Competitive Intelligence ,
 Steve:

During our chat I mentioned Amy Oberg was attending a competitive=20
intelligence conf.  I've pasted her Session Notes below.  I think you will=
=20
find them interesting - I've asked Amy to get on your calendar to discuss a=
=20
"CI 101" education project with you. This effort will help address some of=
=20
the concerns you raised.  As I mentioned she is currently working with eThi=
nk=20
to implement a global "Enron Edge" collection effort and I think the CI 101=
=20
project would dovetail very well.  Amy has other material available from th=
e=20
conference when you need it.

Enjoy the notes - Pete


III. Session Notes: (sessions attended by A Oberg)

What Should You Tell Mgmt When They Ask About the Value of CI? Ben Gilad
? Case study, Levi Strauss: example of extremely damaging blindspots - =20
? Levi Strauss market value went from $14b to $8B in three years ('96-'99)
? Market share went from 48% ('90) to 25% ('98)
? Shut down 29 factories, laid off 16,000+ people in '98 as sales dropped 1=
3%
? Blindspots =3D competitors - didn't know them (GAP, Calvin Klein, etc);=
=20
trends - didn't understand them (kids don't wear what their parents do, one=
=20
size does not fit all, etc)
? Cost for Levi's to set up really, really good CI function =3D $500,000=20
annually
? Cost for Levi's to call in consultants and problem still not solved =3D=
=20
$$850,000,000 !
? Case study, GE and Jack Welch: example of CI culture:
? Jack's greatest achievement (per Jack): "we made this company think outsi=
de=20
of itself". This is a CI culture.
? CI "is not a program, system, or function ---- it's a culture"
? "Intelligence is all about managing risk" (note: key element of Enron's=
=20
culture --- the two are intimately connected)
? "A junior level market analyst is not a BI/CI competency"
? CI professionals "paint the picture of the future" of the company; are=20
"guardians of the future"
? "CI/BI is the total knowledge a company possesses about the environment i=
n=20
which it competes. It is synthesized from the vast amounts of bits and piec=
es=20
of external information bombarding the firm every day. It paints a whole=20
picture of the present and future competitive arena for management decision=
s."
? "This is what a competent CI program should deliver:
1. early warning of competitive threats
2. early identification of competitive growth opportunities
3. benchmarking of best practices
4. quicker response to market moves
5. better understanding of major players: customers, suppliers, politicians
6. future scenarios for strategic planning
7. accurate estimates for tactical decisions
8. improved development activities
9. identification of blind spots
? Bottom line "grand prize" =3D reduced risks, external focus, identificati=
on=20
of blind spots (yours and competitors)
? Peter Drucker, Forbes 1998: in the next 10-15 years, collecting outside=
=20
information is going t be the next frontier."

