Competitive intelligence holds the answers to the most important questions for your Business. Large companies rely on intelligence in order to make and execute important business decisions. Hence decisions worth millions of dollars rely on the process of competitive intelligence.
So this is how important competitive intelligence is for a company. Moreover, it is of great utility for us to understand competitive intelligence. The textbook definition of competitive intelligence is the process of evaluating and analyzing information collected from investigations and research. This is done so that decision makers can understand the market, its trends, and competition.
Since Competitive intelligence is not a popular term, we will dive deeper into its understanding.
Competitive intelligence helps predict the future
If a company has no clue because they lost market share. Or why a major customer turned its back for their competitor, there is something seriously wrong with their operations. Competitive intelligence research is done so that a company could predict such occurring beforehand. Moreover, companies must be able to resolve such threats using the in-depth information obtained from the process.
Competitive intelligence improves return on investment
Large firms with high intelligence activities perform better. This is strongly back by research publish in the journal of business and industrial marketing carried out in India. Amongst 145 companies, the ones with advance intelligence activities had the greatest return on investment. The clear advantage is seen through statistical methods which determine the importance of Competitive Intelligence.
Competitive intelligence is more sophisticated than market research
The process of intelligence is complex. Far more detailed than a google search. Hence the process involves these steps which are simplified for better understanding. Firstly, relevant data is to be collect. This may include primary or secondary data. Secondly, this data is put together in order to create information. The essence of this step is that it converts data into information that can be use to derive strategies. Thirdly, Intelligence is from this information. An assessment is done on the information achieve from first and second steps. As we go up the steps the greater the change of strategies succeeding.
Competitive Intelligence gives you an upper hand on your competitors
Competitive Intelligence answers the most important question: What is your competitor doing? The process involves developing insights by reviewing competitors’ data, their market standings and their performances. Researchers often study competitors’ models, interview their clients, and gather information from experts. This highlights competitors’ vulnerabilities and their market assumptions. Which is use to improve and execute companies’ objectives.
Competitive Intelligence saves you from changing market trends
Take the example of Nokia. The leading mobile phone brand during the 90s and early 2000s. However after the arrival of smartphones, Nokia was knocked out of its boots. Nokia serves a strong example of a leading brand not being able to adapt to changing markets. Good Intelligence provides companies to understand the changing trends by analyzing socio-economic cultural trends. Hence saving their noses from defeat.
Competitive Intelligence is conducted on ethical grounds
The idea of such intelligence is to develop actionable answers which help companies’ objectives. However it is within the legal and ethical boundaries. For instance, practices like spying, or bribing your way to get information cannot be part of the process. Intelligence framework is done honestly, with integrity and ensuring that all laws and ethical guidelines are followed.
Competitive Intelligence uses in depth PEST analysis
Developing intelligence requires in depth understanding of the business environment. The Business environment includes Political/Legal, Economic, Social/cultural and Technological factors. These determine ease and feasibility of business. Moreover, they reveal the change in trends. These factors interact with each other to give us a complex environment which is ever changing and always evolving. This is quite similar to what you might have studied in Marketing. However, PEST analysis is fundamental to the process of generating intelligence. The Birth control pill invented in the 80s changed the socio-political and economic landscape. This is a real time example of how one factor is interlink with the others.
Absence of Intelligence is the reason why bad strategies exist
Ever wonder why, despite the training and educating MBAs, arming them with the most brilliant sense of business, still result in bad strategies. Well, the answer is simple, intelligence is absent or inadequate. There may be many reasons why intelligence is inaccurate. The data may be inadequate which results in incomplete information. However, often with complete data, information lacks analysis. This means that facts have to be understand to fit assumptions. Hence resulting in misjudgment. One thing that surely results in a bad strategy is lacking the ability to think laterally. When there is a time of change, one is force to think outside the box. So that it may open new opportunities and eliminate emerging threats.
Competitive Intelligence gives rise to innovation for newer strategies
The most popular example is the Blue Oceans strategy. This ensures strong competitive advantage by providing double value. The business focuses on product quality as well as lower pricing for the product. Hence it ensures fulfilment of customer needs and wants. This makes your product difficult to copy. Hence you develop a strong standing in the market. Blue Oceans was derive by using Intelligence for the improvement of market dominance.
Competitive analysis pushes you to ask real questions
One of the key steps to reaching Intelligence is to understand your company’s internal situation. And hence ask yourself the real questions. If product Y is failing due to competitor’s product X. Competitor is selling their product at a lower price. However, the real question is, how is the competitor able to manage their cost? Now investigations would reveal the answer. The reason one is able to ask such a question is because of the availability of intelligence.
Competitive Intelligence highlights future competition
Understanding situational analysis along with environmental analysis gives you the answer to your next big competition. If feasible a company may strategize to gain the upper hand or at least stop larger shares falling into the competitor’s lap