Ask why your assistance is needed and how it might affect the substance of the strategy.
9. We have a good strategy. This is a powerful statement if it means that the strategy is measured against competitors’ strategies. It signals a metered assessment of the strategy without outlandish or unsubstantiated claims. Ask what competitors are doing differently to be successful.
10. Please invite us the meeting. Ah, the strategist often loses control of the strategy when it transitions to execution. This statement signals their hope to continue involvement and influence. Ask what value that they will bring to the execution process.

Decoding, translating and understanding are fundamental communication skills. Missing the meaning does not help either party in the conversation. Learning basic tips and clarifying questions helps avoid the pitfalls often encountered by two people speaking different languages.

Do these examples make sense in your experience? Are there other common translations that I have missed for strategists?

What does skin color and social background have to do with strategic or tactical thinking?

Only the recognition that the world is dominated by tactical thinking and a strategist will always be in the minority. “Minority thinking” means that most of the time the strategists must adapt to the tacticians rather than the inverse. It does not mean however that strategists are less valuable or needed. And it does not mean that strategy is unimportant. But a strategist that only masters strategic thinking without understanding how to act tactically will most likely fail (or at best succeed sporadically).

The critical implication is that a strategist has a particular requirement to speak two languages. First, there is the native language of strategy. Second, there is the foreign language of the majority that is primarily tactical.

Say something strategic to most tactical people and it would be like a Kenyan saying something in Swahili to me. Aside from “hakuna matata” (no worries) and a few other phrases, I would be lost. Similarly, when strategy encounters a tactical mindset, the strategist faces the likely outcome that they will be misunderstood unless they follow some simple rules.

Here are 5 powerful rules that can help guide a strategist’s behavior and translate their message.

1. Don’t start by calling “it” strategy. Whatever your thoughts are, whatever beautiful concepts you have developed and whatever your vision may be, just don’t call it strategy. At least at the beginning, just say you are “working out a plan” or “working through an example.” Why say it this way? Because “plan” and “example” sound and feel more definite. They are concrete steps or evidence and most people will latch on to this. Hooking them by helping them understand how to be involved is much more important than the label.
2. Don’t expect appreciation. A good strategy is a beautiful thing. It considers so many factors, distills lessons and makes meaningful bets about the future. You and I can admire when this is done well. Just don’t be surprised when the tactical majority doesn’t value the elegant thinking so much. Most people focus on tasks and it is a good thing that they do. If all the “real” work had to be done by strategic thinkers, most companies would fold due to inadequate output. The best “appreciation” that you can receive from most people is their implicit endorsement of your work and increasing understanding of how it applies to them.
3. Do determine the “choke” point. If someone puts too much food in their mouth, they start to choke. Likewise, if a strategist talks about too many concepts or projects too far into the future, tactical people begin to choke. Different people have different thresholds. Our task is to be careful to know and respect those thresholds. For instance, some people can only imagine what will happen over the next six months. If someone attempts to force them to think about a 2-3 year horizon, they figuratively begin to choke. Don’t go too far too soon or you will lose your tactical friends.
4. Do practice a fait accompli methods. One method of rolling out strategy is to form a high level team, make a grand announcement and launch a comprehensive communications campaign. This happens all of the time and usually results in failure because it doesn’t take into account the essential tactical mindset of organizations. More than that, most people have seen such campaigns come and go. Wisely, they wait for the latest one to pass while maneuvering to avoid serious impact to their work. On the other hand, people do respect results, genuine change and courageous leadership. Thus, a strategist is best served not by announcements but by sustained modeling (both personal and organizational). Then, as the good results become increasingly known, tactical people are motivated to become part of the strategy.
5. Do understand the difficulty of change. Some strategies call for “more of the same.” Most, however, require change and that affects many people. Change causes all sorts of conscious and unconscious reactions. Many of the negative reactions arise because change feels “unsafe.” Unsurprising, unsafe people are not enthusiastic about change. The sooner that a strategic thinker grasps this and masters the safety issues, the sooner that their effectiveness will increase. Understanding safety issues will give you much greater sensitivity to the implementation challenges of strategy. And, it will lower the temperature in your discussions with tactical people. They might actually come to believe that you value them as much as the grand strategy ideas that you have worked so diligently to formulate.

