Academic journal article Competition Forum

Competitive Intelligence in Business Decisions - an Overview

Academic journal article Competition Forum

Competitive Intelligence in Business Decisions - an Overview

Article excerpt

EXECUTIVE SUMMARY

The key to competitive intelligence is the process of turning raw data into valuable information, turning that valuable information into strategy, and turning strategy into actionable items, thereby improving business performance and operations by maintaining an organizational advantage. This paper will set out to further explore the nature of Competitive Intelligence as a key contributor to the process of organizational Knowledge Management Systems, enabling faster more intelligible decision-making.

INTRODUCTION

Competitive Intelligence, which is defined as the purposeful and coordinated monitoring of your competition within a specific marketplace, plays an important role in Knowledge Management and the process of organizational decision-making. Competitive Intelligence is forward-looking and anticipates competitors' future activities. Management Information Systems vendors, such as SAP, go so far as to say that Competitive Intelligence, which is also commonly referred to as Business Intelligence, enables organizations to reach into their vast supplies of data and rapidly turn them into information for knowledge management (http://www.sap.com/solutions/bi/).

In order to fully understand the role of Competitive Intelligence in Knowledge Management, it is important to first examine the properties of Competitive Intelligence and Knowledge Management as separate entities within organizational decisionmaking. Intelligence, as opposed to Competitive Intelligence, can be defined as "an analytical process that transforms tumultuously gathered competitor and market information into actionable knowledge about competitors' capabilities, intentions, performance, and position; as well as the final product of that process." Competitive Intelligence, conversely, involves the use of public sources to develop data on competition, competitors, and the market environment, transforming that data, by analysis, into [useful] information (McGonagle and Vella, 2002). Data developed under this context can be identified as Knowledge Assets (KA). Within competitive business environments, businesses must be effectively prepared to manage Knowledge Assets (KA) in order to remain viable. Knowledge assets are "the knowledge regarding markets, products, technology, and organizations, that a business owns or needs to own and which enable its business processes to generate profits, add value, etc." Competitive Intelligence is a type of Knowledge Asset.

Effectively managing Knowledge Assets involves the process of Knowledge Management (KM). KM is defined as the "identification and analysis of available and required knowledge assets and knowledge asset related processes, and subsequent planning and control of actions to develop both the assets and the processes so as to fulfill organizational objectives." KM however, is not limited to managing Knowledge Assets, but includes the management of "processes, and the subsequent planning and control of actions to develop both the assets and the processes so as to fulfill organizational objectives" (Macintosh, 1999).

Effective Knowledge Management is critical because "in today's information-driven economy, companies uncover the most opportunities and ultimately derive the most value-from (KA) rather than physical assets" (Santosus and Surmacz ,2001). Thus, companies should not solely focus on their tangible assets if they wish to remain competitive. Employing an effective Knowledge Management strategy requires overcoming some challenges such as unwillingness of employees to participate in Knowledge Management, allowing technology to dictate Knowledge Management within an organization, not having a specific goal as it relates to Knowledge Management, failure to recognize that Knowledge Management, alone, is not strategic, and the inability to distinguish useful knowledge from useless knowledge.

In the end, an effective Knowledge Management strategy should encompass the following in order to prove successful within an organization (Santosus and Surmacz, 2001):

* Foster innovation by encouraging the free - flow of ideas

* Improve customer service by stream - lining response time

* Boost revenues by getting products and services to market faster

* Enhance employee retention rates by recognizing the value of employees' knowledge and rewarding them for it

* Streamline operations and reduce costs by eliminating redundant or unnecessary processes. …

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