What is Competitive intelligence?

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Competitive intelligence is about more than just market research. Knowing yourself and knowing your enemy only gets more important as the world becomes increasingly wired and globalized.
By Ethar El-Katatney

Market research is indispensable, but it will not always deliver results — not for highly competitive, fast-changing, action-driven businesses that need to make decisions every day. Corporate espionage is illegal and unethical, but there’s no denying that a lot of businesses would have much to gain from it. The solution? Competitive Intelligence (CI).
Although it began in the US in the 70s, CI entered the Egyptian market only four years ago. Dr. Giselher Dombach, CEO of German-based company GEDcom AG, is the pioneer.
49-year-old Dombach was born in Germany and graduated with a Ph.D. in biotechnology and bioengineering. But when he realized his skills lay elsewhere, he completed his MBA and embarked on a 20-year career in consulting. Dombach has lived and worked in the Americas, Europe, Africa and the Far East in addition to teaching at several universities. He also has extensive military training (and we’ll find out why this is important later on), having served as a lieutenant colonel in many of today’s crisis regions, including Afghanistan and Kosovo.
Dombach arrived in Egypt in 2000 to teach at the German University in Cairo. Believing that he had found a country with great potential, a country that was “the ideal hub” for this area of the world, he decided to open a second branch of GEDcom AG in Cairo. To him, the CI business here is “embryonic, [and] that’s why [Egypt is] a very fertile ground to expand our business in.”
GEDcom AG is a CI company, which also evaluates start-up companies, commercial due diligences, and business opportunities for German companies in crisis regions. The bulk of their work however, is CI. But what exactly is CI?Competitive Intelligence
CI is a process carried out to profile your competitors in order to forecast their moves. We live in a very dynamic world, where CEOs and company decision-makers need to know what the competitors are actually planning and how they are responding to their own moves. CI is also considered a product, giving you a report on your competitor’s plans.
CI differs from market research, which is more stable, scientific, long-term oriented, and needs a certain sample size on which to apply scientific methods and get an overview of potential customer acceptance of one’s products. CI, on the other hand, directly addresses the specific, short-term intelligence needs of decision-makers in what Dombach calls Priority Intelligence Requirements (PIRs).
“I’ll give you an example,” he says. “If you, as a CEO of a company, would like to acquire another company as a move to get entrance in [to] another market, you’d like to know: Is that also what your competitor is planning? And if not, how will your competitor react? Will he or she retaliate and win? That is something which is much more short-term oriented but much more action-driven.”
Neither does CI focus on a specific study of competitors and the market, instead it includes studies of other factors outside of the direct market situation, such as technology positions and human resources. So how does it work? According to Dombach, it’s just like the military.
“CI concepts all come from the military. CI was invented by ex-CIA, NSA, and military intelligence agencies,” he begins. “The CI cycle is very similar to the military world [because] it’s about the PIRs of the CEO: What do I need as CEO in order to make my decision? Then it goes directly into the planning concept: Which target [do] I need to approach in order to get the information in order to come up with my intelligence?”
The information collected to develop intelligence briefings comes from secondary sources, primarily through ‘human intelligence.’ CI professionals network with industry experts to gather information at conferences, trade shows and industry events. That’s why companies usually hire external CI experts to get the information — because if you are a person with military background, according to Dombach, and “you are talking directly to your competitor, you will get the right information.” Therefore, the ‘human intelligence’ has to bring with them both military and economic experience to be successful in the CI field.
The information is then analyzed through static or dynamic simulations, and disseminated in the right way to decision-makers, providing them with recommendations and suggestions for action. If the intelligence gathered is not usable or actionable then it is ignored, meaning it is not intelligence. All you have to do, says Dombach, is “transfer and transform [the information collected] to the economic world, and that’s why [] it’s good to have on one side the fully fledged consultant and on the other side combining this with [] military experience.”
