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Available for free online at https://ojs.hh.se/
Journal of Intelligence Studies in Business 2 (2012) 23-34
Synergy Between Competitive Intelligence and
Knowledge Management - a key for Competitive
Advantage
Jihene Chebbi Ghannay1 and Zeineb Ben Ammar Mamlouk
ESSEC, Tunis, Tunisie,
[email protected]Received 5 May, revised form 11 September, accepted 27 September 2012
ABSTRACT: The market orientation perspective states that organizations have no option but to look
beyond internal business activities and to integrate events from the external environment. These are
complex, turbulent and rapidly changing. Firms today are led to utilize information and the knowledge of
companies because to succeed in the information economy comes from harnessing these resources.
Knowledge and information become strategic, paramount and must therefore be managed. Integrating
knowledge management (KM) and competitive intelligence encourage the use of these resources, improve
their quality and allow an enterprise to respond more rapidly to changing business conditions. The aim of
this article, is to present similarities, differences, benefits of KM and CI for the organization through the
study of current literature. Besides, we present critical success factors needed to achieve a successful
implementation of these two processes, and further, highlight the importance of KM and CI integration for
the organization to compete in the knowledge economy.
Keywords: Knowledge management, competitive intelligence, competitive advantage
1. Introduction
The globalization of markets accompanied by
rapid change in information technology has
increased the competitiveness in most industries.
In the struggle to remain competitive, many
companies have turned to new technologies to
improve their business activities. This
development is also true for information-related
activities and will directly affect the
development and quality of a firms business and
corporate level strategies. These activities are
integrated in the CI and KM functions of the
company. Deed and Hill (1996) argue that firms
that are acquiring knowledge will be able to
create and sustain a competitive advantage in the
knowledge-based economy. Those (firms) that
are not will have difficulty maintaining their
competitive position. CI has long been
recognized as a strategic management tool and a
fast growing field. CI is rapidly becoming a
major technique for achieving competitive
advantage (Davis, 2004). Essentially, CI
involves the legal collection of information on
competitors
and the overall
business
environment. The knowledge gained from this
information is used to enhance the organizations
own competitiveness. As such, CI can also be
viewed as a subset of KM.
Organizations possess numerous resources, but it
is the resources that are unique, inimitable, and
valuable which are central to a competitive
advantage (Barney, 1986, 1991; Prahalad and
Hamel,
1990; Wernerfelt,
1984).
An
organizations knowledge is one such resource.
According to Civi (2000) and Gupta, Iyer, and
Aronson (2000), the only competitive advantage
that organizations will have in the 21st century is
what they know and how they use it. This is
because the proper management and leveraging
of knowledge can propel an organization to
become more adaptive, innovative, intelligent
and sustainable (Wong & Aspinwall, 2004a).
In fact, KM has become an important strategy for
improving organizational competitiveness and
performance by applying it to production,
marketing, research and development, personnel,
planning and innovation. It is also considered as
creating sustainable competitive advantage for
organizations (King and Zeithaml, 2001;
Johannessen and Olsen, 2003; Lado and Wilss,
1994; ofek and sarvary, 2001). Thus, the vision
of KM is to improve a firms competitive powers
or to maintain a firms competition powers. KM
is the management of knowledge assets within
an organization to enhance competitive power by
steering product, leadership, operational
excellence, and customer intimacy.
2. Literature review
2.1 Defining CI
CI is a current topic in the business world today.
Hence, workshops, seminars, training courses
and books have been increasing in numbers
steadily since 1980. CI has been reported as one
of the fastest growing disciplines in the US
(SCIP, 2000; Miller, 2000; Kahaner, 1998). The
concept of CI is very vague, numerous
definitions of CI available in literature are
imprecise and inclusive, and the expression is
often used integrally with other related concepts
such as a business intelligence and competitor
intelligence. Practitioners and theorists have
largely failed to agree on a common definition of
CI. Although, consensus about some aspects of
the function have been achieved, Fuld & Co., a
high profile CI consulting firm, takes an
24
inclusive approach in defining the function of CI
thus: competitive intelligence can mean many
things to many people. A research scientist sees
it as a heads-up on a competitors new R&D
initiatives. A salesperson considers it as an
insight on how his or her company should bid
against another firm in order to win a contract. A
senior manager believes intelligence to be a
long-term place and its rivals (Fuld & Co,
2002).
