Last week, in A Competitive Advantage, I too discussed the recent article Competitive Intelligence: The New Supply Chain which recently hit the on-line edition of the Supply Chain Management Review. However, I only discussed what I believed competitive intelligence really was, and did not really discuss the article in detail.
Even though I was unhappy with the fact that they did not paint what I believed was the whole picture with regards to what competitive intelligence really was, they did a great job with respect to defining what competitive marketplace intelligence was, how to ethically acquire it, and how to analyze it. To that extent, I’m going to elaborate on some of the great points the article made.
The article points out that there is a code of ethics, complied by the Society for Competitive Intelligence Professionals (SCIP). The basics of this code is the following:
- You cannot lie when representing yourself or your company.
- You must strictly adhere to your company’s legal guidelines.
- Secretly recording an interview is not permitted.
- Bribes of any kind are not permitted.
- Eavesdropping devices are not allowed.
- Deliberately false or misleading statements are unacceptable.
- Under no conditions will price information be swapped, traded, or exchanged in any way with a competitor.
- Misinformation may not be swapped, traded, or exchanged with a competitor.
- Procurement of property indirectly is not permitted.
- “Pumping” someone for information is unfair.
- Dumpster diving is fair play (unless there is a municipal law prohibiting otherwise), but unnecessary because the SCIP estimates 95% of the information that you want is publicly available. *
Once you’ve mastered the code, you can move onto the following basic steps of competitive intelligence:
- Identify What’s Important
- Focus on Key Competitors
- Identify Potential Competitors
- Get the Data
- Don’t Wait for All of the Information to Come In
- Look for ways to improve*
Data can come from multiple sources. The article classifies these sources as either primary (straight from the source) or secondary (at least once removed from the primary source). Valuable primary sources include:
- Annual Reports
- Stockholder Communications
- Financial Press Releases
- Management Speeches
- Employee authored Articles, Research Papers, and Books
- Web site content
- Patents and Commercial Registries
- Surveys and Interviews
- Remote Sensing
- Building Permits
- UCC (Uniform Commercial Code) Registration
Secondary data sources include:
- Newspapers, Magazines, and Print Media
- Electronic Sources (The Internet)
- Analysts Reports and Expert Opinions
- Books
- Published Commentary and Observations
- Legal Briefs and Filings
- General Blogs
- Employee Blogs
Once you have data, you move onto the analysis. A number of tools can be used, including the Balanced Scorecard, a simple SWOT assessment, and a Scenario Planning analysis.
Remember to keep in mind Michael Porter’s common barriers to competitive entry when conducting your analysis:
- Economies of scale, without which competing is most difficult.
- High costs of switching from one vendor to another.
- Customer loyalty and bonds created by your product.
- Difficulty of accessing alternative channels of distribution.
- High cost and amount of capital, coupled with the existing large investments of the market leaders.
It’s a lot of work but, as the article says, optimizing supply chains and managing them to outperform competitors will increase revenue, profitability, and ROI while at the same time providing the underpinning for solid business growth in the future. But, as the article states, management can no longer rely on their instincts to achieve supply chain superiority. Instead, they need a structured approach to benchmarking both their own supply chain performance and that of their competition. In the end you must not only understand where your competition is performing well, but where you are not. That’s where you start.
* Identifies author’s addition relative to the original article.