Competitive Intelligence – Think Big, Start Small (II)

In the previous post we investigated whether or not I should consider practitioning Competitive Intelligence in my restaurant ‘Chez Jérôme’. We designed a partial action plan based on my strategic goals and based upon that, I decided that it was most definitely useful to invest some time and effort (and scarce means) in CI. In this post I will focus on the next steps, now that we decided to go through with our Competitive Intelligence ventures. I will also address some tools that you can use to support your process, which are by the way not Competitive Intelligence tools because that is too big an investment for the size of my restaurant (see my post “The Synergy between Competitive Intelligence and Social Media” for my definition of competitive intelligence tools).

To get to the point where we left off in the previous post, we walked through the following steps:

  • Define strategic goals: I determined two strategic pillars for my restaurant: 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. The second pillar is that I want to increase my customer loyalty.
  • Define possible actions to reach your strategic goals: for the first pillar I concluded that there were two options for action. I could either try to beat and outsmart my rivals on those Thursday evenings (increase market share) or I could focus on new/other ways to get people to my restaurant such as cooperating with the local theater (increasing the total market).
  • Define the external forces that influence the actions you could execute to reach your strategic goals. These are the forces that will determine the so called ‘key intelligence topics’ you will use as a starting point for your Competitive Intelligence activities. For my restaurant and based on the first pillar, I determined which competitors I would focus on, based on their location, performance, etc.

Before we continue, I would like to point out that this is not necessarily the ideal CI approach, especially not in bigger organizations. But for my scale, it can be very useful to start with a specific approach, in this case based on one strategic goal, and two ways to achieve it. I will most likely not have the time to constantly monitor my whole (more or less relevant) environment, so I will try to subsequently investigate the strategic goals that I defined, in order of urgency (and/or profitability). In the process of doing this, I will learn about my competitive environment along the way. If certain external forces appear on my radar multiple times, I know these are vital to keep track on and they will form the heart of my competitive intelligence activities (the key intelligence topics).

So let’s go back to the specific example we used in the previous post about my restaurant. We covered the ‘direction’ phase, touching the ‘collection’ and ‘analysis’ phase. That is, we defined a short list of competitors, based on their performance on Thursday evenings (because that is my strategic goal, to get more customers on that evening). We investigated what it is that drives customers to go to a restaurant on that particular evening. All of this is part of the ‘direction’ phase because it helps us determine our focus when it comes to relevant competitors. Once we set the direction, we start collecting, which mostly is a continuous process, whereas setting direction is something we do every once in a while.

Now that we know what information we need, the next step is to actually obtain that information (the collection phase). Buying market reports and similar costly reports is not an option at this point, so I focus on information that is readily available on the internet, one or two magazines that I already have and information that is easily obtainable, either via observation or via organizations such as chambers of commerce or local government. Obviously I cannot write down all there is to know about gathering information (nor on the other steps of the intelligence cycle) so I will try to cover some practical tips for the gathering process as well as for some tools and methods you can use.

Most important to keep in mind – and I kid you not if I said I would print them in A1 format (for readers in the United States and Canada: that’s huge!) and place them above my desk – are the key intelligence topics. You should be able to recite them off the top of your head. If I woke you up in the middle of the night… I think I made my point here, they are pretty important. News will never be written in the language of your strategic goals (figuratively speaking of course) so what you do is you translate your goals into the language of the news (by breaking down your goals into key intelligence topics, which are keywords that can be found in the news). Another important thing to remember is that information overload is defendably worse than information shortage. You may start setting up as many sources as you can find, but do yourself a favor and start eliminating the less useful ones as soon as humanly possible. The sources you select are totally dependent on your business. As a general rule, most businesses benefit from (free or cheap) chamber of commerce reports and free news providers (either local, national or global), added to any branch specific sources you may have.

Toolwise, there are countless ways to help you gather information. On the scale of my restaurant (or let’s say small and medium business) I will rule out costly tools such as Autonomy and Collexis, or newsproviders such as Lexis Nexis and Factiva. Start with a collecting medium such as Google Reader where you can bring together news sources, automated google searches (Google Alerts) and any RSS feeds you may have from websites, blogs, etc. Also, make sure you systematically check Google Reader, build it in your daily routine if possible (which is the small business counterpart for a structured work instruction or process flow). Apart from this and depending on your line of business, there are many options for tools and sources of information (or combinations) you might want to try. You can think of social media and social networking sites here, such as Twitter, Facebook, LinkedIn, etc. For some people these may prove valuable or even indispensable. But keep in mind that overkill can hurt you in the same way shortage can. Also, these sources and tools may be an interesting source of information, but can also be very time consuming. That is why they might be a nice addition to your sources and tools, but don’t make the common mistake to think they actually are CI tools designed to support your CI processes.