The Society for Competitive Intelligence
Professionals (SCIP), gives a more precise
definition: A systematic and ethical program for
gathering, analyzing, and managing external
information that can affect your companys
plans, decisions, and operations. Put it another
way, CI is the process of enhancing marketplace
competitiveness
through
a
greater-yet
unequivocally ethical-understanding of a firms
competitors and the competitive environment
(SCIP Web site, 2002).
CI can be defined, also, as knowledge and
foreknowledge about the external operating
environment. The ultimate goal of each
intelligence process is to facilitate decisionmaking that leads to action. Competitive
intelligence is a formalized, yet continuously
evolving process by which the management team
assesses the evolution of its industry and the
capabilities and behavior of its current and
potential competitors to assist in maintaining or
developing a competitive advantage. (Prescott
and Gibbons, 1996).
2.2 KM definition
KM is often viewed as multidimensional and
multidisciplinary concept. There are many
definitions of KM in the literature, thus
comparisons must be made to know the focus by
each author. Some of the focuses are highlighted
below.
Professor Michael Sutton (2008) of the Gore
School of Business at Westminster College
reported at the ICKM (International Conference
on Knowledge Management) meeting in 2008
that he had assembled a library of more than 100
of them (Mclnerney C and Koeing M, 2009).
Three definitions of KM ones are presented here.
At the very beginning of the KM movement,
Davenport (1994) offered the following:
knowledge management is the process of
capturing, distributing, and effectively using
knowledge. This definition has the virtue of
being simple, stark, and to the point. A few years
later, the Gartner Group created another
definition of KM, which is perhaps the most
frequently cited (Duhon, 1998): A discipline
that promotes an integrated approach to
identifying, capturing, evaluating, retrieving, and
sharing all of an enterprises information assets.
These assets may include databases, documents,
policies, procedures, and previously un-captured
expertise and experience in individual workers.
Finally, the definition given by Peter Drucker
(1994), whom many consider as the father of
KM, defines the need for this function:
Knowledge has become the key resource, for a
nations military strength as well as for its
economic strength (...) is fundamentally different
from the traditional key resources of the
25
economistland, labor, and even capital (...) We
need systematic work on the quality of
knowledge and the productivity of knowledge
(...) the performance capacity, if not the survival,
of any organization in the knowledge society
will come increasingly to depend on those two
factors.
3. CI and KM processes
3.1 CI process
The CI process consists of the following steps:
monitoring business environment (external data,
information and knowledge),
gathering,
analyzing,
filtering
and
disseminating
intelligence that will support decision making
process in order to increase competitiveness and
improve position of organization.
Figure 1: CI process
Many versions of the conceptualization of the CI
cycle can be found in the literature. To show
their similarities and differences, table 1 presents
the basics steps identified by several authors,
each of whom divides the CI process into four to
six phases.
26
Table 1: Models of CI cycle
Information
Management
Cycle (Cheo,
2002)
Identification
of information
needs (1)
CIA (2001)
Planning and
Direction (1)
Information
acquisition (2)
Collection (2)
Organization
and storage (3)
Processing (3)
Analysis and
production (4)
Information
production and
services (4)
Information
distribution (5)
Dissemination
(5)
Fuld & Co,
(2002)
Pirttila (1998)
Planning and
Direction (1)
Secondary
published
information
sources (2)
Primary source
collection (3)
Analysis and
production (4)
Report and
information
Kahner(1998)
Miller (2000)
Definition of
competitor and
information
needs (1)
Planning and
Direction (1)
Identification
on key decision
makers and
intelligence
needs
Systematic
collection of
competitive
information (2)
Collection (2)
Collection (2)
Analysis (3)
Analysis (3)
Dissemination
(5)
Dissemination
(5)
Screening
analysis of
collected
information (3)
Distribution
related user
groups (5)
Information
use (6)
The models presented in Table 1 are similar;
however, some distinctive dimensions are
evident. Regarding the first step, we see that,
despite the different titles, each model recognizes
the importance of identifying the type of
intelligence/information that is needed to begin
the process. Although planning should be the
starting point of any process, we argue that, in
the CI cycle, planning relates mainly to the
identification of the intelligence needs that must
be fulfilled and of the various activities and
analyses that are required to fulfill such needs.
Each model also includes a collection or
acquisition stage as a second step. Fuld & Co.
differentiates the collection of information in two
parts: secondary/published and primary sources.
