9/7/2011 8:31 AM
"The ability to learn faster than your competitors may be the only sustainable competitive advantage"
- The Fifth Discipline: The Art & Practice of the Learning Organization, Peter Senge
Going head-to-head with competitors means knowing your competition. Overtaking competitors requires an ability to evaluate their best practices, understand vulnerabilities and learn from their strategies.
Competitive intelligence is an integral part of an organization's strategic planning. It’s a comparative mechanism to tell management what’s working, what’s not, and why. It is the key to knowing what is undermining or enhancing corporate performance. However all too often its focus becomes diluted and simplistic. Add internal politics, egos and product bias, and the result is a routine exercise comparing only the most basic product, service and price features. Companies are left working with fragmented, simplistic information that does not reflect current marketplace challenges.
Effective competitive intelligence takes a combination of frontline resources, sophisticated analytics and a multi-disciplined team of internal stakeholders to gather, interpret and act.
Learning from the opposition requires dissecting underlying strategic directions behind an organization's leadership, operations, market position and financial structure. Appraise competitors as if you had a financial stake in their business—give it an investor's "due diligence" perspective. Using the following, you can create a "snapshot" of your competition by defining key characteristics of their business:
Business Definition (Core/secondary business, key indicators: size, growth, profitability)
Strategic Vision (Base strategies, market focus, short/long-term performance and plans)
Best Practices (Strengths and vulnerabilities, market differentiators)
Marketing Mix (Product portfolio, price position, marketing tactics, distribution channel mix)
Financial Indicators (Historic trends, recent results, comparative benchmarks)
Infrastructure (Operations: staffing, service, technology; customer satisfaction)
Leadership (Internal/external stakeholders and influencers: visionary, Board, strategic alliances)
Understanding your competition can be one of the most important business tools in the company. It reveals how competitors view their business, implement strategies and succeed or fail in the market. Results provide value to every operating unit and can be used to:
- Develop counter-strategies
- Achieve brand differentiation
- Incorporate operating efficiencies
- Restructure marketing formula
- Address competitors head-on in sales situations
- Articulate customer preferences and perceptions
- Strengthen corporate message and communications
Having information to scrutinize a competitor's business and support your internal strategic decision-making sets the stage for a business to truly excel. It paves the way toward more informed decisions on product changes, customer preferences, pricing decisions and sales strategy. Real competitive intelligence is a disciplined, integral part of an organization’s strategic infrastructure—gather relevant data, process complete and accurate information, and produce actionable intelligence. It makes going head-to-head an easier battle.