Competitive Intelligence Underutilized

Information Management Journal, May/Jun 2005 by Swartz, Nikki

According to a recent survey, a majority of U.S.-based companies that claim to use competitive intelligence (CI) to guide their decision-making processes either do not use intelligence enough or use it in the wrong way.

"Ostriches & Eagles," conducted by business intelligence consultants Outward Insights LLC, studied the effectiveness and use of CI across several industries. Among the key findings:

* Twenty-nine percent of respondents admitted that they do not have "an organized and systematic way to deliver CI," including 14 percent with more than $1 billion in revenue.

* Of those lacking "an organized way," 28 percent said they do not have a need for it, and 17 percent said they are unsure how to do it.

* Nearly 40 percent said they "rarely or never" incorporate likely competitor reactions into their new product plans.

* Almost 30 percent of companies either do not have or do not feel the need for a CI system despite today's ultra-competitive marketplace.

The study of 100 senior executives at U.S. corporations revealed that one of the most beneficial aspects of CI - the ability to receive early warning of competitor activity or emerging industry trends - is going largely unrealized.

"In what is arguably the most competitive global marketplace in history, a surprisingly high number of companies do not consider intelligence for strategic reasons, to assess competition, or to devise operational plans for their business," said Kenneth Sawka, a principal at Outward Insights. "And for those companies that have developed an organized CI function, these systems tend to be ineffective or underdeveloped."

Thirty-eight percent of respondents said that CI does not have sufficient stature in their organizations to have a significant impact, including 30 percent of those from companies with revenues of more than $1 billion. One-third (33 percent) of all respondents said they do not believe that their firm's CI professionals have "sufficient skills and experience to meet their needs."

The study found dramatic differences among respondents from different industries. For example, just 27 percent of high-tech respondents said they integrated competitor reaction into their new product planning while insurance (72 percent) and pharmaceutical (65 percent) respondents said they rely on it more.

Overall, financial services firms were less likely to have organized intelligence (61 percent vs. 71 percent average) and less likely to make intelligence an integral part of their strategic planning process (78 percent vs. 85 percent) compared with insurance, pharmaceutical, and high-tech companies. High-tech firms were most likely to have organized intelligence (82 percent vs. 71 percent average), and insurance companies were most likely to make intelligence an integral part of their strategic planning process (100 percent vs. 85 percent).