Can a business exist without an objective or direction? Without long-term goals? Without short-term milestones that add up to accomplish long-term goals? Without focused efforts in each direction, goal and/or direction? Any person with the slightest business acumen will say no. Any organization that wants to thrive, and not just survive, will need planning and strategy. However, to develop a business strategy at any level of an organization, and to see it through fruition, requires a strong grasp of one's own products or services, an understanding of global trends, the target market, the competitive landscape as well as stakeholder expectations. When organizations achieve that, they are able to forecast the market's movement, outdo their competitors, and plan timely business decisions. They're also prepared for future opportunities and possible risks. This is known as having a competitive advantage.
But gaining a sustainable competitive advantage is easier said than done, particularly in present times where industries are continually being disrupted through technological innovation. Competitive advantages spring from strategy, and strategy is fueled by intelligence. Formulating, implementing, and evaluating strategies continuously in an effective manner - known as strategic management - requires a steady stream of competitive intelligence to flow through an organization. When organizations carry out strategic management powered by competitive intelligence, they are able to strengthen their long-term competitive position, and achieve competitive advantage. In this article, let us understand what strategic management is, how organizations can gain a competitive advantage in strategic management, and how competitive intelligence can help with strategic planning. Let's begin.
What is strategic management?
Strategic management is the orchestration or management of all of an organization's resources to successfully achieve its goals and objectives, and thus create competitive advantage. According to Forbes, "strategic management is a change process, something that is going to take time to develop, cultivate, and assimilate into your business process." You can think of it as an action plan to ensure performance targets are met, and that your organization continues to grow. Strategic management provides an overall direction by helping in the development of plans and policies designed to achieve objectives, and then allocating resources to implement the plans and policies. Ultimately, strategic management helps organizations gain a competitive edge over their competitors.
According to Harvard Business Review, strategic planning progresses or evolves along similar lines in almost all organizations, although at different rates of speed. This evolution of strategic planning can be divided into 4 sequential phases, which are as follows:
Phase 1: Basic financial planning
Of course, any sort of planning in any organization has to begin with basic financial planning, or determining annual budgets. In this stage, formal strategies rarely exist, however, procedures are developed to forecast revenue, costs, and capital needs, in addition to identifying limits for expense budgets on an annual basis. The quality and success of this phase depends on how well the C-suite executives know the market and its major players. Then, of course, they need to have a clear vision of how their product or service is going to make an impact in the market. This will help them build a cost structure, and plan for other explicit financial objectives. The objective in this phase is to meet the budget, while maintaining functional focus and operational control.
Phase 2: Forecast-based planning
Unlike Phase 1, where the plan of action is more or less implicitly understood, Phase 2 is a bit more complex, and requires proper documentation and strategizing. Phase 2 is required for companies that wish to grow beyond the traditional limits, and thus, need to foresee the impact of political, economic, and social forces on their business. Most of the strategic planning done in the world by organizations is Phase 2 planning. Forecast-based planning usually involves advanced methods of forecasting, such as trend analysis, regression models, computer simulation models, etc. However, without proper intelligence, most predictive models fail to signal major environmental shifts. Nonetheless, Phase 2 is an important evolutionary phase in strategic management, as it helps the leadership understand the long-term implications of their decisions and to focus on the business impact of current trends. With time, this will lead to timely business decisions that strengthen the company’s long-term competitive position.
Phase 3: Externally-oriented planning
Most organizations never evolve beyond Phase 2 planning. The leadership/management simply copy last year’s plan, make some performance shortfall adjustments, and extend trend lines for the next year. This leads to non-fulfilment of long-term goals. However, there are those organizations that soon understand that forecasting the market and competitive landscape isn't as easy as they thought it would be. It is then that they try to understand the basic marketplace phenomena driving change. They begin to allocate resources more creatively and dynamically (as compared to Phase 2 where resource allocation is mostly static). Years of situation analysis and competitive assessment have provided them with enough experiences to think strategically, and thus, the business strategists of the organization begin to look at their companies’ product offerings and those of their competitors from the viewpoint of an objective outsider. This leads to the identification of new opportunities and ways to define and satisfy customer needs, e.g. by developing new business capabilities or by redefining the market to better fit their companies’ strengths. The defining factor of Phase 3 of strategic management is that corporate strategists will have a number of alternative strategies to present to the leadership, and an increased response to markets and competition.
Phase 4: Strategic management
There are few companies that are managed strategically, and most of them are multinational, diversified manufacturing corporations. An organization of this level is made up of hundreds of different and rapidly evolving businesses, serving thousands of products across markets and geographies. These organizations link each operational decision to a strategic plan, which is why they are so efficient. The planning framework of such organizations is further divided into (usually) 5 levels, which are, in ascending order: product/market planning, business unit planning, shared resource planning, shared concern planning, and finally, corporate level planning or corporate strategy. Creating competitive advantage is both the goal, and the value derived from Phase 4 of planning, i.e. strategic management. It goes without saying that regular market and competitive intelligence is a necessity at such levels of strategic planning.
