Strategic Foresight vs. Competitive Intelligence
What's the difference and how do you use both?
January 9, 2019, Bruno Jacobsen
For many people, including professionals, the difference between strategic foresight and competitive intelligence can be confusing. And understandably so. Both are concerned with an organization's environment, current and future trends, and strategic decision-making. But the two are alike only in these aspects. Both disciplines serve different purposes and are done differently. And organizations need both.
In this article, we look at the differences between strategic foresight and competitive intelligence. We also explain why optimal decision-making requires both.
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Competitive intelligence as a discipline started at least as far back as the 1970s. But it wasn't until Michael Porter's Competitive-Strategy: Techniques for Analyzing Industries and Competitors in 1980 that modern competitive intelligence was born.
In its history, competitive intelligence has been defined in several different ways. Wikipedia defines it as "the action of defining, gathering, analyzing, and distributing intelligence about products, customers, competitors, and any aspect of the environment needed to support executives and managers in strategic decision making for an organization."
Others have defined it as a tool to help a company identify threats and opportunities in its environment. Others still have defined it as a process that helps companies understand competition and trends to achieve their business goals.
However we define it, we can see that competitive intelligence aims at gathering and analysing information about the company's external environment and stakeholders. This includes customers, competitors, distributors, technologies, and macroeconomic data.
The analysis may turn up threats and opportunities for the company, information about its competitors' moves, indicators of how customer preferences are changing, and so on.
Competitive intelligence is also an inside-out activity. It generally starts with an understanding of the company's strategy and then seeks to gather data that helps it carry it out.
While it is concerned about the future, it mostly cares about the short-term to medium-term future (usually less than 5 years).
Competitive intelligence has proven so popular that, today, as long as they can afford it, almost every company has a competitive intelligence team in one form or another.
But how is it different from Strategic Foresight?
Strategic Foresight is more broad, comprehensive, and long-term oriented. Also known as Futures Studies, it is a discipline organizations use to gather and process information about their future operating environment.
Unlike competitive intelligence, strategic foresight is more "outside-in." It uses a variety of methods to understand future trends and developments (see them here), craft alternative and plausible futures (see how here), and help organizations strategize and make plans accordingly. So competitive intelligence is short- to medium-term, helping organizations fulfil their strategies today and tomorrow. Strategic foresight is medium- to long-term, helping organizations craft strategies and make plans that ensure long-term success.
On top of that, strategic foresight is not about prediction. It's about broadening one's understanding of the drivers of change. It's about preparing organizations for the expected changes and the unexpected changes. It's about making organizations more resilient, agile, and adaptable.
It generally starts with a scanning process for future trends and phenomena. These are not only related to the company's current operating environment. The most critical threats or greatest opportunities often emerge in other industries or sectors. New trends, developments, or phenomena can emerge in adjacent fields or in society at large. And while at first they may seem disconnected, they are often the drivers of change that will eventually affect one's own future, too. And usually in dramatic ways.
After that, it seeks to understand how all these trends and phenomena are connected. These interdependencies are so complex that you won't come out with one future scenario.
In fact, strategic foresight will usually give you narratives of the future. Plausible and alternative futures that might take place. (It does this through a variety of methods which you can check here.) It asks, "what range of plausible futures might our organization have to be prepared for, and which strategies can help us build resilience and create adaptive capacity to anticipate and thrive in the turbulence of change?"
The best of both worlds
Now that we know the difference between strategic foresight and competitive intelligence, which of the two should organizations use? The answer is: successful organizations use both.
While much of the focus has been in competitive intelligence, more and more organizations are seeing the need for a more comprehensive approach to navigate the future. This is especially true in a world that is increasingly more volatile, uncertain, complex, and ambiguous.
In an organization, the ideal is to have a foresight program that incorporates competitive intelligence in it. Strategic foresight will help you get a broader understanding of the future, determine alternative scenarios, and create agile and ambidexterous strategies. This helps foresee the pathways and roadmaps for the organization.
Competitive intelligence then comes in and churns out short-term forecasts and analyses. This helps keep organizations' pace towards their vision steady, with the assurance that, if some drastic change happens, they are able to adapt.
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