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Executives who don't think they need to gather competitive Intelligence set themselves up for a very hard fall.
IN 1980, A LITTLE-KNOWN SEMICONDUCTOR EQUIPMENT manufacturer called Applied Materials established an office in Japan staffed by seven people. The cost of the operation caused some sleepless nights for CEO Jim Morgan, but he persisted. Morgan believed that if his $69 million company was to successfully compete in the semiconductor market, he had to gain firsthand knowledge of how to do business with the Japanese. His seven-person team provided vital competitive intelligence (CI) on how the Japanese companies were gaining power in the semiconductor market. The team was able to gain insights into Japanese business practices that could only be obtained by becoming part of the local business community.
Morgan's intuition paid off handsomely. Today, Applied Materials is a major force in chip manufacturing, with annual sales of $4.1 billion-50% of which comes from Asia.
The story is told by Ben Gilad, founder and president of the Annandale, Va.-based Academy of Competitive Intelligence, to highlight the value of CI. While many factors have contributed to Applied Materials' success, Gilad acknowledges, he maintains that Morgan's commitment to CI as a means of understanding a market and honing his company's competitive strategy, proved decisive.
CI is defined by the Society of Competitive Intelligence Professionals (SCIP), Alexandria, Va., as the legal and ethical collection, analysis, and distribution of information regarding the competitive environment and the capabilities, vulnerabilities, and intentions of business competitors. A variety of information sources come under the CI umbrella. These include external sources such as reports, articles, conference proceedings, the Internet, and outside experts such as consultants. Internal sources include the knowledge of staff members as well as that stored in in-house databases. Competitive information is distilled from this mass of information, analyzed, and turned into competitive intelligence.
Gilad offers a more pragmatic definition of CI. "CI is not about money or egos," he says, "but first and foremost about fighting blind spots in one's view of how markets work, what customers want, what competitors are doing, and where the future lies." The discipline of CI roots out any assumption about the market that has become obsolete, Gilad continues, empowering businesses to respond quickly to market...