14 Jun 12 Observations on competitive intelligence budgets in India…

All businesses everywhere undertake some kind of CI; they cannot survive without it. Even  mom and pop stores do – although very informally. In India, it is mainly the large companies and multinationals that have formal competitive intelligence activities.

How do they decide how much formal CI they should do? Here are some observations..

CI is born out of tactical needs

Many of the formalized CI activities are driven by business development or sales objectives. Teams that have targets – for both, new customer acquisition as well as for farming existing accounts, are keen to set up systematic processes for CI. Most of these teams are located at the business unit/ division levels. Budgets for these teams are also decided at the BU level. Their contribution is measured in terms of their sales conversion rates.

Strategic CI faces the risk of underinvestment

Corporate CI teams do exist in large companies, and are generally attached to the strategy or marketing functions. They typically address the needs of the senior management as well as any requests they get from the BUs. Their contribution is not generally measured in any business metric. If their intelligence leads to a significant strategic decision by the company, their efforts become “visible”. But CI does not always lead to visible action – its recommendations also include things the company should NOT do. Though these inputs have significant value, they are not visible and therefore sometimes, forgotten. Corporate CI teams generally find it hard to justify budgets for their activity. Budgets allocated to the team are dependent on the persuasive skills and PR efforts of the person heading the team, rather than its contribution to the organization’s performance.

For an organization, this is risky. Blind spots at a corporate level can prove to be fatal for the business. This is borne out through the numerous oft-quoted as examples of CI failures such as Kodak, Blockbuster, Barnes and Nobel, EMI, and so on.

Reliance on centralized CI

While multinationals that have been in India for a while, recognize the need for doing competitive intelligence locally, some of the new entrants rely on the CI done by the corporate CI teams of the parent organisation. This is risky. It is not possible to get even good data and information on Indian markets from published sources, let alone any actionable insights. MNCs operating in India need to recognize that they cannot hope to succeed without investing in getting on-the-ground insights in India. There are numerous instances of companies whose India strategies failed initially. They subsequently undertook course correction after gaining a deeper understanding of the local market. MNCs that are new entrants in India do not necessarily face budget constraints; they don’t always appreciate the value of it, and hence fail to allocate budgets for it.

How does your organization decide competitive intelligence budgets? Do share your views…