Recently, I had a discussion with the VP of strategy for a major multinational retailer. Even a company with vast resources and highly capable management struggled with a common issue for top management: the lack of actionable, timely and relevant competitive information to make appropriate corporate strategy and performance-improvement decisions.
Many companies, like this one, have reams of data from multiple internal and external sources, but they lack the structure, focus and processes to turn that data into valuable insight to inform their strategy. Often there is too much data and little actionable information.
Relevant and timely insight can be the determining factor when making major strategy and implementation decisions affecting the direction and quality of multiple business activities including growth initiatives, new market entry, M&A strategy, pricing, product and technology roadmaps, JVs, partnerships, etc.
After spending years working with companies around the world to define, articulate and implement competitive insight programs to educate their business strategy, I have determined there are four key best practices that will help you and your team create a capable competitive intelligence function that not only responds to specific organizational needs and enhances decision making at multiple levels but that also can become a long-term source of competitive advantage in the future.
1. Always start with the big strategy picture and the specific decisions your executives will need to make.
Having a clear understanding of the strategic context is critical. What key decisions need to be made in your strategy planning process? What data is needed and by whom?
Answering these questions will help you map key audiences for the information and clearly articulate needs, requirements and expected outcomes as well as important dependencies and accountabilities.
2. Do a complete inventory of the existing data and reports and identify gaps by comparing existing data with required insight.
Identify each piece of data, internal and external, that is currently produced or acquired, mapping the source, periodicity, associate cost or time to get, level of detail and granularity. When comparing that inventory with executives’ needs most of the missing pieces will be clear. This will allow you to identify any gaps in information, analyses and reports.
3. Design and structure your competitive insight function: Strategy > Structure > People > Process
Define the design principles of this new competitive intelligence group in terms of the main directives and expectations that the function will fulfill. Usually, several organizational models are assembled and top management decides on the one that best fits the overall company structure, budgets and requirements.
Once the final model is selected, then specific details are defined including positions and accountabilities, key performance indicators and competencies, supporting systems and tools required, cross-functional coordination requirements, timetables and budgets, and data storage and security protocols.
4. Do a test run. Test all assumptions, get management feedback and adjust.
Now that management has all the pieces together, it’s time to create a pilot with the new structure. This will require not only hiring the required staff or training existing staff, but also setting up the processes and tools to support the operation of this new capability.
It’s helpful to run a few cycles of capturing, processing and producing competitive insights so you can track key activity indicators and refine processes and operations. During the process, gather feedback from all the stakeholders to help drive on-going improvements.