Competitive Intelligence 101: An Introduction

Editor's Notes

• #2: Welcome – today, we’re going to spend the next 30 minutes or so talking about the fundamentals of competitive intelligence.What is competitive intelligence? What are the basic tools and techniques as well as best practices. At the end, you will be able to determine if competitive intelligence can help your business and what you will need to do in order to develop a successful competitive intelligence function within your business.Before we get started, I would like to get a better feel for your needs. First, what industries do you currently work in today? Second, what is your familiarity with competitive intelligence? And finally, what do you want to take away from today’s presentation in order to feel that this was a valuable investment of your time?
• #3: Let’s start with the basics – what is competitive intelligence? What’s involved? How does it help my business?
• #4: This is why we’re here today – to minimize unpleasant surprises and maximize our opportunities for success.Competitive intelligence is a systematic program for gathering and analyzing information about your competitors’ activities and general business trends to further your own company’s goals.In other words, it’s about getting out ahead of the market.
• #5: How can CI help your business?It’s Monday morning – time for the weekly senior staff meeting and as you walk in, you’re greeted by several of your ‘colleagues’…Don’t you just hate Mondays? Or, better yet, surprises that aren’t good?!Well, CI decreases the chances of being surprised and caught off-guard and it also creates an environment where everyone knows that the CI process is in place so instead of “point and blame” you will have more “look what we found – see we’re helping!”But more importantly, when CI is working, you are able to walk into those weekly meetings and tell your colleagues what’s coming so everyone can discuss the right strategies and tactics for your company’s response!
• #6: The obvious starting point is a need. WALK THRU THE CHARTWhen I worked with University of Maryland University College (www.umuc.edu), we had potential students competitively shopping so CI began in response to enrollment specialists being questioned by prospective students about things the competition was offering. So we started behind the curve, in a reactionary position, because heightened competition was costing us.We quickly got ahead of the curve and started to use our findings to drive new strategies. We used CI to identify opportunities because we were bringing forth insight into strengths, weaknesses and strategies that forced internal discussions, planning and action.For example – STREAMLINE APPLICATION, ADMISSION PROCESS FOR NEW STUDENTS.
• #8: The year was 2003 and competition in the sector was intensifying.UMUC had a goal to achieve 1 million enrollments by 2010.Maryland was going through budget cuts and hiring freezes. For-profit competitors were outspending and outgrowing UMUC. Technology for on-line program delivery was up-for-discussion.
• #9: Eventually, we were able to hold a leadership meeting for the sole purpose of addressing these four questions.And you should notice that the four questions are followed by a 5th box with the words “Test. Measure. Analyze. Modify. Repeat.” That’s the marketer in me – whenever you hear me speak about marketing related topics, you will hear me mention these 5 words. The reason is that I have seen organizations gather and analyze information – then decide to act in an ‘all or nothing’ manner which has resulted in terrible failure because something was misinterpreted. Here’s the thing. Your business is successfully operating so develop a process for testing what you have learned in a way that minimizes risk and maximizes your ability to continue to learn and improve over time. There shouldn’t be a rush – there should be focus on improvement in the near and long-term.
• #10: When we sat down to address this issue, we identified the following major areas that we felt we needed to better understand.Company. Target audiences. Products and services. Pricing. Distribution. Promotion. And human resources.
• #11: The Company Overview section provides us with a stronger, deeper understanding of who the competition is, what their goals and objectives are, their past and current strategies as well as performance, and a sense of the resources available.This put everyone in our organization on the same playing field – and allowed us to compare our organization on specific key factors. Basically, it eliminated a lot of the “But I thought…”For example, by using Google Alerts, we learned that two competitors had leased office space in certain markets – and the facilities manager for one institution told one paper that the expansion was due to planned growth with certain segments of the target audience – Military and US Hispanic – which gave us a jump on their promotional plans moving forward.
• #12: The Target Audiences section focused on past and current performance in terms of where our competition was pursuing new students and serving existing students. The details would help us understand direct competition – working adults – and indirect competition – traditional aged students. This also allowed us to better understand and shifts in targeting because we could compare the student population over time, along with other elements that would impact the audience such as programs, distribution, promotion, pricing…We looked at this information at the top level – as well as by the campus location, if possible.
