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.

As they say in the Lion King, it is all about “the circle of life.” Things begin with a new idea. A few of those ideas result in compelling products. For a small minority of those products, the right people come together to create a valuable proposition for customers. With customers in hand, the company grows and prospers. One day, competitors begin to envy the company’s success. Meanwhile, the competitive environment gets tough. What will the company do? Can it adapt and continue to be successful. Some companies do and go on to bigger and better things. However, all too often, some “die.” Swallowed up by another, stronger company that extracts what is valuable from the dying company.

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)

It is no surprise that competitive intelligence issues and activities regularly show up in business news. After all, intelligent and motivated professionals everywhere are furiously competing to win. To the untrained eye, it may seem that companies’ activities are disjointed or nonsensical (and sometimes they are). However, to someone trained in competitive intelligence, there are stories behind the public moves. From those stories, emerge motivations, strategies and opportunities.

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.

Without a doubt, there have been two dominant strategic business themes in the last eighteen months. First, wherever and however possible, reduce costs. Companies have rushed to reduce staffs, shutter factories and delay R&D spending. Conserving cash during the recent credit crises has been a paramount concern. The second major theme (which is gaining steam) is to grow revenue and profit. The tension between the two themes is apparent. Often growth requires some kind of incremental (or, at least, reallocated) investment.

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