When we hear success stories on Competitive Intelligence (or other related professions such as Business Intelligence), the companies in question often have mature CI systems in place, with lots of supporting software, contracts with (expensive) content providers or news sources and many CI professionals to support decision makers in their tough task of guiding their company through stormy weather. Of course that makes sense because these companies have much more visibility in the market than small companies, the stakes are higher and the struggle to beat competition is drawing more attention, especially when it is a publicly traded company. But that doesn’t mean that smaller companies with ditto budgets cannot gain serious advantage by practitioning CI. In fact I think the effect per invested coin of your choice may even be larger and CI may even be more vital for these companies. Let’s have a closer look at that in this post.
How can a small company benefit from CI? In the basis I believe that every single decision you make influences your performance compared to the competition. I also believe that every company, no matter how small, has a mission. You might not have derived a strategic plan from it, but I’m fairly sure you had something in mind that you intended to accomplish when you started doing what you do. Having said this, let’s pretend we are investigating whether or not my restaurant, Chez Jérôme, should conduct Competitive Intelligence at some point, to a certain level.
I started my restaurant because I wanted to run a successful, well filled restaurant on Thursday through Sunday evenings. I do not intend to be open all week because I have other activities on my mind on the remaining days of the week. As said, we are investigating whether or not I should start investing some time and effort in Competitive Intelligence. So of course my first question is: What will it bring me, how will I benefit? At that point we are back at my initial assumption that every decision I make influences my performance compared to competition. Will I keep making these decisions based on gut feeling, or fingerspitzengefühl as the Germans say? The thought of this makes me feel a wee bit uneasy. So far it turned out pretty well, my restaurant is running rather smoothly after three years, but I’d like to make my decisions based on something more concrete.
I defined, for starters, some ‘strategic pillars’ that I will focus my attention on, one at a time (as said, think big, start small). The first pillar is to get some more customers into my restaurant on Thursday evenings, because that is my least successful night over the past months (and of course I know this because I have a relatively good Business Intelligence process up and running – the internal goggles for my performance perspective). The second pillar is that I want to increase my customer loyalty.
So now we have a first goal: get more visitors on Thursdays. There are several things I can do to get some grip on this. I can try to beat competition and outsmart my rivals (thus increasing my local market share). I can also try to look for other means to get more visitors, like working together with the local theater (thus increasing the local market as a whole). Again, let’s just start with the first:
First, I should conduct an investigation to find out who my competitors are. I need to find out more about rules for competition in my line of work, for instance. My restaurant is in a neighborhood with some more restaurants, roughly five kilometers from the city centre which is crawling with restaurants. Are the restaurants in the neighborhood my direct competitors? Or should I also consider competing with the restaurants in the city centre? To answer that question, I need to find out what’s driving my customers in their choice of a restaurant. Is it distance? The menu? Parking space? Price?
Second, once I have decided what companies qualify as a competitor, I should find out more about them. I should structure them, building a list of my competitors.
Third, once I have this list, I have to decide which ones to focus on (for example, for the time being I might as well skip the ones that are closed (or empty) on Thursdays).
Fifth, and this is where it gets interesting, I need to start analyzing, because until now I have only covered part of the ‘direction’ and ‘collection’ phases of the intelligence cycle. I need to find out why these competitors do well, what makes them special, why do people go there on a Thursday evening, et cetera. If I can determine this, if I can find out what drives people to visit my competitor, if I can see the difference between them and myself, then I can start working on getting the customers to visit me instead, with well aimed actions.
As you can see, an action plan can be made fairly quickly, with very limited resources. I can work out a similar plan to increase the local market as a whole. I can also start drawing a rough plan for the other ‘strategic pillars’. I’m thinking big here, which is great as long as I don’t forget to start small, one step at a time. And apart from ‘of vital importance’, working out these plans can also be a lot of fun. It’s really inspiring and motivating to get a good grasp on your company, and I had to stop myself from ranting on and on about plans for my restaurant, which is by the way fictional.
I hope we can conclude that the benefits for a small company are quite clear. I decided to go through with this and stick to the plans discussed in this post. In the follow-up post I will write about my first steps into Competitive Intelligence practitioning, including processes, activities and also tools I can use to support my CI ventures at Chez Jérôme.