Competitive Intelligence in the Defense Industry : A Perspective from Israel – A Case study analysis

Purpose The defense industry is one of the leading business sectors in Israel and also worldwide. Competitive Intelligence (hereafter CI) is embedded into this sector and supports its decision making process. In recent years more information about this industry and about the CI activity is available while characterized by fierce competition and quick changes in the competitive environment. It is evident that CI is used widely by the leading firms in this sector while it has become an integral part of the business activity, and its added value seems to be significant. It is possible to define a framework of CI activity in this industry and to reflect on its advantages and limitations. It is my hope that this paper will encourage further research on this topic. Methodology/approach – Gathering information that has been published in Israel and abroad that was analyzed and thus offers insight into this issue. Findings – The defense industry in general and especially in Israel is using CI intensively in the highly competitive environment of defense products to support the decision making process. Research limitations – For many years, the information on this sector was not https://ojs.hh.se/ Available for free online at Journal of Intelligence Studies in Business Vol 4, No 2 (2014) 91-111


Introduction
The defense industry was one of the fastest growing business fields in Israel (2010).In recent years and especially since the mid 1990's, defense export became one of Israel's leading export sectors, with high profitability and stable growth.Israel was considered world wide as one of the leading countries in the field of defense The heart of the Israeli defense companies was its advanced technology.Although there were security limitations on defense exports to avoid leakage of secrets that could damage the state security, Israel authorized a wide range of defense products for be exported.(Dvir & Tishler, 1998).
As Competitive Intelligence (hereafter, CI) became recognized, and its value was more acknowledged in recent years, its direction went towards gaining strategic intelligence (Montgomery and Weinberg, 1979).Fulfilling CI became part of the many firms' capabilities (Porter, 1980).

Qualified CI functions have been playing
growing role by Israeli firms in this sector to become more competitive.
The purpose of this paper is to assess the value of CI to the defense industry, especially in Israel and to see how beneficial it was for the process of decision-making in this field.Referring to this issue was possible through studying the performance of Israel's defense firms in foreign markets, mainly in recent years.

Characteristics of the sector of defense industries
Here are the characteristics of the defense industries' markets; As we can see in The evolution of CI in Israel was behind the progress achieved in the US and other western countries (Prescott, 1999).One of the main reasons for this inferiority was the over-confidence of Israeli executives claimed to have captured the essence of intelligence while in their military service and implemented it within the business field with no need to develop dedicated CI capabilities.This has been changed in the last ten years (Barnea 2004).
By its nature, CI in defense industries was more strategically oriented, then tactical.The issues CI often covered were more long term defense trends and indepth competitors and customers assessments.Its customers were the top management, (but also sales teams and technological teams) and its analysis methods were advanced to meet the expectations of senior executives.
The fierce competition described above brings the companies engaged in defense exports to develop strong CI units that make the best use of CI discipline for competitive benchmarking.(McGonagle & Vella, 1996).Companies engage in this sector, unlike many other sectors (Attaway, 1998)  It is likely to infer as shown in Table 2, that the progress of CI practices conformed to the changes in the activity of this sector supplied added value intelligence: Opinion Section

Practical implementation of Competitive Intelligence
Usually the professional level of CI units among defense export companies was considered to be high ranked at the top, comparing to similar units in other sectors by the total resources invested in them including the use of advanced information technological systems (see discussion of the use of these tools in Israel in Barnea, 2009).This was the outcome as of the need to cover a wide range of information sources, regular updates of the decisionmakers and being involved in countless activities, including assessments of the state of competition.These units often Opinion Section make use of forecasting tools of the business environment being characterized by monitoring long-term planning processes (for further discussion on the challenges of business forecasting see Laseter, Lichtendahl andGrushka-Cockayne, 2010 andCourtney, 2001).
An important part in responsibilities of CI units was early identification of business opportunities.The purpose was to find opportunities while still in the initial stage at the prospect, preferably in the stage of shaping the requirements, to be able to prepare a response ahead of the competitors.
Although CI in defense industries enjoyed high awareness to the importance of CI by many executives in the firm, still the implementation of the discipline of "sharing of information" had to be enhanced.The obstacles were not just the nature of people but also the security aspects which were not to be ignored.Still

Primary sources
The defense export market was often characterized by ad hoc collaborations between companies and simultaneously fierce competition known as co -opetion.
Therefore, it is possible that at the same to expect to handle information without the assistance of dedicated information systems (see Barnea 2009).Further thorough examination revealed that the existing solution did not meet the needs of the state acquired it so that competitor needed to present a suitable solution soon.This analysis also elevated business opportunity resulted in an attractive offer to the disappointed customer, a solution that proved itself but was not purchased in the past by that state in respect of the high price.

