To formulate an effective corporate strategy, it's essential to understand two basic questions: What is your company doing; and what are your competitors doing?
Competitive intelligence is a field of strategic research that specialises in the collection and analysis of information about rival firms.
Competitive intelligence is also about adhering to a strict ethical code by collecting bits of information that are available either in the public domain or from other players in the marketplace.
The goal is to amass enough data to make meaningful comparisons between your firm and your competitors — and to make better-informed strategic decisions as a result.
Here's what you need to do:
The goal is to define the question before we start looking for the answers.
Developing a competitive strategy begins with a rigorous apples-to-apples evaluation of how your organisation performs relative to one or more of your rivals. Guesswork and gut feelings aren't rigorous; meaningful comparisons are possible only when you assess your own and other firms on the basis of quantitative data and thorough research.
To avoid analysis paralysis, it's essential to define what competitive questions you want to ask and what kind of research data you will need to formulate meaningful insights.
Generally speaking, most strategic problems boil down to one or more of the following questions:
- What products and services do you and your rivals offer, and what are their comparative benefits?
- What companies might launch offerings that are similar to yours?
- How significant are the resources (marketing budget, R&D budget, spin-off, or upgrade plans) your rival plans to deploy?
- How much does it cost you and your competitor to produce comparable products? Does one of you enjoy a cost advantage?
- Where do you and your rival sell products, and to which target audiences?
- How do your sales perform for different customer segments?
- What products does your rival have in the pipeline, and how will they be marketed?
- How is your rival's company organised? How well are their operations performing?
- What are your rivals' sales channels (branch, brokers, and web)? What is their sales mix, and will it change?
- Is your rival considering a joint venture or strategic partnership?
The goal is to compile relevant information about your company to provide an objective basis for comparison with others.
The quest for competitive intelligence begins under your own roof. To assess your competitor's strategic position, you first need to get a handle on your own business situation. The critical information you need — your company's financial data, marketing plans, R&D roadmaps, product plans, distribution processes, supplier relationships, productivity figures, and so on — is probably sitting around somewhere inside your building.
An often neglected but potentially valuable source of information is your own people. You need to mine internal sources for information about the competition. Jan in marketing may know Thandi in marketing over at your rival. He may also know that she was hired specifically for her ability to market to seniors, suggesting that your rival intends to concentrate on that demographic. Likewise, your customer services representative may have been told about a rival that is shaking things up with new a new technology purchase. Such seemingly little ‘tidbits’ can point to big insights.
The goal is to use publicly available data to compile a detailed picture of your competitors.
Competitive research is all about doing the legwork. Lots of it.
A fair amount of information about one’s competitors is publicly available. Examples include the company’s annual & interim financial statements, SENS statements and Analysts reports.
The important thing to remember is that every company generates a paper trail: annual returns, legal disputes, bankruptcy proceedings, reports from watchdog agencies, patent and trademark filings, and so on.
If all else fails, there's always the eyeball test i.e. physically going into a competitor’s branch and carefully observing the number of tellers or the number customers waiting to be served etc. This can be expanded to the ‘customer experience test’ where you’ll call up a competitors call centre and record your experience.
These suggestions are just a framework to get us started; where you look for answers will be determined by what kinds of questions you ask.
Competitive research demands resourcefulness and creativity.
The goal is to fill gaps in our competitor knowledge by interviewing people.
It's all about knowing what you don't know, asking a lot of questions, and paying close attention. There are many environments where people exchange information freely: Conferences, trade associations, industry chat boards, alumni networking events, and social networking sites are all venues where people maintain their professional identities and boundaries but also trade information for one reason or another.
The goal is to assemble all the bits of data into a constructive storyboard of your competitor’s activities. They say that ‘knowledge’ is gained by taking things apart and ‘wisdom’ is gained by putting things together. Here’s where you aim to get wiser about your competitors by putting all the puzzle pieces together to form a more complete picture about them.
One has always got to be mindful of one’s true objective which is to develop an informed picture of your rivals' business activities. It's tempting to wait until you have every last piece of information at your fingertips before you begin your strategic analysis. However if there’s a data piece that’s missing, make a reasonable attempt to get it, but also know when to move on.
Competitive strategy is ultimately about similarities and differences: What do you have in common with your competitors, where do you differ, and how do you maximize your strengths at the expense of your rivals' weaknesses?
