Introduction to Competitive Intelligence
Hilary McLellan

Satisfaction of one's curiosity is one of the greatest sources of happiness in life. Linus Pauling Look and you will find it - what is unsought will go undetected. Sophocles Even if you're on the right track, you'll get run over if you just sit there. Will Rogers . . information availability is not enough. It must be accompanied by extensive training in ways to develop the information, record it, analyse it, and act upon it. Tom Peters in Thriving on Chaos Competitive Intelligence (CI) is a systematic process that transforms random bits and pieces of data into strategic knowledge. It is information about the driving forces within the marketplace, as well as specific products and technology. It is also information external to the marketplace, such as economic, regulatory, political, and demographic influences that have an impact on the market. Janet Arensberg Competitive intelligence has nothing to do with espionage! Richard Combs & John Moorhead Competitive intelligence, quite simply, is the process of gathering information about your business rivals, and analyzing it in a way that can help your company gain competitive advantage. To some, this conjures images of shady characters sifting through trash bins, searching for carelessly discarded trade secrets or confidential financial information. But this cloak-and-dagger approach is not only unethical, it's often illegal. It's easier, legal --- and a lot more fun --- to use the Web for your competitive sleuthing. Chris Sherman, About.com Loose lips sink ships, Arrogance breeds ignorance, Knowlege creates [and is] power, Curiosity is the seed of intelligence, Wisdom is the ability to listen, learn, and act.

Competitive intelligence is about competition and intelligence. CI has to do with using intelligence to promote one's competitive position in the marketplace. The kind of intelligence that that promotes competition is not just intelligence that has to do with one's competitiors: it starts within your own organization. Competitive intelligence starts with managing and deploying knowledge systematically within one's own organization. Increasingly, knowledge is recognized as a key organizational asset, to be leveraged and exploited for competitive purposes.

In addition to looking within and maximizing the advantage of one's own assets, competitive intelligence involves looking outward. This includes not only gathering intelligence, but having the mindsets and tools --- including thoughtware as well as hardware and software --- to analyze the intelligence once it has been gathered. In her colorful book All Hat and No Cattle (1999), Chris Turner explains,

Most institutional systems are self-absorbed, selecting facts that support collective beliefs, rejecting information that challenges "the way we do things here." All hat and no cattle is this self-justifying, self-perpetuating institutional habit.

What all hat and no cattle is not is self-interrogating. It thinks it is self-critical, but it isn't. The entire environment created by all hat and no cattle limits the playing field in terms of the questions that can be asked. Much is "undiscussable," and the fact that certain things are off limits for questioning is "undiscussable." Although folks fool themselves into believing they are asking tough questions like "how are you going to measure it?" these questions offer little critical thinking or probing of the assumptions underlying the beliefs. All hat and no cattle perpetuates the status quo.

Xerox fell prey to all hat and no cattle in the late seventies and early eighties. Having had a lengthy market monopoly, the mindset became "We're Xerox, and customers will buy from us no matter what kind of machines we make and what price we charge." Then when the market went Dixie because the Japanese could sell equipment cheaper than Xerox could manufacture it, the caca hit the fan. People at Xerox woke up, and since then, the mind-set has become "We've got to get better and better and cheaper if we are to survive." This is not to say that the all-hat-and-no-cattle attitude does not exist at Xerox. It surely does, but not in connection with the need for marketplace vigilance and continuous improvement.

Everyone agrees that we are living in a world of increasing complexity, information overload, and technological revolution. There is broad agreement that to be successful in the future, institutions must rethink themselves. But beyond the talk, there is little progress, because change comes with doing things differently --- and doing things differently starts with thinking differently. (pp. 7-8)

Xerox is a very interesting case study for competitive intelligence. Many of the foundation technologies of the digital age --- the mouse, the graphic user interface, the personal computer --- were invented at the Xerox Palo Alto Research Center in during the 1970s, but the company did not have the mindset to be able to capitalize on these innovations. Xerox could not see how these technological innovations related to its core business as a copier company with a monopoly in that industry. So it went to Apple Computer, led by Steve Jobs, to recognize the competitive value of these technologies and to capitalize upon them. (Xerox is collecting some royalties, but Apple Computer is making the lion's share of the profit: Mindset made a huge difference; this is well demonstrated by how well prepared Steve Jobs was to see and capitalize on the innovations he found when he made his legendary visit to Xerox PARC.) Xerox PARC continues to pursue research and development designed to enhance business comptetiveness. This R&D focuses on technology and on processes. For example, Xerox PARC has brought in anthropologists to look at work processes from a different perspective (Suchman, 1987, Orr,1996). More recently, Xerox PARC has brought in a bunch of techno-savvy kids to challenge "the assumptions of some of the world's most free-thinking researchers." (Weil,1997) These are only a few of the many examples of R&D at Xerox PARC that have implications for competitive intelligence.

