Competitive intelligence practices: A survey

Competitive Intelligence Practices: A Surveq John E. Prescott and Gaurab Bhardluai University of Pittsburgh

As competitive intelligence (CI) gains acceptance throughout the world it is important to document “stateof-the-art’’ practices. While most organizations no longer question “if” they should have a CI program, many struggle to implement their efforts in ways that best serve organizational objectives. The proliferation of books, seminars, and consultants recommending a variety of approaches has further contributed to the dilemma. It is time to take a step back and examne the data on just how organizations are structuring their CI efforts. By loolung a t data regarding the actual practices of CI, practitioners can benefit in at least three ways. First, they can benchmark their efforts to industry norms. One way in which this article can be viewed is as a set of norms for CI practices. The survey respondents, being members of the Society of Competitive Intelligence Professionals (SCIP), can be assumed to be representative of leadingedge firms in the area of CI. A second benefit is that objective data can be shown to line managers to help them better appreciate the scale and scope of the effort currently being undertaken in the CI profession. The results are presented using a framework which focuses on four key components of any CI proCompetitive Intelhgence Review, Vol. 6(2) 4-14 (1995) CCC 1058-0247/95/02004-11 0 1995John Wiley & Sons, Inc.

gram: administration and structure of the program; characteristics of CI personnel; core project tasks; and the outcomes, benefits, and problems associated with CI programs. A third benefit is to assist in raising questions regarding the further evolution of CI within a firm (Prescott, 1995). The data clearly illustrate that there is a wide variety of approaches and levels of sophistication across the CI programs among the survey respondents. The data also reveal patterns which suggest that firms at varying levels of sophistication “approach” CI in different ways. Clearly, successful CI programs continue to evolve and the data can assist in this process.

Background on the Shdq Over the past few years there have been several studies oriented toward assessing the practice of CI (Ghoshal and Westney, 1991; Jaworski and Wee, 1992/1993; Prescott and Smith, 1989; Sutton, 1988; Wall, 1974; Zinkham and Gelb, 1985). These studies illustrate the growing importance and diversity of C1 in business organizations. However, since 1991 there has not been a systematic assessment of the broad set of components which comprise a

CI program. This study was initiated with the purpose of addressing this limitation. The survey of CI practices was developed through several steps. First, a review of the CI literature highlighted many issues (e.g., see Barndt, 1994; Bernhardt, 1994). The previous SCIP questionnaires of 1987 and 1991 were modified to reflect these issues. Next, SCIP’s board of directors and several other practitioners reviewed the draft questionnaire and provided valuable insight for the questions and format. The questionnaires were mailed to 1200 members of SCIP The survey was targeted to individuals in organizations that are responsible for conducting CI. Usable surveys were returned from 390 individuals for a response rate of 32%. The responses represented a wide range of industries includng industrial products (16.3%), telecommunications (lO.l%), consumer products (7.4%),insurance (7.2%), uthty (5.9%),health care (5.6%), computers (5.1%), and information (4.4%). The average size of the firms was over one billion dollars with an afier-tax R.O.E. of 5-1096. The average age of the CI unit was three years. There were 73 firms (19.2%) that had CI units less than a year old and 94 firms (24.7%) had programs for over six years. Two other background statistics of interest are the general level of uncertainty and whether there were ethical problems in their industry. O n a seven-point scale ranging from highly certain (1) to highly uncertain (7), the average response was 4.4. This average indcates a rather moderate degree of uncertainty. However, the lstribution across the categories was somewhat evenly spread. One hundred and thrty-three individuals (34.6%) indicated that there were ethical problems in their industry whde 175 (45.6%) indicated that there were no problems of this type. Seventy-six (19.8%) indcated that they were unsure if there were ethical problems in their industry. The industries with the most reported ethical problems were healthcare, information, and defense. The background data reveal that the sample is comprised of a diverse set of large firms that are relatively successful. The importance of this conclusion is that the interpretation of the data as a set of norms must be done in light of the characteristics of the sample. It is our conclusion that the sample is comprised of more rather than less sophisticated firms with respect to their CI practices.