After the collection of information, the only CI
cycle that identifies a step related to the
processing of information is the CIA model. In
comparison to the information management
cycle, the organization and storage of
information is a step that is regularly overlooked
by the CI community. This step is key to an
effective information-related system. All CI
models presented here include an analysis stage.
Although it is not part of the information
management model, this stage is an integral part
of any intelligence process. Analysis transforms
information into intelligence using a variety of
techniques. Pirttils model, which omits the
organization and storage step, includes
screening in the analysis step.
3.2 KM processes
We earlier defined knowledge management as
performing the activities involved in discovering,
capturing, sharing, and applying knowledge so as
to enhance, a cost-effective fashion, the impact
of knowledge on the units goal achievement.
Thus, knowledge management relies on four
main kinds of KM processes. As shown in
Figure 2, these include the processes through
which knowledge is discovered or captured. It
also includes the processes through which this
knowledge is shared and applied. These four KM
processes are supported by a set of seven KM
sub-processes, as shown above with one Subprocess socialization supporting two KM
processes (discovery and sharing). Of the seven
KM sub-processes, four are based on Nonaka
(1994). Focusing on the ways in which
knowledge is converted through the interaction
between tacit and explicit knowledge, Nonaka
identified four ways of managing knowledge:
27
socialization, externalization, internalization, and
combination. The other three KM sub-processes
exchange, direction, and routines are
largely based on Grant (1996) and Nahapiet and
Ghoshal (1998).
Figure 2: KM processes
4. CI and KM benefits for the organization
4.1 CI, which advantages for the organization?
According to Prescott and Bhardwaj (1995), CI
practitioners believe CI programs provide the
following benefits:
Influencing actions of decision-makers
Improving early warning signals
Identifying new opportunities
Exploiting competitor vulnerabilities
Sharing of ideas
Better serving the companys customers
Prescott and Bhardwaj (1995) argue that these
benefits are directly identifiable, although there
are no quantitative measures to support this. An
improved market position and improved
revenue/profits are not directly identifiable since
they are uncertain effects. These benefits fall
into the category of bottom-line measures, which
are usually the most commonly requested. Simon
and Blixt have tried to measure these uncertain
effects. They describe the relevant issues to be
measured when considering uncertain effects or
monetary benefits of a CI program as:
Quality, relevance, timeliness, and
accuracy of intelligence
Accuracy of data in analysis
Increasing number of clients and
additional business from current clients
Business success and performance
measured by industry benchmarking
CI reveals the state of business, exposes the
unknown, and shows how to tackle current
market conditions. It helps recognize risks and
new market opportunities earlier and act faster.
Good CI delivers often surprising truths, gives a
head-up on whats coming, and equips the
organization with the knowledge to outmaneuver
the toughest rivals. Using the accurate and
objective knowledge, good CI provides particularly during unpredictable and turbulent
time - can gain better control over their business
in the future.
4.2 Benefits of KM
According to modern approaches, KM is already
considered as a key factor in the organization's
performance and, the best resource and the only
sustainable competitive advantage to individuals
and organizations, because it deals with different
resources that can aid decision makers in many
ways (Keen, 1991). Most commentators writing
on the subject highlight the primary purpose of
KM as efficiency and productivity achieved
through the reuse and sharing of experience and
know-how. Often overlooked is the potentially
important goal of promoting quality of work
28
product and practitioner training that can be
shown to increase the value of the client service.
KM can serve a wide variety of purposes.
According to Petter Gottschalk, of the
Department of Technology Management at the
Norwegian School of Management, "effective
knowledge management pays off in fewer
mistakes, less redundancy, quicker problem
solving, better decision making, reduced research
development
costs,
increased
worker
independence, enhanced customer relations, and
improved service.
Table 2: Benefits and challenges of KM
Benefits of KM
- Fosters innovation
- Improves efficiency
- Improves coordination and efforts
- Enhances customers and employee
satisfaction
- Improve response time
- Rewards employees
- Improves market time
- Responsive to market changes
- Reduces costs
- Encourages free flow of ideas
- Connects geographically dispersed
people (e.g., customers, employees,
suppliers, and consultants)
- Foster collaboration
- Improves information access
- Expertise localization
Challenges of KM
- Requires full employee participation
- Requires constant updating
- Must sort useful knowledge from useless
information
-KM projects are not always successful in term of
increased profit margins and reduced costs
5. KM and CI success factors
available resources and goals of each specific
company (Gilad, 1985; Fuld, 1997).
