Bruce Taylor spoke with Arik Johnson, founder and managing
director of Recon Competitive Intelligence at Aurora WDC on
competitive dynamics among enterprises. This is an edited
transcript of that conversation. You may also
listen to the original interview here.
Hi. I'm Bruce Taylor, and this is Voices on ITworld.com. In a
time of great concern about corporate risk, regulatory
compliance, and the safety and sanctity of proprietary and
competitive information, the field of competitive intelligence
as a part of the strategic planning and positioning of a
corporation may seem a bit of out of sync with the times. Our
guest today, however, may have some very different thoughts. He
is Arik Johnson, founder and managing director of Recon
Competitive Intelligence at
Aurora WDC, where he advises business leaders on how to
better understand their business rivals, the competitive
dynamics among enterprises in the marketplace. He also writes a
syndicated column on competitive intelligence issues.
Bruce Taylor: Arik, welcome to the program.
Arik Johnson: Thank you, Bruce, great to be here.
Taylor: To begin, could you give me an overview of
competitive intelligence, what it is, what it is not, what kinds
of information gathering and analysis tools does it require, and
things that you think that an audience of IT professionals would
want to know.
Johnson: Certainly. Competitive intelligence is one of
those undertakings that any moderately successful business will
do, at least informally in order to create sustainability for
itself and its market. And ultimately the level of formalization
of that function sort of separates winners from losers, in my
opinion. It allows organizations to out maneuver and outsmart,
really out innovate their functional equivalents, their direct
competitive rivals in whatever markets they decide to play in.
I think that there has been a great consensus building effort
in the last few years to decide exactly what we mean by
competitive intelligence when we talk about it, and it generally
fits into two realms. The first, and what is arguably sort of
the most important from a management perspective, is the
strategic intelligence that's really collected from a predictive
point of view. You're really trying to generate early warning of
likely scenarios and events in the marketplace that present
particular risks or opportunities to the long-term or near-term
success of the business, its business model, its ability to
attract and retain its customer relationships, and ultimately
produce products and services that the market finds important
and worth buying. At a tactical level, much more operationally,
CI generally takes on the form of trying to benchmark an
organization against its functional equivalents, or really
against best in class or best in world practices that exist in
the market to allow the company to either squeeze out cost to
make itself more efficient, or to really just raise the bar in
the industry and potentially to leapfrog its competitors.
That said, it is also, and perhaps foremost, directed at
really selling and marketing more effectively the firm's
products in the short-term to the customers that they have and
customers that they feel would also be attracted to those
products or services. And the analytical tools chiefly are
divided into those two separate realms. You see very theoretical
sort of pattern recognition types of applications that take
place in the strategic realm where you're trying to effectively
predict the future and your ability to be a part of it. And at
the tactical level, it's very much one of creating messages or
to comparisons between different metrics of performance between
and among different companies, and there are, obviously,
tremendous variance in the information systems that are used to
produce those insights.
Taylor: You just raised something I'd never even
thought of, that competitive intelligence could be seen as a
component, if you will, in business performance management.
Johnson: It certainly is. And in fact, I gave a speech
a few months ago where one of the first questions in the
question and answer period was about what's the connection here
with business performance management, and how does that work?
Really benchmarking is that primary connection in the tactical
realm. Once you've figured out what business you want to be in,
you then have to figure out how to out execute everyone else in
that business in order to really be number one and number two in
the market. And that's sort of the description of CI in very
brief terms. The strategic level intelligence that's produced
for management decision makers versus the tactical operational
stuff that you use to make yourself better and improve, I call
it doing the right thing versus doing the thing right. Really
doing the right thing is being in the right business at the
right time and having the discipline to exit those businesses
when you have no longer a sustainable competitive advantage. And
then also doing the thing right, making sure you can execute in
the businesses that you choose to compete in.
Taylor: Arik, it seems to me that competitive
intelligence brings two very different kinds of IS and software
development skills to play. One would be in the area of content
management, and the other would be in the area of what we would
consider to be business intelligence, the data mining, analytics
side of the spectrum. Is that how you see it?
Yes. I think from a BI point of view, I think that
understanding where the trends lie, both within your own
customer base, as well as the customer base that might be made
available to you, either through acquisition or through organic
growth, are certainly important decision making factors in
understanding how the business is going to go to market. At
another level you're right. The content management, knowing
where information is housed within the enterprise is a huge part
of that. And I think the fact that, the old saw about there
being 80% of what you need to know in the CI realm already
existing within the enterprise, and it's a matter of figuring
out how to tap into and access that intelligence or really that
almost corporate instinct about how to perform and how to
compete, those are very much IT dependent and IT intensive
tasks. I think that we're seeing just in the very recent history
around the knowledge management area, BI area, things like
visualization, and even being able to incorporate desktop search
and the sort of proliferation of information silos throughout
organizations. We're now seeing that a lot of the stuff that's
housed both in people's heads, as well as in their own
information repositories, are now being made available on a
broader basis, and IT is certainly a huge enabler of that.
Taylor: I would think that a CIO has two very
different functions arising from the same thing. One is that
internally he wants to be able to make sure that the enterprise
can get its hands on the information it already owns and gather
in the information that it needs to have, but then secondarily,
he is charged with the responsibility of protecting the
enterprise with its firewalls from information that is
proprietary from leaking out into the world. In the era of the
Internet, that's dicey business. Is that a fair statement?