The Design of Competitive Intelligence Programs The implementation of CI programs involves a set of four interrelated components: administration, personnel, core project tasks, and outcomes (see Table 1). Managers must

balance their attention to each of the components since they are fundamental to successful implementation and evolution of CI programs. The first component, administration and structure of the program, concerns the objectives, location, size, and budget of the effort. Characteristics of CI personnel relate to attributes of the individuals who “do” CI including salary, education, and time they spend on CI activities. While the first two components have received limited attention in the literature, core project tasks, the third component, are what most people think of when CI is mentioned. This component involves the steps of carrying out a CI assignment. The final component is the outcomes, benefits, and problems of CI efforts. This component is very important in assisting managers to evolve their CI efforts in ways that assist organizations in meeting their goals. The remaining sections of this article are organized around each of the four components.

Rdministration and Structure of Competitive Intelligence Programs A key aspect of any CI program is the manner in which it is structured. Many firms begin their CI efforts by experimenting with a structure to see if it adds value to the organization. Over time, as the organization gains experience with CI there is a need to modify the administration of the function. It is clear that organizations need to develop a structure whkh meets their unique needs. However, it is possible to identify patterns across a large number of firms that can be used as benchmarks. The profile of the prototypical CI program is summarized in the answers to the following questions: What Is the Objective of the Program and How Is It Operationalized? The main objective of CI programs is to provide a general understanding of industries and competitors. Two secondary objectives are to identify areas where competitors are vulnerable and to identify potential moves that competitors might make that would endanger the firm’s

Table 1.

The Four Components

fa CI Program

i 0 Administration and structure of CI program O Characteristics of CI personnel 0 Core project tasks 0 Outcomes, benefits, and problems

position. The data to support this conclusion are provided in the manner in which the respondents allocated 100 points across the three objectives. In the allocation, 46%, 26%, and 28% was allocated respectively across the three objectives. Two of the ways in which the objectives are implemented are the percentage of time devoted to the types of decisions and the comprehensiveness of the efiort. Tactical decisions are oriented toward implementing current strategies while strategic decisions concern changes in strategic direction. CI programs devote equal time to each of these types of decisions. CI programs are slightly more project-based (54%) than comprehensive (46%))in nature. There is no relationship between the type of decision emphasis (strategic versus tactical) and whether the program is comprehensive or projectbased. Where Should CI Programs Be Located and Should There Be a Centralized CI Effort? The location of CI programs is very important because it influences reporting relationships, budgets, and the types of projects that are undertaken. For this sample, 40% of the respondents are located in marketing/marketing research, 32% in planning departments, 9% have independent CI units, and 8% reside in R&D departments. The remaining programs are located in a variety of places including libraries and sales departments. Programs located in marketing groups are involved in significantly more tactical decisions than those located in planning and R&D. Related to this focus is the finding that CI programs located in planning and K&D are more likely to report to upper management than marketingbased and independent CI units. Independent CI units are more likely to focus on competitor moves while planners and marketers focus more on general trends in the industry. There is an average of one other CI unit in another location in the firm. While firms that have multiple location do interact, the extent of communication is nioderate (average rating of 4 on a seven-point scale). In the sample, 32% of respondents indicated that they were the only organized CI function in the firm. Being the only unit does not imply that the function is centralized. The data show that the majority of firms (65%) do not have centralized CI units. However, those firms which had centralized units experienced significantly more cross-unit communication than those multiple unit operations that were not centralized. Additionally, cen-

tralized CI units were more strategy oriented and had greater interaction with top management than noncentralized units.