Building a True Intelligence Capability, Ben Gilad
? How competitive is your company? 1. Does it viscerally know its market? 2=
.=20
Can it predict reaction to its initiatives? 3. Is it blind?
? Numerous case studies of when CI could have been a "life saver" but was n=
ot=20
utilized - Sears (from #1 retailer in the world to #4 and dropping), Schwin=
n=20
(missed mountain bikes market), Goodyear (missed "ugly tire" market), other=
s.
? #1 danger =3D competitive blind spots. Classic example: large companies p=
ay=20
attention to other large companies; large companies hire large consulting=
=20
firms; large consulting firms learn from large companies, "and so on and so=
=20
forth until Chapter 11 do them apart"=20
? #2 danger =3D unchallenged assumptions. Classic examples: corporate myths=
,=20
corporate taboos
? Competitive intelligence is "any information that tells top management=20
whether or not the company is still competitive"
? The role of CI is "the guardian of company competitiveness"
? The CI process is "any organizational design that somehow ensures:
? That CI flows to one place (CI mgr as "weaver"; you see the forest, other=
s=20
see the trees)
? That is turned into strategic updates
? That updates reach top mgmt regularly
? That top mgmt discusses, analyzes, debates, and does something w/ the=20
intelligence (key role of CI is to affect thinking, to change the Corp.=20
worldview)
? That the intelligence is used to uncover blind spots (regardless of how=
=20
holy they are)
? That the intelligence is used to empower employees (creating a culture of=
=20
sharing knowledge; tried tying $ to sharing, putting sharing in PD and=20
neither worked. What worked was recognition via feedback about what resulte=
d=20
from their sharing)
? That the most "fearless, most observant, most out of the box thinker" in=
=20
the org becomes the Dir. of CI and then VP of Corporate Competitiveness
? That the CI Dir. reports to a powerful and eager exec
? That this exec is the CEO/President"
? Companies organize CI units in two different ways: CI as information cent=
er=20
(AT&T, Kraft, Kodak, McDonald Douglas, Ameritech, Dupont, Citicorp) or as=
=20
decision based intelligence (Motorola, Pfizer, Corning, NutraSweet, 3M,=20
Xerox, Marriott, Shell, IBM, others)
? Best Foods has "one of the best CI units today"
? Charge back of CI activities to units "doesn't work because if it costs,=
=20
units won't use it"
? Building awareness works - General Mills trained 120+ people about CI
? Bottom line: company needs to be competitively oriented, so awareness and=
=20
attitude are what count.
? Intelligence input should be mandatory across the organization
? Intelligence should be personally delivered once a week to the exec=20
committee
? "If you accept your role as that of passive competitor tracking, you'll b=
e=20
collecting coupons till the end of time"

Successful CI =3D Impact, John Hovis
? "CI must be part of the company's strategic management system because =01=
( it=20
lights up the targets"
? Case study of Avnet Inc. (note: John Hovis is Sr VP, Investors Relations =
&=20
Corp. Planning for Avnet)
? Evolution of Strategic Mgmt Process: Stage 1 (1997) =3D no research or=20
intelligence activities, little or no strategic planning;  Stage 2 (1998) =
=3D=20
limited library or research function, strategic planning a separate activit=
y;=20
Stage 3 (1999) =3D intelligence system in place, strategic management funct=
ion=20
fairly well developed; State 4 (2000) =3D comprehensive intelligence system=
 in=20
place and working effectively with full integration; comprehensive strategi=
c=20
management system in place and working effectively
? Tool: "SLAM" chart =3D strategic leverage matrix. Used among other analys=
is=20
techniques
? Strategic positioning of CI enables company to "play the game differently=
"=20
and produce "discontinuous innovation". Crucial.

CI Analysis: Get Real! Liam Fahey
? Competitor analysis (aka: "CA")=20
? CA driving questions: which competitors should we analyze? What should we=
=20
learn about them? How can we leverage CA to learn more about customers,=20
suppliers, marketplace changes, etc? How can we integrate CA into decision=
=20
making?
? CA principles:
1. Purpose: not to learn about competitors, but to enable thinking, decisio=
n=20
making, action
2. Always focus on the future
3. Insights are the value!
4. Focus analysis on assessments, insights, implications - and NOT on=20
description
? Strategy Domains: outwitting (thinking), outmaneuvering (doing), and=20
outperforming (results) - of current, emerging, and potential competitors
? Strategy Arenas: factors (suppliers, materials, HR, etc. channels=20
(distribution), end customers, institutions (political, legislative, courts=
,=20
etc.
? Which competitors to focus on?=20
? Which do we understand the least?
? Which has strategies most different to our own?
? Which are affecting strategic change?
? Which are failing?
? Which are potential harbingers of emerging / future marketplace?
? Competitor analysis framework: assets & capabilities, the organization,=
=20
firm in the environment, mind set=20
? Knowing current strategy is not enough - must identify future strategy
? Activity/value chain analysis must be future focused
? Identifying and assessing competitor's assumptions is extremely important=
=20
(as well as own)
? "We over estimate what we are and under estimate what we are not"

