Tl;DR Competitive Intelligence is the practice of gathering information about the external business environment, including consumers, the market, and competitors, to formulate business strategies and tactics.
What is Competitive Intelligence?
According to Karl Swope, a private investigator in Trustify’s network, competitive intelligence (CI) is “a highly complex undertaking... the intelligence process involves not only the collection of data, but the interpretation of the data… to use as a strategic business component.” In simpler terms, CI is strategic information gathering that allows a company to gain a competitive edge in its respective market.
The discipline involves a variety of tactics. According to Swope, “investigations could encompass due diligence on a company or person in the company, analysis of emerging companies, or mergers or acquisitions.” Essentially, CI involves any and all methods necessary to gather the information that the client needs to achieve the goals of their firm.
To compile a complete picture of the market, CI can be classified into one of two types: tactical or strategic.
- Tactical intelligence: This is more short-term. It focuses on the best ways for a business to perform tasks such as capturing a larger share of the market, or increasing overall revenue.
- Strategic intelligence: The purpose of strategic intelligence is to inform decisions over the long-term. This type of intelligence gathering identifies broader issues, such as possible risks or opportunities that may be presented to the company.
Both types of information play an important role in the overall creation of a business strategy, so one is not better or more useful than the other.
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What Makes CI Successful?
Successful CI, according to Swope, depends on “the investigator and client (having) clearly defined goals in terms of what types of information is sought, and clear understanding of the company and industry from a local and global perspective.” This clear mutual understanding makes sure that the investigation actually serves the business goals of the client and provides new, actionable information. “Ethical parameters must also be clearly defined,” says Swope. “Any ‘gray’ area must be discussed, and transparency is essential.”
The main aspects of successful corporate intelligence gathering are:
- Speed: Whether a company uses an in-house or external team, they must be able to react to changes in priorities quickly and to gather information in time for senior staff to act
- Accuracy: CI informs business strategy and investment decisions with serious financial consequences. Competitive intelligence must be accurate if the business is to make good decisions.
- Breadth: Some competitive intelligence operations are limited in scope to estimating a competitor’s sales, or some other niche data set. Competitive intelligence has to be able to incorporate digital research, interviews, market analysis, and more to get the full picture.
- Ethics: Competitive intelligence must be gathered ethically. If it is not, it can reflect badly on the firm collecting it, on the client requesting it, and can lead to legal action.
How is CI Gathered?
Much of the information gathered for CI can be obtained through public records. “A simple rule that I adhere to is that 90% of successful CI investigations information is available from public sources—the remaining 10% of the success lies in the synthesis of data into useful intelligence,” says Swope.
Common sources of intelligence gathering that Swope and other investigators use includes:
- Market analysis: Analyzing the marketplace is a critical aspect of any CI operation. More than just looking at competitors, CI should also look at potential changes in laws and regulations, forthcoming mergers and acquisitions, changes in consumer tastes, volatility in the prices of raw materials, and more.
- Government records: Government records are a trove of data for private investigators and market intelligence gatherers. If you know how to navigate them, you can find information about business relationships, new products, business finances, lobbying activities, and more.
- Industry Standard Databases: Specialized databases available to investigators allow them to research people and businesses in detail, including their financial relationships, associates, and much more.
- Trade shows: By observing competitors, analyzing products, and interviewing people, investigators can gather information about competitors
- News outlets: Monitoring news outlets can keep you abreast of market shifts.
- Customer interviews: Interviewing customers can reveal changing tastes and preferences.
- Industry conferences: As with trade shows, industry conferences are an excellent venue to gather information about competitors.
- Stakeholder information: Semi-private information available about stockholders (or even to stockholders) can be accessed by investigators, giving insight into the financial decisions and relationships of competitors.
Why is CI So Important?
Due to the constantly evolving nature of the global marketplace, in part driven by e-commerce, the internet, global trade, and startups, businesses of all types cannot afford to rest on their laurels. Consumers and businesses now have seemingly limitless options when it comes to selecting a product or service. To survive, every company must gather information about the marketplace and their competitors to formulate a competitive strategy.
Many organizations also use CI to gauge the effectiveness of their branding as well as the efficacy of direct competitors' branding and messaging. If utilized skillfully, CI offers an excellent means of studying both the positive and negative aspects of a competitor's actions.
Most often, useful information about the following areas can be obtained:
- RFP and bidding processes
- Product selection
- Website or architectural design
- Content strategy and SEO marketing
- Stock market performance
What's The Difference Between CI and "Corporate Espionage"?
On its surface, competitive intelligence may sound like a stealthy, cloak-and-dagger activity, but the truth is far more mundane than that. As Swope pointed out, most CI gathering actually involves public information.
Espionage, on the other hand, is a dangerous activity that can leave you legally liable. “Illegal activities should not be pursued under any circumstances,” Swope warns. Typical CI is done through ethical work and analysis, whereas espionage uses illegal methods to gain an unfair advantage over competitors. “Examples of such actions includes theft, bribery, blackmail, trespassing, eavesdropping or recording…(and so on),” says Swope. In fact, Swope warns that converting trade secrets of any type to benefit of yourself at the expense of the secret’s owner is also illegal under the Economic Espionage Act of 1996.
If you suspect that your business has been the victim of industrial espionage, Trustify also offers investigation services to identify the culprits.
Skillful competitive intelligence gathering allows companies to:
- Assess risks and opportunities before they become apparent
- Make tactical and strategic decisions regarding business strategy
- Better understand the state of the industry and marketplace
- Learn from the strengths and weaknesses of direct competitors
Utilizing specific intelligence gathering strategies is an excellent way to gain a definitive edge over competitors.