Should a company spend money on competitive intelligence?

Well, if they knew that their returns would be twice their investment, then they might quickly answer “yes.” Conversely, if the return was half the needed investment, then it is equally clear that the answer would be an emphatic “no.”

Those answers are easy when credible numbers are assigned to both the investment and return sides of the equation. However, as most experienced CI professional know, this is not a trivial matter. Although incontrovertible, quantitative evidence of impact is highly desirable, CI professionals usually have to use qualitative ROI “measurements.”

Sometimes the investment side is easy. For instance, it is often clear what a consulting engagement costs or the sum of the tools and salaries for an internal staff. However, this precision is often missing on the return side.  After all, competitive intelligence is a support function for decision-makers. Their decision-making process can be quite complicated and involve many factors beyond the direct CI input. In the end, did CI tip the scales one way or the other? Was the CI input valuable or not? How valuable? Who would know the answer to these questions?

Gather a group of competitive intelligence people together and commonly you will hear the same sorts of issues. One issue is that many competitive intelligence customers do not understand the value of CI. Another common topic is how to ensure that competitive intelligence people are properly involved in decision-making. Occasionally, the discussion turns to picking the best tool or technique for an organization. Sometimes we talk about the economic conditions (i.e., how many jobs have been affected) for competitive intelligence staffs. These are all good issues but the most impactful problem is something else.

The most common issue is how to connect with senior management effectively.

This topic came up at the recent SCIP Conference in Washington, DC. In one session, everyone around a table shared their challenges about making the case for competitive intelligence to a prospective sponsor. One person explained that they were due to present such a case in about a month to a senior manager. Understandably, this important meeting caused much stress. What information should be presented? What splendid arguments should be assembled to convince the reluctant or uninformed manager? What presentation style was most appropriate? In short, what was the best approach to gain ongoing support for competitive intelligence from this senior manager so that the competitive intelligence person’s assignment and job was safe (at least, temporarily)?

There were many good suggestions bandied about.

Admittedly, it is hard for outsiders to know the right answer for another organization without more background than we could get in a short conversation. Still, one guiding principle emerged from the discussion.

A CEO faces a decision about whether to make an investment in a new product line that requires significant capital. Does he need any competitive intelligence?

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.

I would like to lose a few pounds. It would make me feel better, my pants would not be so snug and my blood pressure would go down. You would probably agree that these are laudable goals. So, a remarkably bad idea for me is to go somewhere that they serve chips and salsa. Or pizza. (Or a few other things.) It is just that certain things attract me so strongly that consuming them in moderation is difficult. Thus, because I cannot avoid these temptations, my weight loss goal is especially hard to reach (but I do enjoy mealtimes).

Of course, these foods are not completely bad. Maybe if I ate a few chips or only one slice of cheese pizza, I would do better. Perhaps I could eat other healthier foods more often and combine them with better exercise habits. I need the whole package to reach and maintain the correct weight. Whatever else I do, I especially need to be aware of the common pitfalls to avoid (goodbye to deep dish pizza).

In competitive intelligence, it is my experience and observation that we have pitfalls that inhibit us from reaching the desired goal. That goal, in my opinion, is to help strategy leaders make better decisions. Nevertheless, the pitfalls distract the competitive intelligence professional from usefully satisfying the needs of strategy decision-makers.

Here are my five (least) favorite pitfalls that should be avoided. I wonder if you agree with me.

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