One of the most well-known statements by Sun Tzu is, “Know the enemy and know yourself; in a hundred battles you will never be in peril.” What Sun Tzu stated is true not only for warfare but for business as well; for a company to succeed it is critical to have excellent competitive intelligence capability. If a company is large enough it will often have its own competitive intelligence (CI) department. As I’ve spoken and written about before there are several key attributes a solid CI organization should have;
- Deep Knowledge about the Competition: The CI team needs to be able to tell the business not only what competitors’ strengths and weaknesses are but what their assumptions are about the industry, their goals for their business, and how they plan to achieve them. The CI team needs to get inside the heads of the competition. Only in this way will it be possible to project what a competitor will do next or how a competitor may react to your market moves.
- Finding Weaknesses as well as Strengths: Often times a company will only see a competitor’s strengths. This is even more true when the company is not number one in its industry. However, Sun Tzu highlighted that it is critical to focus on the opponent’s weaknesses to achieve success, stating, “Now an army may be likened to water, for just as flowing water avoids the heights and hastens to the lowlands, so an army avoids strength and strikes weakness.” The CI team needs to help the company focus the firm’s strategy on highly vulnerable and critical weaknesses of the competition so successful programs can take advantage of them.
- “Wargaming” Capability: Business history is replete with examples of companies launching attacks on competitors that backfired, with the competition coming back hard and soundly defeating the initiator of the attack. Before launching an attack a company needs to “wargame” what might happen if they attack a competitor; will the competitor respond vigorously? Or will they ignore it? How will everything play out as both firms counter-attack one another? Is there a more subtle way to defeat the competition that will not draw a massive response? Only in this way can major mistakes be avoided and success attained.
- Strong Executive Sponsorship: Sun Tzu stated that “Of all those in the army close to the commander none is more intimate than the secret agent.” While CI professionals are not James Bond wannabes they do provide the critical intelligence executives rely on. Unless the CI team has the strong support of executives (and wins it by providing insightful and timely information) the intelligence they do collect will be wasted.
Below is self-test that will provide a means to analyze the strength of your firm’s competitive intelligence capabilities. Keep track of your “Yes” and “No” answers and total them at the end for your score.
- We have a formal intelligence-gathering and analysis process.
- We have a good understanding of our competitions’ offerings and how they bring them to market.
- We know how well our competitors are doing financially, their business model, revenue sources and cost structure.
- We have a deep understanding of the capabilities of our competitors – what they can and can’t do.
- We know the goals of our competitors and which markets are most important to them.
- We know their strategy and major plans to achieve success.
- We know the mindset of the executives of our top competitors; how they view the industry, the degree of risk they are willing to take, and the priority of their business goals.
- We know how our top competitors will respond in key situations, based on knowing their mindset and how they’ve reacted in the past.
- We regularly wargame our strategies vs. the competition, role-playing different scenarios that may occur so we can adjust our strategy and tactics accordingly.
- Competitive intelligence and analysis significantly influences the direction of our strategy and plans.
- If you answered “Yes” to 0-3 questions you have a long way to go. You have only surface knowledge of your competitors and what little you have is not actionable. You may be in for a surprise from the competition.
- If you answered “Yes” to 4-7 questions you are probably equal to or slightly ahead of most of your competitors. According to one survey about 40% of large and mid-size firms have no formal intelligence gathering process. However, there is still much room for improvement.
- If you answered “Yes” to 8-10 questions you are practicing leading-edge competitive intelligence. Congratulations!