How Large Should the CI Staff Be? The average size of the professional staff is three individuals. However, it is probably more realistic to discuss the median which is two due to the wide distribution in the sample. Further, 44% of the respondents indicated a staff of one individual. There was no part-time staff for 69% of the sample. The average size of part-time staff was one-half of a person’s time. CI programs averaged one f~ill-timesecretary. W h o Do CI Professionals Report to and Who Are Their Primary Users? Forty-four percent report to upper management, 39% report to middle management, while 17% report to others in their organization. The survey respondents were asked to report on their two primary users. The primary users in descending order were marketing, corporate, sales, planning, and K&D. Have Firms Developed a Code of Ethics? The data indicate that 38% of the sample had a formal code of ethics for their CI activities. CI units that were newly formed were less likely to have a formal code of ethics. The data suggest that it takes at least two years before codes of ethics are developed. What Budget Should We Allocate to the CI Function? Data related to the allocation of budgets should be interpreted with caution because firms differ in how various activities are funded. With this note of caution, the average budget is $350,000. A third of the sample had budgets under $100,000 and a third had budgets over $250,000. The median budget was $150,000. The vast majority (76%) of the sample expected their budget to increase or remain the same in the upcoming year. The breakdown of the budget into specific activities is reported in Table 2: In sum, the administrative coniponent appears to be structured in a manner which requires CI personnel to interact with others throughout the organization to accomplish their objectives. This structure is good in the sense that dispersing the function of CI throughout the organization will lead to an increased sensitivity and credibility of the function. A key challenge of this structure is

Table 2.

I

at the bachelor’s or beyond. Salary is positively correlated (p = 0.35) to education level. PhDs earned an av-

Budget Allocation

nctivih

Percentage Allocated

I Salary Clerical support Operating supplies/equipment Training/seminars/meetings Travel External database use Outside services/consulting/ research Miscellaneoudother

49% 5 6 5 6 11 13

5

to integrate the diverse intelligence produced in a manner that impacts decision-making.

CIPersonnel One of the most frequently asked questions regards the staffing of CI operations. The administrative aspects described above addressed questions regarding how many individuals to have in a CI function and their reporting relationship. In this section we examine four other aspects of CI personnel. The Appendix contains a list of the most common job titles for CI personnel. The average amount of time spent in CI activity in a typical week is 51%. This is consistent with the structure of most CI efforts in that they are located in planning, marketing, and R&D. Thus, CI personnel perform other tasks. When the sample was further broken down, 43% spent one third or less of their time on CI activities. In the sample, 37% devoted more than two thirds of their time to CI and 18% spent all of their time on CI. The amount of time devoted to CI had no relationship to salary. A second aspect of stafling relates to the years of experience that individuals have in the field. The average is 4.5 years. However, the data show a bimodal distribution. Forty-six percent of the sample has been involved with CI for three years or less while 35% had six or more years of experience. One of the challenges of SCIP is to identi@ training needs for a group that has different levels of experience. Salary level was positively (p = 0.19) related to the years of experience in CI. The majority of the sample (57%) has a master’s degree. In total 94% of the sample has an education level

erage of $78,000. Thus, PhDs earned more than $20,000 above the average salary. Individuals in R&D earned $67,000. The salary breakdown for the sample is reported in Table 3. The average salary is $57,000. The average was $68,000 for individuals working in organizations that had revenues in excess of $20 billion. However, an inspection of the data reveals a rectangular distribution. We explored the relationship of salary to many variables in the questionnaire. Few significant relationships were found. In addition to the ones mentioned in the above paragraphs, three other relationships were identified. Salary was positively (p = 0.17) related to the size of the respondent’s organization. That is, large organizations pay more. This is a consistent finding in the compensation literature. Second, salary is positively (p = 0.27) correlated with the size of CI budgets. Third, those individuals who worked in organizations which had explicit codes of ethics for their CI operations had higher salaries than those who did not have codes. The correlation was 0.19 and 0.13 when controlling for organization size. On average, indwiduals in those organizations with codes of ethics earned $6000 more than those without codes. The determination of salary is an important topic that needs additional research. The results indicate that CI personnel serve in key linlung positions in their organizations. Since most have other responsibilities, one of the challenges they face is to integrate others in the organization into CI. Given their solid education background and experience, CI personnel should be able to assume a strong advocacy position. As they move throughout the organization, the role of CI should gain credibility.

Table 3.

1

Salary Breakdown

Salarq Cakrgorq

Peintage ofSample

Less than $39,999 $40,000-49,999 $50,000-59,999 $60,000-69,999 $70,000-79,999 $80,000-89,999 More than 90,000

16% 18 15 18 12 8 13

.

