Implementing a Competitive Intelligence Function
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- Lester Lloyd
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1 A competitive intelligence function should distill all available information to the most salient and actionable points to enable key decisionmakers to act faster, with greater confidence. systematic methodology, providing a step-by-step overview of points, issues, and tips to consider when deciding how to implement an CI function in your organization. A competitive intelligence (CI) functionality provides a mechanism to make sense of our information-driven global economy. In the CI process, a company collects market information on competitors, products, and consumers before applying analysis to identify key strategic implications. These insights not only help your executives make better-informed business decisions, but also have a positive impact on general operations. Organizations with internal CI functions outperform peers without similar capabilities, according to nearly two decades of empirical evidence. A 2013 study found that a company with a successful, proactive CI process will respond quicker and more wisely to market conditions than competitors (Ezigbo and Uduji, 2013), and a 2012 survey found that CI benefits innovation, cost containment, and revenue (Nasri, 2012). The road to establishing an internal CI function can be challenging. Likely hurdles include an inability to systematically recognize or access intelligence; geographic distance and/or language barriers; technological limitations; ill-defined areas of expertise; internal conflicts; lackluster incentives to employees; inadequate training/mentoring programs; and culture barriers (Simmons, 2013). Nevertheless, it is possible to leverage clear strategic vision and a well-articulated roadmap to create a world-class internal CI function. The eight steps listed below integrate five key underlying tenets of a successful CI function people, processes, structure, technology, and culture in a 1
2 Outline objectives and assess existing CI capabilities. Setting research objectives and assessing current strengths and weaknesses is a critical first step of implementing a CI function. Invest time in articulating end goals before selecting a CI tool, defining a process, or developing workflows to ensure the end result will meet requirements. Consider adopting a two-pronged approach when establishing research objectives. First, identify and document key business challenges facing important departments such as business development, marketing, R&D, and sales. Then create specific goals corresponding to each challenge, so you can easily articulate how and why resources are being spent on CI. Confirm that research objectives cover both immediate and long-term strategic goals. Meeting and/or exceeding short-term goals will provide valuable feedback on strategic direction. Longterm goals, on the other hand, are equally important to help create and communicate the big picture, ensuring all employees are working toward a shared vision of the future. Once you outline initial CI goals, the next step is an honest assessment of current CI capabilities to provide a baseline on which to build or expand. Organizations will fall into one of five categories based on current capabilities, strategic intent, and current knowledge management practices: Stage 1 Little to no CI capacity; reactive and tactical approach to issues; no coordination between departments. Stage 2 Minimal CI capability; primarily reactive but mostly still tactical; little coordination between departments. Stage 3 Still mostly tactical but developing an ongoing, repeatable, coordinated CI pro- cess; nascent counter-intelligence functionality; early signs that non-ci employees are becoming auxiliary intelligence resources. Stage 4 Becoming proactive, long-term strategic thinkers, with good coordination and training; CI function is well-defined. Stage 5 Proactive CI team with long-term strategic goals and excellent coordination; focus is on creating actionable, strategic intelligence; CI team has strong executive support. Establish clear roles and responsibilities for internal CI team members. Internal CI team capabilities have a significant impact on overall research quality, making personnel a top concern for any organization developing an internal CI function. Finding and hiring the right people and placing them in the correct roles is crucial to ensuring the CI team operates smoothly. Consider designating some non-ci employees as knowledge leaders who can evangelize the importance of intelligence. A core CI team requires three key roles: The research director (RD) develops and implements overall strategic vision for the CI team. RDs should be skilled CI practitioners with substantive management and strategic development experience, as well as solid leadership, communication, and relationship management skills. The research manager (RM) implements research requests and directly manages analytical teams. RMs should be skilled CI practitioners experienced in project management, employee oversight, team building, and communications. Organizations may have more than one RM. 2
