Study on competitive intelligence in Israel: 2016 update

This paper investigates the state of competitive intelligence among Israeli firms in 2014. The methodology used was self completion questionnaires, which were responded to in May and June of 2016. A response rate of 26% was achieved with 39 questionnaires returned of the 69 questionnaires that were sent out to 65 local firms, most of them with an annual turnover of greater than 100 million USD. The results indicated that there were insignificant changes in the use of competitive intelligence in Israel in the last 10 years, since a survey conducted in 2006. Initially it looked as if the use of competitive intelligence was expanding, but the actual findings shows that the contribution of competitive intelligence to the decision making process was not progressing as it was expected to and there were difficulties in making competitive intelligence an integral part of the decision-making process and having it reach an influential position. The results indicated that the recent global downturn evidently had only a minimal effect on the competitive intelligence scheme and in 75% of the firms there were actually almost no changes in the competitive intelligence programs. Clearly, competitive intelligence was primarily a tool used by the larger organizations and most of the firms that responded (60%), were among those who competed in the global markets. I have also attempted to look into the quality attributes of competitive intelligence performance, and it seemed that the low use of analytical tools was an indicator that we cannot ignore. Only 33% of the competitive intelligence professionals were using these tools regularly as part of their analysis work and in presenting their findings.


INTRODUCTION
Business research literature deals extensively with competition between firms, and global competition has made the competition a more dynamic environment (Grant 2005, Chan Kim & Mauborgne 2004).Business strategy literature deals with the early detection of competitors' intentions and capabilities (Fellman & Post 2010) and recognition strategies of their objectives, strengths and weaknesses combined with trends in the markets and among consumers.Hughes, Le Bon & Rapp (2013) explain that they all are critical components in the success of corporations.A study of 800 firms showed that an important factor in the success of companies is the special expertise of customers' requirements and competitors' moves (Nunes & Breene, 2011).
The importance of monitoring the business environment (external environment) arises with respect to rapid technological developments (Grant 2005).It is impossible to win competition strategy (strategic competition) without introducing competitors, warning of threats (Henderson, 1981) and analyzing information on the competition environment (Fleisher, Right & Allard 2008;Chernev & Kotler 2012).
The basis for competitive intelligence was the need for environmental scanning of information about activities that happen around firms and have an impact on their performance (Aguilar 1967).The increase of environmental uncertainty gradually strengthened the demand for information processing activities within firms (Daft & Macintosh 1981;Culnan 1983).Firms' skills to adjust to market conditions largely rely on their competences in processing relevant information, mainly on market conditions.Broud (2006) went on to connect competitive intelligence and environmental scanning in the process of building scanning capabilities to affiliate firms' strategy with important changes in the external environment.
Competitive intelligence (CI) is a process involving the gathering, analyzing and communicating of environmental information to assist strategic decision-making (Dishman & Calof 2007).Although there are calls (Hoppe 2015) to move away from a narrow perspective of the practice to pursue a broader understanding of intelligence as an organizational discipline, the above definition of CI is widely recognized by most scholars who are doing research on competitive intelligence and related areas like business strategy and information sciences.Intelligence as part of strategy, (Solberg Søilen 2015) mainly marketing as an instrument to increase a firm's competitiveness in its strategic planning process, has been long recognized (Montgomery & Weinberg 1979) and is also backed strongly by Porter (1979Porter ( , 1980)).
Many scholars have proposed theories about intelligence processes in business.From environmental scanning (Aguilar 1967), strategic intelligence (Montgomery & Weinberg 1979), competitor analysis (Ghoshal & Westney 1991) and market intelligence (Maltz & Kohli 1996), Day and Schoemaker (2006) brought forward the concept of "peripheral vision" which is near to the concept of CI in its broader sense.Most works (Bulger 2016) look at CI as an essential requirement for better strategic planning and execution.The literature shows evidently that CI is not only about competition but covering the whole business environment.
More firms were aware that one of the keys to success was intimate knowledge of the global markets (Bulley, Baku & Allan 2014) by ongoing monitoring of the changes, and it was not enough to offer advanced technological solutions (Prescott 1999) and prevent business failures as a result of intelligence downfalls in business (Tsitoura & Stephens 2012).Many corporations already understood that CI (Blenkhorn & Fleisher 2005) can be of a great help in reaching a competitive advantage and sustaining it (Global Intelligence Alliance 2009, 2011).It is evident that companies with poor information about competitors are stuck being reactive (Le Bon 2013).Contrary to findings by Reinmoeller and Ansari (2016), CI added value can be assessed mostly by strategic planning and decision making (Hambrick 1982;Fingold, Carlucci & Page 2005;Grant 2005) although it is not an easy task as the CI discipline is broadly based on qualitative evaluation.
The growth of the Israeli economy was highly dependent on its exports, mainly hightechnology industries and the ability to develop new technologies and applications that would be attractive in the global markets (Central Bureau of Statistics 2014).The use of CI in Israel can be found mostly in large-size companies.It was moving forward slowly, according to recent studies (Barnea 2006(Barnea , 2009)).It seems that the discipline of CI in Israel is still looking for its position of influence, since it is focused on management practices and fulfilling the immediate needs of the corporation rather than working closely with the strategic planning and the senior decision-makers.It is largely focused on formal intelligence activity through CI units, while there are those who believe (Hoppe 2015) that in most organizations intelligence is constructed informally.

