DIY Detection: Competitive Intelligence for SMEs
Wednesday, 1st August 2007
Gaining a competitive advantage presents an enormous challenge for small and medium enterprises (SMEs). Usually they will have many competitors offering similar products or services and operating in the same market and locale. And competing on price is not the most effective technique. Furthermore, they have limited resources. If, for instance, a large multinational corporation fails to read the market correctly it can often buy its way out of the problem. A small business making a similar mistake will probably fail completely. In some ways, then, involvement in competitive intelligence is much more important for a small business than it is for a large one.
Obviously, if you have an SME and wish to compete effectively, you should aim to offer something different. In order to do that, you must know as much as possible about your business environment. In other words, you need to find out what is going on, decide what to do about it and take action before your competitors. That, very simply, is competitive intelligence (CI).
You will have excuses for why this can't be done. You will almost certainly claim that you simply can't afford to hire qualified people to conduct intelligence activities, or engage consultants to do the job for you. But, think carefully. You already have people collecting information from many and varied sources - that's what people do; and they know your business better than anyone else. If you can persuade some of your colleagues to tell one nominated individual about significant items of information, you will have the basis for an intelligence operation.
What is CI for SMEs?
There are many definitions of intelligence, but this quotation from Tom Stonier in "Beyond Information: The Natural History of Intelligence" is particularly apt:
"Intelligence is ... a property of any information-processing system which is able to analyse its environment, then, on the basis of that analysis, respond in a manner which enhances its chances of survival."
Intelligence operations not only improve your chances of survival, they are extremely effective, carry little risk, are difficult to detect and are almost impossible to prevent. Yet they can (and should) be conducted both legally and ethically. The primary role of intelligence is strategic early warning; making a significant contribution to your decision making and long-term planning. But, used with flair and imagination, CI will also help you to:
- Identify business opportunities and potential new markets
- Anticipate and manage risk
- Take action before your competitors
- Be more innovative.
What should you look for?
Some major differences between intelligence and traditional research are that:
- Intelligence usually results from change, the unusual or the
- In intelligence operations, timing is crucial if decisions and
strategies are to succeed - speedy response invariably gives you an
- People are the most important sources of intelligence.
In other words, routine, repetitive information is of little or no value for intelligence purposes. The sort of information that will put you ahead includes rumour, suggestion, opinion, gossip, hints and speculation. Because it is usually the first evidence of impending change, such soft information represents the more colourful and critical parts of the intelligence puzzle. Important events to look for include:
- Acquisitions, mergers, joint ventures and other forms of alliance
- Expansion or relocation of plant or premises
- Resignation or recruitment of senior or specialist staff, or of
several people at the same time
- Developing technologies or techniques that may be adapted or adopted
to your advantage
- Introduction of new regulations or legislation.
Where do you find intelligence?
Surveys show that most SMEs are well aware of some of the more valuable information sources. These include:
- The mass media (including newspapers, business magazines, television
and the Internet)
- Trade magazines and journals
- External events, especially trade shows and exhibitions.
Mass media is widely used by SMEs. Unfortunately, most managers simply scan the news items in which they are interested and ignore the really valuable content. But a more thorough examination of certain sections may prove to be of more practical value. These might include such things as:
- Competitors' job vacancies
- Promotional material
- Contact details of individuals who may be helpful
- The movement or promotion of people (especially those of your competitors)
- Requests for tenders
- Introduction of new competitor products
- Notification of imminent events
- Relevant developments in technology.
Bear in mind, too, that local newspapers covering the areas where your rivals are located usually present a much more comprehensive treatment than national newspapers.
The Internet is currently the most popular medium for gathering information; it has enormous advantages. At the same time, it calls for a minimum level of expertise if it is to be effective. For instance, you need to be able to find specific information, and that calls for familiarity with search engines and sophisticated retrieval techniques. With very few exceptions, standards for citing and classifying information are poor, unenforceable or non-existent; and there is a distinct absence of identifying information (metadata). Content often lacks depth and substance, and it is almost impossible to distinguish between fact, editorial, advertising and news. But be aware that many of these disadvantages will be overcome with time.