5.1 Key success factors of CI
According to Stanat (1990) no single system
architecture can be found appropriate for
developing a successful intelligence program
because of cultural and structural issues. CI
process is likely to be unique in each
organization. Therefore, there is rarely a
similarity between successful CI processes.
Despite, some general success factors and
guidelines can be mentioned. In fact, CI process
should reflect the organizational culture,
5.1.1 Top management support and participation
The support from top management is considered
the most important success factor for CI
implementation success. Intelligence operations
should have
full
senior
management
commitment and an operating mandate from the
top. An intelligence strategy must have full
support at board level if it is to succeed (Bord,
1997; Kahaner, 1996). It is also essential to make
sure top management has the available
intelligence at their fingers (Hering, 2000).
5.1.2 Identifying CI needs
The companys management must view the CI as
a key resource for better decision-making. This
means identifying the impending threats,
becoming important and alert management to
new business opportunities.
5.1.3 CI culture/ awareness
For a company to use its efforts successfully, an
appropriate CI culture that support open
communication, team spirit, information and
knowledge sharing and focus on shared goals, is
necessary (Olivier et al., 2003). According to
Calof (2000) the attitudes of people when they
dont trust CI, and are unwilling to share
information is considered a main barrier that
prevent firms from effectively gathering and
using CI. The organization should develop
programs that make people want to share their
knowledge and acquire new one (Iivonen and
Huotari, 2000; Den Hertog and Hnizeng, 2000).
5.1.4 CI tools and resources
A good CI functions must also have adequate
resources to deliver the required judgments,
insights, and analysis that support the
managements decisions. Asking one or more
individuals to take responsibility for the
companys CI requires providing them with the
budget and resources for professional
development,
outsourced
research,
and
29
technology tools to implement and succeed with
a CI process.
5.2 Key success factors of KM
KM covers a wide range of functionalities and
support different sets of activities. Some factors
are considered critical for the successful
implementation.
However, there exist different views among
practitioners and researchers on how a KM
program can be designed and implemented in
organizations. Several studies have proposed
several
key
variables
for
successful
implementation.
6. KM and CI to achieve competitive
advantage
6.1 What is meant by competitive advantage?
Concept of competitive advantage has a long
tradition in the strategic management literature.
Ansoff (1965) defined it thusly: (...) (To) isolate
characteristics of unique opportunities within the
field defined by the product-market scope and
the growth vector. This is the competitive
advantage. It seeks to identify particular
properties of individual product markets which
will give the firm a strong competitive position.
Table 3: Success factors of KM
RESEARCHER
SUCCESS FACTOR FOR USING KNOWLEDGE MANAGEMENR
Kuan yen wong (2005)
Senior management support, culture, information technology, strategy and
goals, measures, organizational infrastructure, activities and processes,
motivational support, resources, education, human resources management
Mathi (2004 )
Knowledge-based organizations, culture strategy, systems and information
technology infrastructure, systematic and effective process, measures.
Martins et al. (2003)
Organisationnel culture, motivation and skills, senior management, structures
ans process, information technology
Moffett et al. (2003)
A friendly organizational culture, senior management leadership and
commitment, employee involvement, employee training, trustworthy
teamwork, employee empowerment, information system infrastructure,
knowledge structure
Reyan and Prybutok ( 2001)
An open organizational culture, senior management leadership and
commitment, employee involvement, teamwork, information system
infrastructure
Technology infrastructure, organizational infrastructure, balance of flexibility,
evolution and cost-of- accessibility to knowledge, shared knowledge, knowledge
friendly culture, motivated workers who develop, share and use of knowledge.
Devenport et al. (1998)
Hospal and Fusion (1997)
30
Management factors, coordination, control, leadership and measures; factors
related resource : knowledge, people, financial and non-financial resources ,
environmental factors : competition, markets, time pressures, economic and
government situation.
NNN South (1981) defined competitive
advantage as the philosophy of choosing only
those competitive arenas where victories are
clearly achievable. Porter (1985) states
"competitive advantage grows fundamentally out
of value a firm is able to create for its buyers that
exceeds the firm's cost of creating it." He argued
that a firms ability to outperform its competitors
lay in its ability to translate its competitive
strategy into a competitive advantage.
Competitive strategy entails positioning the firm
favorably in an industry relative to competitors.
