1. BEST PRACTICES IN MANAGING A CI FUNCTION June 6, 2007

2. www.outwardinsights.com 2 GOALS AND OBJECTIVES Provide an overview of competitive intelligence, what it is and what it is not Description of how competitive intelligence is used within an organization Competitive Intelligence Usage Survey Results Instruction on the basics of a competitive intelligence process Overview of best practices from our experiences with clients in managing a competitive intelligence function

3. www.outwardinsights.com 3 AGENDA What is Competitive Intelligence The Uses of Competitive Intelligence Competitive Intelligence Usage Survey Findings The Competitive Intelligence Process Best Practices in Managing the Function

4. www.outwardinsights.com 4 WHAT IS COMPETITIVE INTELLIGENCE? Knowledge and foreknowledge of the competitive environment the prelude to decision and action. Competitive Intelligence: The organizational means by which information is systematically collected, analyzed, processed and disseminated as intelligence to managers who can act on it. Competitive Intelligence Process:

5. www.outwardinsights.com 5 WHAT COMPETITIVE INTELLIGENCE IS NOT Traditional competitive studies News clipping service Databases / data warehouses Market research Knowledge Management Unconnected pieces of data

6. www.outwardinsights.com 6 – John Naisbitt We are drowning in information but starved for knowledge. CHALLENGES IN CI

7. www.outwardinsights.com 7 CI TRANSFORMS DATA/INFO INTO INTELLIGENCE

8. www.outwardinsights.com 8 INTELLIGENCE IS EXTERNAL (I)t can be argued that the information revolution has caused managements to be less well informed than they were before... (T)he most important changes affecting an institution today are likely to be the outside ones, about which present information systems offer few clues. Peter Drucker, A Survey of the Next Future, The Economist, 11/3/01

9. www.outwardinsights.com 9 COMPETITIVE INTELLIGENCE IS NOT LIMITED TO COMPETITORS CI Group Corporate Security Threats TechnologyDevelopments & Sources Political, Economic, & Social Forces Markets & Customers Competitor Capabilities, Plans, & Intentions Industry Structure & Trends

10. www.outwardinsights.com 10 AGENDA What is Competitive Intelligence The Uses of Competitive Intelligence Competitive Intelligence Usage Survey Findings The Competitive Intelligence Process Best Practices in Managing the Function

11. www.outwardinsights.com 11 USES OF COMPETITIVE INTELLIGENCE Defensive To provide early warning of new competitors or disruptive technologies Offensive To spot new markets or opportunities ahead of competitors Short-Term To determine how a key competitor will price or position a new product or service Long-Term To forecast the viability and attractiveness of a future market Intelligence is forward-looking, predictive, and actionable

12. www.outwardinsights.com 12 INTELLIGENCE IS ANTICIPATORY – Wayne Gretzky On the ice, everyone goes to where the puck is. Me? I go to where the puck is going to be.

13. www.outwardinsights.com 13 AGENDA What is Competitive Intelligence The Uses of Competitive Intelligence Competitive Intelligence Usage Survey Findings The Competitive Intelligence Process Best Practices in Managing the Function

14. www.outwardinsights.com 14 More than 7 our of 10 companies claim to have an organized CI function...... But most say they do not have the means, interest, or understanding to use it properly. Source: Ostriches and Eagles: Competitive Intelligence Usage and Understanding in US Companies, Outward Insights, February 2005 SURVEY SAYS…

15. www.outwardinsights.com 15 ROADBLOCKS TO EFFECTIVE CI Source: Ostriches and Eagles: Competitive Intelligence Usage and Understanding in US Companies, Outward Insights, February 2005

16. www.outwardinsights.com 16 AGENDA What is Competitive Intelligence The Uses of Competitive Intelligence Competitive Intelligence Usage Survey Findings The Competitive Intelligence Process Best Practices in Managing the Function

17. www.outwardinsights.com 17 HOW TO CREATE INTELLIGENCE: THE CI CYCLE Most corporate intelligence programs consist of four broad functions: Planning and direction: management and oversight of intelligence to ensure a demand-driven, needs-based program. Information collection: exploiting secondary and primary (human) sources for information, observations, and insights. Analysis: interpreting information, drawing conclusions, identifying implications, and making strategic recommendations. Reporting: disseminating finished intelligence products, in time, to those managers with the responsibility and authority to act on the information. Analysis Informati on Collectio n Planning & Direction Report & Inform Needs Decision Makers Other Users The Intelligence Cycle: Each step is necessary and adds value

18. www.outwardinsights.com 18 KEY INTELLIGENCE TOPICS FOCUS THE CI GROUP TO DELIVER THE HIGHEST VALUE INTELLIGENCE KITs are high-level business concerns upon which management must take action Define KITs based on the critical decisions that must be made Provide direction to the competitive intelligence effort and overall strategy Improve the quality and timeliness of decisions; prevent surprise through early warning Definition Management Role Purpose Benefit