I

< PreaoR and BhardMaj > Gore Proiect Tashs The third component, and arguably the most fundamental responsibility of CI programs, is the design and implementation of projects (Table 4).The intelligence cycle involves planning the study, collecting data, analysis, dissemination, and evaluation of the project. The averagc time devoted to each of the tasks is shown below. T h e collection and analysis phases constitute approximately 66% of the tinie allocated to a project. Planning and presenting the results represent almost 30‘% and are roughly equal in their tinie allocation. What is most interesting is that 28% o f t h e saniple reported that they did not devote any tinie to the evaluation of CI assignments. Beyond examining the tinie allocated to various activities in the intelligence cycle, the survey examined four specific aspects of CI tasks. The four activities are: (1) the types of information monitored; (2) the methods used to collect information and the extensiveness of analysis applied to the information to develop intelligence; ( 3 ) the extent to which a variety of analytical techniques are used; and (4) dissemination modes and their perceived effectiveness. E x h of the activities will be discussed in the sections below.

Types of Intelligence Monitored The types ofinformation to monitor is a key decision for every CI program (Table 5). This choice should be driven by the mission of the CI effort and the needs of intelligence users. Once the broad categories of intelligence needs are determined, the type and quality of the data along with tinie pressures determine the frequency of collection and the extensiveness of analysis. O u r questionnaire identified 16 information catcgories. For each category, the sample respondents were asked to make two assessments. First, frequency of collection was determined by rating each category on a seven-

I

Rctivitq

Percentage of Time

Planning Collecting data Data analysis Presenting and dissemination Evaluation Other

13 37 29 15 5 1

~~

Frequent monitoring and extensive analysis C> General industry trends 3 Potential competitors C:Technological development ,:-.I’ Marketiiig/sales/pricing Financial :I, Acquisition/divestiture activity Periodic nionitoring and some analysis C.1) Customers c:) Services provided 3 Operations of individual divisions/business units ~12Organizational goals and assumptions C.1) Manufacturing operations Channels of distribution , : .c Public and international affairs Ad hoc monitoring and little analysis z Supplier and procurement practices ,--, L‘, General administrative structure Human resources and practices “-1

k E . 1

~

:

6

point scale. T h e seven points were anchored with “continuous/with high frequency” at the high end, “periodic” in the middle, and “ad h o d b y special request” at the low end. The second rating involved the extensiveness of analysis applied to each of the information categories. The anchoring on a seven-point scale ranged from “data are analyzed with specific and extensive implications drawn” at the high end, “simple analyses such as plotting of trends with few, if any, iniplications drawn” in the middle, and “data are collected and stored in the same form in which they were gathered” at the low end. T h e presentation of the results will be done together since the Spearman Rank-Order correlation between the ranking for each category was 0.97. In other words, if an information category was rated high on frequency of collection it was also rated high o n extensiveness of analysis. O n e of the conclusions of the analysis is that CI analysts monitor and analyze a substantial amount of information. Given the breadth of information that is monitored, firms should be presented with few surprises in the competitive arena. The table above shows the extent to which each of the sources are monitored and analyzed. There are several conclusions that can be drawn from the data. The two most monitored and analyzed information categories are general industry trends and potential

competitors. Closely following these are technological developments, marketing, financial, and acquisition/divestiture activity. While these six categories are important they also involve data sources that are often readily available. As we examine the other categories, they represent activities that are more difficult to monitor but are important sources for the development of competitive advantage. A second conclusion is that there appears to be little systematic monitoring and analysis of suppliers, human resource practices, and the administrative structure of competitors. Given the dramatic increase in alliance activity and the quality focus of many firms, it is surprising that the above categories are given so little emphasis. A third conclusion is the low level of activity for many firms across all of the information categories. The data whch support this conclusion are drawn from the percentage of respondents who indicated that they did not monitor a particular activity or rated it at the extreme lower level (1) of the scale. For all categories, except general industry trend and potential competitors, at least 20% of the sample I d not monitor the category. The results are even more dramatic for the analysis of the information. There are at least four explanations for these results. First, many CI units have specific focuses driven by their location (e.g., R&D, marketing) which lead them to deemphasize certain categories of information. Second, CI units may have a difficult time finding information on certain categories such as distribution practices. Third, there is a lack of analytical tooldtraining for the analysis of information. Fourth, CI personnel and their clients may not see a need to perform more sophisticated analysis. It is important that we better understand how the combination of these and other explanations contribute to the degree of monitoring and analysis of information. Sources and Techniques of Information Collection Survey respondents were asked to rate the extent to which they used 25 sources and techniques for collecting CI. Table 6 divides the sources into four groups based on their use. The most heavily used sources by a large margin were trade journals and external databases. For both of these sources 59% of the respondents used them extensively (rating of 6 or 7 on a seven-point scale). A characteristic of all the sources in the most heavily used category is that they are easily accessible. Another characteristic is that with the exception of employees, they are external to the organization. It is interesting that key constituent groups such as customers, competitors, and suppliers are not used more heav-

