Competitor Intelligence in Business: Some Thoughts on Its Potential and Its Problems

Over the last two decades business journalists and consultants have produced a good-sized stream of books and articles on competitor intelligence in corporations. This is always seen as a critical function that will grow in importance. In his 1996 book (Competitive Intelligence) Larry Kahaner of Business Week declared that "turning raw information and data into actionable intelligence is fast becoming the most critical management tool of cutting edge business leaders." Peter Drucker in 1998 proclaimed that the phase for the information revolution was to finally deliver useful information about customers and competitors to senior executives.

Despite these pronouncements, CI has a worse than mixed record inside of corporations. In 1999 the president of the Society of Competitor Intelligence Professionals noted that 90% of new corporate CI groups are shutdown or abandoned after three years.

The gap between perceived need/proclaimed value and the frequent demise of CI initiatives is a yawning chasm. No single factor is the cause. Rather a host of forces drag down the performance and perceived value of the CI function. These range from micro-factors involving specific mistakes in implementation to systemic weaknesses in management training to macro-forces that undermine the relevance of CI in many marketplaces. I'll start with the micro-factors here and discuss the other two categories in later posts.

When you look at how many (most?) firms do CI, you find that the activity has only a shoe-string budget, a low spot on the org chart, and is carried out by inexperienced and junior people. I personally have seen multi-billion dollar divisions of very large companies place their CI activities in the hands of an intern or a secretary.

All of this suggests that the commitment to CI does not run very deep. Hence, it is not surprising that the initiatives wither on the vine.

One reason for the lack of commitment is that the impetus to launch these sorts of CI initiatives does not come from senior management. Rather, it comes from the sales force. They have the most interest in competitor actions and they, as a group, are information-poor compared to finance or operations.

An effort started under these conditions has no choice but to go after the low-hanging fruit-- collecting news clippings, brochures, advertisements, etc. The result is a CI initiative that concentrates on tactical information and does little strategic analysis.

This sort of CI work rarely has the chance to impress senior management or to become integral to the strategic planning process. Nor is it likely to hold on to the best analysts. Turnover and stagnant/shrinking budgets combine to choke off the CI effort after two or three years.

Part Two

Part Three