Is competitive intelligence good for business

Cranfield School of Management

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Is competitive intelligence good for business

Second World War espionage thriller The Imitation Game is one of the hot tips for honours at this year's Oscars.

Patrick ReinmoellerCentred around the British cryptologist Alan Turing, this entertaining adaptation shows how the Allies gained an information advantage, aiding the victory against Germany and liberating Europe, at nearby Bletchley Park in the 1940s. British Prime Minister Winston Churchill understood that he was investing in winning the war with his support for Turing and his team as, by building on Polish intelligence, they eventually cracked the secrets of Germany's Enigma machine.

This is a fascinating case study but often businesses that engage in competitive intelligence do not win accolades or plaudits. Thinking it helps in winning against their rivals, many business leaders overlook that engaging in a range of practices – from market research to stigmatised snooping – can lead to losing the trust of the public, investors and their customers.

Forthcoming research by Cranfield's Professor Patrick Reinmoeller on the subject of competitive intelligence has been accepted for publication in the British Journal of Management. The research reveals that the widespread and continued use of competitive intelligence requires more scrutiny.

Professor Reinmoeller said: "Looking at a number of cases from US companies, we discovered that the original idea of competitive intelligence in business can be traced back to national intelligence organisations and a few individual consultants. The legitimacy of such practices at the level of national security led firms to adopt the practice.

"Unfortunately there have since been many criminal cases which have stigmatised competitive intelligence. So why, and how, do businesses continue to engage in this practice?

"While there is an absence of 'clearly demonstrable benefits' from competitive intelligence – as companies don't talk publicly about it – firms persist in this legal but risky practice sometimes in order to harm competition by 'creating fear, uncertainty and doubt' among rivals."

Professor Reinmoeller continued: "The research shows that firms seek to cushion the negative effects or stigma of competitive intelligence by keeping their efforts opaque with little transparency about what they or their contractors are actually doing or why.

"Businesses justify their ongoing investment in and use of competitive intelligence by 'constructing' a defence that it is useful. The practice is further entrenched by accepted beliefs and that breaking with standard industry practice creates perceived risks arising from unilateral abandonment; 'we can't be the ones not using competitive intelligence'. They also increase this diffused 'acceptability' by creating multiple versions of competitive intelligence and evolving the practice still further.

"Businesses need to ask: 'Is this is a game which is more about entertainment for high rollers than about savvy investment with high returns'?"

'The persistence of stigmatised practice: a study of competitive intelligence' is co-authored by Professor Patrick Reinmoeller and Shaz Ansari of Judge Business School, University of Cambridge. You can view the research here: Stigmatised practice: a study of competitive intelligence.

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