Competitive intelligence (CI) at its core is about creating and maintaining competitive advantage. Michael Porter describes the sources of competitive advantage as cost advantage (the ability to deliver the product at a lower cost than other companies) or differentiation advantage (the ability to deliver a better product for the same cost). For CI, creating differentiated advantage hinges on providing intelligence that identifies threats or opportunities missed by others. In this post, we’ll cover the ways that CI units support competitive advantage and how to create differentiated advantage.
Creating Effective CI:
Effective CI starts with a deep understanding of the company’s strategic goals and objectives. Using the strategy as a guide, CI units gather data on the competitive environment. Data covers areas such as:
- The market (competitors, customers, suppliers, and other participants)
- Regulatory issues of all types
- Technology developments within the industry ecosystem
- Social trends and buyer preferences
- Economic issues at local, national, and international levels
The broad range of data there is to cover requires a substantial effort. Typically, this is done using secondary search and aggregation tools. Recent technology developments have increased the efficiency and the accuracy of these tools. CI professionals use these tools to filter information from data faster than most “manual” methods. Adding in artificial intelligence (AI) tools helps CI professionals find connections within the data in less time. Improvements in data collection speed and analysis can free the CI professionals to spend more time building stakeholder engagement and promoting competitive awareness.
Speed can be a competitive advantage, allowing decision makers to react faster to opportunities and market shifts. The speed advantage varies by industry. In the case of stock trading and financial transactions, learning about a competitor’s actions even seconds before anyone else does creates a big advantage. When there are long lead times in the industry, speed creates much less of an advantage.
True competitive advantage comes from a cost or differentiation advantage according to Porter. In the case of CI, differentiation advantage comes from access to information that competitors don’t have. There are three ways to gain information advantage.
- First and most important is access to primary-sourced information. If all the competitors rely on secondary data and AI processing, it is safe to assume that they are working off the same information set. They may use different platforms to collect and analyze, but anyone using the same or similar tools will generate the same results. Primary sourced information is based on specific requirements and is produced exclusively for one CI unit.
- The second is access to internal information. No ethical competitor, even one using ethical primary research, can match an employee’s intimate knowledge of their own company, including strategic plans and new product developments
- Third is counter-CI tools. All companies leak information, often in support of key objectives and planned marketing programs. Counter-CI engages and educates employees to identify CI collection efforts and block unauthorized information flows
Effective CI advantage is gained through differentiated information, supporting decision makers with unduplicated levels of insight. There is still no comparison between the level of insights offered through ethical and legal primary sourced information backed by secondary source insights. Relying on secondary data and AI alone produces results that any competitor with similar data access gets. Using the same data and analysis as competitors does not create CI differentiation.
Fletcher/CSI has teamed up with Contify and Wide Narrow to provide clients with the tools to create a fully differentiated CI advantage. If you would like to learn more about how to create differentiated CI, please feel free to contact us.
-Erik Glitman, CEO Fletcher/CSI