Effective Competitive Intelligence. Characteristics of an Effective CI Operation March 2016
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1 Effective Competitive Intelligence Characteristics of an Effective CI Operation March 2016
2 Contents Introduction and Scope 3 Executive Summary 4 Detailed Survey and Primary Research Findings 8 Conclusions and Recommendations 28
3 Introduction and Scope In the fourth quarter of 2015, Fletcher/CSI surveyed a range of Competitive Intelligence (CI) units, across a variety of industries, in order to assess what an effective CI unit looks like and how it delivers actionable CI A total of 138 unique companies responded Industries ranged from Aerospace to Pharma to Insurance The distribution of respondents is representative of the CI universe A variety of key global CI leaders were also interviewed by telephone, and selected excerpts from those interviews are used to illustrate key findings The survey examined four main areas of CI effectiveness: Data sources and applications Engagement with other parts of the enterprise Funding and spending Feedback and responsiveness The survey identified the actions that effective CI units take that allow them to be effective and assessed the impact they have on company strategy and tactics Some characteristics seem to carry across organizations 3
4 Eight Traits of an Effective CI Unit Omega 3s DHA, EPA, and C-Suite ALA; healthy fat source, CI reduces inflammation and Board of promotes cognitive Directors health benefits Omega 3s DHA, EPA, and ALA; healthy fat source, reduces inflammation and promotes cognitive health benefits Omega 3s CI Team DHA, EPA, and ALA; healthy fat source, reduces inflammation and promotes cognitive health benefits Omega 3s DHA, EPA, and ALA; healthy fat source, reduces inflammation and promotes cognitive health benefits Strategy Marketing Sales Operations Reports to the C-Suite or Strategy Constantly monitors for competitive threats Has an early role in the decision process More Pull than Push Omega 3s Omega 3s Omega 3s Omega 3s DHA, EPA, and ALA; healthy fat source, reduces inflammation and promotes cognitive health benefits Uses a full range of CI tools to collect and analyze DHA, EPA, and ALA; healthy fat source, reduces inflammation and promotes cognitive health benefits Works on BOTH short and long term goals DHA, EPA, and ALA; healthy fat source, reduces inflammation and promotes cognitive health benefits Less focus on information, more on analysis and recommendations DHA, EPA, and ALA; healthy fat source, reduces inflammation and promotes cognitive health benefits Lots of interaction across the company 4
5 Executive Summary Characteristics of Effective CI units Survey Question Less Effective CI units (Self-ranked 1 & 2) Most Effective CI units (Self-ranked 4 & 5) Key Takeaway Organizational Reporting Where within the organization does your CI function report to? Answers varied from business unit directors to C-Suite. Less effective CI units DID NOT report to Strategy. The majority of respondents reported directly to Strategy. The most effective CI units reported directly to Strategy, while the least effective reported to various other departments Reporting Push vs. Pull Is your CI output more Push (you send out information without a specific request) or more Pull (users specifically request information from you)? The majority of respondents answered push Responses were split between push and pull Less effective CI units sent push output, versus more effective units which sent a mix of push and pull information Timing of Involvement At what stage is the CI team most often engaged in a project? The majority of respondents are involved in the early to mid-stages The majority of respondents are involved very early to early in the project lifecycle The most effective CI units tend to get involved very early to early on in a project lifecycle CI Role in Defining Tasks What is your most frequent role in defining the CI tasks? The majority of respondents answered Our users tell us what they want and ask for our input in how to best solve the issue The majority of respondents answered We meet with users and jointly develop the research agenda or We suggest to our users what we think is critical and get their buy-in before we start The most effective CI units are highly involved with their end users and collaborate with them to develop and manage projects Trade Shows How effective do you rate your trade show/convention/congress CI efforts? With one exception, answers ranged from: Not Very to Somewhat With one exception, answers ranged from Pretty good to Very The most effective CI units consider their trade show/convention efforts to be worthwhile 5
