Creating differentiation: how much do you know about your competition?
“You don’t have to be the best, you just have to be better than your competitor.”*
Successful marketing executives know a lot. That's how they create differentiated value propositions.
But first, please don’t tell me you think competitive intelligence (CI) is espionage. I’m not naive – there have been far too many cases to pretend industrial espionage doesn't exist and some major countries are well known to engage in spying for their companies.
Ethical competitive intelligence has a long history, going back centuries. The first published mention dates from 1876, in an Institute of Civil Engineers discussion of carriage design. It gained popularity in the 1980s following the publication of Michael Porter’s Competitive Strategy,** now in its 60th printing. Today, most major corporations have a CI function and there is even a professional organization of Strategic and Competitive Intelligence Professionals (SCIP).
I actually got my start at 18, as a mobile ice cream salesman. Ice cream sales is a winner-take-all business – if you get to a swimming pool full of kids on a hot summer day 10 minutes after your competitor, you sell nothing. A long-standing competitor straddled the routes of a friend who was selling for the same company I did. At the end of each day, we plotted his route until we knew exactly where he was when (this was before cell phones...). Once we had the intelligence, our sales skyrocketed, while his dropped to near zero. He abandoned the route within weeks and we had free rein for the rest of the summer. I didn't know I was doing CI. It was purely a matter of financial survival.
In my first corporate job, marketing aircraft tires, I could predict within 1% the price our competitors would offer, through a thorough analysis of bid performance. My technical team was able to assess the performance characteristics of each tire in our competitor’s line, which enabled us to arm the sales force with the information they needed to increase sales. We gained share every year.
Perhaps surprisingly, the first thing you need to do is learn as much as you possibly can about your own business, before you try to understand the competitor’s. You’re only as good as your ability to impact your business – you can be the greatest analyst in the world, but if you don’t understand your own business well enough to know what intelligence is needed to impact a decision, you’ll fail. And, as you deepen your knowledge of your business, you’ll gain incredible insights into the competition. Faye Brill, who was CI chief of Ryder Systems, Inc., ‘believes that 80% of what you need to know about your competitors is right inside your company.’***
You’ll find this easier than you might think. Consumers and “clients are often happy to provide feedback to soften the blow of losing a contract”**** or selecting another product.
As Chinese philosopher Sun Tzu wrote: “If you know your enemies and know yourself, you will not be imperiled in a hundred battles.”
Next: What do You Need to Know About Competition?
*Elix, Doug, SVP, IBM, conversation with the author
**Porter, Michael, Competitive Strategy, The Free Press, 1980
***DeWitt, Michelle, Competitive Intelligence, Competitive Advantage. Grand Rapids, MI, Abacus, 1997
****“Get something from losing,” One Minute Articles (link no longer active).
“You don’t have to be the best, you just have to be better than your competitor.”*
Successful marketing executives know a lot. That's how they create differentiated value propositions.
But first, please don’t tell me you think competitive intelligence (CI) is espionage. I’m not naive – there have been far too many cases to pretend industrial espionage doesn't exist and some major countries are well known to engage in spying for their companies.
Ethical competitive intelligence has a long history, going back centuries. The first published mention dates from 1876, in an Institute of Civil Engineers discussion of carriage design. It gained popularity in the 1980s following the publication of Michael Porter’s Competitive Strategy,** now in its 60th printing. Today, most major corporations have a CI function and there is even a professional organization of Strategic and Competitive Intelligence Professionals (SCIP).
I actually got my start at 18, as a mobile ice cream salesman. Ice cream sales is a winner-take-all business – if you get to a swimming pool full of kids on a hot summer day 10 minutes after your competitor, you sell nothing. A long-standing competitor straddled the routes of a friend who was selling for the same company I did. At the end of each day, we plotted his route until we knew exactly where he was when (this was before cell phones...). Once we had the intelligence, our sales skyrocketed, while his dropped to near zero. He abandoned the route within weeks and we had free rein for the rest of the summer. I didn't know I was doing CI. It was purely a matter of financial survival.
In my first corporate job, marketing aircraft tires, I could predict within 1% the price our competitors would offer, through a thorough analysis of bid performance. My technical team was able to assess the performance characteristics of each tire in our competitor’s line, which enabled us to arm the sales force with the information they needed to increase sales. We gained share every year.
Perhaps surprisingly, the first thing you need to do is learn as much as you possibly can about your own business, before you try to understand the competitor’s. You’re only as good as your ability to impact your business – you can be the greatest analyst in the world, but if you don’t understand your own business well enough to know what intelligence is needed to impact a decision, you’ll fail. And, as you deepen your knowledge of your business, you’ll gain incredible insights into the competition. Faye Brill, who was CI chief of Ryder Systems, Inc., ‘believes that 80% of what you need to know about your competitors is right inside your company.’***
You’ll find this easier than you might think. Consumers and “clients are often happy to provide feedback to soften the blow of losing a contract”**** or selecting another product.
As Chinese philosopher Sun Tzu wrote: “If you know your enemies and know yourself, you will not be imperiled in a hundred battles.”
*Elix, Doug, SVP, IBM, conversation with the author
**Porter, Michael, Competitive Strategy, The Free Press, 1980
***DeWitt, Michelle, Competitive Intelligence, Competitive Advantage. Grand Rapids, MI, Abacus, 1997
****“Get something from losing,” One Minute Articles (link no longer active).
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