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Competing with Intelligence

Competing with Intelligence

There is a relatively inexpensive information system you can set up which can produce massive returns and which meshes IT intimately with your company's business strategy. I'm referring to competitive intelligence (CI) systems, the effective use of which can help prevent bad decisions, save millions of dollars, and deliver real competitive advantage. Competitive intelligence has been defined as the collection and analysis of public information to paint a picture of companies, competitors, customers, markets and the industry. The word "intelligence" implies more than mere information collecting; it means drawing implications from analysis of that information. Companies are able to use CI in areas like new product launches, benchmarking, mergers and acquisitions, competitive monitoring and joint ventures. For example, Robert Flynn, former CEO of The NutraSweet Company, credits use of CI with saving his firm more than $US50 million a year from 1988 to 1990, by enabling it to retain its aspartame customers as the sweetener came off patent.

CI does not mean cloak and dagger espionage activity. The latter includes such unsavoury and illegal steps as wiretaps, bugs, pseudo job interviews with rivals, bribes to suppliers or staff, "dumpster diving", or spies. Instead, it means systematically looking at the vast amount of public information that is available. Leonard Fuld, a leading US practitioner of CI, says the first rule of intelligence gathering is that "Wherever money is exchanged, so is information". In other words, every business transaction that a company does necessarily reveals information about that company. It might be data they had to disclose to a government body. It could be a news item about a new distributor being added, or it could be a swag of hiring ads in the papers.

Radical changes such as divestitures or acquisitions always generate a flood of useful data, Fuld says.

One prerequisite to a successful CI program is a corporate culture that encourages sharing of information. This can be a challenge, especially in large firms with independently run divisions that see no reason to share. Appropriate inducement or motivation is needed. Also, CI is not a hit and run business. It needs constancy of effort, week in and week out. It takes time : a decent CI program often takes several years to mature. The good news is, CI is relatively cheap. A basic CI team needs a librarian cum database searcher; an analyst to decide on areas to research, to supervise primary research, and to draw conclusions against an appropriate analytical framework or model; and a manager, to keep things on track, help resource and smooth out any politics.

The NutraSweet example I mentioned cost around $250,000 a year. Competitive intelligence is not a purely IT-driven process. The human element is paramount.

However, IT can contribute a lot. A recent survey of 120 US firms with CI systems found the most common tools used were intranets, Lotus Notes, the Microsoft Access database, and a knowledge management package from a Chicago firm called Wincite Systems. Other tools go beyond retrieval and organisation of data, into analysis of the data. The Australian-developed GrapeVine product is one example.

If your company decides it makes sense to set up a CI program, then the place to start is with an intelligence audit. This examines what is available in the organisation already, including your business library, the association memberships your staff hold, the market studies or reports lying around, and so on. This all assumes you can negotiate the biggest hurdle of all -- gaining the buy-in of the CEO and of senior management, who are often reluctant to credit what comes out of a CI program, so they need to be persuaded how useful it is. CI is a burgeoning field in the US. Leonard Fuld estimates well over half the Fortune 500 has a CI program. There is an association called the Society of Competitive Intelligence Professionals which represents practitioners of CI and promotes ethical standards and a better understanding of what CI is about. SCIP has 6500 members, and membership is growing at 30 per cent a year. The status of CI in Australia is difficult to determine because companies don't publicise their efforts. There is no international chapter of SCIP in Australia, and the closest equivalent I'm aware of is the Australian Institute of Professional Intelligence Officers (AIPIO).

Steve Ireland is publisher of ComputerWorld newspaper

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