Competitive intelligence (CI) is the process of obtaining knowledge about an organization's competitive environment to improve organizational performance.Madureira, L., Popovic, A., & Castelli, M. (2021). Competitive Intelligence: A Unified View and Modular Definition. Technological Forecasting and Social Change, 173, 121086. https://doi.org/10.1016/j.techfore.2021.121086 Competitive intelligence involves collecting and analyzing information from multiple sources as part of a coordinated competitive intelligence program. It is the action of defining, gathering, analyzing, and distributing intelligence about products, customers, suppliers, competitors, and any aspect of the external business environment needed to support executives and managers in strategic decision making for an organization.
CI involves developing an understanding of what is happening in the world outside the business, so as to increase one's competitiveness. It means learning as much as possible, as soon as possible, about one's external environment including one's industry in general and relevant competitors. This methodical program affects the organization's tactics, decisions and operations.
Key points Competitive intelligence is a legal business practice, as opposed to industrial espionage, which is illegal. The focus is on the external business environment.Haag, Stephen. Management Information Systems for the Information Age. Third Edition. McGraw-Hill Ryerson, 2006. There is a process involved in gathering information, converting it into intelligence, and then using it in decision-making. Some CI professionals claim that if the information gathered is not usable as the basis for action, it is not intelligence.
Another definition of competitive intelligence regards it as the organizational function responsible for the early identification of risks and opportunities in the market before they become obvious ("early signal analysis"). This definition focuses attention on the difference between the dissemination of widely available factual information (such as from market research reports, financial reports, newspaper clippings) performed by functions such as libraries and information centers, and competitive intelligence which is a perspective on developments and events aimed at yielding a competitive edge.Gilad, Ben. "The Future of Competitive Intelligence: Contest for the Profession's Soul", Competitive Intelligence Magazine, 2008, 11(5), 22
The term competitive intelligence is sometimes viewed as synonymous with competitor analysis, but competitive intelligence is more than analyzing competitors; it embraces the entire business environment and stakeholders: customers, competitors, distributors, technologies, and macroeconomic data. It is also a tool for decision-making.
Commercial intelligence can be obtained and analyzed in various ways that include: Information on a supplier's financial performance Political developments Economic indicators New product development Currency market movements Competitor performance New market entrants
On the other hand, business intelligence is a misnomer for data mining and enterprise dashboards that present useful patterns or distillations of internal information to the executives.
Historic development Competitive intelligence literature can be exemplified by the bibliographies that were published in the Strategic Consortium of Intelligence Professionals' now discontinued academic journal The Journal of Competitive Intelligence and Management.Dishman, P., Fleisher, C. S., and V. Knip. "Chronological and Categorized Bibliography of Key Competitive Intelligence Scholarship: Part 1 (1997-2003), Journal of Competitive Intelligence and Management, 1(1), 16–78.Fleisher, Craig S., Wright, Sheila, and R. Tindale. "Bibliography and Assessment of Key Competitive Intelligence Scholarship: Part 4 (2003–2006), Journal of Competitive Intelligence and Management, 2007, 4(1), 32–92.Fleisher, Craig S., Knip, Victor, and P. Dishman. "Bibliography and Assessment of Key Competitive Intelligence Scholarship: Part 2 (1990-1996), Journal of Competitive Intelligence and Management, 2003, 1(2), 11–86.Knip, Victor, P. Dishman, and C.S. Fleisher. "Bibliography and Assessment of Key Competitive Intelligence Scholarship: Part 3 (The Earliest Writings-1989), Journal of Competitive Intelligence and Management, 2003, 1(3), 10–79. Although elements of organizational intelligence collection have been a part of business for at least a century, the history of competitive intelligence as a discrete topic began in the U.S. in the 1970s, although the literature on the field pre-dates this time by at least several decades.
In 1980, Michael Porter published the study Competitive-Strategy: Techniques for Analyzing Industries and Competitors which is viewed as the foundation of modern competitive intelligence. This has since been extended most notably by Craig Fleisher and Babette Bensoussan, who through several popular books on competitive analysis described 48 competitive intelligence analysis techniques to the practitioner's tool box.Fleisher, Craig S. and Babette E. Bensoussan. Strategic and Competitive Analysis: Methods and Techniques for Analyzing Business Competition. Prentice Hall, Upper Saddle River, 2003.Fleisher, Craig S. and Babette E. Bensoussan. Business and Competitive Analysis: Effective Application of New and Classic Methods, FT Press, 2007.
Although Michael Porter first discussed the importance of monitoring and analyzing competitors, the discipline became a separate branch of business strategy in 1985, when Leonard Fuld published a book dedicated to competitor intelligence.Fuld, Leonard M., Competitor Intelligence: How to Get It, How to Use It. NY: Wiley, 1985. However, the institutionalization of competitive intelligence as a formal activity among American corporations can be traced to 1988, when Ben and Tamar Gilad published the first organizational model of a formal corporate competitive intelligence function, which was then adopted widely by US companies.Gilad, Benjamin Gilad and Tamar Gilad, The Business Intelligence System. NY: American Management Association, 1988. The first professional certification program (CIP) was created in 1996 with the establishment of The Fuld-Gilad-Herring Academy of Competitive Intelligence in Cambridge, Massachusetts - now known as the Academy of Competitive Intelligence. Within Europe, the Institute for Competitive Intelligence, based in Germany offers similar training and certification.
