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Competitive Intelligence

. . . By the 1980s, many business managers were wondering why it [strategy] worked so poorly. Part of the answer may be that strategy without intelligence had become a contradic­tion in terms.

- William Sammon, Mark Kurland, and Robert Spitalnic

For any effective IM model, a competitive intelligence system should be incorporated in the orga­nization's work systems (i.e., be cultivated as part of the structural capital). Competitive intelligence is relevant to all levels whenever decisions that affect the organization's competitive position need to be made. At the strategic level, it is important for leadership to comprehend the organization's competitive position relevant to its competitors, before making any competitive moves or deciding on strategies. At the senior management level, competitive intelligence enables the formation of the innovation portfolio while keeping competitors' strengths and weak­nesses in mind. Other forms of competitive intelligence (e.g., technical/patent intelligence) are important at all levels for technology-driven industries.

By definition, competitive intelligence (CI) is "the refined intelligence product that meets a decision-maker's unique needs for understanding a competitive aspect of the internal and/or external environment."64 It involves the use of "public resources to locate and develop data that are then transformed into information about competitors, their capabilities, current activities, plans and intentions."65 It includes more than one form, ranging from competitors' profiles, project-based or scouting, market and technical intelligence. All types, however, follow the same process, which involves collecting data from public resources, analyzing the data, then disseminating it to the strategists and decision makers.

The most effective CI is that aimed at critical intelligence needs. In general, however, intelli­gence efforts should focus on discovering through lawful means "future goals that drive the com­petitor," "what the competitor does and can do," "assumptions held about itself and the industry," and its strengths and weaknesses.66 More specifically, on the strategic level, CI should provide a systematic review of the organization's competitiveness and relative position (product positions, market shares, alliances, etc.). This should be augmented with competitors' profiles, which assess competitors' positions and predict future moves. The focus of these profiles will depend to a great extent on the innovation strategy. A customer-driven strategy, for example, requires finding out the major customers of the competitor, market segments, customer involvement methods, mar­keting campaigns, and pricing policies.

Competitive intelligence as a system may be centrally managed, wherein periodic reports are produced on competitors' moves and teams are allocated on a project/need basis. The CI opera­tion may also be decentralized to various units across the organization. The best model, however, is one in which every employee is trained to be a detector of competitive moves in their respec­tive areas, and tools are provided according to the type of intelligence that each group needs to perform. Interestingly, many organizations are incorporating CI in the work of the innovation team itself. We have seen that to a high degree with the use of the lead user methods. In addition, many organizations require that their researchers spend more time with customers. Researchers are encouraged to leave their ivory tower for the ivory basement, where they can have access to the insights of frontline employees from marketing, sales, and other departments; they are encouraged to move to the ivory street to have access to customers as well. IBM, for example, increased the time that researchers should spend with customers from 5 percent to 25 percent at the beginning of the 1990s.67 When it comes to technology management, however, the stress is increasingly shifting to the use of technology/patent intelligence.

Technology Management and Patent Intelligence

The rise in the number of patents owned by major players in the market facilitated the emer­gence of a number of tools and methods that can be used to aid in obtaining patent and technol­ogy intelligence, and hence aid in directing the innovation process. These methods can help in providing directions for the innovation portfolio and perfecting the design of the product under development.

Patent documents can be used as reservoirs of information that can be analyzed to assess the competitive position and expected competitive moves. The patenting history of a competitor reveals the technology road map they are following and provides insight as to future moves. Patent data analysis can also be used to reveal the strengths and weaknesses of the competition's technological position. An examination of the file wrapper, for example, will reveal areas that the patentee agreed to limit and thus can provide guidance as to getting around a competitor's block­ing patents. The most valuable intelligence that can be gained from patent data analysis is how the competition is reacting to the organization's own patenting activity. How does the competi­tion get around the organization's patents? How often are they cited in the competition's patent applications? And what types of patents are the competition filing for that are built on the orga­nization's patents?

For the innovation portfolio, this aids in revealing past patenting activities of the competition to decide areas where the organization can only design around existing patents (i.e., introduce incremental changes) and areas where they would have less competition. Patent citation trees can help management to find the parties who are applying for patents on improvements related to their own products, and thus incorporate in the portfolio projects for doing the same in relation to the competition's products. This will enhance the organization's bargaining power in negotiating cross-licenses if seeking a license is strategically required. In addition, patent visualization tools, which present a bird's-eye view of the patenting activity in a certain technological area, should be used in determining the areas where the organization will aim to develop next-generation and breakthrough products.

When it comes to perfecting the design of the product under development, it is important to thoroughly assess the design, which will be able to withstand competitive forces longer. Even though the organization can protect all possible product designs with IP, it should focus on the design that will be harder to replicate regardless. For example, when designing Gillette's Sen­sor shaver, the engineers came up with seven designs relating to how the twin blades can be mounted on the cartridge. To enable the choice of the best design, Gillette undertook a full patent analysis of all seven versions of the design, comparing them to the existing patents of the competition. Gillette chose the design that it believed competitors would have the most dif­ficulty in getting around.68

CONCLUSION

The goal of IM is to develop the organizational ability to manage a growing number of ideas, product concepts, and ultimately innovation projects, with one main focus—to get a successful product to market as fast as possible. The optimal benefit of IM is to prevent the undercapitaliza­tion of IC often caused by limited contribution from employees and customers into the innova­tion process. To effectively tap into its human and customer capital, an organization needs to create and manage internal and external networks by incorporating IM in the way business is done. Effective implementation of IM involves effecting certain changes at the strategic and oper­ational levels, to create a balanced innovation portfolio, adopt the appropriate innovation strate­gies, manage and allocate financial and human resources across innovation networks and projects, and effecting a number of structural and cultural changes.

Chapter 12 provides a step-by-step guide on how to implement IM. Chapter 8 outlines the intellectual property management stage.

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