Company websites can be very rewarding, especially those of your competitors. Although very few companies intend to reveal their secrets, they do want the world to know about them and must, therefore, publish certain aspects of their operations and administration. With a bit of imagination you can often trace valuable personal information which will help you to find individuals with specific expertise or with access to other sources of information. Quite often, people can be persuaded (through the use of elicitation techniques) to impart some of that information.
Trade magazines are highly popular; they are readily available, easily circulated and often provide clues about competitors' intentions and strategies. In many companies, however, circulation of trade magazines (even today) is achieved by attaching a distribution list consisting of an annotated slip of paper. This retards the whole process. Instead, copy the contents pages of periodicals to which you subscribe, and distribute these pages to interested parties who can then choose which articles they wish to receive. This simple measure ensures speedy circulation, keeps your original in good condition, and helps you to evaluate the most useful publications and modify your subscriptions (if people never ask for articles, is it worth subscribing?). Of even greater importance, it can provide you with a record of individual interests or activities, thus identifying managers' specific information needs, and facilitating the accurate and rapid distribution of other information.
To ensure that nothing of importance is missed you should allocate a minder to each periodical. That individual's function is to scan the whole publication for additional items that may be of interest (see the paragraph on Mass media above).
Networking is a highly popular means for gathering information of value. Networks are ideal for meeting other people and for sharing ideas. They offer an informal medium for the exchange of information between individuals who have grouped together for some common purpose. They are successful because they allow people to socialise and to become known, and people feel free to offer advice or exchange information when they don't feel threatened. Note, too, that small networks are usually more effective than large ones; they allow for far more effective interaction between individuals, and they encourage the more reticent to make a contribution. Aim to participate in more than one network to cover different aspects of your business, profession or industry.
External events are an extension of your networking activities and include visits to other companies or countries, and attendance at trade shows, seminars or conferences. Whatever their nature, you need to plan well in advance. Attendees should be properly briefed before an event, and should debrief after it. In many cases, the briefing should provide everyone with an information kit, which may include:
- Details of people known to be attending, especially competitors
- Copies of pertinent news items, media releases, articles,
advertisements and other promotional material
- A marked map or diagram of the venue, showing the location of
competitors' displays, or other areas of interest
- An outline of specific information needs that have been decided in
One major key to success for SMEs lies with relationships, with knowing who to contact in certain circumstances, and to seek help, advice or other soft information. Therefore, at every networking opportunity you should extract maximum value by talking to people and exchanging business cards. But simply arranging your cards alphabetically by name (of individual or company), as many do, offers a very inferior tool. Instead, use the details on these cards, and the accompanying notes (see below), to compile a contacts database (also known as a knowledge map or expertise database), an absolutely essential intelligence tool.
In order to extract maximum value, your database records should incorporate personal information that may subsequently be used as disarmers. These are an outward manifestation of your interest in that individual, and will encourage him or her to provide information that would not otherwise be revealed. The use of disarmers and flattery, together with other sophisticated conversational techniques, are collectively known as elicitation. The importance of such relationships and techniques - and of the preference for soft information - is implied by Ben Gilad in the article "My source is better than your source", from Competitive Intelligence Review, when he tells us that: 'Only human sources can provide commentary, opinion, feelings, intuition, emotions and commitment.'
After having collected business cards from those people you meet (and having made notes as soon as possible afterwards) you need to record the details in your database or knowledge map. In addition to the obvious fields of individual name, company name, title and contact details, other items of importance include:
- The date and venue of the occasion, and the circumstances under
which you met
- Personal details (eg, names of spouse and children, date of birth,
interests and hobbies)
- Subject expertise (probably the most important, yet frequently
- Activities and projects in which the individual is involved
- Membership of any influential groups or committees.
As soon as possible after any event, you should debrief decision makers and the intelligence manager concerning:
- What was seen or done
- What was accomplished
- Any lessons learned, impressions gained, and mistakes made
- Potential business opportunities or new markets
- Possible threats
- Any action required - and by whom
- Names and contact details of potentially useful individuals.