Johnson: Well, the protection of the enterprise and
really establishing the firewall around it and making sure that
the perimeter defense is there, is certainly a part of what the
CIO needs to do. And I would say in partnership with the
worldwide security function, as well as competitive intelligence
provides the fabric under which proprietary information, trade
secrets, and the rest of the intellectual property and the
intellectual capital of the organization is very protected. That
said; we're in an era of new openness where compliance and
regulatory compliance really make it necessary to create both a
knowledge sharing culture, as well as a knowledge protecting
culture. I think that the advent of certain economies around the
world to global status and now their ability to compete with us
globally, we see IBM selling its PC division to a Chinese
company, and, in fact, raising certain questions about the
security of the trade secrets involved in their business there,
and a number of other areas that are really more economic
espionage and industrial espionage related topics. Certainly
calls into question the level and degree of involvement that
CIOs want to have in the ultimate defensive and counter
intelligence really capability of the organization. At the same
time, certainly, they have to try and enable the ability of the
company at large to really make use of those intellectual
assets. And it's definitely a tightrope walk to try and manage
both tasks at hand. I think that ultimately what IT needs to do
is to make itself a strategic contributor to the organization's
long-term competitive advantage. If we go back to seeing where
competitive differentiation arises, a great deal of the time it
arise from the ability of the organization to deploy its
intellectual capital in the most innovative and also the most
efficient and effective way possible, and really the only way to
do that is to use IT enabled resources to accomplish that task.
Taylor: So, on the corporate org chart, where does the
director of competitive intelligence sit?
Johnson: Good question. It depends on the strategic
versus tactical focus. Very much today we see a decentralization
of the competitive intelligence function into what's been called
the hub and spoke model. Essentially the hub is the strategic
level, distillery of insights and intelligence that's coming in
from the field. That's the strategic sort of forecasting,
forward-looking risk management practice; very much like sort of
an internal think tank. We actually have a whole body of thought
around how to really build the strategic level CI function is in
many ways a consulting firm within the broader organization.
Taylor: Is that within corporate council office? Is it
in the office of the CEO? The office of the CFO?
Johnson: Often it's standalone. And if you look at an
organization, for example like Motorola, Motorola has a
standalone strategic competitive intelligence function that
really reports to the CEO. In other organizations that model is
the same. And, in fact, we've found that among some 20 to 25% of
the Fortune 1000, that model of the standalone executive level,
really VP level reporting relationship is very much one of the
corporate, at the corporate level. Now, tactically speaking, an
organization like a Motorola or like Hewlett-Packard or Dell or
Cisco or any one of the technology giants out there that you
might want to become familiar with, each one of them has
multiple lines of business, and each one of those lines of
business has very different competitive dynamics.
Certainly it has made sense, and I think continues to make
sense that there is a decentralized line of business function
for CI that looks at each one of the businesses in which the
enterprise competes. And even though you've got a strategic risk
management forward-looking very much strategic level function
that's looking out ahead for the future of the organization,
each one of the businesses that the organization has needs to
have its own tactical support infrastructure to support sales,
support marketing, support R&D, each one of those lines of
business also has a manufacturing and a finance component to it.
So, certainly there are different practices, but this is sort
of what's been accepted, at least in the large pad enterprise as
being the preferred model. Unfortunately, we see that many large
organizations still have no competitive intelligence department.
And I think that that's sort of like bringing a knife to a
gunfight, if you ask me. The larger organizations out there that
lack that competitive intelligence dynamic, in some cases, have
been able to instill that in the culture of the organization,
sort of CI is part of everyone's job, so to speak, and they're
able to enable that with information technology. But it's much
more the case where you have sort of small or solo or part time
CI managers in the SME market. Smaller and medium sized
enterprises who ultimately just simply don't have the resources
to apply to a full-time competitive intelligence function. I
would argue that in an era where Sarbanes-Oxley makes really
forecasting of real time issuer disclosures a requirement to
really remain in compliance with regulation, they can't do
without it. And ultimately CI needs to be, from a strategic
point of view, an early warning think tank for the organization
that's properly funded, that has good relationships with the
other infrastructure providers and risk management folks within
the organization, and ultimately gives visibility on what that
future might hold.
Taylor: And this is another clear case where, to me,
the IT infrastructure is absolutely a requirement for
competitive intelligence. You can't do it without it.
Johnson: No, absolutely. And I think the simple
collaboration, for example, between knowledgeable or domain
expert sources within an organization is one of the functions
that CI has always wanted to figure out how to provide. And I
think CI in its frustration to fulfill its own mission has been
somewhat competitive or confrontational with IT in the past in
trying to figure out how to enable that process.
IT is, in my opinion, on board at this point. IT realizes
that it needs to be a contributor to competitive advantage for
it to really be a strategic level function and to remain a
C-suite reporting relationship with management. If it doesn't do
that, it sort of falls into the same department as some of the
other organizational components that have so easily been
outsourced in years past. If it's no longer strategic, then you
get rid of it because you can't afford to have it anymore.
So, I think IT has gotten that message and I think they're
willing and able partners for the competitive intelligence team,
and ultimately the agenda setting forces behind CI within every
organization to really help enable that process, and, of course,
without the technology tools there, it becomes a monumental
task. And that's only something that's really taken place and
come about in the last couple of years. It really wasn't even
there throughout most of the late 1990s when the Internet and
Intranet and knowledge management technologies began really
proliferating in the enterprise. CI, even back in those days 10
years ago, I was arguing that CI was one of the best business
cases for knowledge management that's ever cropped up.
If you think about what knowledge management needed to do in
order to really provide a charter for itself, CI was one of
those outcomes that it needed to try and enable. And many
organizations were successful in doing that, in others it
wasn't. But I think the same holds true today, even as sort of
the terminology has changed and we start to think more about
risk management than we do necessarily about anything else, the
long arm of the law tends to be a great motivator when it comes
to creating the need and argument around business processes like
CI and IT and getting them to work together.
Taylor: Arik, wonderfully said. Thank you so much.
Johnson: Thank you Bruce. It's been a pleasure.
