Keeping a close eye on the competition is often thought to be a “big boys” game. Many Fortune 500 companies have entire departments devoted to competitive intelligence (CI), and there’s a whole sub-industry of CI-focused management consultants to serve those departments. Small companies, on the other hand, are thought to be too busy minding the store to mind others’.
In fact, competitive intelligence may be more important to small companies than to large ones, because small businesses feel the impact of competition more immediately and more deeply. At successful companies, competitive intelligence is part of the day-to-day operation… part of the fabric of the enterprise. However, before you can begin to understand the competition, you have to be able to articulate your own business’s goals and strategy… knowing both where you currently stand in the marketplace and where you would like to be.
Determine who matters. Keeping tabs on your rivals, formally or informally, usually occurs one of two ways. Either you are monitoring them regularly, updating your store of information as circumstances warrant, or you are suddenly faced with a surprise (in the form of a new challenger, say) that requires a prompt response. Though most business owners can identify their current top direct competitors, they assume what exists today is going to be true tomorrow. However, don’t try to watch more than five companies at any one time or you may find yourself overwhelmed. Spending too much time on competitive analysis is spending too little time on being truly competitive.
Focus on what matters. Analyze four aspects of a competitor’s behavior:
- its goals (or “drivers,” often expressed in terms of revenues or profits)
- management’s assumptions about the market
- its strategies and tactics to achieve those goals
- its capabilities for meeting the goals
And, for the most part, tracking strategies, tactics, and capabilities only requires collecting information on your competitors’ products, marketing, and operations.
Formalize the process. Start by designating someone to oversee the CI effort. It doesn’t have to be you the owner/founder, but your employees must know that you back the effort. Establish a repository of competitive information that is accessible to anyone on staff who could contribute to or benefit from it. Finally, senior management should periodically review and analyze the data that is collected. Competitive intelligence in and of itself has no intrinsic value. The value accrues when you use it to make better decisions.
Gather intelligence in the news. Sign up for email alerts about the search terms of your choice from Google News which tracks hundreds of news sources. CI experts say the best sources are very often small-town newspapers or local business papers (like Dallas Business Journal) that avidly cover hometown companies, particularly when they are the big fish in a little pond.
A competitor’s web site is an obvious place to begin. After you study the site itself, deconstruct it by using **bleep**an Finder, a bare-bones but very useful research site. Plug in the competitor’s URL into the search box at the top of the page and you’ll be able to learn other site that link to it, which can possibly reveal alliances, networks, suppliers, and customers. Business data aggregators such as Dun & Bradstreet and InfoUSA provide detailed company information, including financials, although the services are not cheap. Often, however, local academic and public libraries have subscriptions (in libraries, InfoUSA is rebranded ReferenceUSA) and are willing to share the resources with local small businesses.
Finally, your company should engage in a management-wide SWOT Analysis (Strengths, Weaknesses, Opportunities, Threats) every 6 months. Requiring your team to be somewhat dispassionate about strengths and weaknesses, allows for the potential reveal of possible opportunities and threats and illuminates the strategic space that remains open from competition.