Managing the intelligencer efforts
This industry was often characterized by intense macro analysis of foreign economies, internal politics, international relations, social changes, and a good understanding of legal and regulation issues.This was in addition to common analysis of competitors, customer, supplies and monitoring of new technologies and advanced applications.Opinion Section

Using internal information systems
CI units in the field of defense understood that one of the keys for their added value was on one side to give access to many people in the organization to competitive information and on the other hand to make many in the organization relate to information obtained, to evaluate the significance and bring it to the attention of others in the organization.
Advanced information systems were a critical support tool for the success of competitive intelligence processes but the primary challenge was to develop the awareness among the employees.
These systems usually divided into two types: 1. Systems developed by the companies themselves often via their information technology units 2. Purchased solutions in which adjustments were implemented so that they can give the answers expected of them.
The direction was to acquire and later adjust systems from the external software houses because solutions were often cheaper and enable internal information systems units to focus on their core areas.
One of the challenges is to require of systems that interface with other systems within the organization, such as CRM (Customer Relations Management) and ERP (Enterprise Resource Planning), where important information was analyzed in conjunction with competitive information.For example, an army of a certain country issued an immediate RFP (Request For Proposals).It was required to know all "our" existing and potential capabilities to know if and how a reply could be provided.Further assessments revealed that the date of the development of essential parts of the required system was two years therefore it was impossible to give an answer to that RFP.Its submission date was in six months and placing the system was within a year.

Key success factors (KSF's) for CI function
Defining KSF's (Key Success Factors) for a CI unit is important in any industry (Singh, Fuld and Beurschgens, 2008).It They all had to be interrelated as shown in Figure 1.  2. CI functions were integrated into the up to date priorities and had been given resources that enabled them to fulfill their missions.
3. There was an ongoing effort to assure that CI capabilities were matched to the scope of their KIT's and were executed in accordance with the working plans.
4. The value of the CI was assessed continuously by the senior executives to maximize its contribution.
5. The resources allocated to CI had to be measured to make sure that shortage of resources will not hurt its activity.