An Advanced Intelligence Training Model, Lenny Fuld, Ben Gilad, Jan Herring
? "Aha! Means intelligence, not data"
? Data =3D unconnected bits; information =3D knowledge built by looking at=
=20
several data points; intelligence =3D the implications of the organized=20
information.
? Each industry as its own set of key drivers for costs; a cost driver is a=
n=20
extrinsic factor that affects costs; to analyze costs, you need to focus on=
=20
the right drivers (ex: cost drivers of PG&E, fixed asset intensive, highly=
=20
regulated)
? Question to determine cost drivers: is the competitor in the same=20
business?  - apples to apples
? Competitor analysis based upon Porter's Five Forces - barriers to entry,=
=20
suppliers, buyers, substitutes, rivalry
? Strategic options are those that fight the forces; reducing/fighting the=
=20
forces is the essence of competitive strategy; anything that doesn't, isn't=
=20
strategy
? CI's job is to watch all five forces
? 4 quadrant analysis: drivers, strategy, mgmt assumptions, capabilities
? 4 main CI questions every company needs to answer:
1. is the competitor happy? (w/ its strategy, position, etc. =3D degree of=
=20
complacency)
2. what are the competitor's likely moves (what should the competitor do?=
=20
What will the competitor likely do?)
3. what are the things your companies does that make the competitor really=
=20
mad? (their hot buttons - these will cost you a lot of $ if things go bad)
4. what are the competitors blindspots? (where strategy doesn't fit reality=
=20
any longer? If you know mgmt assumptions, you can know these)
? Parties that need CI =3D management as users, existing management procedu=
res=20
(operations), selves (CI people)
? Types of KITS (key intelligence topic questions): strategic issues &=20
decisions (should be 40% of time), early warning topics (40% of time), key=
=20
players - competitors, customers, others (20% of time)=20
? Measuring CI/BI effectiveness: examples =3D time savings, cost savings, c=
ost=20
avoidance, revenue increase, value added, combined values, other.
? "foster cultural acceptance of intelligence activities"

CI and the Web: What We Know about Knowledge Management Over Distance, Bruc=
e=20
Kogut
? "Intelligence is more necessary now than ever before in business"
? Digitization of context
? Open sourcing - the Linux model: worked because of dislike of MicroSoft;=
=20
"gift giving" culture between developers, modular development of software
? CI and "digital anthropologists": web is changing the coordination of=20
space; control and ownership are not the same thing; social context is the=
=20
challenge.

Developing a Successful CI Program, John Prescott
? Review of recent APQC study on CI
? Some sponsors of study: Entergy, Southern, Shell
? Usually a "critical event" ("Big Bang") happens to the company before a C=
I=20
unit/function is initiated
? CI must be planted in the culture
? Key findings of study:
? CI structure emerges from Big Bang
? Need a well defined focus for CI
? Need a standardized process for CI
? Need a champion
? CI is a social process=20
? CI needs to be supported by technical processes
? Need to build trust and credibility to be effective
? French model of CI =3D human network; practiced by Concordia

Executive Roundtable: Moderator; Max Downham, former VP, NutraSweet;=20
Participants: Steve Necessary, CEO, PowerTV; William Maiola, VP, Coca Cola;=
=20
Michael Pticher, VP B2B Marketing, i2go.com, formerly Nat'l Sales Dir for=
=20
Bitney Bowes.
? Maiola: most useful intelligence is on emotions of competitor's decision=
=20
makers; Coke has done a lot of scenario development; "everyone is in the=20
intelligence business"; most appealing to executive users - what is your=20
hypothesis? what is your insight?
? Necessary: follow the 3 B's - be brief, be reliable, be gone; E strategy =
=3D=20
E competitive advantage.
? Pitcher: be sure to include in research  3 Ps: partnerships, people,=20
passions. These influence decisions; question to ask - is it a signal or is=
=20
it just noise?
steven.kean@enron.com