Sometimes it seems that tactical people are averse to understanding strategic people. I suppose that it could easily be said that strategic people feel misunderstood and underappreciated by the tactical world. My view (as someone that purports to think strategically) is that the obligation to bridge the gap belongs primarily to the strategists. Fortunately, this can be done by thinking strategically but acting tactically.

Do you agree? Are there other lessons that you have learned like these?

One example that we often use is armed conflict between nations. Wars are the ultimate human competition because the stakes are so high for many people. The problem with using it as analogy for business competitive intelligence is that the rules are clearly different. Ethics in business and war are not the same. Nations may justify actions during war time that an anathema to peace time life.

Another example that we can use is sports. The attractiveness of the sports analogy is that a “lifetime” is played out in plain view each season. All teams start with similar resources and the same record. Pitted against each other in a series of contests, the stronger teams emerge to contend for the title. There, superior systems collide to determine which will prevail. Nice and neat. Then it happens all over again.

Of course, business contests are not all that neat. Plus they usually occur with multiple, simultaneous competitors. The beginning and endings are not so clear cut. And, it is entirely possible that there will be more than one winner.

Okay, despite the caveats, there are good and bad lessons to be learned from American professional football.

The most successful team from the last ten years has been the New England Patriots coached by Bill Belichick. They have won three championships and regularly compete at the highest levels. Belichick’s reputation is that he meticulously and effectively prepares his team for each game. Players are aware of their roles and how to attack the opposing team. Knowing and exploiting every possible weakness of his opponents is a trademark of the Patriots.

Interestingly, it seems that this drive to know everything about competitors is what led to an apparent ethical lapse. In 2007, the Patriots (in violation of league rules) taped the sidelines of an opponent for the purpose of deciphering hand signals used to communicate with players on the field. Maybe they had been doing this in other games and for a long period of time (suspicions)? Many began to question how the spying affected the previous championships. Should they be considered tainted?

This is a cautionary tale about the ethics of competitive intelligence that does apply to business.

Where did Belichick’s drive come from? Did it arise first from proper and healthy impulses?

Actually, it did. Bill Belichick’s father, Steve, wrote one of the seminal books on football scouting methods. When scouting was done in a haphazard and spotty fashion, Steve pioneered the methodical use of scouting (i.e., competitive intelligence) to gain advantages over opponents. While scouting for the Naval Academy football team, he wrote “Football Scouting Methods” which contains a wealth of philosophy and practical methods for understanding competitors.

My favorite quote from the book describes his view of scouting.

“The objective of [football] scouting has been, and still is, to get as much useful information about a future opponent as possible. A more practical objective, however, seems to be to get as much usable information as can be utilized either (1) to help formulate game plans, or (2) better prepare various individual players to either combat the strength, or take advantage of the weakness of an individual or opposing team.”

To warm the hearts of competitive intelligence professionals, his first chapter is entitled “A Case for Specialization in Scouting.” This chapter reads like manifesto for (football) competitive intelligence. With little modification it works just as well for business competitive intelligence. Here are a few quotes from that chapter.

“Regardless of whether the accent is on scouting, the use of movies, or a combination of the two methods, it is generally agreed that advance information of an opponent is important and necessary.”

“It does seem strange that some head coaches feel that any coach, regardless of experience, can scout a football game”

“The argument for specialization get a further boost from the scouts themselves, as most scouts agree that they do get more proficient as the season progresses, regardless of whether they scout the same team for several weeks or a different team each week.”

“Basically, every football team has a pattern.”

Steve Belichick’s book was published in 1962. My “ah ha” realization is that competitive intelligence principles can be learned from non-business arenas. Bill Belichick obviously absorbed many lessons from his father. He just took them one step too far.

Knowing what my friends could and could not do served me well in those halcyon days.