PAST STUDIES ON COMPETITIVE INTELLIGENCE IN ISRAEL
There were a few studies on competitive intelligence in Israel conducted in previous years.The first one was conducted in 2003 (Barnea 2003) and was published in Israel (in Hebrew) which was followed by an English version that was also updated (Barnea 2004).The next ones were published in 2004 (Belkine 2004;Shirtz 2004).Both studies showed that competitive intelligence in Israel was in its early stages, more in the stage of ad hoc approaches, but they identified the move towards established activity.It pointed towards the potential of the progress of competitive intelligence in Israel as the needs were obsevered.
The next study was published in 2006.It was titled "Why start-up companies failed to adopt competitive intelligence" (Barnea 2006).
The key conclusion was that the absence of competitive intelligence awareness was one of the main reasons why Israeli start-up companies failed in the global markets during the 1990s.The author has offered different ways to change the situation: one of the primary ways was to appoint a senior executive to take care of this issue, as monitoring the international markets was a critical factor for such companies.The author has recommended also that the investment ventures that usually heavily support these initiatives encourage these ideas and act to implement them, and by doing so they could save a lot of money and help to make better decisions.
The next study was concluded in 2006 (Barnea 2006).Its focus was on competitive intelligence in large Israeli exporters.The key findings were that CI was used by almost 50% of the companies and that CI professionals were succeeding in bringing added value through their activities, mainly tactical insights.The study stated that ad hoc solutions were still common but there was a growing understanding of the need of CI expertise.The findings showed that the use of Open Source Intelligence (OSINT) was wide while the use of primary sources was limited, mainly due to a lack of awareness of its potential.Another important result was that the use of expert tools (i.e.software) was very rare, while the expectations of the developers of such tools were higher, as Israel had a strong orientation toward using information technology tools.
In 2008 and 2009, two short studies on CI in Israel by Barnea were published (in Hebrew) in two Israeli management magazines.The key findings were that CI in Israel is moving forward slowly while the main obstacle is the lack of awareness by senior executives who expect to present their intelligence needs and the needs of other units.The conclusion was that without their firm support the creation of durable intelligence capabilities will be difficult.
Another study that has looked at CI in Israel mainly from the aspects of using expert tools (Barnea 2009) has revealed that "local firms were not prepared to invest in new CI tools that would enable CI professionals to perform better.As a result, most CI professionals have to continue using generic tools such as Office (Microsoft), which offers unsatisfactory solutions to their CI program needs".And also that "the high level CI solution has not reached its potential target market due to a lack of support by senior executives who did not see it as critical to move CI forward in their firms".
In 2015, research on the use of Open Source Intelligence by Israeli firms (Markovich 2015) showed that there is an intensive use of these sources, but the added value to the corporate decision-making process was low.It overlooked the entire picture of CI in the Israeli business scene.
It was therefore challenging to conduct a new study of CI in Israeli companies, especially in the time after the global downturn (2008/9).The objective was to compare the results with previous studies, to evaluate the latest findings to see what still has to be done and to try to indicate the directions that CI in Israel may have to take in order to strengthen its position.Research conducted by The Federation of the Israeli Economic Organizations (2011), showed that the global financial crisis almost had limited affect on Israeli global corporations.The depression moderated the growth of Israeli companies abroad.Despite the economic crisis, Israeli multinational companies showed impressive economic strength.