Conclusions
The defense products and technologies were considered to be most advanced, Opinion Section multi-disciplinary and often long ahead of the technology used in the civil market.The primary source of Israel's relative advantage in this industry was the needs for the most advanced products set by the Israeli military systems, especially by the IDF (Israel Defense Forces).On the other hand, one of the most important goals of Israel's economy is to increase its exports as its economy relied heavily on export of most advanced technological products.A distinct advantage of Israeli defense products is the fact that they usually have gained a variety of combat experiences by the IDF, which increased their attractiveness in the eyes of its customers (http://www.businessmonitor.com/defence/israel.html).
position of Israel and enhanced Israel's rapid economic growth while the export was its leading strength.
the need to share more competitive information existed.Defense industries are not alone.Lovello and Sibony (2010) were referring to the problematic culture of many organizations that withhold to share information and practically were strengthening the "silo thinking" while CI was often aiming towards avoiding these behaviors.Accepted estimate was that anyone who could translate the competitive information received from Open Source Intelligence (OSINT) combined with primary sources and translated it all into formulating an answer would have an advantage and increase the chance to win defense tenders.We could assume that a British company in the defense industry will monitor the difficulties of British soldiers fighting in Afghanistan, for example, in the early detection of enemy snipers and will initiate the British Defense Ministry to propose a solution, even if the bureaucratic procedure of issuing a tender yet not started or completed.This information may come from a variety of sources, including social networks, publications of the Department of Defense, blogs of soldiers participating in the war, interviews with soldiers who have returned from the battlefield in local newspapersthe threats that were faced by Indian troops on the border with Pakistan were different than the threats faced by the Spanish intelligence and Opinion Section security organizations fighting against the Basque resistance ETA.Being aware of military threats often led later to characterizing the operational needs and the requirements specific tools, which will reduce the threat or cancel it altogether.Comprehension of the progress of the operational needs by the customers or future customers were critical factors expected to be addressed by CI units.2. Technological Intelligence Technological intelligence continuously monitors technological solutions offered by competitors in response to customers' needs as early as possible.The aim was to understand the existing and future products that would compete in the marketplace in the future.It was required to implement the discipline of Competitive Technology Intelligence (CTI).One aspect of this issue was the need of the CI units to build strong internal collaborations with technological professionals to estimate precisely the current and future markets.One of the challenges was determining the right priorities of the technological issues that have to be monitored at any given time.3. Marketing Intelligence While technological intelligence was targeting competitors' capabilities, the focus in marketing intelligence was on the customers.Marketing focuses on gathering intelligence on customer needs and rising opportunities and support decisions throughout all stages of the competition.An important tool was the company's employees who were in continuous touch with their customers.They should be briefed also to collect information on current and future marketing needs.For exampleprior knowledge of budgetary limitations of potential customer, which was familiar to just a few, ended in submission of a competitive proposal that brought this into account.intentions to enter into new areas, whether by self-development or through acquisitions, mergers and strategic partners.For example, it was reasonable to estimate that the world's leading companies in defense were following with great interest after the business moves of their Israeli competitor Elbit Systems, which in recent years entered into new areas of activity mostly through mergers Opinion Section and acquisitions and not by organic development and would try to assess Elbit's strategy in the coming years (http://www.accessmylibrary.com/coms2inthis sector, but it was still done on day-to-day basis: monitoring changes in the markets, customer insights, changes among competitors and new products (see discussion on tactical and strategical CI in Sawka 2010).This intelligence often had an added value for the strategic intelligence.In conclusion of this chapter -some people may think mistakenly that CI in defense industries was about price discovery offered by competing tenders.It was usually impossible to obtain this information in advance and companies competing in this area were required to expand their intelligence scoop as outlined above in order to maximize their chances to win.CI in this industry was actually in its strongest position of managing the intelligence, according with the outline that was described in the white paper by Arthur D. Little consultancy (2010).Working programs CI functions usually fit into the annual programs of the Israeli defense companies.The main task of the intelligence was to respond to the intelligence requirements according with these plans.For example, a company decided to focus on the defense market of the Far East which until recently was ranked low in its priorities list.Its CI unit was expected to provide information about competitors' activities in the above mentioned region, the customer's needs by defense establishments and states, to point towards new competitions (tenders) and to identify early strategic partnerships between companies that may give a joined response to the customer's needs and intelligence unit.It was also likely that the CI functions may build quickly intelligence capabilities that would meet the needs of the firms and thus Opinion Section increase their chances of winning.Action plans were expected to summarize priorities in collaboration with their business units.CI units expected to work closely with the company's executives to bring on to their attention the new opportunities as a result of the intelligence monitoring.The uniqueness of CI activities in the sector of defense was the ability to act simultaneously in several areas of intelligence as mentioned above, in markets which were characterized by tough competition and often insignificant differences in products offered by competitors.Therefore, it was necessary for finest understanding of customer needs, markets and capabilities of competitors to know how to produce competitive advantage that would help in pointing at the competitive price which was often a determining factor in the final decision who wins the competition.
time a single unit at a certain company cooperated with another company while another business unit within that firm competed against it in another sector.This modus operandi allowed skilled benefits of the primary sources among the company employees, especially among the skilled sales force and technological staff that having been working at relationships with various elements in the market.Primary sources were also intensive users of CI materials and their professional expertise was playing a role in obtain important information on customers, products, competitors and opportunities, and shared it with CI professionals and other users.Thus capable internal networks within the firm, supported by dedicated software often enable CI managers effectively to manage it.Secondary sources What characterizes the activity of secondary sources in this industry was the challenge of utilizing enormous amounts of information gathered on military equipment needs, marketing intelligence, new technologies etc.The defense market was characterized by a lot of open source information on one hand and on the other hand, keeping secrets tight.This required high quality information management and precise direction of collection efforts, selection and analysis and distribution to the appropriate units.Usually it was hard Opinion Section This competitive market required constant development of new information sources while keeping the existing sources.This was a result of the need to cover new technological solutions, new geographical regions and countries that were not in focus in the past, new products, etc.At the same time, there were sources that become obsolete as a result of changing priorities and focus in other lines of businesses.Therefore, it was necessary to conduct an advanced system for managing Key Intelligence Topics (KIT's) and the targets of gathering ( firms, armies, military establishment, etc.), including answers to the needs: who was the firm initiating the request (asking for the information), who in the organization could provide the answers, monitoring and access to the answers received at any given time and information collected in response to avoid duplication and ensure optimal use of resources by the firm.By implementing the above, the CI functions were moving from occasional management of its KIT'moved into fast development of an advanced generation of technological solution, although the previous generation was relatively new.
sidesfrom the CI to the internal clients and from them to the CI function.making without the contribution of CI was incomplete.These three essentials were together critical for the success of CI function in a corporation.

Figure 2 :
Figure 2: Challenges of acquiring valuable information recent global economic downturn since 2008 had only minor effect on this sector.The number of military conflicts is in increase Opinion Section (http://www.globalsecurity.org/military/world/war/index.html) and a moderate rise in global defense expenditures is expected to continue in the coming years jointly with the increase of the competition on each governmental customer.Israeli firms in the defense sector enjoy a high reputation by their competitors and customers for their CI professionalism.Not very much has been written about the role of CI functions inside defense companies and their effectiveness in the fierce competition in this sector (see an example in the Journal of Competitive Intelligence Management, Vol.2, No. 4 2004), either worldwide or specifically in Israel.The main objective of this paper is to focus on the role of CI in the Israeli defense industries and its importance.It appears that CI was capable of holding an advanced position among the Israeli defense firms while its capabilities were considered to be a critical success factor like in other sectors, i.e.Pharma (Badr, Madden and Wright 2006) and medical devises.This was mainly a result of the recognition by the valuable input of CI into the decision making process and its contribution to the success of companies in their various business lines.CI functions held a critical position this sector's activity in Israel, CI considered an integral part of the organizational structure and its business culture.Still there was a tendency to keep the CI capabilities' secret, but this was in a swift change as it became evident that strong CI capabilities were common in this sector worldwide as in many other competitive areas.

Table 2 :
Changes in Israeli CI activities