Statistics versus Competitive Intelligence

Thinking out of the box Statistics versus Competitive Intelligence

How to make decisions using superior CI

In an issue devoted to statistics, this piece will probably stand out as sacrilege. In stark contrast to the excessive use of number crunching at various managerial levels, and the excessive weigh executives place on the predictive qualities of quantitative data, competitive intelligence is qualitative and predictive. Numbers to executives are like magic to the Middle Age man. They believe in them. They base decisions on them even when the methodology behind them is shaky. They worship the divine market share figure, though at times it reflects nothing more than data agencies’ peculiar definition of product segments. Business schools add to the rituals by placing great emphasis on financial models for decisions. Taken together, one would think real business decisions are all about statistics. They are not. Real decisions, especially strategic ones, are based on competitive intelligence, which is the art and science of assessing strategic risks and opportunities the enterprise faces in its environment. These risks and opportunities are available to competitors as well, so decisions must always tie strategy to an evaluation of the firm’s distinct positioning vis-à-vis with its rivals. And here lies the secret of using superior intelligence for (superior) decisions: instead of piling up mindless detailed statistics and data on competitors, decision makers should look at competitive intelligence to distill strategic differentiators from unyielding amount of the white noise inundating them. Superior strategy always emanates from true understanding of what your company unique positioning is, and how this strategic distinction can be sharpened and defended against competitive development in your market. Seen this way, competitive intelligence is very different from the more common competitor information compiled by companies and consultants by the tonnage. Instead, it is the source of insights for one’s next strategic moves. Filtering white noise for nuggets of insights on strategic risks and opportunities requires perspective on both industry and strategy. It is not just data or number-crunching or even “facts”. Perspective can arise from years of experience, or an innate entrepreneurial inclination to see through the rabble of data, but quite often it is just a matter of rigorous training in analyzing and predicting industry evolution and the forces that shape customers’ preferences (i.e., what makes one competitive? Would it stay that Benjamin way tomorrow?). The result is that Gilad some managers have superior skills at The author of 4 interpreting the risks and opportunibooks on competitive ties in their environment, and others intelligence, including seem more oblivious. Darwinian printhe latest Business ciples in meritocratic environments War Games (Career suggest that those that possess compress, 2009), petitive intelligence rise to the top. Benjamin Gilad Those that don’t, or stop using superiis a former Israeli or competitive intelligence once they Police Intelligence have reached a power position, will officer, a former probably see their glory wane. The Associate Professor good news is that quite often it is just of Strategy at Rutgers a matter of applying the right assessUniversity’s School of ment frameworks to understand the Management in NJ, dynamics of one’s market. The bad and the co-founder news is that many managers, trapped and President of in mindless meetings and endless pathe leading global perwork, neglect this crucial aspect of training institution their job. The secret to superior deciin competitive sions is at times as simple as the folintelligence, The lowing: lift your gaze from your navel Fuld-Gilad-Herring on occasions, and rethink some basic Academy of CI. • assumptions about what makes you different.