CI in China.
Matt FishBehind many of the world’s best known and most successful companies are the lesser known stories of how these firms surpassed competitors to become industry leaders and global giants. Whether it’s Coca-Cola vs. Pepsi, Unilever vs. Procter & Gamble or China Mobile vs. China Unicom, the main method of establishing a firm’s top position has always been through using your resources more effectively than the competition.
Planning timely and effective usage of available resources is a company’s strategy. “Strategy” is one of the most overused words in business. “Strategy” isn’t becoming #1 or making a billion dollars in revenue this year, but it is how you plan to use your resources in order to get there. By using those resources more effectively, a firm can provide greater benefit to their customer and larger returns for the shareholders.
If using your resources more efficiently than the competition is such an essential factor in establishing the strategies of global giants, why do less than 10% of fortune 500 companies surveyed, and substantially fewer major Chinese firms, have formal competitive intelligence (CI)programs? The typical answer we get from firms operating in China is that they simply do not know how to get an appropriate system up and running.
The aim of this article is to combine “best-of-class” CI practices commonly used abroad, practices commonly used in China, and our experience as practitioners of CI to help companies get a head start in the China market.
Before jumping into the nuts and bolts of setting up a CI system tailored to your company and the China market, it is important for us to define it. Competitive Intelligence is the process of enhancing marketplace competitiveness through a greater, yet legal and ethical, understanding of a firm’s competitors and the competitive environment by analyzing the moves of rivals. CI allows companies to anticipate market developments rather than merely react to them.
Identification of CI SourcesAs much as some practitioners of CI would like to compare our job duties with the likes of James Bond, the key to collecting actionable information does not lie in uncovering secret corporate strategies and tactics, but in filtering, benchmarking, distilling and analyzing piles of publicly available information into actionable intelligence.
However, one of the biggest differences between conductingCI in China and other countries is the lack of credible published materials. Therefore, public information does not mean published information or desk research. In The States and Europe, consultancies have the luxury of typically relying on 80% desk research and 20% primary research or interviews. In China that ratio is reversed, and usually over 80% of credible data comes from primary research.
Now, in terms of CI, is primary research a tricky way of describing skillfully eliciting your competitor’s closely guarded trade secrets? No, elicitation techniques are important in any conversation where the goal is to gain as much appropriate information as possible. But we firmly believe that in order to gain a competitive advantage you do not need to know their trade secrets. In order for Apple to compete with Microsoft, they don’t have an intelligence need to uncover top secret source code. Instead, Apple has a general indication of Microsoft’s marketing plans, organizational structure, gaps in production, and strategic growth drivers that provide valuable guidance in Apple’s strategic planning.
Primary research can come from the mouth of your competitors, but in most cases that’s the toughest information source to get in front of. A more readily available and often less tight-lipped source is through competitors’ business partners, some of which may also be your business partners. At the beginning of a project, we recommend diagramming your competitor’s known business partners. This should include everyone in the value chain from raw material suppliers to end-customers. Each of these partners, or what we call “listening points,” has at least a financial relationship with your competitor. Every time money changes hands, so does information.
Information Collection: internal informationBefore heading out to set up external interviews and jumping head first into creative ways to probe competitors’ sales reps, take a step back and identify the internal tools you have to gain intelligence on your competitors. We find that typically in large firms, or firms operating in an overly incestuous environment, such as pharmaceutical firms, tons of intelligence is scattered throughout the organization, but not valuable until it is pieced together.
The department that usually has the most indirect interaction with competitors is the sales team. Every day they are pounding the pavement talking to potential customers, the same customers that are also in constant contact with your competitors. Sales reps are often a good key to keeping up to date on competitors’ latest promotions, large accounts they have recently won, pricing programs, trade terms, etc.
Simply keeping an ear open to the sales department isn’t enough. This tends to make the information more reactive or biased dependent on the sales performance of a given period. In order to really extract unbiased intelligence from your sales team’s information, a more systematic approach is required. To best benchmark, track and predict future moves, it is best to develop a short questionnaire for your sales team that is administered on a routine basis, either at a regular time interval or after every sales call.
External InformationAlthough you may not be out in the field, with access to your rival’s top executives, it is a common reaction for your ears to perk up when you hear your competitor’s name pop up in a party conversation or to closely evaluate seemingly benign conversations with competitors at trade shows and conferences. To assure you make the most of these opportunities the correct approach can give you a major advantage. At the end of the day, the best barometer on the level of CI that can be gained from a conversation is the skill of the practitioner.
The first skill that we look for in consultants simply comes down to being personable and possessing the charisma that makes people want to talk to you. Unfortunately, we can’t teach you this, but what we can share are some of the techniques that we have found indispensable in eliciting the most possible information from a sometimes uncooperative person:
Do your background research: Making someone want to talk to you requires more than a cute smile and a clever one-liner. You need to make sure that you have enough information to ensure that your conversation is an information exchange and not an interview. The trick is to assure you get more relevant information than you give. Also use the background research to make sure you have a conversation opener.
Ask questions without asking questions: Questions tend to raise concern. Keeping a conversational tone is the key.
Be flexible: Allow for the unknown and let your competitor talk as much as possible. Just make sure you have an excellent memory or take notes after the conversation, because information that is not useful today may become very important tomorrow.
Flattery: Everybody likes being patted on the back for a job well done. Do your background research and be able to point out successes as a conversation opener. Also for us to set up meetings, it is always helpful when we can quote another industry insider who recommended them as an expert.
Criticism: Find other industry sources that have made critical reports of the competitor’s business. People tend to talk a lot when they want to set the record straight.
Instinct to complain: Finding an angle to get someone complaining about their company, their boss or the industry environment is a technique that often opens the information flood gates.
Return on InvestmentAlthough putting an exact dollar figure on the amount of increased revenue and cost savings derived from understanding the competitive environment is hard to gauge, the benefits gained from companies that implement competitive intelligence systems are substantial. The former CEO of NutraSweet, Robert Flynn, said that competitive intelligence was worth $50 Million per year for his company. In China, we see the relative benefits for firms even higher because of the limited number of companies that have a systematic approach to CI. Focusing on competitive intelligence in the China market is a key competitive advantage in what is rapidly transforming into the world’s most competitive market.
BackgroundMatt Fish is with Synovate Business Consulting in Shanghai, the Intelligence unit of global research player Synovate. The company provides competitive intelligence and strategy solutions services through its unique infrastructure: a team of 55 specialists based in Synovate offices in Singapore, Tokyo, Seoul, Hong Kong, Beijing, Shanghai, Bangkok, Jakarta, and Kuala Lumpur, working with a wide network of highly-qualified consultants across 18 Asian countries. Since 1994, Synovate Business Consulting leads CI in Asia and has completed over a thousand assignments for MNCs and Government organizations covering numerous industries. Matt can be reached at
matthew.fish@synovate.com.
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