Your Say: Competitive Intelligence and Knowledge Management

Feature

posted 1 Nov 1999 in Volume 3 Issue 3

Your Say: Competitive Intelligence & Knowledge Management

In this month’s Your Say, we look at the relationship between competitive intelligence & knowledge management. The views expressed in this section are quite harsh on the KM front, but it was important to include them because there is definitely some truth to the claims. All good things are vulnerable to the bandwagon, including knowledge management, but one must remember that amongst those companies “re-labelling” their products and programmes, quite a few are really changing the way they do business. This magazine is a testament to those companies who can prove that with evidence! Competitive Intelligence is also susceptible to buzzword status. Read on to find out about correlations between the two.

Two parts of the same whole

Prior to the introduction of the term, Knowledge Management into the collective business vernacular, Competitive Intelligence (CI) was defined and positioned somewhere between market research and industrial espionage in the minds of most managers in the modern business enterprise. While this is a tragic misunderstanding, the development of thought leadership in the KM sector in recent years has caused many CI practitioners to reevaluate the continuum along which we operate.

I consider CI and KM to be as much parts of one another as separate disciplines on their own and there are a number of lessons that each might learn from the other in contributing value to the firm. The major differences between CI and KM is the much broader scope of KM and the somewhat more developed scale of CI – rather than applying knowledge to the entire firm and all of its myriad objectives, CI is exclusively focused on the goal of successfully defending the firm from competitive threats and proactively transferring marketshare from competitors to the bottom line.

As a CI professional, I define the field as giving meaning and understanding to competitor initiatives and motives, more than simply unifying sources of discovering and monitoring competitive threats in the marketplace. There has been a great deal written in observation of the synergies between the two areas, although a few theorists have focused on the true value of knowledge driven activities. The goal of both CI and KM should be first to understand that business, like life, is really a continuous series of decisions in which we hope to convey wisdom in evaluating options for organizations in that difficult business of decision-making.

Many have misunderstood this fundamental facet of each field, rather than focusing their attention on the unification of sources of knowledge or intelligence. In KM, we describe our sources of knowledge either being Tacit or Explicit; likewise in CI, we call them Primary or Secondary, respectively. The unfortunate consequences of such a blind focus on access rather than understanding means that we continue to add complexity to the decision-making process – essentially making decisions more difficult rather than easier because of the breadth and depth of information inputs available and applied to evaluating options. Not only must we make the right information available to the right people at the right time, we must add to its value through giving it meaning.

We might interpret this phenomenon as being in need of a broker for such knowledge – a kind of information professional who understands the meaning behind the business decisions required, and the nature of the sources of enterprise and competitive knowledge available as inputs to the decision-maker. For example, CI professionals are often loath to make recommendations to their internal customers on what to do about the intelligence they’ve gathered. This misunderstanding of the role of the CI practitioner – to give meaning – has led to the demise of many CI units because of their failure to add value to the decision-making process. They are left with little to point towards as return-on-investment during the next budget cycle. Likewise, a failure by KM professionals to deliver a manner of understanding of the applications for the knowledge within an organization is just as likely to lead to their demise.

While it’s troublesome to simplify the relationship between CI and KM, we instinctively regard them as similar in terms of applying enterprise knowledge of the internal and external environment for long-term competitive advantage. The goals of both disciplines is to evaluate the business decisions at hand, locate and deliver appropriate knowledge from within and without the organization and, in the end, help to give it meaning and help decision makers better understand the options available to them.

Arik R. Johnson is Managing Director of the CI consultancy Aurora WDC. He can be contacted at:Arik Johnson

Competitive Intelligence: The Real knowledge management

Knowledge management is such a wonderful buzzword. The buzz however, is mainly from the large consulting companies jumping on the wagon and circling their prey. What started as a noble (if not new) idea has turned into an all too familiar game: Big Names’ consulting “practices” selling hype to eager executives.

Face it – no matter how many conferences, practices, centers for innovation and magazines spring up, knowledge management remains an empty slogan. The reason? It is basically no more than the old MIS all dressed up, ready to suck up corporate resources. Since the times are good, resources are abundant. Fortune 500 will spend money on anything. As Erik Brynjolfsson of MIT argues, there is no direct correlation between MIS/KM investments and business performance. As to actual “knowledge management? Judge for yourself.

KM started nobly. The objective was to manage knowledge – an intangible yet enormously important resource. Then the software companies took over and the entire noble effort came down to… search engines. In other words, KM today centres around ways to retrieve (albeit faster and more cleverly) existing information hidden in corporate mazes. Intranets, portals, and virtual communities- what do all these have to do with knowledge? At best they are information retrieval tools!