6 Executive Summary Characteristics of Effective CI units Survey Question Less Effective CI units (Self-ranked 1 & 2) Most Effective CI units (Self-ranked 4 & 5) Key Takeaway War Games Does your CI unit engage in War Game/Scenario Planning sessions? Most respondents answered No Approximately half of the respondents answered Yes Less effective CI units are not involved in War Games, whereas half of the most effective CI units are involved Strategic Tasks What percentage of your CI tasks and outputs is strategic in nature? The majority of respondents spent <50% of their time on strategic tasks All respondents spent >10% of their time on strategic tasks, and the majority spend 50-75% of their time on strategic tasks More highly effective CI units invest more of their time on strategic tasks Role in Decision Process When an internal client gets your CI output, what role do you have in its use? The most frequent responses were We include our recommendations for action along with the output and We deliver and then they take it from there The most frequent responses were We include our recommendations for action along with the output and We are involved in the decision on what recommendations to take The most effective CI units are highly involved with their end users and collaborate with them on decision making and implementation of recommendations Promotion of CI What is the most common method you use to promote action based on CI input? The mot frequent answers were We make sure everyone affected by the information is made aware of it and We present our findings along with our recommendations and hope for the best The most common answers were We make sure everyone affected by the information is made aware of it and We give briefings to top executives and get their buy-in The most effective CI units give briefings to top executives and get their buy-in on findings and recommendations 6
7 Executive Summary Characteristics of Effective CI units Longevity of CI Unit Department size Staff Experience Survey Question Key Takeaway All Very Effective CI units have been in existence for more than 4 years Most effective units have a staff base of more than 5 people; however, many effective CI units are able to function with a smaller staff The most effective CI units have seasoned staff members with more than 4 years of experience Budget Most Very Effective CI units have large budgets, although many effective CI units are able to function well over a wide range of budgets 7
8 Ratings of Effectiveness Self-Evaluation of CI Unit Effectiveness 5 (Very) (Not very) N/A 0% 10% 20% 30% 40% 50% An effective CI unit is aligned with the goals and objectives of the groups they serve. CI s purpose is to help the organization or client be successful. They have to be insightful, actionable, and proactive, not reactive. Vice President, Corporate CI An effective CI unit puts together a clear picture of the world in which your client is operating and one which they wouldn t be able to assemble without your insight. Executive Director, Strategic Business Intelligence Effectiveness and being impactful means that you create value for your stakeholders by helping them make decisions. Anonymous Respondent Key takeaway: The majority of CI units rate themselves in the middle of the effectiveness scale, which leaves room for improvement. Only 8% of all units rate themselves as very effective. 8
9 How Strategic is Your Role? 35% 30% 25% 20% 15% 10% 5% Percentage of Tasks Which are Strategic in Nature vs. CI Unit Self-Effectiveness Rating 0% < 10% 10%-25% 25%-50% 50%-75% >75% (Most effective) Our role is to minimize decision risk. Vice President, Corporate Strategic Intelligence Your role is to understand. Executive Director, Strategic Intelligence Key takeaway: The plurality of respondents stated that less than 25% of their time was spent on strategic issues, whereas the effective CI units invest more of their time on strategic tasks. 9
10 Age of CI Unit Age of CI Unit vs. CI Unit Self-Effectiveness Rating 35% 30% 25% 20% 15% 10% 5% 0% 0-1 year 1-3 years 4-7 years 7-10 years 10+ years (Most effective) Our team is probably much more seasoned than most, with a lot of years in CI and their respective areas. You are not going to put someone in front of executives that is not seasoned. Executive Director, Strategic Business Intelligence Key takeaway: There is a link between longevity and effectiveness. Very Effective CI units have been in existence for 4 years or more. 10
11 Size of CI Department Size of CI Unit vs. CI Unit Self-Effectiveness Rating 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 1 person 2-4 people 5-10 people 10+ people (Most effective) We have probably one of the larger groups out there. We have people on our staff that know the business of our clients. Generally we do a lot of hiring from the client group. When you hire from your clients, you hire someone with a seat at the table. You can train them to learn intelligence work, and you should have to train them on the main business. Executive Director, Strategic Business Intelligence Key takeaway: Most Very Effective units have a staff base of more than 10 people. Many Effective units are able to function well with a smaller staff, but few units with only one person rated themselves as Effective or Very Effective. 11