Table 6.

Sources qf Competitive IntelIlqence

High use 0 Trade journals 0 External (oil-line) data bases 0 External hard copy documents 0 Employees O Industry experts 0 Trade organization Moderate use O Sales representatives 0 Customers O Internal documents 0 Tradeshows 0 Internal databases/CD-ROM 0 Telephone interviews Low use 0 Government records O Direct observation 0 E-mail O Clipping services 0 Security analysis 0 Competitors (contact directly) O Personal (face-to-face) interviews 0 Suppliers Very little use O Product purchasing 0 Freedom of information act 0 FOCLIS groups O Case studies 0 Mail questionnaires ~

~~~

ily to collect CI. These groups, along with other sources such as direct observation, interviews, product purchasing, and focus groups, require a different set of slulls than those sources in the high-use group. Also, with the exception of employees and possibly industry experts, the sources in the high-use group are learning curve sources. That is, they are most effective in providing an in-depth understanding of the general state of the competitive landscape when there is plenty of time available. This set of sources is consistent with the espoused objective of CI programs to maintain a general understandmg of their industry and competitors (see administrative section above). Many of the other sources mentioned above are target sources. Target sources are characterized as having spe-

a

Customer satisfaction surveys CI Issue analysis Merger and acquisition analysis G Core competence analysis C> Strategic alliances Low use 3 Benchmarking C; Critical success factors C: Management profiles -, Industry scenarios

--

(3Market signaling 7 ii Strategc group analysis

a Value-chain

analysis

competitors. While there is a large number of techniques for assessing the competition, C I programs focus o n only a few (see Table 7). Twenty-seven techniques were rated in ternis of their use. T h e most heavily used techniques were conipetitor profiling, strength and weakness analysis, and financial statement analysis. Each of these techniques is consistent with the general orientation of CI programs to assess their industry and competitors. Several observations can be drawn fiom the data. First, many of the techniques are seldom used. For 13 of the techniques in excess of 50% of the respondents stated they rarely if ever used the technique. Since all of the techniques are widely cited in strategic management and marketing textbooks, it is interesting to speculate on the reasons for their low use. Second, several of the techniques such as core competence analysis, value chain analysis, management proflmg, and assumption analysis could be considered to be complementary techniques to the high-use category. It would be interesting to better understand how some firms have integrated these techniques with the high-use ones. Third, many of the high-profile techniques such as benchmarlung, five-forces industry analysis, and reverse engineering had low or little utilization. Have these techniques run their course or are they more applicable to a certain class of CI? Fourth, the high-use techniques are more present- and past-oriented than future-oriented. Future-oriented techniques such as industry scenarios and market signaling have low use. It is interesting to note that one of the central issues facing CI programs is how to be more predictive (see issue section below). Fifth, while the high-use techniques are applicable for assessing diversified corporations, many of the other corporate-level techniques such as portfolio analysis, divestment analysis, merger and acquisition analysis, and political and country risk analysis are less used. There is an opportunity for synergy in this area.

D Portfolio analysis

ci Business process reengineering 0 Five-forces industry analysis 0 Multipoint competition Very little use C' Reverse engneering /3 Political and country analysis C' Divestment analysis a Experience curves 0 Stakeholders and assumptions S PIMS analysis

a

Dissemination of CI The effective dissemination of CI is a critical process since it closes the loop between those who use it in their decision-making and those w h o collect and analyze it. An overarching objective of any dissemination effort is to provide intelligence in a manner which assists managers in doing their job. Thus, feedback is a key aspect of the dissemination process. Users can assess the timeliness, accuracy, and relevance of the intelligence and thus assist CI personnel in improving their efforts. CI personnel can get

question that needs to be addressed is if the effectiveness of CI programs would be enhanced by expanded utilization of sources and techniques. For example, would a combination of target sources and increased sophistication in the application of analytical techniques significantly improve the effectiveness of CI programs?