• #13: With education, the two questions asked by virtually every prospective candidate is “How much?” and “How long?”We addressed “How long?” with the admissions criteria and graduation requirements under Products and Services – now under Pricing we would address “How much?”What we discovered were that everyone promoted cost per credit hour – but when you added up the number of credits needed to graduate, the total costs could tell a different story. For example, UMUC undergraduate degrees required 120 CH for graduation but Strayer, which was on a quarter basis instead of a semester basis, required 180 CH. That meant when you calculated the cost of the degree (Cost per Credit Hour x Credit Hours), their lower credit hour cost translated into a comparable cost for the degree – something we could stress in our marketing and recruitment efforts!We also would find out about grants, scholarships and other “discounts” that could lower the total cost of the degree – and we could elect to respond by [ex] increasing our funding for grants in order to compete.Finally, we uncovered some universities outside the competition had started to offer “Guaranteed Tuition” which meant that as long as the student met certain requirements, they would not be subjected to annual tuition increases. Since tuition rates typically increase 3-6% annually, this could have a significant impact on a student pursuing a 4 year degree or a PhD that might require 5 to 7 years.
• #14: Products and services allowed us to see where we competed directly with the competition – and how we compared. Did their Doctoral program in Education match with ours or did if focus on different elements? We could use this insight in [a] developing new programs, [b] marketing existing programs, and [c] projecting where the institution was headed for future positioning.For example, an MBA program might focus on finance and accounting at Hopkins and IT at DeVry. Where our program focused more on management and leadership – something we could use to differentiate ourselves in the marketing and recruitment efforts.We also looked at accreditation – some degree programs have special accreditations that make them extremely valuable but they are extremely expensive to earn so many institutions don’t have them. Teacher licensure within specific states – is that included in the Master of Arts in Teaching program or do the graduates need to take additional courses and test? Is the business school AACSB accredited – which some corporations required for tuition reimbursement programs?Or we could see that DeVry might be moving away from its IT foundation with programs in nursing…and we would need to determine if we wanted to develop a nursing program or focus our resources on other options.
• #15: UMUC offered face-to-face courses in the traditional classroom setting as well as 100% online and hybrid – a combination of classroom and online.Some of our competitors were 100% online – which meant we had an advantage for those students that preferred classroom learning.For those with classroom offerings, we looked at location, course offerings and facilities in order to determine if we had advantages – or if we were at a disadvantage. For example, Hopkins has a downtown Baltimore location that appeals to city workers and residents – whereas UMUC tended to locate campuses in rural areas that were closer to home. This meant we should focus on “convenient location near your home”.But this also identified other opportunities and threats – for example, UMUC offers asynchronous learning which means you learn on your own without a formal class meeting time. Some of the competition offered synchronous learning which offered some different benefits for the right segment of the audience – so we needed to know how this offering was performing in order to determine if we needed to expand our offering in that direction.
• #16: Understanding how much is being spent and where it is being spent addresses a great many concerns within any organization. You can imagine the amount of meeting time that can get focused on “Did you see their ad…”By tracking these elements we were able to focus those conversations by presenting “Here’s what they are doing…and here’s what we are doing and why.”
• #17: With any educational institution, there will be a great deal of interest in faculty hiring, training, evaluation – but for other businesses there will be an interest in [ex] engineers for technology firms or sales people.This allowed us to identify the type of people hired for specific position, the training they received as well as the monitoring and evaluation of performance. Plus we were able to see what types of positions were being hired which helped us identify expansion into new programs and services or turn-over issues.
• #18: Based on the questions and topics identified, we created a CI Team in order to:Involve key leaders so the project was seen as a UNIVERSITY PROGRAM and not a MARKETING or RESEARCH PROGRAM – this increased visibility across the organization and improved buy-in and supportThis also helped us share the workload with people that had expertise in the topic/subject area. Now, I love research - but finance is not my strength, so I might miss some data that’s important just because I didn’t know better or I might misunderstand it which would impact analysis and recommendations. So we brought in the subject-matter experts in order to improve the quality of the work.