12 Staff Experience 40% Average Staff Experience vs. CI Unit Self-Effectiveness Rating 30% 20% 10% 0% 0-1 year 1-3 years 4-7 years 7-10 years 10+ years (Most effective) In order to be effective, you need quality people. Instead of being just a collector or aggregator, you need to become a dialogue partner who becomes an equal partner to the stakeholder who you are working with. In other words, you need a seat at the table. Vice President, Corporate Intelligence An effective CI unit is comprised of people with a variety of backgrounds and who have breadth of experience and expertise; your people need to be able to understand and interpret their findings. Executive Director, Corporate Strategic Intelligence You need a combination of very seasoned people with more energetic younger people who can crunch numbers and go through lots of data. Also you need people with a sense of curiosity. And people who are credible and knowledgeable, who have good analytical capabilities, and are able to tell a story. Former Head of Global Intelligence Key takeaway: While there are effective CI units with average staff experience of under 3 years, the most effective CI units have seasoned staff members with over 4 years of experience. Simple. Powerful. 12 Insightful. Intelligence
13 Number of Respondents CI Unit Size, Company Size, and Effectiveness 7 CI Unit Size to Company Size and Unit Effectiveness Company Size Unit Effectiveness 1 person 10+ people 2-4 people 5-10 people Unit size, Effecitvness, Company Size Unit Size There is no apparent link between company size and CI unit size, and a weak link between unit size and effectiveness. 13
14 CI Organizational Reporting CI Unit Generally Reports to Strategy group C-Suite Business Unit Directors Product and Brand managers Sales leadership R&D Operations 0% 10% 20% 30% 40% You need to be linked into group where decisions are made. If the organization is decentralized in decision making, then the CI unit should be more decentralized. I believe the centralized organization is the best model, and we report to strategy. Vice President, Corporate Strategic Intelligence We report to the Chief Strategic Officer, who reports to the CEO. This removes bias, versus reporting to a business unit. We have the responsibility to be a referee. The brand teams are responsible for handling their own needs within their franchises. Executive Director, Corporate Strategic Intelligence Key takeaway: The most effective CI units report directly to Strategy, while the least effective reported to various other departments. 14
15 Competitive Intelligence Activities Competitor Monitoring Competitor Profiles Benchmarking Sales Enablement Product Development or Clinical Trial Initiatives Pricing Analysis Win/Loss Analysis War Gaming/ Trade Show Collection R&D Financial Forecasts Executive Profiles Brand Planning Other (please specify) Patent Tracking Distribution Channel Analysis CI Activities Supported Most Often (Respondents selected top three options) 0% 5% 10% 15% 20% 25% 30% Tasks and information should be demand-driven, which sets up topics to therefore create communications pieces. Senior Director, Competitive Intelligence Sit down with leaders and map out a plan for them. Make sure to spend your time on areas that make a difference. Get in cadence with senior management, understand the importance of their priorities, and get buy-in from them on the plan of action. Executive Director, Competitive Intelligence Key takeaway: The most common activity involved competitor monitoring, profiles, and benchmarking. 15
16 CI Budget 30% 25% 20% 15% 10% 5% 0% Average Annual CI Budget vs. CI Unit Self-Effectiveness Rating (Most Effective) For CI organization to avoid the 6 year budget cut cycle and avoid downsizing, you have to provide visible case examples to give a dollar value to demonstrate ROI. Look at aggregate spend, growth, and other examples. This is not always possible, but definitely worth trying. Vice President, Corporate Strategic Intelligence The brand teams are responsible for funding and handling their own CI needs within their franchises. Executive Director, Corporate Strategic Intelligence Key takeaway: Most Very Effective CI units have large budgets; however, many effective CI units are able to function over a wide range of budgets. 16
17 Total Spend for Contractors % Total Spend Allocated to Contractors (Excludes subscriptions and portal management) 3% 9% 11% 6% 23% 48% <10% 10-20% 20-30% 30-40% 40-50% >50% We fund secondary sources, and funding for primary research comes out of our client s budget. Director, Competitive Intelligence We contract out our primary. The more primary, the more juicy it is. Primary gets people s attention. Former Director, Competitive Intelligence Key takeaway: The plurality of respondents spend less than 20% of their budget on contracting, excluding subscription databases and syndicated reports. 17
18 Project Initiation Departments Initiating CI projects 15% 8% 5% 4% 1% 20% 17% C-Suite Strategy Group Business Unit Directors Sales Leadership Product and Brand Managers Other CI Output - Push vs. Pull Demand Push 59% Pull 41% 15% 15% Operations R&D Other: All of the above It is a constant process where you are part of the organizational thinking and you know when to recommend certain actions. Executive Director, Competitive Intelligence Information should be demand-driven. Executive Director, Corporate Strategic Intelligence Our timing of involvement depends on the situation and timing of events. Some deep dives are self-initiated, and the rest are per request. Anonymous Respondent Key takeaway: Less effective CI units tend to send more push output, and more effective CI units use both push and pull. 18
