Most companies have a fairly good handle on competitor capabilities. The managers have created at least one SWOT chart taking into account internal strengths and weaknesses relative to your competitors.
Yet the real goal of competitive analysis – to predict the future plans and objectives of competitors – is where competitive analysis can be particularly revealing.
Competitive analysis is both a vehicle, an instrument, a tool used to serve as the foundation or infrastructure of strategy, and it is an end, in and of itself. In his 1996 book Competitive Intelligence, Larry Kahaner defined competitive intelligence as "a systematic program for gathering and analyzing information about your competitors' [or acquisition target's] activities and general business trends to further your own company's goals."
Most practitioners of competitive analysis have years of experience, often in other analytical arenas, and are able to spot trends and identify patterns efficiently. Competitive intelligence operatives gather their insights overtly. Secondary sources, such as the Internet, published material, and speeches may be browsed, but the most valuable and most important research tool is the telephone. Analysts developing primary research are well-spoken, articulate professionals who are able to develop interactive conversations with industry experts.
Telephone research is effective for a number of reasons. The insights that are gained are timely. Since the interviews are "live" and interactive, the researcher can ask the respondent specific questions and follow-ups that act as cross-checks and verify information obtained through other means. Merely researching published information in the public domain does not offer this advantage. Clarification of confusing issues or apparent contradictions is much easier when the source is on the telephone.
Contact with numerous experts brings researchers many steps closer to the knowable "Truth". Instead of basing decisions on a one-sided perspective, acquirers are able to develop a complete understanding of the trends affecting an industry overall and the general competitive landscape of a marketplace which are critical to executing value-creating acquisitions that afford competitive advantage.
Below are some elements of an effective competitive analysis process:
· Focused on a list of information points critical to a particular (evolving) strategic decision.
· Ongoing and never-ending.
· A data collection plan encompassing primary (first hand from competitors), secondary (published data), and tertiary (discussions, largely online) insights.
· A collection and analysis database that is accessible to key decision-makers throughout the organization.
· Assessments (continuously) of the intelligence gap.
· An analytical function that ties information to strategic implications for corporate strategists.
· Outputs that conform to the needs of the decision-makers (alerts, projections, background context, strategic plan implications)
After establishing an ongoing process, the next step is to develop a list of all competitors. It is useful to know where your competitors earn their revenue, and ideally, the percentage gained from each product or service area in each market segment. They may be earning revenue in areas you never considered becoming involved. If you can determine that the level of profitability in these areas is significant, there may be an opportunity for you.
By speaking with competitors, competitive analysts should be able to gather candid insights about the perceived opportunities and threats that competitors see. After determining what each competitor sees as a potential opportunity or threat, it should be relatively easy to determine what each company's primary and secondary goals are. After determining the Goal, the next logical question is to ask how the competitor plans to accomplish the goal. Professional competitive analysts leverage the client’s time by scrutinizing informational puzzle pieces and developing pictures that shed light on the direction of a company's corporate strategy, marketing plans, production schedules, and more. The result is a prediction of the competitor’s intentions and strategies.
Executives who ignore competitor opportunities are doomed to develop strategies they cannot (or do not wish to) accomplish.
Comments