The most critical strategic issue for any business is its competitiveness. No one would disagree with this yet few businesses really spend time and effort to deeply understand and manage their future competitiveness.
Most executives monitor their competitiveness through market share and as we all know that indicator is historical and is in no way predictive. Neither is historical tracking of past revenue trends.
So how do you monitor your competitiveness, identify potential new entrants, understand your existing competitors, and manage as well as identify your potential competitiveness? How do you manage the risks involved in being in a competitive market?
While generally the CEO is the one responsible for the competitive ability of any business, they are often lacking the right insights to make the best decisions. And while most businesses have plenty of information and plenty of know-how they have very little Competitive Insights or Intelligence (CI). One reason — there is no tie between business strategy and future competitiveness, and business systems and processes.
CI is concerned with the methods, systems and processes that a business uses to monitor its competition, any potential industry disruption, its own competitive position, and to improve its competitiveness overall.
Although most managers intuitively carry out some form of CI – generally in an ad-hoc way – the overwhelming data that is available, rapidly changing technology, and increasing global competitive pressures mean that there is an increasing need to develop more systematic ways of doing CI.
There are a number of key steps that will ensure the success of a good CI process. These are:
- Ask the right question
Far too often, businesses make decisions too quickly and without a strategic context — it is a case of ‘ready, fire, aim’. The internet and social media has not helped this mindset, as the speed to market has become a more critical factor. In the end, we are left with a smoking gun, but where did the bullet go?
Experience has shown that ‘asking the right question’ is one of the hardest steps for senior management. Here we need to define the decision objective or purpose and to put it simply to understand what really needs to be identified.
- Manage information effectively
Once you have identified your objective and possible key questions, the next driver for understanding what you have and don’t have within the business needs to come from studying the forces at work on your business. These forces could include competitors, technology, clients, consumers, new entrants, industry trends and so on.
Getting solid information on the decision at hand requires a number of information sources:
Human sources: for example, people in your organisation, business networks, experts, etc.
Economic and financial sources: for example industry reports, economic analyses specialist media.
Corporate sources: for example, customers, suppliers.
Technical sources: for example technical reports, academic papers, and product manuals.
Remember all the information needs to be put into context and subjected to interpretation to derive some meaning and value.
- Analyse for insight and intelligence
The major focus in the CI process is the method of analysis used to turn the information collected into intelligence or insights for the decision maker. It is only through analysis that intelligence or insight is created.
The value of insight is early awareness, as it enables you to recognise and monitor the future as it unfolds, thereby reducing risk and minimising mistakes. Today, executives are faced with many pressures — they may sometimes seek only short-term gains — but costly mistakes from executives making uninformed decisions are no longer an option. The risks are too high.
It is important to note that the purpose of CI is not to predict the future, but to enable management to make better decisions about the future.
In a VUCA world, CI is becoming an integral part of making business decisions. The data and information gathering and evaluating process can identify and project strategies that current or emerging customers and competitors might pursue, and provides an assessment of the implication of these strategies on your company’s future competitiveness.
We need to realise that we have exciting new ways to protect margins, to fight the competition, to achieve breakthroughs. We need to realise the positives will far outweigh the negatives – but only if we change.
Forced change is always second prize. The secret lies in putting together a strategy for the future based on sound intelligence.