The contempt of CI professionals to the hype around KM is simple. CI professionals have already been managing all external knowledge for their corporations for the past decade. For many years they’ve done it without any software toys, with a phone and an (large) index cardholder. Today they have their software and still, a single brilliant CI officer and an effective company-wide CI program - one that is structured correctly and is ingrained in the culture - in a Fortune 500 unit, costs a few hundred thousands dollars per year. Compare that to a typical Big Name’s “KM project in search of KM problems” and you immediately understand why CI professionals actually add value to shareholders and why boards are beginning to demand them. Their secret? They understand Management of Knowledge. First step: One has to Create knowledge. That can only happen if one knows how to look outside one’s cubicle – the old profession of human intelligence collection. Second step: One has to convince people to Use it. That will only happen if one provides real insights about real opportunities and threats in the competitive arena, which is the core of the intelligence synthesis. Third step: One has to guard the strategic future of large organizations managed by insular, and sometime overconfident, executives. That can happen only if one embraces intelligence as basic “decision insurance” culture, tracking blindspots and operating as a risk manager. That’s Competitive Intelligence. That’s the way it is practiced in several global market leaders, and that’s a Real knowledge management. As Peter Drucker observed, companies that can’t look beyond their navels are doomed. No virtual communities gazing collectively into their navels will change that. No amount of Internet searches and surfing will change that, either. Without real competitive intelligence, CEOs that spend millions on big KM projects led by Big Names’ consultants will find themselves, like Eckhard Pfeiffer, formerly of Compaq, when the environment changes: Poof, and they are gone!

Ben Gilad is President of the Academy of Competitive Intelligence. He can be contacted at:Ben Gilad

Soft Underbellies and Shoelaces - Troubling weaknesses that can cripple knowledge management – and competitive intelligence

You’re better off showing an individual how to tie a shoelace than by handing over written instructions. When it comes to shoelace tying, you need to show, not describe. There are times when I believe knowledge management (KM) only confuses and over-complicates an organization’s need to learn from itself. You have to wonder why such complicated constructs are ever needed. Are organizations invoking this new so-called KM panacea, making more out of less? In the end, are corporations actually spending untold amounts of money on undefined, unclear knowledge management goals?

It is somewhere around this point in the discussion of KM’s value, when others summon its so-called cousin, competitive intelligence. CI, as it’s otherwise nicknamed, aims to fulfill specific needs: analysis of privately-held rivals, forecasting new product developments among competitors, determining acquisition prospects or pricing strategies. These are all very practical, high-return objectives. Unlike knowledge management, CI’s goals are clear, necessary and nearly a three-dimensional product you can wrap your hands around. Yet, CI also has its weak underbelly.

KM’s soft underbelly is its very bigness. Big words, big concepts and large systems – with large budgets – often follow. Many managers find it difficult to describe KM in just a few words. They use big words and sociological-like phrases, such as “codification strategy” or “decision architecture” to describe how a company has used a groupware or Intranet-based network to share information.¹

The software industry has naturally fed into this desire by creating or refashioning existing packages to meet the demand for knowledge management. It is the software programming and consulting business that has taken long-standing data mining and data warehousing packages and given them a KM makeover.

Often the same packages claim to perform both knowledge management and competitive intelligence tasks. These are great claims, but I have found they can fall short. Software is one arena where both CI and KM have experienced mutual weaknesses. My firm has spent the last two years examining software packages offered to both KM and CI audiences and find they do indeed fail to deliver on many of their promises. Such failures – often coming at a very high cost in personnel and out-of-pocket – can create a downward pressure on both movements, potentially burying the benefits gained.

On my firm’s web page we compare over a dozen large and small software packages that lay claim to the KM and CI markets. The complete intelligence cycle, which shares many characteristics with the KM process involves five steps:

Defining requirements

Collect and organise

Analyze

Report and inform

Evaluate

None of the packages we reviewed perform more than two or three of the five tasks well. None actually analyze. So, while these packages claim to provide knowledge management solutions, these solutions are partial at best – and severe overstatements at worst.

If KM’s reach may be too broad, then CI’s is too specific. In many corporations we serve, CI has been assigned to an elite, almost cloistered group of professionals. Competitive intelligence in corporations that have used it well encourages a broad use by all ends of the organization, from sales, R&D, and purchasing to the executive suite. These successful CI-driven corporations generally do not rely on software solutions and arguably have become excellent users of internal, competitive, and market knowledge. They are the minority. For most, the CI message has become entangled with libraries, information systems or market research and has not successfully transferred true intelligence skills to the organization at large – this despite the very concrete benefits of CI, including improved win-loss sales records, better-targeted new products, and overall improvement to the bottom line.

Don’t mistake the message here: KM is not CI. They are cousins, but with different objectives. KM’s goals are very lofty – that of harnessing the entire corporation’s skills, market knowledge and overall business smarts. I have found that day-to-day business does not often reward such dream-like goals that do not return distinct profits, or show specific returns. Add a high price tag to KM’s goals and you create lots of friction – friction that bring movements, such as KM, down in defeat. CI, on the other hand, has proven successful time and time again, mostly in very focused, tactical arenas. Although the price tag is much less than its KM cousin, it has not yet broken through this elitist corner in many corporations. CI is not likely to fade away; at the same time, it desperately needs to grow and be used by more than just the marketing set.

To date, both KM and CI have failed to show most organizations how to tie that shoelace. KM has made it too complicated and expensive, and CI has only taught it to a few.

Leonard M. Fuld is president of Fuld & Company, a competitive intelligence research and consulting firm. Mr. Fuld has authored three books on competitive intelligence, including his latest work, The Fuld War Room(tm) (CD-ROM, Iron Horse Mulitimedia, Montreal, Canada). He can be contacted at:Leonard Fuld

¹ 1. “What’s Your Strategy for Managing Knowledge?,” Harvard Business Review, March-April 1999