a better feel for the types of intelligence needed and preferred format for delivering it, identifjr missing information, and suggest areas for future research. Twelve modes of dissemination were examined. Each was rated on a seven-point scale as to the extensiveness of use and perceived effectiveness. The rank ordering of the dissemination modes are shown in Table 8. The dominant modes of dissemination are custom reports, personal communications, competitor files, and presentations to end users. While competitor files were the third most heavily used form of dissemination they were ranked sixth in their effectiveness. Articles and books on CI often espouse the virtues of dissemination modes such as newsletters and bulletin boards. In the case of newsletters, 47% of the respondents stated that they rarely, if ever, use them. Newsletters are ranked ninth in terms of effectiveness with 40% stating that they are ineffective. In the case of bulletin boards, the percentage is 72 for nonuse and 68% feel they are ineffective. It appears that personal and specific modes are more often used and perceived as being more effective than impersonal modes such as databases and bulletin boards. Further, special retreats and in-house training seminars are rarely used as a mode of disseminating CI. Ultimately, the effectiveness of CI programs will be judged on the basis of how the core project tasks are implemented. CI personnel have a broad array of tools at their disposal, many of which are underutilized. A central

Table 8.

Benefits and Problems Rssociated luith CIPrograms The fourth component of a CI program is the perceived benefits and problems associated with the production of intelligence for clients. Ths is an important component because it can highlight areas for further emphasis, potential sources of misunderstanding, and reasons why it is &fficult to assess the effectivenessof CI programs. There were three sets of questions regarding this component of CI programs. The first set explored two summary questions regardmg outputs. On a seven-point scale with “to a very little extent” at 1 and “to a great extent” at 7, respondents were asked to rate the extent to which CI delivered to decision-makers had the characteristics of being timely, accurate, and reliable. The average response was 5.3 with 52% scoring a 6 or 7. Thus, the survey respondents feel to a strong degree that the CI delivered is timely, accurate, and reliable. The second summary question (on a simdar scale) asked the following: “Overall, other members of your organization believe that CI is of little (great) value in aiding decision-malung.” The average was 4.9 with 34%scoring a 6

Modes of Dissemination arid Their Perceived Effectiveness

PercentageUsing Mode of Oissemination

Usage Aanh

Ixtensivelq

Effectiveness Aanh

Custom reports Personal communications Competitor files Presentations Special memos E-mail Computerized databases Newsletter Regular meetings Training seminars Bulletin boards Special retreats

1 2 3 4

62 54 54 46 34 41 33 30 14 8 11 2

1 2 6 3 4 5 7 9 8 10 11 12

5 6 7 8 9 10 11 12

Ranlang of 6 or 7 on a seven-point scale where 7 is “used extensively” and 1 is “not used.”

Positive benefits 0 Influenced decision-making 0 Increased organization’s sensitivity to need for CI O Indentification of new opportunities 0 Sharing of ideas Positive benefits with significant uncertainty 0 Improved managers’ ability to anticipate surprises 0 Challenge assumptions 0 Exploit competitor vulnerabilities 0 Better serve customers 0 Build distinctive capabilities Uncertain of effect 0 Improved market position 0 Improved revenues/profits 0 Integration of diverse ideas Underdeveloped O Counterintelligence

these categories since the CI unit may not be directly involved in the implementation process. The next three benefits are characterized by the high number of individuals who were uncertain whether CI had an impact. At least two of the three (revenues and profits) are of central concern to managers. Further, these two categories are probably the best justification for fundmg CI operations. Counterintehgence, the last category identified in Table 9 appears to be an area that has received limited attention &om many CI operations. O n the whole, it appears that CI as a mscipline needs to devote more effort to evaluating the benefits of organizational investments in t h s area. Issues for CI Programs to Address A final set of questions was developed to identify issues that CI units face. This set of issues is oriented toward better understanding where potential problems reside and areas that have been adequately addressed. The survey asked individuals to rate on a seven-point scale the degree