• #19: With the questions identified and the subject matter experts in place, we created a list of information sources that we all felt would ensure the highest quality information. This focused our efforts, saved time and money, while also addressing the possibility that someone might, at some time in the future, question the analysis and recommendations.We also created a process for sharing information, and briefing the other members of the CI Team – this helped us catch things that might have been missed.For example, we noticed that one institution was starting to offer loans which we thought might be an advantage – until finance noticed that bad debt expenses were increasing. Finally, we also agreed that our recommendations would include an owner that would be required to act on those recommendations within a specific time frame and show how/if the recommendations had helped the institution increase performance.That way, the reporting of the recommendations didn’t turn into another example of “Great report – let me put it on my bookshelf.”
• #20: Alright, now we’re ready to start collecting information…
• #21: The CI Team agreed to the following Internal and External sources of information. Then, we developed specific processes for gathering and storing the information so we could share it and analyze it.We started internally because of the number of employees that had extensive experience in the industry – some of whom had worked for the competition and others that had contacts that we could reach out to and speak with in order to gain information.We interviewed front-line staff in order to learn what they were hearing from prospective and current students. This gave us some insight into what was being said in the market – and what was being sought after by our target audience.We then turned to external human sources such as our customers, research firms, consultants, industry analysts, government employees at the state and federal levels, textbook suppliers, content developers…anyone that was involved in the industry that could offer us insight into what was going on in higher education and with our main competitors.Some of our senior faculty had worked for the competition. Others had been involved in accreditation reviews and program development processes – so they had a unique perspective into the competition.Next, we started gathering information that already existed internally because some people had captured data but had no process in place to analyze or share…And then we started searching external sources. Some were free, others were fee-based.
• #22: When you want to learn about other businesses Hoovers offers you tremendous insight into the basics – mission, products and services, financials, key employees, competitors.I find this service of great value when trying to learn about privately-held companies and though the information is self-reported, it offers a quick, quality source for understanding key factors.
• #23: We agreed that corporate websites were an acceptable source of information. Here, you see a screen shot of one of my more favorite pages – the investor relations page for a publicly traded competitor.Not only does this provide us with annual reports but presentations on topics such as advertising,
• #24: After completing information gathering from internal sources, we turned to our external sources. Corporate website are an obvious choice – and with the development of social media such as blogs and RSS feeds, we enjoyed unique access to information and an easy way to gather and store the information.A quick word on RSS feeds – real simple syndication – which allows you to subscribe to automatic distribution of new content on the page or site. All you need is an RSS Reader to gather the feeds and you have your own newsroom and ticker tape.But I will expand on this in a minute….
• #25: How many of you have created Google Alerts to stay on top of specific items? When you type in a search, and look under NEWS, you will be given the opportunity to receive email alerts on that specific search term delivered to your Inbox.
• #26: Now, about RSS Readers – do any of you use Google Reader? This is an RSS Reader that’s free – which fits into most budgets!!This screen shot is my Reader account and you can see folders on the left side and in the center you can see brief summaries of stories and news.The way this works is whenever a content provider publishes new content, the RSS Feed distribute it to anyone that subscribed to the feed – and within seconds, my Google Reader will show me the news.I have set up folders for topics and companies so every morning I flip through the summary section of the page, looking for important news. When I find something I want to learn more about, I click on the link and go to the full story. I can then save it, email it, print it…whatever makes the most sense for capturing data.
• #27: Social media is a great source of information – who left your competition? Who joined them? In what roles?What groups do key members of your competition participate in – what questions do they ask? What answers do they provide?
• #28: Twitter searches is something that’s growing in value = this screen shot is an example of one search and provides me with any mention of “small business” or “entrepreneur” or “start up”.Notice in the upper right corner – the RSS Feed symbol. I then add that feed to my Google Reader and get regular updates.Now, imagine setting up searches for the names of your competitors, their products and services! You can read what the market – the customer – is saying about them.For example, I am working on a project for a software firm and I have created Twitter searches that help me monitor reactions to new products and prices as well as customer service issues….
• #29: Syndicated research is also extremely important to CI – within higher education, we turned to Eduventures and received reports about the market perception of online learning so we knew that this mode of learning was growing in acceptance with students and prospective employers.In other industries, I have subscribed to research from Gartner for IT firms and for a project I did for Under Armour, I was able to use another syndicated research firm to understand the demand for performance athletic apparel in the US teen market.
