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Tuesday, January 27, 2009

Competitive Intelligence (CI): Think like your Competitor and War Gaming

This morning, I attended a quarterly breakfast meeting of the Oregon Chapter of the Society of Competitive Intelligence. Competitive Intelligence has become one of my default job responsibilities and it's also one of the cooler sounding parts of my job. When I say that I work in product development for health insurance, people always wonder what a health insurance product is. In case anyone is curious, a product is any type of health insurance plan such as an individual plan with a $1000 deductible and a buy one colonoscopy get another one free option. I really think the idea of a 2 for 1 colonoscopy has traction.

Back to the post at hand, my competitive intelligence responsibilities include reviewing the quarterly financial filings of other insurance carriers, analyzing market share by product line, and working with the sales teams on gathering market buzz. I also test our competitors by applying to their plans and attending their presentations. However, SCIP has provided a structured way for me to think about my intelligence gathering and also how to use cool terms like "War Gaming". This was explained at the breakfast meeting today and other topics such as:

War Gaming: is term used by Mark Chussil, who is the founder of Advanced Competitive Strategies, Inc. It is an approach where rather than thinking about how you would respond to competitors, you put yourself in a competitors position and think about their approach or what they would do. As Mark describes it, it can be as simple as sitting around and asking, "What do you think they would do?", "I don't know what do you think?" For me, the beauty of it is that it can be a simple change of perspective to gain new insight. Rather than look at past data to see what happened, you guess what you think someone will do in the future.

One of our Medicare competitors had some very successful high end plans (or products) and if we had put ourselves in their position, we would have realized their next logical step would be to launch a low priced product to reach a new segment and hedge for any economic down turns. That's exactly what they did. This approach breaks down insular thinking and it's fun to pretend you're someone else and role play, especially for us former Dungeons and Dragons players.

Job Descriptions: This is an even simpler tool but looking at what job positions your competitor is posting is a way to look at their future strategies. Are they hiring construction project managers? Probably building something new. Hiring a new VP? Someone probably left or they are adding a new department. Some companies will even detail the business objectives in a position with beauties like, "Hiring new position to launch a $x strategic initiative that will launch product line Y."

The Business Case for Competitive Intelligence: Cool terms like War Gaming, Competitive Intelligence, and Hit Points (sorry lapsing into Dungeons and Dragons again) will get you at least 6 months but eventually someone is going to ask for the ROI on your CI. The best calculation that I heard was that competitive intelligence improves your odds of successful product launches, getting new accounts, maintaining business, or other strategic initiatives. Improving the odds of a successful $1 million product launch by 10% is worth $100,000.

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