He confirmed that there are, in general, only two
possible competitive advantages a firm may
possess, a cost advantage or a differentiation
advantage.
Others, particularly proponents of the resourcebased view of the firm (Barney, 1991; Conner,
1991), have extended the definition to include a
wider range of possible advantages such as
physical capital (Williamson, 1975), human
capital
(Becker,
1964),
technological
opportunities and learning (Teece, 1980; 1982;
1986), and organizational capital (Tomer, 1987).
6.2 Synergy between CI and KM to obtain
competitive advantage
Knowledge management (KM) is the process
through which organizational performance is
improved through better management of
corporate knowledge. Its goal is to improve the
management of internal knowledge processes so
that all information required for corporate
decisions can be made available and efficiently
used. Competitive intelligence (CI) is a process
for gathering usable knowledge about the
external business environment and turning it into
the intelligence required for tactical or strategic
decisions. Both KM and CI systems are designed
to enhance the information resources of an
enterprise, but often target different information
types and sources. While CI is concerned with
gathering information from the external
environment to enable the company to gain
competitive advantage (Williams, 2002), most
investigation into KM has focused on capturing
the knowledge stored within the minds of
individual employees (Nidumolu, Subramani, &
Aldrich, 2001). Bagshaw (2000), Johnson
(2000), Rubenfeld (2001), and Williams (2002)
all focus on the use of KM for collecting,
managing, and sharing internally generated
knowledge.
The combination of effective KM and
appropriate CI provide the right mix of the right
31
information to the right decision maker at the
right time. Certainly, these two fields are starting
to blend into the same melting pot. However,
each field has some unique qualities that
differentiate it from the other.
Table 4: A comparison between knowledge management and competitive intelligence
The fields of CI and KM have a number of
differences as shown on in the table above, but
potential relation can exist if we instinctively
regard them in terms of applying enterprise
knowledge of the internal and external
environment
for
long-term
competitive
advantage. The goal of both disciplines is to
evaluate the business decisions, locate and
deliver appropriate knowledge from within and
without the organization and, in the end help to
give it meaning and help decision makers.
According to Bensoussan (1996), the keys to a
companys future are not found in forecasts,
predictions or media gurus, but through
patiently, carefully and strategically turning a
companys
knowledge
into
competitive
intelligence. She identifies the components of
CI as available data and expert judgment, and
calls for intelligence to be future-oriented,
accurate, objective, relevant, useful, and timely.
In other words, each drives the other. As shown
earlier in table 3, although there are significant
differences in the focus and activities of KM and
CI, they have similar goals and are natural
extensions of one another (e.g., manage
information overload and timely/targeted
information delivery, provide tools for data
analysis, identify subject matter experts, enable
collaboration) (Meta Group, 1998). Davenport
(1999) even goes so far as to take the stance that
CI can be viewed as a branch or subset of KM.
Figure 3: The KMCI relationship. (source: Katherine Shelfer, Drexel University, 2004)
The study conducted by Breeding (2000) at Shell
Services International (SII) shows how CI
activities at SSI have been impacted by the
extensive use of KM. It is demonstrated that
using the CI/ KM system gives more time to
higher value-added tasks such as simulation,
strategy.
7. Conclusion
As discussed above, KM and CI are distinct by
being both complementary and synergistic. At
their core, both fields are concerned with gaining
competitive advantage from better applications
of information or knowledge. Knowledge may
perhaps be the only remaining and one of the
most critical sources of competitive advantage
available to an organization in the 21st century.
This is true; more so, as previously available
traditional resources may no longer offer any
significant competitive advantage. To remain
competitive, organizations must create and use
new knowledge. However, the current practices
in knowledge acquisition, utilization, and
management are mostly limited to capturing,
recycling, and deploying the existing
information, and making it available on a
technology platform. KM and CI are in this
regard two important strategies or practices
through which organizations could use effective
knowledge
to
improve
organizational
effectiveness, improve productivity, improve
decision making, and especially, obtain a
sustainable competitive advantage.
Even if it is difficult to simplify the relationship
between CI and KM (Johnson, 1999), it is
obvious that the two approaches complement
each other. KM and CI are two parts of the same
whole because both are designed to apply
enterprise knowledge of the internal and external
environment for long term competitive
advantage. The synergy between KM and CI
indicates that greater convergence between the
two approaches (Parker and Nitse, 2011).
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