Also in 1986, the "Society of Competitor Intelligence Professionals" (SCIP) was founded - later changing names to become the "Society of Competitive Intelligence Professionals" (reflecting that the focus for CI was not just competitors). SCIP was initially an independent non-profit but ran out of money and in 2009 was merged with the Frost & Sullivan Institute . SCIP grew in the late 1990s to around 6,000 members worldwide, mainly in the United States and Canada, but with large numbers especially in the UK and Australia. SCIP was then renamed Strategic & Competitive Intelligence Professionals to emphasize the strategic nature of the subject, and also to refocus the organization's general approach, while keeping the existing SCIP brand name and logo. In April 2023, SCIP was renamed again to the Strategic Consortium of Intelligence Professionals. The renaming was intended to reflect the organization’s expanded global scope, encompassing practitioners in competitive, strategic, economic, and social intelligence.
A number of efforts have been made to discuss the field's advances in post-secondary (university) education, covered by several authors including Blenkhorn & Fleisher,Blenkhorn, D. and C. S. Fleisher (2003). "Teaching CI to three diverse groups: Undergraduates, MBAs, and Executives", Competitive Intelligence Magazine, 6(4), 17-20. Fleisher,Fleisher, C. S. (2003). "Competitive Intelligence Education: Competencies, Sources and Trends," Information Management Journal, March/April, 56–62. Fuld,Fuld, 2006 Prescott,Prescott, J. (1999). "Debunking the Academic Abstinence Myth of Competitive Intelligence", Competitive Intelligence Magazine, 2(4). and McGonagle.McGonagle, J. (2003). "Bibliography: Education in CI," Competitive Intelligence Magazine, 6(4), 50. Although the general view would be that competitive intelligence concepts can be readily found and taught in many business schools around the globe, there are still relatively few dedicated academic programs, majors, or degrees in the field, a concern to academics in the field who would like to see it further researched. These issues were widely discussed by over a dozen knowledgeable individuals in a special edition of the Competitive Intelligence Magazine that was dedicated to this topic.(Competitive Intelligence Magazine, 2003, 6(4), July/August) In France, a Specialized Master in Economic Intelligence and Knowledge Management was created in 1995 within the CERAM Business School, now SKEMA Business School, in Paris, with the objective of delivering a full and professional training in Economic Intelligence, although this is no longer offered. A Centre for Global Intelligence and Influence was created in September 2011 in the same institution.
Practitioners and companies regard professional accreditation as important in this field.Gilad, Ben and Jan Herring. "CI Certification - Do We Need It?", Competitive Intelligence Magazine, 2001, 4(2), 28-31. In 2011, SCIP recognized the Fuld-Gilad-Herring Academy of Competitive Intelligence's CIP certification process as its global, dual-level (CIP-I and CIP-II) certification program.
Global developments have also been uneven in competitive intelligence.Blenkhorn, D. and C.S. Fleisher. Competitive Intelligence and Global Business. Westport, CT: Praeger, 2005 Several academic journals, particularly the Journal of Competitive Intelligence and Management in its third volume, provided coverage of the field's global development.(Journal of Competitive Intelligence and Management, volume 2, numbers 1-3 For example, in 1997 the (School of economic warfare) was founded in Paris, France. It is the first European institution which teaches the tactics of economic warfare within a globalizing world. In Germany, competitive intelligence was unattended until the early 1990s. The term "competitive intelligence" first appeared in German literature in 1997. In 1995, a German SCIP chapter was founded, which is now second in terms of membership in Europe. In 2004, the Institute for Competitive Intelligence was founded, which provides a postgraduate certification program for Competitive Intelligence Professionals. Japan is currently the only country that officially maintains an economic intelligence agency (JETRO). It was founded by the Ministry of International Trade and Industry in 1958.
Accepting the importance of competitive intelligence, major multinational corporations, such as Amazon, Microsoft, and Procter & Gamble have created formal competitive intelligence units. Organizations execute competitive intelligence activities not only as a safeguard to protect against market threats and changes, but also as a method for finding new opportunities and trends.
Organizations use competitive intelligence to compare themselves to other organizations ("competitive benchmarking"), to identify risks and opportunities in their markets, and to pressure-test their plans against market response (business wargaming), which enable them to make informed decisions.
One of the major activities involved in corporate competitive intelligence is use of ratio analysis, using key performance indicators (KPIs). Organizations compare annual reports of their competitors on certain KPIs and ratios, which are intrinsic to their industry. This helps them track their performance, vis-à-vis their competitors.