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Why Competitive Intelligence is a must for your Company?

Cathy Winston on Feb 28th 2018
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“I gather as much information as I can, I think about it, then I decide what to do” William G. McGowan, the late chairman and CEO of MCI once said this in response to the question “How do you make decisions”. (Larry Kahaner, 1998, Competitive Intelligence: How To Gather Analyze And Use Information To Move Your Business To The Top)

The crux is,  right decisions that bring success and growth are based on information and analysis of information. In a world where rapidly changing technologies and economies alter the rules continuously and competition is fierce; one wrong move can destroy your company. In order to survive and grow, you need to make right decisions by gathering and using competitive intelligence.

Novertis launched its new heart failure drug, Entresto, in July 2015, predicted to be a blockbuster drug with expected sales of $10 billion annually by Forbes. Yet, Novertis sold only $17 million of Entresto in the U.S. market in the first quarter of 2016. The failure can be attributed to resistance by insurance companies as well as cardiologists due to high price ($4000 a year, compared to pennies a day for existing drugs) (Gilad and Hoppe, HBR June 2016, subscription required). The problem here is not lack of information / data, but the inability to extract relevant information from data. According to Leonard Fuld and Ben Gilad (HBR January 2016, subscription required) only half of the companies actually use competitive intelligence data they collect, many executives use data to confirm what they already think. The point is companies need to constantly reassess its market environment and competitors in order to thrive in today’s highly competitive world.

Small and medium sized companies (SME) argue that they don’t have resources like big multinationals to gather competitive intelligence. SMEs with few financial resources can develop low budget approaches to competitive intelligence by:

  • Reviewing competitors Web sites, annual reports etc.
  • Attending conferences
  • Interacting with customers
  • Reading industry association’s publications and Government documents
  • Interacting with competitor’s clients and suppliers
  • Interviewing corporate personnel or industry experts
  • Accessing competitive databases especially patent databases

I would like to point out again that information is merely the starting point of decision making process. Although the quality of information is important, how you analyse the information and use it is much more important.

  • Be aware of market dynamics so that you can target your customers better and forecast the potential of your market.
  • Have complete knowledge of external business environment so that you can figure out how the economic climate impacts your market.
  • Assess risks by knowing the changes happening in the market and how they might influence your product / business.
  • Find opportunities by analysing your competitors and you may find a segment ignored by your competitors.

References:

Gilad, B. and Hoppe, M. (2016). The Right Way to Use Competitive Intelligence, Harvard Business Review, June 16.

Fuld, L. and Gilad, B. (2016). Only Half of Companies Actually Use Competitive Intelligence, Harvard Business Review, January 26. 

Kahaner, L. (1998). Competitive Intelligence: How To Gather Analyze And Use Information To Move Your Business To The Top. New York: Touchstone.

 

 


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