Business intelligence and competitive intelligence make up two thirds of what is sometimes known as the “strategic intelligence triad” for businesses (the other third is knowledge management). But because they are similar terms, there is sometimes confusion as to whether they have different meanings or instead refer to the same thing.
So we’re going to compare and contrast business intelligence vs. competitive intelligence to help you better understand how each one can be used to reinforce your company’s decision-making processes. Here’s a quick rundown of our agenda:
We’ll start by offering summary definitions of the two terms. Then we’ll get into explaining the particulars of each one and how they can influence your business strategies.
The terms “business intelligence” and “competitive intelligence” are sometimes used interchangeably, but they do mean different things. Business intelligence is a broader term that refers to any kind of data-based analysis and decision-making aimed at helping a company operate more efficiently.
Competitive intelligence is a more exclusive term that refers specifically to a company gathering data about its competitive position within its market or industry – basically, where and how it’s positioned next to its rivals. This helps the company make moves that take advantage of market conditions and competitor weaknesses, as well as cover for its own shortcomings.
Here are a couple of short definitions that sum up the two terms:
Business intelligence: Analyzing and using a company’s data, tools, processes, people, and market standing to look for and implement more efficient operations
Competitive intelligence: Studying data about a company’s competitors, as well as other external factors that affect the company, in order to shape its business strategies and contingency plans
The important thing to remember is that while business intelligence and competitive intelligence aren’t exactly the same thing, they do have similar goals. They’re both aimed at making a company run as smoothly and profitably as possible so it can make the best of the good times and stay afloat when times are tough.
We’ll also mention that our data at SafeGraph can be useful to gather data for both applications. Our data can be used to optimize the locations and layouts of your stores and advertisements, to study foot traffic and demographic patterns so you can identify profile competitors and analyze their strategies, and more.
Having said that, next we’ll take a closer look at what each type of intelligence specifically entails, as well as how it can be used.
Business intelligence is the process of a business collecting and analyzing large amounts of data to aid in making decisions and solving problems. It is typically conceptualized as being directed at streamlining a business’s internal operations in order to improve efficiency and reduce costs.
It’s difficult for a company to be successful if the cost of operating it outweighs the amount of money it makes selling its goods and services. That’s just a basic principle of business. To that end, business intelligence refers to a broad range of activities aimed at optimizing the different systems that make up how a company runs.
The overall goal is usually to speed up how fast goods and services can be produced, minimizing the costs of producing them, or both at the same time. It can also include balancing those objectives with improving employees’ satisfaction with, and devotion to, the company and their positions within it. The latter is important for attracting and retaining talented employees that can help the company reach its targets.
Again, part of taking a company in the right direction is assessing where it stands now. Business intelligence lets a company contextualize data on its current position with data on how it has grown: what tools and processes worked or didn’t; what targets or goals were met or missed; and what employees liked or disliked about working at the company. This can pay dividends for various parts of the company; for example:
Competitive intelligence is a sub-type of business intelligence. It still involves a company collecting and analyzing mass quantities of data, but most of this information is about a company’s competitors. The goal is to use this information to develop business strategies that outperform rivals.
Competitive intelligence sometimes gets a bad reputation because it is equated with companies spying on each other. Rest assured, though, that competitive intelligence is not the same thing as industrial espionage, in that it does not involve obtaining information in illegal or unethical ways. When done correctly, competitive intelligence is a perfectly legal and very powerful tool for generating competitive advantage for your company.
To reiterate, the point behind competitive intelligence is not just to know things about competing companies. It’s to understand how what you know about your competitors can be used to help your company counteract their strategies or weather market disruptions better than them. Remember, though, that your competitors may be trying to find out the same things about your company. So it can also be important to think about your own company’s weaknesses and how competing businesses may act to exploit them.
Competitive intelligence deals with studying the business maneuvers of competing companies. This helps your business assess where it stands relative to its rivals in the marketplace, and where it should go next. The goal of competitive intelligence is for your business to try to anticipate competitor moves and other external market forces, so that it has plans in place to seize opportunities and defend against threats caused by these shifts. Here are some different ways that can benefit your company:
The main differences between business and competitive intelligence are their orientation and scope. Business intelligence is inward-facing, aimed at improving a company's internal systems. Competitive intelligence is outward-facing, meant to improve a company’s competitive standing in the market.
It can be said that competitive intelligence is a special type of business intelligence. As business intelligence is concerned with improving all facets of a company’s operations, it naturally scrutinizes how prepared the company’s internal systems are to deal with competitors’ strategies and other events that affect the overall industry. That is part of what competitive intelligence involves. The other part is to look outside the company to try and predict what competitors will do, and what other market-affecting events will happen, so the company can hypothesize what exactly it has to be prepared for.
Having said that, both types of intelligence can make use of data both internal and external to an organization. To illustrate, most facets of business intelligence examine data, tools, systems, and people a company already has on hand. However, it can also involve some third-party external data on what kinds of technology, systems, best practices, and so on are currently successful within the industry and that the company could adopt.
Conversely, because a lot of the direct information on competitors is kept hidden and protected by law, competitive intelligence tends to rely more on data from alternative third-party sources. These include news stories, social media posts, websites, job postings, and advertisements. However, it can still be useful for a company to compare data from these sources with data on its own internal workings. This could give a company a more complete picture of how well it’s prepared to attack and defend against competitor moves and industry events, if and when they happen.
The following table summarizes some of the key differences between business intelligence and competitive intelligence.
We hope you now understand the differences between business intelligence and competitive intelligence, so you know how to use each one towards setting up your business for success. We’ll also remind you that the data we carry at SafeGraph can be helpful in optimizing the location-based facets of your company, or in outmaneuvering competitors’ geospatial business strategies.