How Important is CI?Posted: December 3, 2015
December 3, 2015
Sometimes we have to justify CI to others. Why we have to do that is not at all clear. We do not have to justify cleaning the car’s windshield so we can see oncoming traffic. We do not need to have someone argue with us that having a smoke alarm in our home to warn about a fire that could kill us is a good idea.
But, if you have to make a case for CI, let me give you some ammunition. The first is from a recent speech by Cliff Kalb, former head of CI for Merck, the pharma giant. The second is an insight from the gospel of “disruptive competition”. The third is a look at some past multi-company studies.
Here is a report of what Kalb told the International Association For Intelligence Education about the value of CI:
“Proctor & Gamble saved $40 million by applying the results of competitive benchmarking. NutraSweet did not spend $38 million because CI revealed its competitors posed no threat. General Motors cut $100 million from manufacturing costs from competitive benchmarking. Merck increased revenues by $300-$400 million as a result of CI team actions which outmaneuvered the competitor.”
Let’s look at CI’s value from another perspective. Here is a recent analysis of what Professor Clay Christensen’s “disruptive competition” involves:
“[I]ncumbent companies can fail despite being well run and serving their existing customers as assiduously as possible. Their success can blind them to the realisation that scrappy upstarts are quietly rewriting the rules.”
What is a key concept here? Companies that fail due to disruptive competition do so because they are blind to upstarts, their competitors. Effective CI prevents that blindness.
To those can be added the results of several multi-company studies:
- In the early 1990s, a study of the packaged food, telecommunications and pharmaceutical industries reported that organizations that engaged in high levels of CI activity showed 37% higher levels of product quality, which is, in turn was associated with a 68% increase in business performance.
- A PricewaterhouseCoopers’ study of “fast growth” CEOs reported that “virtually all fast-growth CEOs surveyed (84 percent) view competitor information as important to profit growth of their company.”
- A McKinsey study published in 2008 asked executives how their firms responded either to a significant price change by a competitor or to a significant innovation by a competitor: “A majority of executives in both groups [across regions and industries] say their companies found out about the [significant] competitive move too late to respond before it hit the market.”
 William C. Spracher, “Competitive Intelligence Keynote Speaker: Cliff Kalb, Former Senior Director, Strategic Business Analysis, Merck & Co.”, IAFIE Newsletter, Vol. VI, Issue no. 2, p. 8.
 For the sources for these, see John J. McGonagle and Carolyn M. Vella, Proactive Intelligence: the Successful Executive’s Guide to Intelligence, Springer, 2012 , p. 21.