Competitive Intelligence (CI): Overview, Trends & Developments Jerry P. Miller Director Competitive Intelligence Center Simmons College Boston, MA (fax) cic.simmons.edu

Conduct Intelligence to: Gain a Competitive Advantage

3 Jerry P. Miller 2002 The Intelligence Function: The process of ethically collecting, analyzing, and disseminating accurate, relevant, specific, timely, foresighted and actionable intelligence regarding the implications of the business environment, competitors, and the organization itself.

4 Jerry P. Miller 2002 The Intelligence Function: Gather information from primary & secondary sources Upgrade information to intelligence incorporating analysts perspective Generate insights and suggestions Disseminate to decision makers who take action that can gain a competitive advantage for the firm

5 Jerry P. Miller 2002 The Intelligence Process is NOT: Industrial/Economic Espionage Corporate Spying Routing news clippings Searching the Web

Why Intelligence?: … to be defeated is excusable, but to be surprised is unforgettable. D. Rouach, 1996

7 Jerry P. Miller 2002 Why Intelligence? Managers need to increase the quality of: 1) products or services 2) strategic planning and 3) market knowledge That results in higher business performance

How Do I Know if I Need an Intelligence Function? How critical are the questions that keep you awake at night?

How Many Resources Are Enough? How many key managers are currently obtaining and using adequate intelligence effectively for decision making?

10 Jerry P. Miller 2002 Strategic Intelligence: Emphasizes the relationship between the intelligence function and strategic decision- making

11 Jerry P. Miller 2002 Business Intelligence: Incorporates the monitoring of a wide array of developments across an organizations external environment, which includes customers, competitors, suppliers, economic issues as well as technical and regulatory changes

12 Jerry P. Miller 2002 Technical Intelligence : Monitors research and development issues Reduces risky decision making Broadens awareness of competitive situation Identifies business alternatives Increases warning time from 31 to 37 months in chemical/pharmaceuticals industry and from 17 to 33 months in other industries

13 Jerry P. Miller 2002 Counterintelligence: Protects intelligence collection activities and protects plans, programs, and projects from adversaries Hire security specialists Train employees not to give away sensitive information Computer usage heightens importance

14 Jerry P. Miller 2002 Whos Doing Competitive Intelligence ? 90% of Fortune 500 firms in the U.S. 9% of U.S. firms with formal processes Chemical and telecommunications firms Firms with high R&D expenditures Firms that own many patents 2-3% of German firms in various industries U.S. & U.K. firms: leading intelligence producers

15 Jerry P. Miller 2002 How Do Leading Firms Conduct Intelligence? Broadcast intelligence to users Increase number of intelligence users View intelligence as decision critical Intelligence is part of managers duties Institutionalize the intelligence function Manage corporate knowledge assets Maintain and rely on during a recession

16 Jerry P. Miller 2002 Primary Information Sources: Interviews with internal experts, customers, and suppliers Industry analysts Business editors Associations Observations Unpublished documents

17 Jerry P. Miller 2002 Secondary Information Sources: Internal and external databases Industry and government reports Directories Statistical sources Newspapers and magazines Trade publications

18 Jerry P. Miller 2002 Criteria Not to be Overlooked: Balance strategic & operational needs Adjust the function as the market changes Determine locus of decision making Companys structure Corporate culture Market environment

19 Jerry P. Miller 2002 Common Problems: Managers dont value intelligence Managers consider intelligence a luxury Inability to incorporate it into strategy Managers believe I know my industry! Unskilled people try to perform intelligence Managers hoard information The function doesnt meet decision makers needs No metrics developed to measure impact on bottom line Intelligence is seldom used by decision makers

20 Jerry P. Miller 2002 Creating the Intelligent Firm: Adjust decision-making process & culture Open communication lines Sensitize firm to marketplace changes Align intelligence to decision-making Support the process with technology Develop an evaluative mechanism

21 Jerry P. Miller 2002 Excellent Intelligence Service: Clearly define intelligence needs Use creative sources Understand the complexity of the issues Upgrade information to intelligence Offer recommendations, suggestions, and alternatives Obtain feedback from decision makers

Motivator: Whats in It for Me?

23 Jerry P. Miller 2002 Motivational Issues What are the benefits to the firm? What are the benefits to decision makers? What are the benefits for intelligence professionals?