That leads to a present day business question. Wouldn’t you and I always want to know everything we could about our competitors? Surprisingly, the answer is “no.” Sometimes competitive intelligence is optional.

Here are 4 instances when competitive intelligence matters little or not at all (maybe).

1. When there is an overwhelming disparity in talent, size or performance.

Suppose Kobe Bryant or LeBron James found out that they had to face me in a game of basketball. Do you think that they would tremble and request films (if they existed) of all of my playground triumphs? Would they try to understand my tendencies, diagnose my weaknesses and hone their own plans? No, they would just show up and whip my butt. The differences in talent, experience and size obviate the need to do competitive intelligence.

Maybe an upstart search firm would be viewed by Google the same way. Or, if a startup was introducing a new spreadsheet product, it is possible that the Excel team at Microsoft would not be too concerned. There are times in business when such a disparity exists and endures. Then maybe competitive intelligence is not so important.

(However, across the broad panorama of business, there are few situations like these. Most competitions are not so one sided. When things are not one sided, competitive intelligence makes a big difference.)

2. When an artist is at work.

Artists compete to get commissions. But during the creation process there is little focus on what another artist has done or is doing. Instead the focus is internal and on the vision of what is being created. There is no need to track the production rate of others or their profit margins. It would be distracting to diagram the exact paint and brush combinations that worked so well for someone else. What artist would take time away from creating their vision to try to project what other artists will be creating over the next 2-5 years?

Passionate entrepreneurs go through this phase. Once some funding has been secured, there is an intense obsession with the first product. It means everything. At least for a time, what others are doing is not so important. The “masterpiece” being created is all consuming.

(However, any firm that succeeds in the long term will move past this phase. Passion about products (witness Apple) may still exist but there will be many imitators over time. All products will require enduring business models and there will be alternatives proposed. Smart people and organizations will be mobilized in proportion to the success of the “artist.” That’s when competitive intelligence becomes mandatory.)

3. When there is an emergency.

A couple of years ago we experienced a house fire. The new air conditioning unit in our attic caught fire and smoke was pouring into the second floor of our house (where the kids sleep). Who ever expects such a thing? The alarm went off at 1 AM and our only thoughts were to get the children out. Once that was done, we called for help and took a few important things out of the house. Emergencies focus your thoughts and actions quickly into what is immediately important. There is no time or desire to think about the long term. The only “strategy” we had was to make sure that everyone was safe.

The macro economic situation feels like an extended emergency to many companies today. Sales have plummeted and the need to control expenses seems paramount. Why bother with the long term when it is not clear that surviving the short term is guaranteed? Studying the competitive environment seems superfluous in 2009.

(Time marches on. Every recession so far has ended at some point. Even now, some positive signs are appearing that may indicate that the current one has bottomed out. When the turnaround becomes more pronounced, a few farsighted companies are going to be well positioned to prosper. Part of their success will be due to a continued investment in looking outwards despite the hard times. In short, they will continue their competitive intelligence efforts.)

4. When burying the dead.

The ultimate finality is death. When someone dies, friends and family gather to remember and celebrate the life of the departed. We typically don’t recount failures or what might have been. Instead we focus on who they were, what they accomplished and what they meant to others. Later, the will is read and the possessions of the deceased are distributed. We say that they are “at rest.”

Companies die too. Many are being “buried” during a normal year, never mind the kind of year that we are experiencing in 2009. When “death” occurs, the mistakes of the company may be instructive but few are usually interested. Rather, most other companies are focused on those that continue to “live.” Studying the dead is useful to those in forensic or academic disciplines. Since most competitive intelligence people are concerned with neither of these areas, being associated with the dead or dying company is not interesting.

(There is a caveat. Some “sick” companies can recover. As someone that has had a terminal diagnosis, I know that being sick is not the same as being dead. Good information, the right strategy and expert help can lead to recovery. Competitive intelligence can help convert a deadly prognosis into a new beginning.)

Yes, competitive intelligence is optional for companies. Or is it?

What are more instances when competitive intelligence is optional? What are the counterexamples?