• #30: Here are some other resources you might want to keep in mind…Factiva delivers worldwide business news and information and powerful searching to provide customers with relevant information to inspire their business decisions.Radian6 gives you a complete platform to listen, measure and engage with your customers across the entire social web.The US Patent Office is great for learning about engineering and technology work being performed by the competition. In higher education, with the creation, management and delivering course content being so important, some institutions are developing their own solutions – and registering patents.BlogPulse is an automated trend discovery system for blogs. It analyzes and reports on daily activity in the blogosphere.
• #31: For our work, the analysis of the data was pretty straight forward. We had identified the questions that we wanted to answer at the start and that focused the information we gathered.Each member of the CI Team presented their information to the group. We discussed any possible impact for the entire organization, and agreed to recommendations.The report was a narrative document with Question, Key Findings, Recommendations with Rationale and proposed next steps for bringing the recommendations to life.
• #32: WAR GAMESWhen competition is clearly defined and we have some predictability about what is going on, we can use war gaming to focus on key competitors. This can be extremely useful when the rate of change has slowed down, allowing us to out-guess a small number of competitors in a “game” that has fairly well established rules of engagement. It’s not unlike war strategy where you study the likely moves and positions of the opponent, create a strategy to counter the opponent and launch an assault to improve your position on the battlefield (marketplace).Most war games will use cross-functional teams to facilitate a strategy based on what you think will happen. In order to forecast what you think will happen, you will need to do both internal and external research. This research can be presented to the cross-functional team in the form of a research report. Team members will use certain analytical techniques, such as four-corners analysis to estimate likely moves by the competition.SCENARIO ANALYSISFor environments that involve rapid change and high levels of uncertainty, competitive intelligence may have to construct different scenarios based on what might happen. This can be very important where barriers to competition are low and numerous companies are competing in the marketplace. As a result, your assumptions tend to be very unreliable and there is a real need to map out alternative strategies. Scenario analysis is somewhat involved, usually taking place over several months in distinct stages:Stage 1 – Identify key drivers within your organization. This will require brainstorming with key management personnel.Stage 2 – Study the competitive universe to isolate possible scenarios. This may result in a real need to develop competitive intelligence for filling in certain unknowns.Stage 3 – Create three to five different scenarios and try to assign a probability on the likelihood that the scenario will happen.Stage 4 – Conduct a series of strategic meetings to build a set of strategies for addressing different scenarios.Stage 5 – Establish and monitor a set of indicators for each scenario. You will need to assign responsibilities to different people for researching and analyzing these indicators.When a threat or opportunity becomes real, take appropriate action.GROWTH SHARE MATRIXFor companies trying to sell products in a highly competitive marketplace, the use of a matrix can help categorize and understand how strategy should be developed around the product mix. The Growth-Share Matrix, developed by Boston Consulting Group, can be used to forecast how a company should manage its product line.You will need to segment your products between growing markets and mature markets. For mature markets, you need to determine which products are stable, not requiring major investments. If you have growing markets, you should determine if additional investments could accelerate the growth. The objective is to have a “balanced” portfolio of products – mix of stable products and rising stars.Psychological ProfilingEvery organization has its own unique culture. We can view this culture like we view the psychological profile of an individual.ShadowingAssign a cross function team of experienced/trained CI professionals to constantly monitor a competitors actions.Reverse EngineeringReverse engineering is a process of taking an existing product or service, breaking it down into components, parts, sub-assemblies, and other products, understanding how to build it, and creating a model or representation of how the production process works.
• #33: BEST PRACTICESWhere arethe best sources of quality information and how quickly can you gather that information so it can be analyzed?Build a team and establish a process –leverage your resources for maximum impact.Remain neutral – your goal is to discover the unknown not confirm suspicions.Go where the information is – have you shopped your competition? (Have you shopped your own business?)Focus on human intelligence – people add insight that typically doesn’t exist in printed material.Act ethically – Clear goalsClear policiesClear process, roles, responsibilitiesIdentify acceptable sourcesBuild TeamTrial and errorBuild around culture and resources of companyCommunicationMeasure impactKeep trying