Research objectives:
1. To evaluate the existing use of competitive intelligence within Israeli companies, primarily large companies with annual revenues of 100 million USDand above.2. To compare the findings with previous studies and to recommend what has to be done in the future to support the use of CI.

METHODOLOGY
The study was based on a questionnaire of 25 questions that was sent out to 65 Israeli companies.
The directory of the companies included in this research was based on records of participants in competitive intelligence conferences held in Israel in the last five years.
The questionnaire was divided into six sections: 1. General questions about each firm, 2. Questions about the characteristics of the competition in the relevant industry, 3. How CI is conducted, 4. The value that CI was delivering to the firm, 5.The state of the competition in the recent global downturn 6.Recent changes in the mode of CI activity.
The data was collected by self-completion questionnaires.They were sent directly to CI managers that have been identified in each company.Sixty-nine questionnaires were sent out.Thirty-nine completed questionnaires (56%) were received.These questionnaires were analyzed.The high rate of response is related to my personal acquaintances with the responders.
The actual meaning was that all companies studied had active CI functions.

LIMITATIONS
The limitations of this study were as follows: The results were based only on the self experience of the CI managers rather than on their superiors.
It was impossible to know how much these replies represented the view of senior executives in these companies about some of the questions, for example the added value of CI.

DATA ANALYSIS
The profiles of companies that responded and participated in this study by sector are shown in Figures 1-5.All CI managers that responded indicated that their CI units were operating in -house, meaning that they were part of the company's structure and located in the company's premises and thus interacted continuously with its people.None of these units was operating externally.Obviously, many of these companies were receiving input from external suppliers, mainly information gathered from public domains.In comparison, the "global study on large companies" (Global Intelligence Alliance, 2009) has stated that 71% of the intelligence activities were produced within the company.The results in Figure 6 indicate that the size of the competitive intelligence units in Israel were usually small.In 90% of the firms the CI units were two people or less.There were no differences in the size of the units between companies who focused on the local market and those that were competing in the global markets.The hypothesis that Israeli companies in the global market needed larger CI units than in the local markets due to the scope of the intelligence tasks was not supported by the results of this survey.As CI units were small, CI was usually fulfilled through a centralize unit.
It is possible that Israeli companies in the global markets were using outsourcing services by information professionals more intensively than those operating internally, but this was not substantiated in the results of this study.
Figure 7 The profile of competitive intelligence units: how old is the CI unit in your organization?
It was found in this study (Figure 7) that 69% of the units are more than four years old while the rate of new CI units in the last three years was only around 30%, meaning that in this period the growth of CI in Israel was slowing.These results were contrasted with my initial assumption that CI is growing in Israel in the last three years faster than in the years before.The majority of CI directors in Israel were reporting to the senior level management, i.e. to VPs (Figure 8).It seems that CEOs preferred not to manage the CI function directly, mainly as a result of a lack of ability to allocate management attentiveness.In most of the firms, CI was part of the marketing or sales units, and their directors were reporting to the VP level.Second most common were CI units that operated under the guidance of the VP business development.The VPs of strategic planning were getting continual support from CI, but usually were refraining from taking direct control of CI.
Figure 9 The participation of CI in major decisions.
The question here was referring to the rate of participation by CI directors in the regular meetings of the senior management and the results showed that the level of participation on a regular basis was low while the participation on an occasional basis was 30 percent (Figure 9).It was not satisfactory but it revealed that the awareness of the importance of the contribution of CI is growing.The following question regarding the level of satisfaction from the contribution of the CI activity added a better perspective on this issue (Figure 10). Figure 10 indicates that most of the CI directors were aware of the situation that their units were not graded very highly by their executives.These results also exhibited that the CI managers were aware of the need to improve their performance.Although