The Need for Competitive Intelligence

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Competitive Intelligence? What’s competitive intelligence? According to Wikipedia “Competitive intelligence (CI) is the action of defining, gathering, analyzing, and distributing intelligence about products, customers, competitors and any aspect of the environment needed to support executives and managers in making strategic decisions for an organization“.

Clearly though this defines any organization, however, it is typically interpreted as some classified top super secret information on your competition and utilized to gain a competitive advantage. Sure it could be that, however, we’d like to think that CI is an ongoing process that defines the market sphere and accumulates relevant knowledge that can be put to use by members of the company and board in formulating a concise strategy.

So how does or should a startup go about collecting CI, read, talk, visit trade shows, collect “relevant” information on the industry, as well as other industries that directly affect yours. i.e. if a new technology launches which can lower your production costs, see if you can implement it, your competitor may not be able to or may not know the new complimentary technology was launched, and you can beat them on price. Starting to see the need for CI now?

That said – different industries need different levels of CI, that in a number of ways are relevant to the following factors.

Competitive Intelligence Criteria

1. Level of capital investment – low investment startups need worry less about CI than ones requiring a million+ to get to market? Why? Simple, with little investment your clients should be virtually at your doorstep. If you have long lead times, and are in a competitive industry, well… there’s a good change there exist a few competitors trying to do the same thing you are.

2. The Blue Ocean approach – if your business is simply not looking at your market’s competition and going after an entirely new or competitor irrelevant market segment (think MSFT XBox, Sony PS3, Nintendo Wii), your level of CI involvement may not have to be as high as other industry competitors. In the above example, Nintendo basically made the Xbox and PS3 irrelevant as they targeted a totally different type of home video game user. Notwithstanding, this approach requires a deep understanding of the industry.

3. Identifying specific types of CI – are partnerships necessary, is your business based on intellectual property (IP) or perhaps human capital? Are there technology opportunities, risks? Identify and assign roles to each to base and develop your CI strategy. There is after all no need to expend resources where they are not needed.

However since, we’re focusing on Biotech this week, we found a great list of CI requirements at nature.com for any Biotech Startup, the list can be found via above link and continues now.

Types of Competitive Intelligence

1. Intellectual property. Depending on the company’s resources, one should do a comprehensive patent literature search at least once a year. When searching for patents, it is useful to start with the European Patent Office, which publishes all patent applications within 18 months of when they are filed, usually after one year, whereas the USPTO will not publish patents until 18 months after they are filed. This is valuable information, because most countries do not make a patent available to the public until it has been reviewed by the patent office.

2. Market need and size. Identifying target market segments will allow the company to know what markets competitors are planning to move into or are ignoring. During the long development periods required for most biotech products, the market needs and size will change. It is therefore vital to keep CI up to date by regularly consulting with key people, such as members of a carefully chosen Scientific Advisory Board and a broad sample of experts in the relevant fields. Networking at professional or industry conferences is a good way to do this.

3. Partnerships. By monitoring new technologies entering the market and in development, the company can identify possible partnerships with other companies and academic institutions. Scientific journal and patent literature searches along with professional conferences can all be potentially fruitful sources of new partners.

4. Competitive environment. It is important to continuously monitor the competition. Some players will drop out, while new, potentially disruptive technologies developed by small firms may enter the market that may not be readily apparent as competitors. The company has to be very expansive in thinking about the possible kinds of competitors. By attending conferences and examining relevant ads, the company can assess competitors’ product strategies.

5. Marketing and distribution. By talking with distributors’ and competitors’ sales forces, the company can determine how competitors are getting their products to market. This information can help the company develop its own more efficient and targeted strategy for product marketing and distribution. The company can, for example, look at how much competitors spend on advertising or how big competitors’ sales forces are to create benchmarks for its own goals and performance. Although most people will decline to talk to a “competitor,” many will talk to their “peers” in other companies if the questions are asked in the right way.

6. Technology opportunities and risks. By reading the publications of competitors’ scientists and their academic partners and talking with them at conferences, the company can identify the bottlenecks that competitors have encountered when developing similar technologies.

7. Regulatory and reimbursement issues. Surveying the regulatory agencies is one way to determine the current regulatory requirements and identify new issues that might affect the approval of a product or the way it is labeled and marketed. With a CI process one can examine the various factors in the regulatory environment and anticipate changes that may profoundly affect the enterprise.

8. Financing options. One of the most vital tasks for the leader of any startup is ensuring the resources that the firm needs to operate are available. CI can help determine which venture capitalists are investing in the firm’s technology area and what organizations might be interested in acquiring those technologies. This data can better establish the value of a company during financing and can potentially strengthen a firm’s negotiating position. In addition, CI can be used in examining merger and acquisition candidates, government grants and joint-venture partners that could provide alternative sources of funding, thereby increasing the firm’s negotiation leverage.

9. Human capital. Salary surveys and analyses of job ads can provide important insights into competitors’ staffing strategies. Likewise, recruiting agencies, while keeping their client information confidential, may be good sources for industry skill trends and the strategies of non-client firms. This kind of information can allow the company to determine the type of people it needs to succeed in a market niche and what it will take to attract and retain them.

In all CI is a vital part of any business, and as mentioned before should be an ongoing and active process at all organizations, we oftentimes forget that we’re conducting it by talking to people, networking and reading up on relevant industry literature. But the rub is, that if you’re not actively participating in it, you will loose your competitive advantage. Take our recommendation, and have a talk about it at your next board meeting and have one person in the company actively collect CI and make strategic recommendations based on those findings.

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