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A Rare Bird

If competitive intelligence has so much to offer, why is it so uncommon in professional firms? This month's article digs into some of the reasons why competitive intelligence initiatives don't reach their potential at many firms.

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Suzanne Lowe
Author, Marketplace Masters: How Professional Service Firms Compete to Win
President, Expertise Marketing, LLC

Competitive Intelligence at Professional Firms: The Blind Leading the Blind?

Why is competitive intelligence such a rare bird in professional service firms? Surely, there’s no argument that access to relevant competitive information and analysis can help a firm become more successful in the marketplace. And intelligence-gathering of all kinds has been gaining steam in various aspects of our lives – professional and otherwise. From the frequent shopper card we swipe at the grocery store to the fact that our government monitors patterns of phone activity, we’re surrounded by (and, we hope, benefiting from) the effects of data being collected and analyzed.

But too often, I think, professional firms underestimate the return they could realize from having strategically meaningful competitive intelligence. I don’t mean the easy stuff like trolling competitors’ Web sites and tracking their press releases – these simple activities can offer some nuggets, but mostly, they only reveal what everyone else can also see. It would be much more meaningful to gather unbiased or below-the-surface information from which one can draw revealing insights.

My research has shown that many firms intend to ramp up their competitive intelligence efforts. So why isn’t competitive intelligence routinely included in marketing activities? (It’s not!) Why isn’t it a regular line item in more firms’ overall marketing budgets instead of popping up almost randomly in practice or geography budgets, usually at the urging of a leader who is anxious about wobbly marketplace performance?

The research I did for my book Marketplace Masters and the years I’ve spent working at or with professional firms have given me some clues as to why competitive intelligence is so underutilized.

Like a Neglected Child

Although increasingly endorsed, research is still not a popular activity at the majority of professional firms. And if market research is the neglected child of a firm’s marketing efforts, competitive intelligence is the skinny dog chained to a tree outside.

Initiatives like promotions and awareness-building get the meat and potatoes of the budget; market research might get a drumstick now and then, but competitive intelligence is lucky to be thrown a meagerly budget bone on rare – and usually pressured – occasions. Even those firms that do have a formal budget for market research still haven’t embraced competitive intelligence as an integral part of market research that needs to be allocated some of those dollars.

Used for the Wrong Reasons

Another problem with competitive intelligence stems from the fact that people misunderstand what it is – and what it is not. A common assumption is that the first competitive intelligence initiative a firm should pursue is determining its market share compared to the competition.

Why is this bad? First, market share is often subjective, and therefore very hard to discern. If many of your competitors are privately-held, trying to ascertain this number can be a huge exercise in frustration. Secondly, it’s difficult to assign hard “boundaries” around the competitors against which to compare “share,” since so few firms offer completely apples-to-apples services. When firm leaders focus solely on determining market share, they lose out on opportunities to capture other important (and easier to obtain) insights. It’s like deciding to go mountain climbing and choosing to scale Mount Everest first. The failure rate is likely to be painfully high.

Meanwhile, you expend a lot of effort to learn very little, and you end up thinking that competitive intelligence is a waste of time and money. Getting a handle on your market share is a good thing to do, but it’s a mistake to assume that this is the one and only way to approach competitive intelligence.

Breeding Blind Men and Elephants

There’s an old Hindu tale about five blind men who get the opportunity to touch and then describe an elephant. The man who touches the trunk says “It’s like a snake.” The man who touches his leg says “It’s like a tree trunk.” The ear feels like a fan to another; the tail feels like a rope to the fourth. The man who touches the elephant’s side says “No, it’s like a hill.” Not one of the men gets the whole picture of the elephant’s true characteristics or capabilities.

When it comes to competitive intelligence, many professional service firms are like the blind men and the elephant. They think about it in such a piecemeal, project-oriented way that they really don’t get a broad picture of their whole competitive sector. Because research (and therefore competitive intelligence) tends to not be funded at a higher level (national or global), the firm gets only a picture of competitors in one practice area or geographical region.

Naturally, and especially if the effort has yielded valuable insights, other leaders in the firm catch wind of this limited research and are miffed either because it didn’t cover the areas on which they need analysis, or useful information was not systematically shared throughout the firm. The firm as a whole would get a higher ROI on its marketing dollars if the intelligence effort had been funded through the marketing “department,” coordinated centrally among the practices, and had results communicated to everyone. At that point, smaller units of the firm can conduct analysis at the more focused level.

Reach Higher and Dig Deeper

There are two types of competitive intelligence data: primary, which you collect directly with the subject you are studying, and secondary, which is information already filtered by others. Sometimes, secondary data is all a firm needs. But more often, the most valuable competitive intelligence data is that which a firm could collect directly – some of it even from highly acceptable, easily accessible sources.

Analysis Paralysis

Even when firms do surmount the obstacles and misperceptions about competitive intelligence, and are able to successfully collect competitive intelligence data, they can find themselves in a state of analysis paralysis.

I’m talking here about too much data yielding too little valuable insight that can help firms make strategic decisions. Perhaps the volume of data is overwhelming. Or the team doesn’t have the skills to interpret the data appropriately. Most often, analysis paralysis occurs when competitive intelligence data is gathered without a well-thought-out potential business strategy, e.g. “If our analysis reveals our competitors have pursued Situation A, we will initiate the following plans. . . .”

Lack of proper care and feeding has prevented competitive intelligence from occupying its rightful strategic place at professional firms. Understandably, the challenge is to overcome how competitive intelligence has been approached, managed, and executed in the past. But it’s time for a more significant change. The majority of professional service firms need to become more assertive in managing their journey toward marketplace leadership. With an appropriate and systematic and strategically astute intelligence program, a professional service firm need no longer navigate the marketplace blindly.

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