Competitive intelligence: a real value or a buzzword?

ATWS Slide presentation from Sandra Carvao WTO...
Image by !/_PeacePlusOne via Flickr

“What competitive intelligence? We are in the middle of a crizes, we need to survive!” That may be the statement of many executives today, and it seems that competitive advantage is nothing but an elusive goal. The results of a recent McKinsey survey suggest one reason: just 53% of executives characterize their companies’ strategies as emphasizing the creation of relative advantage over competitors; the rest say their strategies are better described as matching industry best practices and delivering operational imperatives. In other words – this is nothing but a buzzword for stakeholders to make them feel safe.

What I even find more interesting is that only 33% say their companies’ strategies rest on novel data and insights not available to competitors, rather than widely available data. We are more or less used to see companies (especially the big ones) as having some “CIA” teams in charge with competitive intelligence but it seems that this is only true in some of them. What we don’t know from McKinsey’s survey is how many of those 33% are large multinationals and how many are not.

However, there may be one likely explanation of this fact that wouldn’t be affected by the size of the company or the existence of such intelligence units: the widespread availability of information and adoption of sophisticated strategy frameworks creates an impression that “everyone knows what we know and is probably analyzing the data in the same ways we are.” Yet if strategists question their ability to see something that no one else does, the question that raises is how reach are the powerful insight that are most likely to differentiate them from competitors?

Another astonishing result: only 12% of surveyed executives place novel insights in strategy among the top three influencers of financial performance. The financial crisis of 2008 and the recession that followed revealed weaknesses in many strategies and forced many companies to confront choices and trade-offs they put off in boom years. Not surprisingly, 56% report that their companies are making strategic decisions more frequently than before. This increased speed may make it difficult for some companies to analyze each decision in detail. However, a shift toward shorter planning cycles only increases the need to focus on the timeless aspects of strategy that can drive competitive advantage.

And this brings us back to our main question: is competitive intelligence a buzzword or does it bring a genuine value to the company and its financial performance?


3 thoughts on “Competitive intelligence: a real value or a buzzword?”

  1. Good Morning Liviu.

    I am very glad that you are bringing this subject for discussion.
    I have dealt with the idea of Competitive Intelligence (CI) for the last 15 years as a Global BI Director. In my opinion CI is buzz word that is used because it is a glamorous expression that the BI vendors and most consulting companies are advertising through the back doors to the office of the CFO .
    If we ask anyone from any organization to define what they mean by CI not only we get multiple definitions but more importunely the majority can not define it.
    It is very difficult to get information from a competitor about product cost business processes etc , and the thinking that goes behind of a competitor’s decision.
    What most organizations want to know from their data is what is the reality of the current position versus their customers and getting the actual results with accurate numbers from transactional fragmented source systems.

    1. Agree Peter. Many years ago we used the term business analysis. The reality is that it doesn’t matter what you call it, any analytical process needs to be robust.
      Organisations today, despite technology, are so busy strategising and proposing marketing/business development solutions, often they don’t spend the necessary time looking at their internal business.
      A litany of failures is attributed to poor risk management and analysis, often because the analytical phase is brushed over to propose the next intuiyive solution.
      This, by its very nature, discards internally generated risks such as leadership, culture, governance practice and ethics to the point where “competitive intelligence” is compromised. Business analysis through robust risk management will give you an edge, without having to create another buzz term such as “comprtitive intelligence”.
      I have coined the term “the theory of compounding consequence” where compromised attention to analysis, particularly risk analysis may be the root cause of lack of “competitive intelligence” (I am starting to dislike the term already). Get the analysis wromg and watch the sub-optimal results decend like an avalanche.
      You are also right Peter when you talk definitions. Language is so important in defining our organisation and I don’t believe any organisation benefits from buzz words with no shared definition. Think about the term “strategic”. Ask 10 different people and you will have 10 different definitions???

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