24 Jerry P. Miller 2002 Predict & Measure the Impact of the Intelligence Function Determine where & how impacts will occur Determine your competitive advantage Assess appropriateness of costs (cf. CFO) Measure impacts in terms of: –Time- or cost-saving –Cost avoidance –Revenue enhancement

25 Jerry P. Miller 2002 Various Roles in the Intelligence Process Core Roles: –primary researchers –secondary researchers –analysts –integrators Supporting Roles: –system builders –data builders –knowledge builders –protectors –decision makers

26 Jerry P. Miller 2002 Intelligence Skills Come From: Personal traits Formal education Mentoring Work experience

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Competitive Intelligence: Its Current Status

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34 Jerry P. Miller 2002 Analytical Tools Used: Competitor profiles: 88.9% Financial analysis: 72.1% SWOT analysis: 55.2% Scenario development: 53.8% WIN/loss analysis: 27.3% War gaming: 27.5% Cojoint analysis: 25.5% Simulation/modeling: 25%

35 Jerry P. Miller 2002 The Status of CI after 9/11

36 Jerry P. Miller Competitive Intelligence professionals have participated.

37 Jerry P. Miller 2002 Industries Represented: Consulting 35 Info technology 12 Telecom 9 Chemicals 6 Financial services 5 Pharmaceuticals 5 Consumer package goods 4 Manufacturing 3 Retail 3 Media 3 Government 2 Health care 2 Publishing 2 Engineering 2 Power generation

38 Jerry P. Miller 2002 Industries Represented: Security 2 Information retrieval 2 Legal Accounting Environmental services Real estate Services Business research Direct mail Automotive

39 Jerry P. Miller 2002 Countries Represented: U.S. 106 Spain 3 Canada 3 Germany 2 Australia 2 Switzerland 1 Sweden 1

40 Jerry P. Miller 2002 Since 9/11, 32% have found it more difficult to gather information from government Web-sites.

41 Jerry P. Miller 2002 Since 9/11, 53% have found it more difficult to gather information from corporate Web-sites.

42 Jerry P. Miller 2002 Since 9/11, 49% have experienced differences in the willingness of people to talk with them when they conduct primary research.

43 Jerry P. Miller 2002 Since 9/11, 66% reported that the heightened awareness about security affected the way their responsibilities were defined.

44 Jerry P. Miller 2002 Since 9/11, 72% reported that research targets and topics, methodologies and budgets have changed.

45 Jerry P. Miller 2002 Since 9/11, 45% have changed how they collect information.

46 Jerry P. Miller 2002 Since 9/11, 58% have changed how they protect their proprietary information.

47 Jerry P. Miller 2002 Since 9/11, 41% have altered their use of third-party researchers.

48 Jerry P. Miller 2002 Since 9/11, 68% have heightened their security efforts.

49 Jerry P. Miller 2002 Since 9/11, 49% have re-examined the legal and ethical aspects of their CI function.

50 Jerry P. Miller 2002 Since 9/11, of the 70 respondents who have re-examined these issues, 48% have placed additional parameters on how they collect information.

51 Jerry P. Miller 2002 Since 9/11, 54% think practitioners are working more in the gray area now than they had in the past.

52 Jerry P. Miller 2002 Since 9/11, 48% have counterintelligence and security programs incorporated into their CI efforts.

53 Jerry P. Miller 2002 Comments: More are going over the gray line since its difficult to get people to talk. A broader array of issues are now perceived as competitive. Most said their security program was separate from CI, but increased inter- relationship.

54 Jerry P. Miller 2002 More Comments: A major U.S. Biotech firm and a major German-based pharmaceuticals firm reported little, if any, changes since 9/11. 9/11 has had less impact in Europe where security had already been an important function, especially in Germany.

55 Jerry P. Miller 2002 More Comments: Former government intelligence officers are selling their previously unacceptable skills to corporations. Responsibilities have increased as the business landscape has broadened considerably. Gary areas expanded due to the heightened value of information

56 Jerry P. Miller 2002 More Comments: Anthrax scare impacted direct mail function in the financial services & consumer package goods industry. Corporate America has increased its use of CI for counterintelligence and security topics.

57 Jerry P. Miller 2002 Current Trends & Issues: CI will not be as big in the future because we are moving to a world of cooperation rather than adversarial business practice Hostile entities could approach firms for information under the guise of buying a product Analysis is still an art, but some people think the technology can replace the art

58 Jerry P. Miller 2002 More Trends & Issues: Search engine technologies are in their infancy in terms of being customer driven In many firms, the CI staff have failed to develop metrics to measure the impact of CI and to develop wide-ranging support across the firm to support CI. CIs role in protecting information has greatly increased.

59 Jerry P. Miller 2002 More Trends & Issues: Most practitioners cant find the time to analyze; they are too busy handling information. CI staff may have to use basic research techniques to establish early warning systems After 9/11, attorneys began to review primary research projects

60 Jerry P. Miller 2002 More Trends & Issues: CI staff struggles with the paranoia of proving their value to management, who think in the short-term Novices often have bosses who are clueless as to what skills they need; so, many people dont stay in the practice too long Still no good business intelligence or knowledge management software available

61 Jerry P. Miller 2002 More Trends & Issues: CI staff havent communicated well with end users, so we lack credibility and are often not viewed as well as those in the finance department Best data comes from people, but corporations dont support these efforts as they lack the patience it takes to gather input from people.

62 Jerry P. Miller 2002 More Trends & Issues: Military intelligence techniques relax ethics so CI had to pull away to maintain credibility CI and security staff must work closely together Clients have unrealistic expectations on whats on the Web, so CI folks have to constantly stress the importance of conducting primary research