Competitive intelligence - an integral part...

SHB student assesses the nature of strategic market and competitor monitoring

Strategy development is a living process. The overall situation affecting a company’s ability to operate within a market evolves continuously, and companies constantly find themselves having to adapt their strategies. As part of his MBA degree at the School of International Business and Entrepreneurship at Steinbeis University Berlin (SHB), Jörg Simon, who is responsible for Market & Competitive Intelligence at Deutsche Telekom, looked at the changing nature of modern-day strategy development processes. Based on this, he drafted an optimized competitive intelligence strategy.

The business environment that companies operate in these days can change very quickly. One moment a new competitor pops up. The next, an established competitor exits the market. There is probably no more visible example of this rapid rate of change than in the telecommunications industry. Deregulation of many international telecommunications markets at the end of the last century opened the floodgates to new market competitors, posing a challenge to the old monopolies. Parallel to this, technology has moved forward in leaps and bounds in recent years, hand in hand with digitalization, allowing many companies in related industries such as IT, the media and entertainment to expand operations and enter the telecommunications arena. So mobile phone manufacturers, such as Apple, have threatened to steal core business from established cell phone companies with value-adding services sold directly through their application stores. Are these companies still just suppliers or business partners to the industry, or have they become competitors?

In the long term, companies like Deutsche Telekom can only maintain a grip on the market if they spot such trends quickly and continually adjust their strategies accordingly. As part of his degree at SHB, Jörg Simon decided to start by analyzing the sweeping changes affecting international telecommunications markets. The competition is becoming more and more cluttered, and companies are coming under pressure to make faster and faster decisions. Simultaneously, as competition intensifies, they are being forced to minimize the risk of making a wrong decision. Key to this is having a reliable “navigation system”, and this is precisely the underlying idea behind competitive intelligence. In simple terms, competitive intelligence can be described as a system for monitoring and managing a company, taking other “road users” into account in the global business environment.

According to Michael E. Porter, one of the spiritual patriarchs of competitive intelligence, to lay down a competitive strategy, companies should focus primarily on competitors within their own industry. But as the borders between sectors of the telecommunications industry become more and more fuzzy, this approach is no longer sensible. Focusing too strongly on known competitors runs the risk of overlooking new competitors from related markets and thus reacting too late to corresponding threats, or failing to exploit the growth potential of related markets. The classic strategy process can no longer do justice to this level of complexity. So the aim of Jörg Simon’s project was to start by optimizing the strategy process, and based on this, draft a concept for an optimized competitive intelligence strategy for the CTIO Business Development department.

There is a tendency amongst businesses to concentrate too much on foreseeable issues and thus focus too much on known competitors. And by only focusing on internal issues, things stay the way they have always been. Often, companies only start looking properly at competitors, and really seeking opportunities to innovate, when a niche market or new competitor reaches a size that can no longer be ignored by the business. The sign of a modern strategy process is that the company is being managed with the future in mind, and managers are not blindly placing trust in successful recipes from the past. Once it is clear which direction management is steering in, it is possible to set individual waypoints more accurately – in the short and medium term. In other words, the strategy can be translated into actions.

Planning the strategy is a core function of senior management and it cannot be delegated to business departments or third-party consultants. The key challenge is still to link the strategy coherently with the management processes that control the operative side of the business. There is no specific dividing line between strategy and tactics (i.e. implementation activities). Continuously revisiting strategic decisions and tweaking the selected strategy in “control loops” further down the line, thereby balancing shortterm objectives with the long-term perspective, ensures that the company maintains its course – even if there is a sudden change in its situation.

The business environment Deutsche Telekom operates in is subject to increasingly rapidly change, and this change is also becoming more radical. So it is particularly important for the company to tackle future issues, even if they are highly uncertain. The number of key influences on strategic decision-making is increasing. The number of (potential) competitors and additional markets or customer segments that need to be monitored, analyzed or evaluated is also growing constantly. So as the business environment becomes increasingly complex and fast-moving, the pressure to accelerate decision-making throughput – without compromising the quality of decisions – is also rising. One of the key findings of the project was that, given these developments, competitive intelligence has actually become a core competence of modern business – an integral part of the strategy process. Competitive intelligence is much more than just gathering and documenting market and competitive data. As a core element of an evolving organization, it helps companies answer some key questions: “What do we have to do to win (versus the competition)?”

To do this, on the one hand competitive intelligence must provide the analytical input needed in the strategy planning process. On the other, it must critically assess the course being steered. So this completely redefines the role of the competitive intelligence manager. As a sparring partner, the competitive intelligence manager has to help managers with questions relating to the current business, and offer credible second opinions during the decision-making process based on their experience and skills. Working jointly with management, competitive intelligence managers help pinpoint suitable solutions, from a outsider’s point of view.

Given the increasingly dynamic, globalized nature of markets, more and more variables are wielding an influence on the competitive environment – so the importance of competitive intelligence will continue to grow. The potential optimizations identified by Jörg Simon are thus currently being introduced step by step within the corporate CTIO Business Development function at Deutsche Telekom. At the same time, channels of communication with other competitive intelligence departments in the company are being opened up further to improve the quality and effectiveness of strategic market and competition monitoring throughout the group.

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