3 Research analysts (RAs) conduct primary and secondary research to support CI requests. The optimal number of analysts varies based on the CI team s scope of activity, current/ expected workload, and reliance on external partners. Some organizations may employ a large enough CI team to justify a tiered structure of junior and senior analysts. es rely on proprietary information such as automotive, financial services, manufacturing, and pharmaceuticals are more conducive to these types of relationships. Follow these key steps when setting the balance between internal and external resources. Determine balance between internal and external CI resources. A key part of setting up an internal CI function is establishing an equilibrium between internal and external CI resources. Your goal should be to keep overall capabilities high and total resource costs low. Keep in mind that almost any employee can be an internal CI resource. A foreman s conversation with a deliveryman or a marketers tradeshow interactions can provide valuable intelligence to the CI team. In most cases, organizations will also need to leverage external CI professionals. These resources augment internal capabilities, but the ultimate responsibility for integrating and leveraging insights must rest with the internal CI team. Examples of external CI resources include: The research contractor, an external partner used to augment internal capabilities on an ad hoc basis. Contractors should be selected on a case-by-case basis using a tailored set of criteria to ensure the arrangement will meet internal needs. The relationship should be as collaborative as possible, to ensure full value from tailored inquiry. The research contact, an independent, unpaid external connection who provides valuable on-the-ground insights on developments that affect the business of the organization or its external clients. Industries in which business- 3
4 Determine how raw intelligence will be accessed and analyzed internally. Identifying information gaps and collecting intelligence can be facilitated by a platform to collect, sort, and disseminate research. Microsoft estimates research professional spend approximately 30 percent of the workweek looking for information and an additional 10 percent working on business document production. Cipher is a market leader in tailored strategic research services, consulting programs, and customized knowledge management and CI software solutions. A properly-configured KM system with workflow management tools and integrated databases can substantially decrease this resource commitment. A well-functioning KM system ensures collected intelligence is easily accessible to internal stakeholders, making it quickly translatable into strategic value. The best KM systems are comprehensive toolkits that facilitate user actions through all phases of the CI process sourcing, collection, classification, monitoring, validation, analysis, collaboration, distribution, and archiving while maintaining the security and reliability of hard-earned intelligence and confidential information. Cipher s research services include custom CI research, strategic decision support, CI optimization, and decision facilitation workshops, all executed using a repeatable process and timeproven techniques based on CI best practices. Knowledge.Works is an award-winning, customizable CI solution with more than 85 global installations. Knowledge.Works supports all steps of the CI cycle and allows users to proactively stay ahead of the competition while reducing information overload, increasing productivity, and eliminating duplicated effort. Knowledge.Hub optimizes the strengths of Microsoft SharePoint with features designed to assist small departments with monitoring research tasks. Knowledge.Hub helps users share content and generate value-added strategic intelligence across their organization. Please visit our website to learn more. Implement well-defined protocols for intelligence gathering. Well-defined protocols are the backbone of any CI team in maximizing efficiency and ensuring compliance in the intelligence gathering process. Err on the side of caution, particularly in highly competitive or litigious industries. Establishing an ethics policy can mitigate many of the risks associated with intelligence collection, and the Strategic and Competitive Intelligence Professionals (SCIP) organization provides a general code of ethics that: Complies with all applicable domestic and international laws; Discloses all relevant information prior to interviews; Avoids conflict of interest in collection; and Faithfully adheres to all corporate policies, objectives, and guidelines. For more information about ethical intelligence collection, see SCIP s frequently asked questions. 4
5 Convert raw intelligence into actionable insights. Facts are just facts if there is no consistent, methodical way to analyze them and develop a larger strategic picture and specific sales tactics. Implementing a strategic plan allows an organization to leverage intelligence in multiple ways while working toward the same goal a smarter, more agile, more competitive business. This plan should include provisions for both information workflow and decision facilitation. An information workflow system will provide the means to process CI and other supplementary information coming in from all parts of the organization. Strike a balance between automation (i.e., computer-generated market updates) and human-based contributions from internal stakeholders and/or external third-party vendors. Encourage employees to use the solution to submit information to their CI team but recognize the value of automated technologies to better facilitate human intelligence. Technology solutions can streamline the CI staff s workflow, and this will leave more time for the tasks best suited to human