According to the Society of Competitive Intelligence Professionals (SCIP) — a global, nonprofit organization whose main goal is promoting CI as a discipline that is unlike corporate intelligence and bound by strict ethical guidelines and of which GEDcom AG is a member — CI “adds value to information-gathering and strategic planning by introducing a disciplined system not only to gather information, but also to perform analysis and disseminate findings tailored to the needs of decision-makers.”GEDcom AG
GEDcom AG is the only fully dedicated CI consultancy in the Egyptian market. Its employees are a mix of Egyptians and non-Egyptians, but all have methodological expertise from the military sector, along with industry and economic expertise. The consultancy helps companies construct a suitable CI organization and trains their clients’ staff in implementation of CI activities.
An example of a CI activity is wargames, a method of analyzing the retaliatory potential of a company’s competitors. The company organizes several teams, brings them together in a room, and assigns each team the identity of a different competitor. Then they simulate what will happen if the company goes ahead with an operation move, whether it’s embarking on a new technology, bringing a new product to the market, diversifying their product line or acquiring another company in a mergers and acquisition operation.
In addition to providing companies with CI, GEDcom AG also provides them with counterintelligence services, because there’s nothing to stop your competitor from using CI against you in return. The services include identifying competitors’ CI operations and trying to neutralize them, in addition to teaching companies operation security (OPSEC) measures.
“Companies spend hundreds of thousands of dollars protecting their assets,” explains Dombach. “But in our high-tech world the real assets are the minds of the people. So by OPSEC measures what you try to do is to identify the secrets that may be of interest to your competitors, what are [your] vulnerabilities and how [you] can prevent the access of competitors to [your] trade secrets. It’s no secret that other companies try to use corporate espionage in order to get your trade secrets [] [which] is the best way to try and find out what are the vulnerabilities [of your competitor].”CI in Egypt
Know what your competitor is going to do before he does it. Keep them from knowing what you’re going to do. Completely legal. It sounds too good to be true. And if there’s one thing about Egyptians, they won’t reach into their pockets until they know where their money is going and have good reason to expect a return. It would seem that GEDcom AG might have a difficult time proving this since it does not divulge its client list, which would undermine their activities. So how did GEDcom AG go about securing business?
“The customers in Egypt,” says Dombach, “are [mostly] international customers because it’s quite a new field for Egyptians [] who are not aware of [the importance of CI]. When you talk about [it], the first question [Egyptians ask] is, ‘what’s the difference between market research and CI?’ If you [...] say ‘it is more action-driven oriented,’ then you see the eyes of your counterparts at the table widening, and they acknowledge [its] importance.”
And so what GEDcom AG is trying to do is create an awareness of CI, counter-intelligence and OPSEC measures in the Egyptian market through word of mouth and holding seminars, which they will start giving at the beginning of 2008.
Regarding his Egyptian client list, Dombach says they are companies in life science industries including high-tech and pharmaceutical companies, but also companies in the consumer goods industry and the B2B business.
Who does he believe his clients should be? “All companies which are in a very intense global and rapid competition,” he answers. “Companies where products have a very short life cycle, because these companies have to act now. Companies which are not protected by domestic home market but [are out facing] international competition.”
Our world today is complex and fast-changing. Instinct and intuition can no longer be relied on. Companies who need correct and action-specific information have much to gain from CI; companies who want to improve their competitive position, enter new markets, or acquire new technologies are all in need of CI. But it is yet to be seen whether Egyptian companies will realize that CI helps them gain a sustainable competitive advantage without venturing into the murky waters of corporate espionage.
In conclusion, says Dombach, “People say [that] we [progressed] from [an] agricultural society, to an industrial society, to an informational society, [now] we are living in a knowledge society, but actually I think this is no longer true. We are living in an intelligence society.” And because we are living in an intelligence society, “What we’d like to know is [how our] customers [can] outsmart competitors and how they can make the right decisions. It’s a game and they would like to have the best cards; we help them.”Soldier OnTurning your boardroom into a war room is the first step to mastering the art of Battle ManagementBy Dr. Giselher Dombach
Remember the “Art of War” cover story that bt ran back in August? It was refreshing to read the author drilling down through all the new management and motivation fads, going all the way back to the ancient wisdom of successful individual behavior in business. Yes, it is true: In the end, competition is a constant economic battle. And the secrets that count in the economic battlefield are the secrets of successful warriors.
