Competitive Intelligence

AuthorJudith Nixon

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Intelligence is information that has been analyzed for decision making. It is important to understand the difference between information and intelligence. Information is the starting point; it is readily available numbers, statistics, bits of data about people, companies, products, and strategies. As a matter of fact, information overload is one of the leading problems of today's executive and the top reason for needing a competitive intelligence expert. Information becomes intelligence when is it distilled and analyzed. Combining this idea with those of competition or competitors leads to the concept of gathering and analyzing information about competitors for use in making management decisions. Competitive intelligence provides a link between information and business strategies and decisions. It is the process of turning vast quantities of information into action.

The field of competitive intelligence, as a profession, is relatively new in the U.S. An indication of the importance of competitive intelligence is the growth, since 1986, of the Society of Competitor Intelligence Professionals (SCIP), an organization committed to developing, improving, and promulgating the methods, techniques, and ethical standards of the group. SCIP defines competitive intelligence as "the legal and ethical collection and analysis of information regarding the capabilities, vulnerabilities, and intentions of business competitors conducted by using information databases and other 'open sources' and through ethical inquiry." The major research firm in the field, Fuld & Company, Inc., defines it as "information that has

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been analyzed to the point where you can make a decision and a tool to alert management to early warning of both threats and opportunities. Competitive intelligence offers approximations and best views of the market and the competition. It is not a peek at the rival's financial books." Competitive intelligence can help managers discover new markets or businesses, beat the competition to market, foresee competitor's actions, determine which companies to acquire, learn about new products and technologies that will affect the industry, and forecast political or legislative changes that will affect the company.


Examples of competitive intelligence include stock traders who analyze the data on prices and price movements to determine the best investments. These stock traders have the same data as other traders, but analysis of the data separates them from others. Another example is the Japanese automobile industry's analysis of the U.S.-automobile market in the 1970s. High gasoline prices and smaller families created a demand in the United States for smaller, more fuel-efficient cars. Japanese automakers employed competitive intelligence methods to determine this trend and then made manufacturing decisions based on it, beating the U.S. Big Three to market with high quality, fuel-efficient cars. Another example of successful use of competitive intelligence is AT&T's database of in-company experts. Part of this service is the monitoring of companies with which their own employees are most interested. This led to some early insights of emerging competitors. A final example is how Wal-Mart stores studied problems Sears had with distribution, and built a state-of-the art distribution system so that Wal-Mart customers were not frustrated by out-of-stock items, as were Sears's customers.


Competitive intelligence is not spying on the competition. It has been associated in the past with the political and military intelligence used during the Cold War era. Because of this association, many people think that competitive intelligence uses illegal, shady, or unethical means to gather information about competitors. Visions of wiretapping, bribing competitor's employees, or stealing information come to mind. This is not true today. Such techniques can...

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