Although it sounds like something that should be conducted under the cover of night, competitive intelligence is actually a legal and very ethical business practice.
In an article on BeyeNetwork, Alexandru Draghici said that competitive intelligence (CI) is critical for many companies to become more visible, increase their market share and, well, become more competitive.
Draghici points to the definition of competitive intelligence in Wikipedia, which is “the systematic, ongoing, legal collection and analysis of Information about competitors, similar products, market trends, branches, new patents and technologies and new customer expectations.”
I know what you’re thinking. What’s the difference between business intelligence (BI) and competitive intelligence? Well, it all comes down to data collected “inside” the company and information gathered from sources “outside” the company.
Here’s what Draghici said about the differences between the two: “Business intelligence is intelligence about one’s own company and uses information from inside the company. Competitive intelligence is additional intelligence about the economical ecosystem in which the company is acting, and can be found outside the company.”
He also said it makes good sense for a company to use both angles to determine just where it stands in relation to the market, its customers and its products so it can achieve its business goals.
Here are a few ways Draghici said your company can work with CI to build a solid base of information for competitive intelligence data:
- Extracting information
- Gaining context for the information
- Collecting data can be done in several ways including using Web crawlers that systematically search Internet pages and extract content in raw form.
Other information sources for CI include:
- Public websites of customers, competitors or regulators
- News services like Reuters, Bloomberg, etc.
- Social media sites like blogs, Twitter, Facebook, etc. deliver a lot of information about different players on the market.
- Information services like Edgar Online that provide finance information about companies including balance sheets, cash flow, income statements, and number of employees
- Market analysts’ studies to gain insight into markets and changes as well as to identify trends and make predictions.
But then what? Draghici said then you have to extract this information from the different information sources using different methods of text mining. Finally you have to put all this information into context so you can determine what it means for your company—but take heed, because this step requires a lot of time.
Be sure to read Draghici’s article because he explains how to use the well-known 80/20 rule in the context of CI—use “only” 20% of the time collecting and extracting the data, and 80% of the time putting the information into context.
To sum up: business intelligence and competitive intelligence are complementary methods to gather information to help your company determine the best way to act in its market.
With BI, the context of information is immediately available to the company and easy to access, Draghici said. But with CI, you have to figure out the correct context by using a number of different methods. And keep in mind that the context and information sources for competitive intelligence are hard to access and the quality of information should be routinely questioned, he said.
Companies that use both BI and CI will be able to make better business decisions, not to mention be more competitive. So put on your dark glasses and your trench coat, pull your fedora down over your eyes and get to it.
By Linda Rosencrance