Before we move on to the analysis phase, I would like to address one more way of collecting information on your competitive environment: observation! It’s not the easiest way of collecting, but it can most definitely be a great resource. If we look again at Chez Jérôme and my first strategic pillar, this is an excellent opportunity to do some field work. If I want to know why my neighbor restaurants do so well, what better way is there to go and see for myself? Before I put on my coat (tip: don’t overdo it, camouflaged coat and newspaper with peeking holes in it will probably blow your cover rather than providing one) I remember to reread SCIP’s “Code of Ethics for CI Professionals” and Anne’s blog posts “Are you gathering competitive intelligence ethically?” and “Misrepresentation in CI: An Ethical Analysis”. There is nothing wrong in having dinner at my competitor’s restaurant, as long as I behave like a typical (but very observing) customer. If asked, I would also not deny that I am indeed the guy from the restaurant at the corner of the street, because that would be misrepresenting myself. Between appetizer and main course I recite the key intelligence topics which help me focus on what’s most important for my own restaurant. But apart from Sherlock, I am also a normal human being who has expectations for having dinner in a restaurant. That what impresses me is likely to be one of the success factors for their Thursday evening success.

Fully packed with impressions, a loaded Google Reader page and tons of inspiration, I now need to actually do something with all the collected information. I cannot stress enough how important it is that you take this next step. Without action, Competitive Intelligence is pointless and a great waste of time, effort and money. As reasonable as this may sound, you probably don’t want to know how often people stop after collecting information. When it comes to investigating competitors, it makes sense that you try to place yourself in their situation. I could of course try to copy everything I noticed at that well performing neighbor restaurant but then I lose my identity, my own competitive edge and probably most of my customers (that make my restaurant a success on the other days of the week). No, what I really want to do is to find out what mindset they have and what general rules they apply to their business, resulting in the ‘why’ behind what I saw in their restaurant. When I look back, I noticed (among many other things) that the average time between courses was much shorter than in my restaurant, the crowd was younger and I also noticed they closed their kitchen relatively early. Thinking about that, it struck me that they focus on another crowd. They appreciate the fact that it’s a weekday, people want a short dinner to catch up with friends or don’t feel like cooking, and go to bed earlier than on a Friday evening. Apart from that I saw a special daily offer for weekdays, which also makes sense if you know people want a quick and affordable alternative for cooking. In my restaurant, I had the same focus all week long, not realizing that that might not be the best strategy for all evenings.

This was just one example and I think it illustrates that analysis boils down to logical “out of the box” thinking (per definition a task for human beings). That already implies that you don’t need all sorts of complex tooling for this phase. There surely are CI tools to make life easier, but they cannot perform analysis for you. On our scale, in fact the only thing we really need is a word processor. What’s more important is that you have the proper mindset. Make sure that you open up to learning from your competition, and that you are willing to place yourself in their position to find out what they are thinking. Use information but don’t forget to draw conclusions, and turn them into action. What is the point of TomTom telling you where to drive, if you systematically ignore the turn it proposes?

The Synergy between Competitive Intelligence and Social Media by Jeroen van Luik
Are you gathering competitive intelligence ethically? by Anne van den Brink
Misrepresentation: An Ethical Analysis by Anne van den Brink
SCIP Code of Ethics for CI Professionals

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Comments: 3 Comments

3 Responses to “Competitive Intelligence – Think Big, Start Small (II)”

  1. [...] Dit blogartikel was vermeld op Twitter door Jeroen van Luik, gillespol, Dink Intelligence, Jeroen Blankendaal, Anne van den Brink en anderen. Anne van den Brink heeft gezegd: New post: Competitive Intelligence – Think Big, Start Small (part II) [...]

  2. [...] the previous post I showed the various steps of the competitive intelligence process. Because I do not have a budget [...]

  3. Jochem says:

    Interesting blog!

    It shows that Competitive Intelligence is great value for not only large enterprises!