Competitive Strategy Report August 20, 2012

newsletter_header

As a group, CI professionals are a curious lot who find connections where others see randomness. This tends to produce serendipitous discoveries of linkages where CI provides the glue.

The story of IBM’s turnaround in the 1990’s highlights the dangers of not leveraging CI, even when it has been collected and distributed in the company. Excerpted from a new book (The Measure of a Nation: How to Regain America’s Competitive Edge and Boost Our Global Standing),the story provides parallels between IBM’s ability to use CI to re-focus its mission with a national need to apply the same commercial CI skills,
analysis, and policy direction to re-focus national policy. This is a new and different use of competitive intelligence at the national level, where intelligence is more often associated with national security and defense. Yet the tools are similar and the need to apply the learning to policy is equally relevant.

That’s where our second article is linked to the first. That CI is a common management decision support tool is not news. What is a bit more interesting is the author’s view that the leading CI firms are in the U.S.A. This is enhanced by the author’s statement that companies in the “Anglo-Saxon” (read “English-speaking”) regions are more advanced in the use of CI. This should result in some level of competitive advantage, and in some cases it does. However, having a strong CI unit does not always translate into better strategy and insight. As the author points out, too often CI only gets attention during times of crisis and ignored or downplayed when times are good. CI also needs to keep up with the times, adapting collection strategies that leverage new technology while maintaining strict ethical guides.

Nation states have access to depths of intelligence that a CI professional can only dream of. When competing on a global level, it is essential to leverage the information you obtain ethically and legally and be alert to competitors who may not follow similar ethical boundaries.

– Erik Glitman, CEO, Fletcher/CSI

America Needs to Adopt IBM’s Turnaround Story

Howard Steven Friedman, July 21, 2012, Huffington Post

IBM is a perfect example of just what competitive intelligence can do. The technology giant had dominated its industry for decades and was the most admired and scientifically innovative company on the planet. But during the 1980s, IBM faltered, losing its lead in the personal computer hardware and software markets as it outsourced key elements to competitors like Intel and Microsoft. Those competitors soon became mega-companies, while IBM slipped. By the end of the decade, IBM was bloated, overstaffed, and overinvested in low-margin businesses; revenue had peaked in 1990 and was declining rapidly while profit margins and the stock price were plummeting.

So what did IBM do? It studied the competitive landscape and immediately learned that its expenses were much higher than other companies in its industry. Further analysis compared IBM to the strengths and weaknesses of its competitors and drew lessons from the comparison. IBM then reinvented itself by developing a strategy to leverage its advantages and cut away many of the practices, expenses, and unproductive assets that were dragging it down. The rebirth was wildly successful. Today IBM is again a master of innovation, with more patents per year than any other American company across nearly twenty consecutive years. It is focused on high-margin software and services, and it boasts greater annual revenue than Microsoft, Apple, Intel, Amazon, or Google.

If America were a corporation, it would today be the equivalent of IBM in the early 1990s — an industry giant that’s failing to keep up with the times. Once a world leader, it is now in effect facing bankruptcy, lagging behind in major market segments like health, safety, education, democracy, even equality. Around the globe, the technology of democracy has evolved, health care systems have been developed, and the world has changed greatly since World War II, yet the United States still operates with the heavy footprints of its founding fathers.