CI survival: making CI pay off.

Bill Fiora, Outward Insights,  bfiora@outwardinsights.com


For years, companies have been establishing competitive intelligence (CI) units to watch their external environment and provide early warning of threats and opportunities. While the rationale for establishing such units is more relevant than ever in these times of rapid change, many of these CI units are being eliminated, and others aren’t providing the value that their sponsors originally hoped for. Bill Fiora reviews several reasons why some CI units fail and other succeed and thrive.

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As companies cut costs and reorganize, some CI units have been singled out for not delivering enough return on investment. The recent economic downturn and accompanying layoffs have exacerbated this trend. In my own estimation, at least half of the CI functions in place today have suffered significant cutbacks, or will face them within the next six months. The unfortunate result is that companies have stopped watching their external environment at a time when their businesses could most benefit from the insights and early warning that true CI can provide.


Why CI units fail

The reason that many of these so-called intelligence units fail is because they were never intelligence units to begin with: they were data collecting teams. The difference is more than semantic. Almost anyone in an organization can collect data, and therefore, it’s a skill that’s not highly valued. Intelligence, on the other hand, can provide benefits far beyond the investment necessary to build a CI team.

Intelligence is forward-looking and decision-relevant. It provides early analysis of emerging trends so that management can begin to act before events force them to. Instead of answering data-focused questions like “What is our competitor’s pricing structure?” an intelligence unit answers questions like "What will the competitive environment look like when we launch our new product in two years?" or "How significant will this emerging technology be in our industry?”

With a good intelligence capability, top executives can begin to anticipate, rather than react to, the events that are taking place in the external environment. Companies with effective intelligence capabilities say that their CI units have generated millions of dollars in increased revenues or cost savings—which easily offsets the costs of running these units.


Why CI units succeed

The difference between the CI teams that are succeeding, and those that are not, is the ability to establish an ongoing dialogue with top management about upcoming decisions. Those CI teams that fail to establish this dialogue must take their best guess about the decisions that management is facing, and not surprisingly, they deliver information that is not relevant or useful. Responsibility for this dialogue rests on both sides.

Successful CI teams need to function at a strategic level, providing forward-looking analysis that provides early warning of emerging threats and opportunities.  Similarly, top executives don’t task their CI teams with requests for backward-looking data, such as the price of a competitor’s product, or a financial report that is not decision-relevant and could easily be found elsewhere.

If a company’s CI unit is buried deep within an organization—in the library or similar area—the odds are long that it will ever establish this type of strategic dialogue with its users. Unfortunately, this is where the majority of intelligence efforts begin. While corporate libraries and research units do provide value, they do this by delivering information, not intelligence. Setting up another information unit—and simply labeling it intelligence—is quickly seen as duplicative.


Can you survive?

If your company has a CI unit—and especially if you are part of this unit—ask yourself the following questions:

• Does the unit deliver unique insights that can’t easily be found elsewhere?
• Does the unit deliver forward-looking analysis that directly supports management decisions?
• How often does the unit deliver information that has already been published on a web site or other medium?
• If the unit were eliminated tomorrow, how easily could the organization adjust?

If your intelligence unit doesn’t fare well against these criteria, the odds are against its long-term survival. Both management and the intelligence team should start taking steps today to keep it alive.


Survival tips

If you are planning to start a new CI unit, or improve the performance of your existing one, keep the following rules in mind:

• Ask yourself what future decisions the CI unit will support, not what kinds of information it should collect. Decision-relevance is critical to the unit’s survival.
• Place the unit where it can have ready access to the decision makers that it will support.
• Staff the unit with experienced professionals who can function on a peer level with users of intelligence.
• Don’t task the unit with collecting only published information or other data that can easily be found elsewhere.

Those who follow these few rules will go a long way to ensuring that their competitive intelligence unit will survive and provide tangible value and return on investment. Those who don’t will be fighting the odds against the unit’s long-term survival.


Background

Bill Fiora is President of Outward Insights www.outwardinsights.com, a Boston-area strategy and competitive intelligence consulting firm. He is a frequent speaker on strategy issues and writes a Best Practices column for Competitive Intelligence Magazine. Bill is also an adjunct professor at Tufts University's Fletcher School of Law & Diplomacy. He can be reached at 781.863.5950.

This article originally appeared as 'CI is not paying off for many companie,'  in the March-April 2002 issue of Staying Sharp, a free e-newsletter. To subscribe, send an e-mail to join-stayingsharp@outwardinsights.com . Copyright 2002 Bill Fiora

SCIP.online, number 22, January 8, 2003.