In my day, I was quite the basketball player. My reputation was cemented on the backyard court where I dominated my two friends. They couldn’t beat me no matter what strategies they devised. Trying outside shots didn’t work. Driving to the left or right didn’t gain them any advantage. Tricky passes were futile against me.  There was nothing that they could do to win. I knew their game and the limitations of their ability because I studied them every day (the early days of my competitive intelligence career). That information let me anticipate and counter anything that they tried to do. Ah, the memories of the victories are still sweet.

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?