Aside from individual leaders, corporations should also follow lessons learned on the battlefield. Let’s face it: We’re fighting our competitors in a constant economic war. We are overwhelmed with the latest management fads, which mainly exist to help consultants make more money. Nice stuff to talk about — but we’ve heard it all before.
Forget about these fads. Let’s get down to the basics and see how we can use the concepts of the world’s most successful armies to succeed in this economic battle. Call it what it is: battle management.Intelligence Matters
Have you ever seen how closely different units cooperate in military operations? Intelligence and operations are constantly interacting in the Operations (OPS) Center in order to lead intelligence-guided operations. You will see how the intelligence section provides the commander with action-oriented information based on his specific priority intelligence requirements (PIR).
Based on this intelligence, the planning section works out operational plans and the operations branch implements them, leading to other intelligence requests and so on. All sections are closely interacting in an OPS Center that uses all possible visualization aids in order to provide a first glance overview of the current status on the battlefield.
Compare this to our corporate world. The CEO is overwhelmed with raw data and information about every aspect of his competition. Action-oriented intelligence is rarely provided. At the end of the day, the market research department has to justify its existence by providing data, doesn’t it? Most of the time its work is reactive, not active. It’s not their fault; they just need the specific PIR of the CEO.
In corporations, we see lots and lots of raw data or information, but little intelligence. What about the interaction between strategic or operational planning, implementation and intelligence departments? Yes, data and information are used in planning, but functional barriers often hinder close cooperation.
Intel-guided operations often fail due to competing egos and inter-departmental rivalry. What is missing is a physical focal point — an OPS Center. Board rooms should become war rooms where computer supported visualization helps bring together intelligence, planning and operations. Precious mahogany tables are not enough. What is needed today are functional OPS Centers where executives make intelligence-guided decisions.Winning the Fight
The picture is not so bleak — some companies have successfully learned from the examples set by the military. They practice the art of battle management. CEOs formulate their PIR, which focuses their planning. Departments for competitive intelligence are set up to employ legal, analytical and collaborative tools to achieve an intelligence advantage over the competition. These companies don’t use trips to international trade fairs and conferences as rewards for deserving employees. They see these missions as intelligence operations, with temporary OPS Centers. Targets are identified, sources developed, all in order to gather specific data which is turned into actionable intelligence.
Competitors are profiled and HUMan INTelligence (HUMINT) and TECHnical INTelligence (TECHINT) are used to gain insight into their strategic plans. OPS Centers are used to coordinate intelligence gathering and to link this with strategic and tactical business planning and current operations. OPS Centers are also used to plan and execute mergers and acquisitions, market entries, media campaigns and other critically important missions. OPerations SECurity (OPSEC) and the instruments of counterintelligence are used to fight competing intelligence operations. War gaming is used for dynamic simulations.
Is it legal? Of course it is! People are more than willing to talk about their work. So, let them open their hearts and minds to your sources at fairs and conferences. It is legal to purchase satellite images in order to see which parts of your competitor’s factories and facilities are really working. It is not corporate espionage — it is legal competitive intelligence gathering, a part of corporate battle management.
Why isn’t it widely used in the business world? Why are companies still gathering mountains of undirected raw data and information, and dumping it on their CEO? Why are leaders still residing in boardrooms with fine, wooden furniture instead of technically advanced, functional OPS Centers? Why don’t they train people in OPSEC basics to avoid leaking strategic information?
The basic problem is that most companies believe in a fundamental conceptual difference between economic competition and military battlefields. These boundaries are blurring. Concepts of both worlds are increasingly interchangeable. And successful companies — and armed forces — have no fear of contacts with the ‘other’ world. Armies have been using management theories developed by business and industry for the last century. Successful leaders, whether armed with rifles or PowerPoint, use the concepts of battle management. As Karl von Clausewitz s “Only great and general battles can produce great results.” bt