There’s an old joke that you don’t have to be able to outrun the bear, just the slowest of your fellow hikers.
In a very real way, that neatly encapsulates the philosophy behind competitive intelligence. The point of CI – to understand what your competitor is up to, so that you can do it better – is certainly valuable. But over-reliance on a CI driven strategy can cause you to overlook the foundation of business success – capturing a larger share of your potential customers’ spending stream. The implicit belief behind CI, that beating your competition will force customers to spend more with you, can blind you to real opportunities and dangers driven by evolving customer needs and preferences. Why?
1. CI looks backward, not forward – to what your competitor is doing or has already decided to do in response to your actions or to market conditions. A strategy driven by CI is reactive – always following, not leading.
2. Being better than your competitor is no assurance that either of you is doing what the customer really cares about or needs. Even the very best of the buggy whip makers lost out when cars replaced the horse and buggy.
3. Nothing forces customers to spend their $$$ with you OR with your competitor. If neither of you is making them happy, then they can take their money somewhere else entirely.
Much of the CI philosophy is built around metaphors of football or war, endeavors in which you win by beating the other guy down. Business success, on the other hand, more often comes from being the best at what a third party – the customer – really values. A business strategy that doesn’t focus squarely on the customer is ultimately a losing strategy.
Competitive Intelligence is a valuable tool to help optimize near term business tactics, but for longer term growth strategy, look to the universe of customers for inspiration and direction.
Tags: CI, competitive intelligence, customer
Bob – I’m glad you wrote this. I’ve found that CI is most popular in cash-flush companies in mature industries, and normally with #2 companies instead of #1s. Companies spend money on CI when they can’t figure out how to deliver value that will attract new customers, and can’t figure out how to deliver new value that existing customers will pay more for. In other words, companies that focus on CI are playing defense, and are bound for decline. The following question should be a prerequisite for any CI spending: “Is there any way that I could apply this money toward innovation or finding new markets?”
Bob:
CI fixation is absolutely true with the major industry players. I used to be the director of CI practice for 10 years at Kline and for the last 5 years moved to marketing and sales of chemicals. Being a convert from CI to sales, these observations are right on the money. Customers do value alternate products and their value proposition is different. For long term growth of the company, you can not depend on CI as it is like driving the car forward by looking in the rear-view mirror. However, CI has its advantages to analyze and correct the direction in the short term if you have money to spend.