19. www.outwardinsights.com 19 What are the strengths, weaknesses, and future strategic intentions of our major competitors? What new, or non-traditional, competitors could enter our key markets? What new technologies are emerging that could impact our business? What are the emerging legislative or regulatory changes that could have a significant impact on our customers, products, and services? What M&A or JV activity might be on the horizon and what are its implications for our companys products and services? SAMPLE KEY INTELLIGENCE TOPICS

20. www.outwardinsights.com 20 INVESTING IN DEVELOPING ESSENTIAL CI FUNCTIONS YIELDS COMPETITIVE BENEFITS Provides Early Warning of Opportunities & Threats Provides Early Warning of Opportunities & Threats Collect Data Prepare Report & Disseminate Analyze & Forecast Essential Functions Primary Benefits Supports Strategic Decision- Making Process Supports Tactical and Operations Decisions Assesses and Monitors Competitors Supports Strategic Planning & Strategy Processes

21. www.outwardinsights.com 21 Communications Verbal Written Presentation Project Management Planning Implementation Monitoring Leadership & People Management Strategic Thinking Coaching Team Building CI Specific Ethics and Legal Guidelines Research Planning Tradeshow Management Analysis Techniques RECOMMENDED CI SKILLSETS

22. www.outwardinsights.com 22 CHECKLIST OF SUGGESTED ANALYTICAL TECHNIQUES USED BY CI TEAM Competitor and Industry Analysis SWOT Analysis Porters 5 Forces Model Four Corners Analysis Competitor Benchmarking Competitor Response Modelling WIN/LOSS Analysis Value Chain Analysis Forecasting Early Warning Indicator Development Hypothesis-based Tools War Gaming Scenario Planning Financial Financial Forensics

23. www.outwardinsights.com 23 AGENDA What is Competitive Intelligence The Uses of Competitive Intelligence Competitive Intelligence Usage Survey Findings The Competitive Intelligence Process Best Practices in Managing the Function

24. www.outwardinsights.com 24 BEST PRACTICE #1: COMPETITIVE INTELLIGENCE IS ALWAYS LEGAL AND ETHICAL Exploit new employees for proprietary information Use illegal methods Compromise customer proprietary information Conduct false job interviews Misuse consultants or agents Misrepresent ourselves We will not...

25. www.outwardinsights.com 25 BEST PRACTICE #2: IDENTIFYING USER NEEDS IS CRITICAL TO THE OVERALL SUCCESS OF PROGRAM CI users are engaged regularly to understand their intelligence requirements These requirements are used to focus CI efforts and resources Efforts are focused primarily on issues management has identified as threatening But, CI has an obligation to alert management to emerging issues Management regularly shares its actions and decisions with CI producers

26. www.outwardinsights.com 26 THE FLIP SIDE OF BEST PRACTICES: COMMON MISSTEPS TO AVOID 1.Failure to focus – Get me everything you can on our competitors. 2.Not linking CI to decisions 3.Placing the CI team too far from decision makers 4.Focusing only on competitors 5.Neglecting early warning 6.Letting ad hoc tactical requests overwhelm the CI effort 7.Confusing the intelligence function with market research or knowledge management

27. www.outwardinsights.com 27 TO SUM UP Competitive intelligence is about providing actionable intelligence, not repackaged data Competitive intelligence is successful when it is driven by managements top business needs and decisions While all organizations are different, there are some common elements to successful CI programs including: ongoing dialogue with management, a focus on Key Intelligence Topics and adherence to ethical and legal guidelines The competitive intelligence process should be structured around the intelligence life cycle: planning and direction, information collection, analysis and reporting

28. www.outwardinsights.com 28 The Intelligence to Anticipate. The Strategy to Lead. TM Karen Rothwell, Director krothwell@outwardinsights.com 1-888-447-5501 www.outwardinsights.com info@outwardinsights.com

29. www.outwardinsights.com 29 KEY FINDINGS FROM OSTRICHES AND EAGLES SURVEY (CONT.) Insurance differed from the survey norms in the following areas: 1. Most likely to make intelligence an integral part of its strategic planning process (100% vs. 85% norm), the best of all industry groups. 2. More likely to make CI an integral part of operational or tactical decisions such as business development/sales (86% vs. 78% norm) and strategic decisions such as R&D planning and execution ( 71% vs. 55%). 3. More likely to use CI to anticipate and thwart competitor strategies (71% vs. 64% norm). 4. Most likely to integrate likely competition reactions into plans for launching new products and services most of the time (72% vs. 40% norm), the highest of all the industry groups.