19 At What Stage is CI Engaged & What is Your Role in Defining Tasks? Project Stages in Which the CI units are the Most Often Engaged CI Unit s Role in Defining CI Project Tasks Late stage 5% Very early stages 30% Mid stages 31% Post stage 1% Early stages 33% 18% 19% 9% 21% 33% We meet with our users and jointly develop a research agenda on a regular basis Our users tell us what they want and ask for our input in how to best solve the issue We suggest to our users what we think is critical and get their buy-in before we start We develop the tasks based on what we think are the critical issues for the company Part of the process is to define what your internal client needs and how they go about making decisions. You want people to come to you to ask what they should be concerned about and how they should feel about it. You should always have an opinion and strategize together with your clients. Senior Vice President, Corporate Strategic Intelligence We are members of the various project management teams. Every product candidate has a project management team that guides development, and we are part of those. Depending on where the product is in the lifecycle, our involvement varies. The more operational, the less we are involved. The more strategic, the more we are more involved. Anonymous Respondent Key takeaway: The most effective CI units are highly involved with their end users and collaborate with them on decision making and implementation of recommendations. 19
20 CI Sources Most Frequently Utilized CI Sources vs. CI Unit Self-Effectiveness Rating Respondents ranked CI sources according to utilization frequency on a scale of 1 (least used) to 5 (most used) This chart illustrates sources ranked 4 and 5 30% 25% 20% 15% 10% 5% 0% Primary Interviews with competitor and competitor affiliated staff Primary interviews with internal staff Targeted secondary searches Subscription databases Repeatable secondary collection (RSS feeds, alert services, newsletters) Other Most effective Get out of the office, stop looking at the screens, and start looking at the people. Talk with those that need intel and can give intel. Look at people as a supply chain. That also provides an opportunity to explain to people the competitive intelligence process. Ex-Director of Strategy and Analysis Key takeaway: The majority of information used by all units comes from secondary sources. The most effective CI units rely on all types of information sources. 20
21 Project Reporting 9% 9% Primary Report Format 4% 4% Ad-hoc reports and presentations 5% 35% Newsletter/recurring reports Competitive deep dives/targeted research Competitor profiles Monitoring and tracking reports Alerts Information put on internal distribution and storage system and a link to the information put on outbound communication Information submitted without presentation but with a scheduled follow-up for questions Methods of Delivering Intel Formal in-person read out Information submitted without presentation. 16% 18% Win/Loss summaries Formal remote (WebEx or similar) read out Other 0% 5% 10% 15% 20% 25% Typical Project Timeline 50% 40% 30% 20% 10% 0% < one week 1-3 weeks 4-8 weeks 8-12 weeks 12+ weeks Never put out anything without giving your take on what it means to the client and what they should do about it. Executive Director, Head of Strategic Intelligence Key takeaway: Ad-hoc report/presentations and formal read outs are most the most frequently used form of reporting. Formal in-person read outs are more common in the more effective units. 21
22 Recurring Reports & End Users Frequency of Recurring Reports Weekly 24% Other 6% Bi-weekly 12% Monthly 25% Quarterly 33% Top End Users of Recurring Reports (Respondents chose two options) C-Suite Sales leadership Business Unit Directors Product and Brand Managers Strategy group R&D Operations 0% 5% 10% 15% 20% 25% 30% 67% of respondents indicated that they produce recurring reports such as newsletters and monitoring updates 75% of the recurring reports are ed to a user list and 15% are posted on an internal portal Approximately half of the survey respondents spend between 10-20% of their time on preparing recurring reports We have no newsletters. We do briefings for Senior Management via telling them how the world looks at us, how the world looks at things. I do some weekly updates to others. I also meet with clients to discuss the bigger picture strategy twice a year or or to redefine. Vice President, Corporate Strategic Intelligence Instead of a newsletter, if you explain to people how you are progressing, in a rhythm, that seems to go a long way. A progress report gives people confidence that there is momentum in the process. Senior Vice President, Corporate Strategic Intelligence Employees need to be able to structure what the problem was, pull together the relevant information, and deliver a story that makes sense and communicates with decision makers. Former Head of Global Intelligence Key takeaway: Recurring reports for the C-Suite and Business Unit Directors are most common for the effective CI units. 22