In their Overview of Competitive Intelligence, Combs & Moorhead (1992) present some other very interesting case studies that show the scope of analysis that competitive intelligence entails. A new industry may be about to break onto the scene that will impact an industry --- companies that are only gathering intelligence concerning traditional competitors will be caught off guard --- all hat and no cattle thinking.

Burwell (1999) reports that there are several reasons to deploy competitive intelligence, including:

1. Use CI to predict a competitor's next moves.
2. Use CI to turn a weakness into an advantage.
3. Use CI to become aware of change as it happens, before it's too late to act.
4. Use CI to gain competitive advantage.

Similarly, Combs & Moorhead (1992) report that some common goals of competitive intelligence include:

1. Detecting competitive threats
2. Eliminating or lessening surprises
3. Enhancing competitive advantage by lessening reaction time
4. Finding new opportunities

Competitive intelligence has to do with looking inward to optimize internal intelligence. It also has to do with looking outward at competitors and potential competitors, whoever they might be. Competitive intelligence has to do with gathering information and monitoring trends but it also has to do with developing the kind of strategic approaches to thinking and analysis that moves beyond conventional wisdom.

In this class we will look at all of these issues. We will also be examining a growing body of material concerning competitive intelligence on the World Wide Web including articles, databases, and more.

Intelligence Tips Business cycles are moving faster than ever, and so it's more important than ever to keep an eye on your competition. Here are some helpful pointers by Gina Imperato from Fast Company issue 14, page 269 He's Got Some Counterintelligence Jan P. Herring, 60, has compiled a thick dossier on tracking the competition. he spent 20 years with the CIA. But he left the Company in 1983 to join a company - Motorola, where he established the first business-intelligence system based on national-security principles. In 1996, he started his own firm, Herring & Associates, based in Hartford, Connecticut. Herring isn't very enthusiastic about the Web as a medium for tracking the competition. "People's expectations about what they can find on the Internet are too high," he insists. He shared his counterintelligence with Fast Company. 1. The best things in life aren't free. "Free information is usually secondary information. And the problem with secondary information is that everyone else has access to it. It doesn't give you an advantage. You won't gain an advantage over other people unless you spend more time and money than they do. That means subscribing to syndicated services and databases - and, in some cases, paying people to work those databases. But ultimately, you want information that can't be found in any database." 2. Human intelligence beats machine intelligence. "Most information never gets written down - it's just floating in people's heads. The only way to access that information is to talk to people. That's why the most valuable network is the human network. If you find an interesting paper on the Web, don't just download it - call the author after you read it. Attending conferences is still the best way to make connections and gather intelligence. You'll hear things that never make it onto the Net. And remember: The best information on your competitors comes from your customers." 3. Group intelligence beats individual intelligence. "Tracking the competition is everyone's job. The more closely people work together, the better they do. For example, companies often send 15 or 20 people to a big trade show. But how often do those people bother to compare notes? Companies should do what's called 'quarterbacking.' At several points during the show, get into a huddle and ask: What have we learned? What else do we need to know? Eventually that quarterbacking mentality becomes an everyday thing." Reprinted from: http://www.fastcompany.com/online/14/intelligencetips.html.

References

Burwell, Helen P. (1999). Online Competitive Intelligence: Increase Your Profits Using Cyber-Intelligence. Tempe, AZ: Facts on Demand Press.
Combs, Richard E., & Moorhead, John D. (1992). The Competitive Intelligence Handbook. Lanham, MD: Scarecrow Press. Chapter One: An Overview of Competitive Intelligence is available online.
Gladwell, Malcolm. (2000). The Tipping Point: How Little Things Can Make a Big Difference. Boston: Little Brown.
Kahaner, Larry. (1996). Competitive Intelligence. New York: Simom and Schuster.
Miller, Jerry P., and the Business Intelligence Braintrust. (2000). Millenium Intelligence: Understanding and Conducting Competitive Intelligence in the Digital Age. Medford, NJ: Cyberage Books.
Orr, Julian E. (1996). Talking about Machines: An Ethnography of a Modern Job. Ithaca, NY: Cornell University Press.
Sherman, Chris. Competitive Intelligence On The Web. About.com.
Suchman, Lucy A. (1987). Plans and Situated Actions: The Problem of Human-Machine Communication. New York: Cambridge University Press.
Turner, Chris. (1999). All Hat and No Cattle. Cambridge, MA: Perseus Books.
Weil. Elizabeth. (1997). Brainstorming the Future. Fast Company.