Table 10. or 7. While there appears to be a perception of value, the respondents obviously feel there is room for improvement. This wdl be further illustrated below in the discussion regarding the benefits and issues facing CI programs.

Benefits

One of the functions of CI programs is to provide a series of benefits for the organization. In this regard we asked eleven questions regarding the degree to which CI has produced benefits. One of the unique aspects of this set of questions was the inclusion of a category labeled “uncertain of effect.” This category allowed respondents to indicate if they were unsure if a particular benefit occurred. Table 9 illustrates several points. First, the first four items in the table appear to be clearly viewed as benefits provided by CI. One aspect that all four have in common is that they are linked to expanding the perspective of decision-makers. The next five categories appear to have a positive outcome but also have a significant number of individuals who are unsure of their effect. These five are directly related to the successful implementation of a firm’s strategy. Possibly, it is more difficult to evaluate the impact of

Issues Facing CZ Programs

Not currently an issue 0 LegaVethical issues 0 Opportunity to interact with top management 3 Credibility among managers for CI 3 Appropriate methodologes to assess competition Mixed perspective n -,Limited interaction between users and providers

a No champion for CI

a Limited feedback from clients Internal political obstacles a Awareness of purpose of CI 0 Underutilization of CI output Current significant issues 0 Managers have difficulty in integrating CI into decisions a Shortage of CI personnel 3 Lack of incentives to share information across the organization 0 Difficulty in measuring the value/effectiveness of CI 0 Need to be more predictive 0 Counterintelligence is not well understood 3 Diverse set of information needs among managers stretches CI unit’s resources

to which each of 17 issues represented problems for their CI efforts. Table 10 organizes the issues into three categories. The first category contains those issues that do not appear to be significant problems. For example, CI professionals feel that on the whole they have ample ability to communicate with top management and that credibility among managers is not a problem. The second set are those that have an average rating of 4 or higher and have at least 20% of the sample indicating that there is a problem in their organization. Therefore, we have labeled these issues as mixed in that some organizations experience them but they are not pervasive. It would be interesting to identify why these are issues within the subset of firms. The third set are issues for the vast majority of the respondents. All of the issues in this category have over 40% of the sample rating these as a 6 or 7 on a sevenpoint scale where 7 is the anchor point for indicating that there is a problem. The one exception to this is the category “need to be more predictive” where 33% of the sample indicated that it was a significant problem. We would recommend that more attention be directed toward addressing the problems in this set of issues.

Conclusions One of the main purposes of this study was to move beyond anecdotal evidence regarding the practice of CI and examine data. The results suggest several conclusions that can be of value to organizations.

Lean and Decentralized CI Operations Most CI operations are very streamlined. There are few full-time CI personnel and their budget is modest. The overriding majority of CI operations do not have a centralized unit which coordinates CI throughout the firm. The primary objective of the function is to maintain a general understanding of the dynamics of their industry and competitors. Lean operations provide an incentive to outreach to others in the organization to assist in the CI process. Multifaceted CI Personnel CI personnel are well educated and assume a variety of tasks within the organization. While many of them are responsible for CI they operate out of planning and marketing departments. Given that the average tenure of CI personnel is approximately 4.5 years, there appears to be a substantial degree of turnover. This turnover is positive in that it exposes more individuals to the field. Further, if

individuals who move on to different positions become champions of CI then the process will become even more institutionalized.

