"Visions of World Benefit & Global Responsibility: Perspectives of McGill Students

Thursday, July 26, 2007

Competitive Intelligence

A few years ago, I was employed at the marketing department of Coca Cola. I was extremely upset when I got laid-off, given that I was absolutely loyal to the company. Fortunately, I got an interview with its direct competitor, Pepsi. At the interview, they asked me about my work with my former employer and, without realizing, I told them every single marketing strategy Coca Cola had planned for the next year. At the end of the interview, they told me “We’re looking for someone more discrete and loyal, so we’re not hiring you. Thank you for your time.” Ouch!

Alright, I lied… I never actually worked at Coca Cola and was never interviewed by Pepsi. However, my little white lie was simply an attempt to present you with a perfect example of how companies gather competitive intelligence.

The information revolution of the late 90s and the new millennium has proven Darwin’s “survival of the fittest” theory. Technology has allowed information to benefit those companies that are quick and perceptive enough to take advantage of this paradigm shift, allowing them to become industry leaders. The rest become marginalized in their old habits of neglecting the market and, in this case, particularly the competition. But, why listen to the market? Because everyone else is doing it.

Competitive intelligence, as the name itself reveals, relates to information about competitors. Its main end is creating an intelligence system with the objective of helping management evaluate competitors, so to become more effective and efficient in the market and earn more. Such intelligence consists of the analysis of information and transforms into intelligence for decision-making when it has repercussions for the organization. For instance, when a company learns that a direct competitor will release a product similar to the company’s, but with an additional 15% efficiency, the company must act immediately upon these news, as it will likely have heavy consequences for the company.

Competitive intelligence is one of the currently most coveted areas in marketing and strategy. Every year, more and more companies seek competitive intelligence advise because it allows managers to predict changes in the commercial relationships, identify market opportunities, protect themselves against threats, predict the competition’s strategy, discover new or potential competitors, get informed on successes and failures of other companies, determine how new technologies will affect their company and be informed about governmental regulations that influence the competition. Thus, competitive intelligence transforms into a long term strategic asset for the organization

The most interesting analogy we can formulate about competitive intelligence is that analysts in the field often act as business detectives. They attain inferences based on their obtained information, even if some of the data might be incomplete or hidden. They determine which information is important based on traces, integrate data according to observations and intuition and perform inferences on the competition’s plans.

A word of caution… competitive intelligence is not synonymous with industrial espionage (the attempt to inform oneself about the competition’s commercial secrets through illegal and unethical methods). While competitive intelligence is legal and considered ethical, industrial espionage is not.

It is essential to mention that the use of competitive intelligence is not exclusively for large corporations, such as Pepsi and Coca Cola. In the age of information, even the smallest, most specialized company needs to continuously learn about the market and its competition. With innovation, the need for information is increasing on a daily basis, leaving companies with the need to gather competitive intelligence. With all sincerity, if a company decides otherwise, its chances of surviving in this cruel, global, interconnected world are slim to none.