Every opportunity should be taken to hold company briefings and debriefings; they are extremely useful for learning, for sharing information, and for making people aware of company activities. Try to arrange regular briefings covering selected topics, such as those listed under: What should you look for? You may wish to include such items as:
- Profiles of rival companies and their key people
- Market-related activities
- Proposed new areas of activity (eg, the introduction of new products
Analysis and reporting
The collected information will be of no value unless it is analysed, reported, and acted upon. It is worth noting that the most powerful analytical tools - in any business - are:
- A thorough knowledge of the industry and the environment in
which you operate
- An awareness of your critical success factors, and those of
- A powerful imagination
- A great deal of commonsense.
Any significant items of information should be passed to decision makers for prompt and decisive action. To that end, some very effective analysis may be carried out simply by arranging a meeting with a few smart colleagues and answering three critical questions, which are reflected in your intelligence reports or briefings. These are:
- What has happened (or is about to happen) (What?)
- What are the ramifications or possible consequences (So what?)
- What actions are suggested or recommended (Now what?).
In that context, Bill Fiora tells us in "The Seven deadly sins of CI" from Competitive Intelligence magazine: ' ... some of the best analysis I have seen was done without using any of the most commonly taught analysis techniques. In most cases, all you need is a whiteboard, a marker, and a few good brains.'
Establishing an intelligence operation
Setting up a successful and effective intelligence operation can take a great deal of time, effort and expertise. But, essentially, you need to nominate one individual to be responsible for intelligence activities, preferably a volunteer with considerable experience in the industry, and at as senior a level as possible. Publicise the identity of that person throughout the firm. This will provide a contact for those people who are itching to report something of significance. In most SMEs, the chosen individual will not be required to devote a great deal of time to this activity, but it does mean that he or she will receive all those parts of the puzzle that have been reported, thus simplifying the task.
Managers have a part to play in making intelligence activities successful. You already spend a great deal of time talking with others (at meetings, on the golf course, at informal parties, by networking and at other business functions). It is vital that you continue to do so. It enables you to collect information, stay in touch and be aware of what is going on. It is essential, however, that you keep your intelligence manager informed of any significant change in your business environment; it can add some critical pieces to the total picture.
People should be free to approach you - interruptions usually mean intelligence. You can expect to be pestered about your current thoughts. If you are to extract maximum benefit from your intelligence activities, your intelligence manager needs to know your aspirations, and what you are thinking. Invite specific members of staff to management meetings where their expertise relates to the items to be discussed, even though their contribution may simply be in the form of a preliminary briefing.
Bear in mind that SMEs' most important advantage over larger companies is the fact that internal communication is fluid, flexible and fast. This means that information can be gathered, analysed and reported quickly; to be followed by prompt and decisive action.
Invest in appropriate training. Basic training about the many sources of information and its collection should be arranged for as many people as possible. Those individuals selected for direct involvement in CI should receive more intensive training covering fundamental analytical and reporting techniques. It is widely recognised that inadequate training is, by far, the most common reason why intelligence operations fail to meet expectations.
The most suitable people for business intelligence operations are your own employees; they know your business best. Although it will take time, setting up an intelligence function does not have to be expensive or glamorous. Even some fairly cheap and simple measures can be very effective. But if you don't get started, you will continue to blunder along in the dark, not knowing where you are going, what your competitors are doing or what business opportunities are passing you by.
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By Vernon Prior
Over the past 20 years Vernon Prior (operating as Prior Knowledge) has presented training programmes in competitive intelligence (CI) and knowledge management (KM) in Australia, Brazil, Brunei, Hong Kong, India, Japan, Malaysia, New Zealand, the Philippines, Singapore, Thailand, and the United Arab Emirates.
Vernon has a post-graduate Diploma in Librarianship and Information Science (DipLib), is a Fellow of the Society of Competitive Intelligence Professionals (FSCIP), and Founder of the Society of Knowledge and Competitive Intelligence Professionals Australia (SCIPAust).
His comprehensive glossary of terms used in CI and KM is widely available online, including at the following sites: www.knowledgeboard.com, www.markintell.com, www.adler-ls.com, www.quantumiii.co.uk, www.quantum3.co.za, www.mindshifts.com.au, www.intellonet.com, www.scip.org, and www.swisscia.org.
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