Competitive Intelligence in a Digital Economy
Competitive Intelligence in a Digital Economy
Competitive intelligence is a prerequisite to remaining competitive in the face of disruption. It's a CEO's way of seeing what others are offering or plan to offer in their market, and to anticipate how the competition might respond to their competitive moves. And without being able to anticipate how breakthrough technologies will be used to acquire customers in your market, companies won't be equipped to make informed decisions, which often results in guesswork.
Companies that don't arm themselves with the right type of digital economy intelligence are already finding themselves being surprised too late in the day. Because often their customers will have already started jumping ship and telling the world about the new players and their offerings.
Amazon made a huge splash with its $13.7 billion acquisition of Whole Foods. The big question is, which industry will Amazon, Google or other tech-powerhouse enter next? Building materials, chemicals, electrical, metals, pharmacy, and many more are all vulnerable. So what competitive intelligence do you have on the disruption that is being prepared for your industry? – either by the tech powerhouses or unknown start-ups. No CEO can afford to turn a blind eye to the hidden intelligence that can expose both the opportunities and threats that require tactical and strategic responses.
What is Competitive Intelligence?
Competitive Intelligence involves the collection and analysis of information to anticipate competitive activity, to see past market disruptions and interpret events. Because whether you want to admit it or not, regardless of the industry you’re in, your competitors are out there. Some visible, many not, others embryonic.
At a basic level, competitive intelligence can be broken into two main types:
Tactical competitive intelligence – shorter-term and seeks to provide input into issues such as capturing market share or increasing revenues.
Strategic competitive intelligence – focuses on longer-term issues such as key risks and opportunities facing the business.
Using new competitive intelligence tools and techniques, along with a process to collect, analyse, disseminate, and interpret data from the competitive environment is important to acquire both tactical and strategic intelligence that can be acted upon.
Competitive Landscape Shift
Being acutely aware of the competition is very different to what many CEOs are accustomed to from their past. In the digital economy, competitive intelligence is highly strategic in nature as it assembles information to create an accurate prediction of future market conditions. It includes technological breakthroughs that will underpin the rise of completely new and powerful business models.
Back in the day, established incumbents used to compete largely against one another. They knew each other extremely well and had all been around for many years. It was almost as if every industry had its own club of competitors. Each CEO often had a pretty good handle on what their peers were doing strategically.
That’s all changed now and disruptors are capable of rapidly acquiring large chunks of market share, taking incumbents by surprise and throwing them off balance in a just a matter of months. Little known start-ups now disrupt markets at unprecedented speed and steal customers from under the noses of established global companies. Their potential is acknowledged with venture capital in their quest to exploit the gaps that incumbents have left wide open.
Then there are the tech powerhouses like Amazon and Google that are venturing into new industries, and as hyperscale businesses, they pose a serious threat to incumbents. These hyperscale businesses enjoy unprecedented operating leverage, which pales what traditional businesses can achieve into insignificance. Innovation and digital is at the heart of what they do, whereas many incumbents are only recently beginning to dabble in these new competencies.
Digitisation lowers entry barriers, causing age-old boundaries between industries to get taken down. This allows established incumbents in other industries to gate-crash new markets. Even very small companies that might never reach scale, can steal small segments of customers from incumbents.
The integration of breakthrough technologies such as IoT and AI are enabling the birth of new business models that will render existing ones antiquated, and yet most firms still know little about the opportunities and threats this presents.
It’s clear that the nature of competition that companies need to look out for is very different from what it used to be. It’s far less obvious – which makes competitive intelligence even more important, and using competitive intelligence to leverage technical innovations is vital for survival.
Do You Know What You Don't Know?
Knowing who your competition is or could be, is key to defining your short, medium and long term strategy, which in turn gives you more control over your future. The alternative is letting the competition disrupt your market and then reacting as best you can to what could have been an avoidable crisis. This makes competitive intelligence an essential component to developing strategy.
But competitive intelligence must be acted upon. All too often companies acquire competitive intelligence but fail to act on it. If Motorola, Polaroid, Nokia and others had acted upon competitive intelligence, perhaps things might have been different for them. But their leaders thought they knew better. Competition in the digital economy changes customer expectations as they become accustomed to completely new experiences and value, delivered through new platforms.
Should you cooperate with your competition? Should you compete with them, attack them or even buy them? You can only respond to these questions with informed decisions when you have the right level of competitive intelligence in front of you.
While most companies can find substantial information about their obvious competitors online, it's important to understand that competitive intelligence in the digital economy goes way beyond merely trawling the Internet for information.
Don't wait for a powerhouse like Amazon to make a move on your industry. Acquire the competitive intelligence you need – before it's too late.
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