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Tilting The Playing Field Your Way


The Journal of Commerce

by Rose McLymont

Companies ranging from one-person operations to the world's biggest multinationals are shunning the notion of leveling the playing field as they pursue global markets. Instead, they're trying to tilt it in their own favor. The shift, which has become more pronounced in the last three years with the explosion of easily accessible information on the World Wide Web, has catapulted into the limelight a heretofore barely acknowledged concept known as competitive intelligence.

"I started in this field in 1983 when it was not a field yet. At the time I was lucky to get in front of top management once a year. Now I don't have time to breathe. I live in the plane and have seen all the new movie releases," said Ben Gilad, founder of the Academy of Competitive Intelligence, based in Israel.

"This is a highly competitive society, not just in our industry but across the board. And companies are realizing there's a couple of things they need to do to stay competitive. One of them is knowledge management," said one executive in charge of monitoring the competition for a medium-sized U.S. specialty chemical company.

"A year ago when I started there was just a little information about competitive intelligence out there. Now there is reams of it -- how to do it, tools to use. It's definitely a growing area. Lots of consultants out there," said the executive, who asked that neither she nor her company be identified.

Competitive Intelligence

The need for competitive intelligence is nothing new, said Mr. Gilad, whose books -- "The Business Intelligence System" and "Business Blindspots" -- laid the foundation for the modern theory and practice of competitive intelligence.

"I think companies needed CI (a decade ago) as much as they need it now. I can cite the typical theme of "rising competitive pressures, change, globalization, etc.," all the song and dance. But I don't buy this," said Mr. Gilad, who is based in Israel but travels widely.

"The truth is that if you look at the competitive failures of IBM, Sears, American Express, Schwinn, Chrysler, GM, and so on and so forth -- the list is endless -- you realize they could have all been avoided with a bit more effective, and a lot more organized, approach to business intelligence. The difference today is that some of us raised the corporate world's awareness since the early '80s and now we are at last winning the battle."

The Society of Competitive Intelligence Professionals defines competitive intelligence as the process of monitoring the competitive environment. "Competitive intelligence enables senior managers in companies of all sizes to make informed decisions about everything from marketing, R&D, and investing tactics to long-term business strategies," says the Alexandria, Va.-based group. For almost every business, finding out competitors' identities, pricing, plans, strengths, weaknesses, suppliers and customers plays a very important part in formulating a business strategy, said David Gikandi, president of Access Global Trade Exchange Inc., an on-line service that links you to all sorts of information databases and resources for intelligence gathering.

"In fact, having or not having adequate competitive intelligence could mean the difference between success and failure, especially in international markets where the costs of making mistakes and the rewards of doing the right thing are much higher than in the domestic situation," Mr. Gikandi said.

EXECUTIVES CONCUR

Company executives could not agree more, it seems. Their desire to keep tabs on the competition is generating such brisk business these days that the field not only is replete with "CI consultants," but also has sprouted its own institutions of learning, its own software and its own areas of specialization. The Academy of Competitive Intelligence, for example, offers public courses in all aspects of "CI" knowledge management; in-house training programs and management presentations; and startup help to companies interested in creating an intelligence program. Clients come from all five continents and represent a range of industries: financial, health care, consumer products, computers, food, defense, high tech, automotive, heavy machinery, telecommunication, chemical, pharmaceuticals, imaging, energy and utilities. Most of these clients are from Fortune 500 companies, but a significant number are consulting firms and smaller high-tech companies.

The academy was founded in 1996 by Mr. Gilad and by Jan Herring, a former CIA officer who created Motorola Inc.'s famous Business Intelligence unit. The academy's Corporate Development office is in East Grand Rapids, Mich. Some CI companies specialize in intelligence for specific industries, such as Bolt International Inc. of Loveland, Ohio, which provides intelligence for the health care, pharmaceuticals and life-sciences industries.

ON THE MARKET

Others have designed software to manage competitive information. Strategy Software Inc.'s STRATEGY! for instance, is a PC-based competitive information management system that works on a standard Windows platform. Introduced just last summer, it enables a company to organize, summarize, analyze and share information about its competition and industry. For example:
  • Management can look up and compare specific information about competition such as their known goals, strategies, product strengths and weaknesses, for strategic planning and review;
  • Marketing staff can generate market size and market share reports;
  • Sales people can call up a competitive product comparison matrix to see the comparative strengths and weaknesses between two or more products;
  • A comprehensive set of report templates is available to help users generate concise reports that can then be viewed on screen, printed, e-mailed, faxed or converted to an html document to share with all employees on the corporate intranet.
Strategy Software president George Durtler said the software already is a hit with a variety of entities, from colleges and universities beginning to teach classes in business strategies to large corporations that need to provide a sales tool for its staff.

"The typical prospect is the Fortune 2000 company with multiple offices and generally tends to be in industries where the products and the competitive landscape changes from year to year. For example, any kind of technology business, pharmaceuticals, metals, bio- chemistry or biology kinds of technology where the stakes are high and you can't afford to fall behind," Mr. Durtler said.

The cost of the software is $7,750 for "everything you need to get going, except the PCs to run it on and the network, printers, etc.," Mr. Durtler said.

Earl L. Harvey, competitive intelligence analyst at Lucent Technologies, said the arrival of STRATEGY! was timely in an age of information overload.

"It's the classic scenario we see going on in our world today -- way too much information and very few tools to help categorize it. This is what the STRATEGY! software does so well. You're just remembering 3,000 linear facts but you'll forget 2,999 of them," he said.

Lucent, a telecommunications equipment provider, formally structured its CI department about three years ago and bought the STRATEGY! software, said Mr. Harvey, who is based in Dallas. "The market we're in is highly fractured so we wanted to look closely at what was going on."

Mr. Gilad said the industry will continue to evolve electronically. Secondary collection, or the collection of published and electronic data, will be completely and fully automated, he said, meaning CI managers will no longer need to call a central information center to do a search.

"I am on the board of an Israeli startup company that right now is developing a fully intelligent search agent that every manager will be able to acquire for a few hundred dollars a month and it will collect, intelligently, web-based information according to the manager's needs, deliver them, sift through sources and update them continually, etc. This is the future," he said.

"Business intelligence in companies will be about value-added analysis, analysis, and analysis, and managing a human source network, mostly internal, sharing knowledge across the organization - - a tremendously difficult task in a big company and a task very few American companies do well," he said.