23 Decision-Making Roles CI Unit s Involvement in Decisions CI Role with Internal Client in Project Output 18% 33% Decision Supporting (participating in the decision as an interactive part of the decision making team) Decision informing (provide intelligence to decision makers who then make a decision) 18% 6% We include our recommendations for action along with the output We are involved in the decision on what recommendations to take 21% Early Warning (provide intelligence to a wide range of users to alert them of market changes) 18% 58% We deliver and then they take it from there 28% Decision Enabling (presenting competitive issues for discussion and to force a decision) We are involved in the implementation of the recommendations If you want to be accepted by your client as a peer, you need to step into a consulting role. Talk to them about what is good business sense. You need to operate sometimes in the area of CI, and sometimes in a general consulting sense. Executive Director, Strategic Business Intelligence Key takeaway: Effective CI units provide decision support and include recommendations for action. 23
24 Trade Shows, Conventions, & Congresses Number of Trade Shows/Convention Attended Annually 40% 30% 20% 10% 0% Perceived Effectiveness of Trade Show Attendance 20% 17% 25% 38% Somewhat, we find out enough to make it worthwhile Pretty good, we always find new information Not very It does not justify the effort Very. We work to a plan and share information companywide Methods of Planning for Trade Shows/Conventions 22% 10% 8% 33% A few weeks beforehand we review the sessions and decide what to attend We don t We meet with stakeholders and build out KITs and KIQs for the event We ask stakeholders what they want us to get 27% We plan out every minute, identify KITs and KIQs far in advance, and build collection templates Key takeaway: The most effective CI units consider their trade show/convention efforts to be worthwhile and engage in regular CI collection at trade shows. 24
25 War Games Frequency of War Game Scenarios Methods Utilized to Communicate War Game Results 8% Once per year Formal in-person read out at regular intervals (monitoring and updates) or at project completion (ad-hoc and planned) Formal in-person meeting and debrief (alerts) 32% 60% 2-3 times per year 4 or more times per year Information submitted without presentation. Questions invited but not scheduled Formal remote (WebEx or similar) read out at regular intervals (monitoring and updates) or at project completion (ad-hoc and planned) Information put on internal storage system (SharePoint, intranet portal, etc.) and a link to the information put on outbound communication Formal remote (WebEx or similar) meeting and debrief (alerts) 37% of respondents participate in war games 0% 5% 10% 15% 20% 25% 30% 35% War Games are good to put together a plan of action. What better thing could corporate America do now other than to sit around with information and make decisions? Executive Director, Strategic Intelligence Yes, we believe competitive simulations help to sharpen your CI mind. We help to organize and sometime facilitate, but most of the time we use outside parties for facilitation. Vice President, Corporate Intelligence Key takeaway: Less effective CI units are not involved in War Games, whereas it is common among the most effective CI units. 25
26 Win/Loss Analysis Primary Use of Win/Loss Results Competitor Insights Value Proposition Alignment Market positioning evaluations Sales team performance evaluations Battle Card production 0% 5% 10% 15% 20% 25% 30% 39% of respondents engage in win/loss analysis Key takeaway: Out of the 39% that engage in Win/Loss, ~30% found it to be useful to gain competitor insights. 26
27 Promoting Action Most Common Methods to Promote Action Based on CI Inputs vs. CI Unit Self-Effectiveness Rating 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% We make sure everyone affected by the information is made aware of it We present our findings along with our recommendations and hope for the best We give briefings to top executives and get their buy-in Our follow-up with the users includes questions on how they have used the CI 1 (Least Effective) (Most Effective) You need to provide intelligence in a timely fashion that supports business decisions. Director, Competitive Intelligence We will produce something and see it in the public news 3 days later. The fact that we get news to management faster is the kind of thing they like to see. Director, Competitive Intelligence Key takeaway: The most effective CI units make sure they communicate to the relevant parties and engage users in follow-up to assess how the information is used. 27
28 Conclusions & Recommendations In order to be effective, a CI unit must hire and maintain seasoned people that have in-depth knowledge of their business area. They must be able to clearly understand the business issue, analyze all available information, and professionally present a logical story. In addition, they make recommendations that will allow your internal clients to make better informed decisions Effective CI units dialogue and partner with your internal clients and have a seat at the table in the very early stages of the decision-making process Effective CI units sit down with leaders and map out plans based on their needs, then carefully choose activities to coincide with internal clients decision-making processes A CI unit should never put out a deliverable without giving an opinion on what this means to the internal client and what they should do with information Follow-up on information provided is valuable for assessing how it was used and the impact CI had on the decision 28
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