analysis responsible for centralizing intelligence, identifying what matters, and understanding how it relates to the organization. Once you have found a balance between automation and human analysis, introduce a strategic scenario planning initiative that includes regular war games, internal working groups, and market or competitor studies. Bring together the CI team and key internal stakeholders to focus on exploiting CI to inform institutional knowledge. More importantly, always have an implementation plan in place so insights can be quickly applied within your organization. Do not just check the box; ensure there is a dissemination mechanism that feeds a positive feedback loop and drives future research. These scenario planning initiatives are a prime opportunity to leverage external partners, whose outside knowledge and independent perspective will foster creatively and augment strategic insights. Benefits of consistent scenario planning include: Ensuring CI activities align with current and future core business strategies; Clarifying how CI is used in practice; Identifying unrecognized knowledge gaps; Increasing collaboration between the CI team and key departments; Highlighting how CI can optimize internal business processes; and Garnering the CI team credit for its efforts. Embrace automation with a human hand. Automation will have the greatest positive impact on business operations if it is used to optimize human resources. CI professionals can use software to automate routine tasks such as distributing market and competitor updates, then utilize the time savings on human analysis the so what? meaning to bring true value to their company. Develop a tailored performance measurement system. Although CI is widely recognized as having a positive impact, determining how effective a particular CI team is can be difficult and frustratingly subjective for many organizations. Much of the challenge stems from the fact that there are few established performance metrics for CI that easily 5
6 identify specific, quantifiable work output; score targets against results; or measure how clients and competitors respond to a given action. Developing a tailored performance measurement system aligned with corporate goals and expectations allows executives to develop a clear, consistent picture of CI contributions to the organization. Focus on creating a balanced scorecard that considers performance, quality, compliance, and value, while recognizing particular needs (Simmons, 2013). Another option is to create a review mechanism to track internal CI contributions. Include provisions (Kerr, 2007) based on the following considerations: Direct financial impact Tie CI to specific revenue increases and/or cost savings to determine the CI team s ROI and organizational impact. Indirect financial impact Recognize some CI efforts will set the stage for future gains but will not provide any immediate financial benefit. In these cases, the CI team can claim partial responsibility for long-term ROI. Support to other departments Highlight the underlying influence of CI on daily operations and overall organizational efficiency when no measurable immediate or longerterm financial impact can be attributed to the CI team s work. Traffic and/or internal utilization Maintain detailed records of all internal CI requests to document the CI team s value and remind executives of the utility of CI throughout the organization. Foster a culture that embraces CI. A corporate culture that embraces CI will provide the internal CI team with the organizational support it needs to operate effectively. Consider implementing the following steps to create this culture: Discuss any stakeholder reservations, using these opportunities to thoroughly explain how CI works and how it will be leveraged. Highlight examples showing CI s positive operational impact. Reassure employees that their CI efforts are visible to executives. Incorporate knowledge sharing behavior as a metric in employee appraisal, performance, and promotion policies. Give executives a role in articulating how CI supports the organization. This support will mitigate much of the friction from lowerlevel managers or territorial employees. Conduct regular strategic reviews with key executives and update lower-level department heads or key employees. Use these meetings to ensure CI efforts align with corporate goals and encourage a sense of collective ownership. Conclusion. Following the roadmap outlined above will set your company on the path to implementing a successful internal CI function. With the right people, processes, structure, technology, and culture, CI can provide strategic insight to stay one step ahead of competitors in a fast-paced global economy where the competitive, product, and consumer landscape is continually changing. 6
7 About Cipher Systems Cipher Systems is a full-service strategic and competitive intelligence consulting firm that supports clients through strategic research and two industry-leading technology solutions Knowledge.Works and Knowledge.Hub. Who We Work With Cipher has worked with over 100 clients to complete over 125 engagements in 23 countries since Where We Work Headquartered outside Washington, DC, Cipher maintains offices in Brazil, China, Switzerland, the UK, and the US, as well as a trusted global KOL/SME network with a presence in nearly 20 countries. Cipher Systems LLC 2661 Riva Road, Building 1000, 5th Floor Annapolis, MD (410) info@cipher-sys.com 7
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