Competitive intelligence as a management tool

The concept of CI is multidimensional, but its connecting component is strategic advantage. Calof and Wright (2008) described CI as a continuous and evolving process by which businesses assess the behaviour and capabilities of their current and potential competitors to assist in maintaining and developing a competitive advantage. Systematic CI is important in allowing organisations to keep step with the changing market conditions and avoid serious errors (Anderson & Hoyer, 1991; Patton &

McKenna, 2005).

Pellissier and Nenzhelele (2013) have conducted a qualitative stady on all identified sources establishing and analysing CI definitions. As a result of 50 definitions of CI, common and unique characteristics were identified. The following comprehensive and universal definition is therefore proposed for CI (Pellissier &

Nenzhelele, 2013): A process or practice that produces and disseminates actionable intelligence by planning, ethically and legally collecting, processing and analysing information from and about the internal and external or competitive environment in order to help decision-makers in decision-making and to provide a competitive advantage to the enterprise.

It includes CI, as well as intelligence collected on customer, suppliers, technologies, environments or potential business relationships (Gilad, 1989). It involves discovering, analysing, and using intelligence

implementation of business strategies in contemporary organisations (Hughes, 2005; Prescott & Smith, 1987; Dishman & Calof, 2008). It allows top managers to make better strategic decisions based on developed intelligence and a systematic and formal approach (Dishman & Calof, 2008; Gilad, 2003).

CI consists of two overall activities: first is the use of a public source to develop data (raw facts) on competition, competitors and the market environment; second is the transformation, by analysis, of those data into information (usable results) (McGonagle & Vella, 2002a). CI is not just market research (Bose, 2008; Pelsmacker et al., 2005) or business scanning, rather, it is a process of knowing what the competition is up to and staying one step ahead of them, by gathering information about competitors and, ideally, applying it to short- and long-term strategic planning (Wright et al., 2002; Dishman and Pearson, 2003; Jourdan et al., 2008). In fact, CI has long been proposed as a strategic business tool in an effort to increase a company’s competitiveness (Pelsmacker et al., 2005).

There are numerous definitions of CI, but Calof and Skinner (1999) provided one that is simple:

‘Competitive Intelligence is actionable recommendations arising from a systematic process involving planning, gathering, analysing and disseminating information on the external environment for opportunities, or developments that have the potential to affect a company’s or country’s competitive situation’. According to the SCIP, ‘CI is a systematic and ethical program for gathering, analysing and managing external information that can affect your company’s plans, decisions and operations’ (SCIP definition). CI is not just the monitoring of secondary sources, such as news clippings, and it is also not a new business activity (De Pelsmacker et al., 2005). Furthermore, as intelligence is developed on a systematic and formal basis, it allows top managers to make more well-informed decisions regarding future events (Dishman & Calof, 2008; Gilad, 2003).

In fact, CI that refers to corporation or business intelligence is the art of collecting, processing and sorting information to be made available to people at all levels of the firm, in order to help shape its future and protect it against current competitive threats: it should be legal and respect codes of ethics, and it involves a transfer of knowledge from the environment to the organisation within established rules (Zangoueinez had & Moshabaki, 2009). It could affect a corporation’s competitive position (Rouach

& Santi, 2001).

In ‘Proven Strategies in Competitive intelligence’ Prescott and Miller discussed ‘the new world’ vs. ‘the old world’ in the context of CI, and compared the new and the old world of the company ‘Procter &

Gamble’, in order to emphasise the role of CI in increasing the competitiveness of the company (Table 6).

Table 6. Competitive intelligence at Procter & Gamble

• Routine report generation, reactive

• Responsibility of CI analysts

• Highly centralised and highly decentralised

• Individually and functionally driven

• ‘Need to know’

• Limited and sporadic top-management support

• CI embedded in strategy development and option analysis

• Everybody’s responsibility

• ‘Hub & spoke’

• Team effort

• ‘Need to share’

• Top management deeply involved

Intelligence is viewed as a process comprising a number of activities, steps or constructs that should follow on from one another without any of the steps or actions being overlooked (Kahaner, 1997). Key constructs or stages that have emerged in the literature are as follows:

(1) Planning and focus - focusing on issues of highest importance to senior management (Daft et al., 1988; Herring, 1998; Gilad, 1989)

(2) Collection - the focused collection of information from a variety of sources internal or external to the company (Collins, 1997; Herring, 1998)

(3) Analysis - converting information into ‘actionable intelligence‘ on which strategic and tactical decisions may be made (Gilad and Gilad, 1986; Kahaner, 1996; Calof and Miller, 1997; Herring, 1998) (4) Communication - packaging and communicating the results of the CI process or project to those with

the authority and responsibility to act on the findings

(5) Process and structure - those structures that ensure effective CI can be performed

(6) Organisational awareness and culture - to ensure that CI is well executed, and that all should participate, there must be the right competitive culture and information-gathering (i.e. it should be on everyone’s mind) (Kahaner, 1996).

Theoretically, it is thus postulated that CI consists of planning and focus, collection, analysis and communication of intelligence, as well as the necessary processes and structures and an organisational awareness and culture.

There is, however, agreement that the CI process is not just a function in the firm, rather it is an attitude towards organisational learning, information sharing, a co-operation driven management culture and a desire by decision makers to capitalise on gathered intelligence (Wright & Calof, 2006).

The importance of culture as the bedrock to successful information sharing has also been suggested by scholars (Blenkhorn and Fleisher, 2005; Wright and Calof, 2006; Desouza and Paquette, 2011; Hislop, 2013).

Several studies have shown that organisational and cultural issues are the most difficult problems to