recent

Download: Insights for success in AI-driven organizations

Ideas for innovation from MIT Sloan Management Review

4 ways the US election could impact 2025 climate policy

Credit: Rafael Rex Felisilda / Unsplash

Ideas Made to Matter

Strategy

How to use competitive insight

By

John Horn has a message for executives: For an edge, it’s essential to see things from a competitor’s point of view. The Washington University professor and longtime McKinsey war-games expert advocates for using “competitive insight.” It’s a step up from competitive intelligence, and it’s a tactic that’s dangerously overlooked.

Horn believes that business leaders tend to dismiss their competitors’ actions as irrational at their peril. When they fail to take competitors seriously, they’re caught off guard and unable to act or react effectively.

He wrote the newly released book “Inside the Competitor’s Mindset: How to Predict Their Next Move and Position Yourself for Success” to help companies better understand the actions of competitors — from startups to traditional organizations — and how to strategize accordingly.

In a recent webinar with MIT Sloan Management Review, Horn described competitive insight as a four-part process for turning data into action.

The first part is standard competitive intelligence: reviewing annual reports, listening to a competitor’s earnings call. Once the data is in place, the second part involves understanding what tools a competitor will leverage to make strategic choices with that data: assets, facilities, supply chains, distribution setups, government relations, and more.

Third, it’s important to understand how decision-makers are likely to behave by examining their past. Not all leaders are the same: A CEO with a marketing background will make very different choices than one with a supply-chain history.

“Think about the person who’s making the choices. What’s their background? How long have they been in the industry? What type of industries have they worked in? What’s their functional background? That’s going to affect how they view the world and therefore how they’re going to frame a decision,” Horn said.

Finally, companies should make short-term predictions about how a competitor might act and quickly change course if they turn out to be wrong. It’s a process Horn likens to playing chess — always staying one or two steps ahead of your rival, being prepared for their next move, and staying nimble if they surprise you.

If they do surprise you, figure out why and change course.

“Did we get it right or wrong? If [you] got it right, that says you’re on the right track of understanding the competitor, so keep doing it,” Horn said. “If you miss it, then you can go back and say, ‘Did I miss something that they said? Did I miss a key asset or resource that that they leveraged? Was there a new person that made the decision that I wasn’t tracking? Did I miss something about their background?’

“Once you learn where the mistake was made, you can update how you collect information on the competitor in the future to make a better prediction,” he continued. “Your predictions will get better and better over time as you follow this process.”

Don’t trust AI for competitive insight (just yet)

There are still some things that artificial intelligence can’t do, and competitive insight is one of them.

Related Articles

Triumph of the underdog: How to beat the odds as a startup
Try this data framework for analytics advantage

“AI is fantastic at collecting, organizing, and seeking patterns [based on] historical facts,” which can be useful for analysis, Horn said.

The issue: Competitors don’t always follow predictable patterns, and AI lacks human intuition.  

Horn emphasized that people still matter. It’s important to draw on the strengths of employees from various professional backgrounds for perspective, intuition, and insight. Companies need teams that can intuit and analyze patterns from diverse points of view to draw a good conclusion.

Integrate knowledge with action

“Having good competitive insight isn’t effective or useful unless it actually impacts decisions that the organization makes,” Horn said. Companies can deploy their insight in three ways: through people, processes, and performance.

When deploying through people, consider who should get hired, how many, and where. Having decentralized competitive insight isn’t helpful; leaders should ask themselves, “How do I get the right people who are going to have the right seniority and the right impact to affect changes?” Horn said.

Process involves refining information-sharing: Find the right method and channel for your organization.

Performance refers to measuring impact. This is difficult, since competitive insight doesn’t generate revenue directly. To measure impact, “think about individual competitive-insight staff members, the function itself, and the organization overall and how competitive insight is helping,” Horn said.

Watch: How to make sense of irrational competitors

For more info Zach Church Editorial & Digital Media Director (617) 324-0804