How organizations can use competitive intelligence in strategic management
For an organization at any phase of its planning/strategy journey, regular intelligence is a must. Without regular market and competitive intelligence, it is rather difficult, bordering on impossible, to measure performance against rivals, make effective future strategies, and fulfill goals that if accomplished will lead to a sustainable competitive advantage for their company. The problem, of course, with collecting market and competitive intelligence is that we live in an age of surplus information. Thus, sifting through the right sources in order to meet the specific goals and objectives that an organization has planned can be frustrating, and cannot be performed manually, at least not efficiently. Collecting and analyzing competitive intelligence at the level of fueling strategic management will require a competitive intelligence platform or tool. Competitive intelligence platforms can mine the internet for relevant business insights and inform each aspect, level, and phase of your strategies. But where do competitive intelligence tools gain information from? Here are the top external sources of competitive intelligence that can be used in strategic management, and where competitive intelligence platforms source intelligence from.
A competitor's website is perhaps the most easily-accessible and also quite an important source of competitive intelligence. Analyzing a competitor's website can provide tremendous insights into the way they operate, particularly about their products/services, their leadership team, their geographic presence, as well as their marketing strategies. Their press release section can reveal the latest company news, such as market expansion, partnerships, product changes, etc. Their careers page can provide an inside-view on current projects, investment areas, as well as their organizational structure.
Although not all organizations are required by law to make their annual reports available to the public, a large number of organizations still publish their annual reports on the internet. Annual reports are a reliable source of company data such as revenues, employee numbers, history, business growth strategies, stakeholders, subsidiaries, and can easily be crawled by a competitive intelligence platform or tool. Annual reports offer a comprehensive view of your competitor’s activities and their financial health.
Premium databases/Analyst reports
As the name suggests, premium databases and/or analyst reports are not available freely, but can be bought. Both are veritable goldmines of competitive intelligence and provide in-depth information on companies, products, pricing, investments, innovation, among other business information. Although a competitive intelligence platform won't provide you with the information found in premium databases and analyst reports, competitive intelligence platforms like Contify allow users to integrate these databases and reports into the platform itself. Usually, each database or research report has its own taxonomy. However, a CI tool creates a custom taxonomy enabling users to collate and access information using tags in a centralized format.
For example, let’s say an organization’s custom taxonomy consists mostly of companies from the energy sector, and you wish to search for a specific topic, let’s say drilling. With premium databases/analyst reports integrated in the CI platform, the platform will provide you with insights using your custom taxonomy (and not the taxonomies of individual reports/databases), including results from the databases/reports.
Social media is a great source of competitive intelligence as well as customer intelligence these days, as there's rarely anyone who won't be found on one of the numerous social media platforms. Insights from social media can help get a handle on customer sentiment, and also help inform brand strategy. In addition, tracking your rival’s social profiles can help you stay informed on their latest developments, events, collaborations, messaging, product and marketing strategies, etc. A CI platform can help you accomplish all of this.
Of course, News is still the number one source of information for organizations to stay informed about their market and their competitors, even though there is no dearth of information on the internet. Millions of articles are published every minute, on every topic one would need to know about. However, manually tracking multiple news sources can not only be exhausting, but practically impossible, owing to the ever-increasing amount of information on the internet. A CI platform can track all relevant news stories and articles for you, based on your specific taxonomy.
Contify's Competitive Intelligence Platform
A regular stream of competitive intelligence and insights ensures that you're not just reacting to your competitors’ strategic moves, but planning your own in advance. Contify is a market and competitive intelligence platform that filters noise from unstructured web data, transforming it into actionable competitive intelligence. This helps businesses track and monitor their competitors, industry segments, customers, and their entire competitive landscape with unmatched precision. But that's not all, it comes with a host of other features that make it a one-stop market and competitive intelligence platform. Let's have a look at the features:
- Personalized News Feeds: A continuous stream of the latest updates on your target markets. Discover intelligence relevant to your organization using smart filters.
- Intelligence Newsletters: Set up personalized alerts on competitors, customers, and industry topics.
- Taxonomy Builder: Categorize and tag sourced intelligence based on how your business is organized.
- User Management: Grant or restrict access to modules and knowledge areas for your users and teams.
- User Analytics: Analyze the consumption of intelligence by tracking user metrics, organization-wide.
- Sourcing Manager: Add custom sources using a built-in sourcing module. Manage all active sources in a single view.
- API Integrations: Integrate intelligence from your markets into your intranet portals, ERP, CRM, and KM systems.
- White-labelling: Customize the platform with your brand’s logo, color palette, and visual design language.
Identifying strategic opportunities for business growth is a never-ending process, and one that no organization in the world is ever fully-satisfied with. While competitive intelligence is certainly not the only factor that will lead to efficient strategic management, it surely is one of the important ones. Each aspect of strategic management, whether it be crafting and executing formal business planning, or measuring and reviewing the results of your strategic approach, all require regular competitive intelligence. The management of industrial strategies relies heavily on the ability of companies to access strategic information to better anticipate future markets and competitors' strategies. Thus, it is advisable for organizations of all shapes and sizes to invest in a competitive intelligence platform, which is already a part of the strategic management of most Fortune 500 companies (90%). Hopefully, this article helps organizations understand a bit about strategic management and its undeniable relation with competitive intelligence.