Fundamentals of Competition Projects The types of projects undertaken are primarily concerned with understanding the fundamentals of competition. That is, the sources used, methods of collection, and analysis are oriented toward understanding how to conipete in evolving industries with diverse competitors. The data suggest that there is a moderate level of sophistication in the implementation of CI projects. The key question is not the level of sophistication but whether the projects are meeting the needs of the users. Team-Based CI The acceptance of CI into the culture of an organization is a core issue facing many organizations. The issues identified in this study suggest that involving individuals throughout the organization in CI projects is one way to address cultural acceptance. Issues such as integrating CI into decision-making, political obstacles, sharing of information, and the shortage of CI personnel can all be addressed by drawing on the individuals who will be affected by the outcomes of CI projects. Measure Effectiveness It is widely agreed that measuring effectiveness is very difficult. However, CI operations must develop metrics to evaluate projects and see how they are meeting client needs. Bottom-line measure such as costs savings and increased revenues are important if they can be obtained. However, we suggest that effectivenessbe thought of in broad terms. The items identified in the “benefits” section of this article are a start in this direction. Several organizations use quotes from satisfied managers as one indicator of value. One way to summarize the data from this study is to develop a description of the “typical” CI program. While many CI efforts in the sample have a more developed program than the description below, it represents the rnajority of the programs. T h e CI efort is in the process o f developing and rgfitritg a formal structure and network. At least one person is responsiblefor CI artivity The rollertion (rf data inrludes a m i x ofgeneral irgormation arid ad hoc projects. T h e analysis (zf the data is limited and involves primarily qirantitative summaries. More ofthe efort is directed toward tactiral as opposed to strategic derisions. Top management Ic

C-PrescoB and Uharltuai involvement in the process is limited to specijic areas o f attention and there is a relatively weak lirzk into the decision-making process.

0 Manager-

Competitive Advantage

C>Director-Technical 0 Coordinator-Product

Itttelligence and Competitor Analysis

References What’s in a Name: A List of Titles of CI Personnel Below is a list of some of the job titles that were reported in the questionnaire. While the complete list is longer, we tried to include a cross-section of titles that included key words such as information, market, intelligence, competitive, and business. T h e complete list is available from the authors.

0 Director-Market ~3Market

Research

Research Analyst

C>Cornpetifor Analyst c 3 Business Analysl

0 Business Intelligence Analyst

Research

0 Business Intelligence Specialist

0 Manager-Business

Information Center

0 Strategic Research Analyst cj

Senior Industry Analyst

0 Information Specialist 0 Strategic Irtformation Coordinator

0 Manager-Information 0 Manager-Business (3

Director-Strategic

0 Manager-Marketing 0 Director-Strategic

Bernhardt, D. (1994) Pe$ectly h g a l Competitor Intelligence: How to Get It, Use It and Profitfrom It, London: Financial Times, Pitnian Publishing. Ghoshal, S., and Westney, E. (1991) “Organizing Competitor Analysis Systems,” Strategic Manaxement Journal, 12: 17-31. Jaworski, B., and Wee, L.C. (1992/1993) “Competitive Intelligence and Bottom-Line Performance,” Competitive Intelligence Review, 3(3/4):Fall/Winter, 23-27. Prescott, J.E. (1995) “The Evolution of Competitive Intelligence,” In D. Hussey (Ed.), International Review of Strategic Manapnient, London: John Wiley.

ci Intelligence Coordinator

0 Manager-Market

Barndt, W.D.,Jr. (1994) User Directed Competitive Intell@we, 3rd ed., Homewood, IL: Richard D. Irwin, Inc.

Prescott, J.E., and Smith, D.C. (1989) “The Largest Survey of Leading-Edge Competitor Intelligence Managers,” The Planning Review, 17(3):May/June, 6-13. Sutton, H., Jr. (1988) Competitive Intell&ence. Research Report No. 913, The Conference Board, Inc., New York. Wall, J.L. (1974) “What Competition Is Doing: You Need to Know,” Harvard Business Review, November/December, 22. Zinkhan, G.M., and Gelb, B.D. (1985) “Competitive Intellgence Practices of Industrial Marketers,” Industrial Marketing Management, 14(4):269-275.

Research fntelfigence

Research Information Systems Information

0 Senior Business Research Analyst

a

Corporate Intelligence Manager

Cj

Manager--Technical

Information Services

About the Authors Johri E. Prescott is Professor in the Katz Graduate School of Business Administration, University of Pittsburgh. H e has unitten and consulted extensively in the area of competitive intelligence. He can be reached at 252 Mervis Hall, University oj’Pittsbutgh, 1693. Plttsbugh, P A 15260; Zl:4 12-648-1573; F~:412-648Gaurab Bhardwaj is a doctoral candidate in the strategic management department at the University of Pittsburgh. His research centers on how networks aject the competitive position .f oganizations.