the results came from the CI managers, it was reasonable that they took into account the feedback they received regularly from their "internal customers", mostly the executives.The primary advantage of CI (approximately 70%) was placed on the identification of threats (Figure 11).This may also be pursuant to the directions they got from their superiors.It was intriguing and annoying to find out the low rate (8%) that CI received in improving the decision making process.It is possible to deduce that the most important advantage was threat identification, while they felt a lesser need to support in the decisionmaking process.The results of the question shown in Figure 12 remained in firm correlation with the results in Figure 8. Evidently, CI was primarily serving the needs of marketing or sales.As a result of a lack of awareness and resources, the service to other functions was low as CI was incapable of looking simultaneously in other directions, mostly due to a lack of resources.The results show undoubtedly that setting up a systematic process of KITs has been executed very well (Figure 13).It shows also that the routine of ongoing amendments was working properly.CI directors had intense awareness of the significance of keeping their attention on the real needs of their firms.It remained unclear why 25% of the CI directors were not operating using the same procedure.I tend to believe that this was a lack of awareness, which had an impact on their level of expertise in the CI discipline.In comparison to the global scene, 87% of the companies were systematically collecting and analyzing information.
Figure 14 The use of information from primary and secondary resources.
The results in Figure 14 show that using secondary resources was a standing procedure while using primary sources was less frequent.These results correlated with the difficulties of building a primary source network, which could be a result of the lack of capabilities by the CI professionals and/or a result of difficulties in establishing themselves in their firms.
Figure 15 The use of CI dedicated information technology tools.
Although Israel was positioned high in the development and the use of advanced information technology tools, the rate of CI units that were using these tools was low, only one third of the companies (Figure 15).The prospects for the future were not promising.It is relevant to add that there were three local companies that provided excellent CI dedicated tools (Barnea 2009).The results in Figure 15 did not match the results of "the global study on large companies" (Global Intelligence Alliance, 2009), stating that 64% of the firms utilized technological CI tools and 9% were intending to do so.The difference between the results in this survey and the one by GIA is high, especially while Israel is considered to be advanced in using new technologies.The findings from the Global Intelligence Alliance survey on Market Intelligence in Global Organizations (2011), did not relate to this issue.Looking at the question of the ROI, (blue bars, Figure 16), the results did not supply any hard figures to support the estimation of the ROI grades.The replies expressed the perspective of the CI managers and their observations.It looks as if the high grades (4 and 5) that have exceeded 84% of the replies, may be too high, and it would be possible to accept them only if we had substantial data to support them.However, it is possible to say that CI managers believe that the CI units had proven themselves also from a financial perspective.I did not use specific models to measure the ROI (Faran 2003) and thought that the above results were sufficient.
The other two questions (green and red bars in Figure 16), reviewed the involvement of the decision makers that were expressing high satisfaction to the CI managers regarding their position and their abilities to contribute to the firmsquestion no.2: 87% in grades 4,5 and question no.3: 66% in grades 5, 6.The results to question no. 3 were extremely high -almost all the replies, except one, ranked the contribution as 4, 5, or 6.The results of the global study on large companies ( 2009) indicated that 98% of companies are utilizing CI while making key decisions.
The results of these three questions (Figure 16) show the high satisfaction of the CI managers with their contribution to the firms and to the internal process of the decisionmaking.These figures were also in firm correlation with the results in Figure 10.Comparing them to the results in Figure 9 revealed that CI managers were not pleased with the level of their participation in the decision making process, and they seem to believe that they could be more effective.It is clear from Figure 17 that the ability of the CI function to fulfill the immediate needs of the management was leading by far.This means that CI was perceived mostly as a tactical tool.CI managers did not think that CI would be more effective if it was pushing for sharing the information it acquired and encouraged different management layers to use it.It could be an indicator that CI managers were not yet fully aware of their role to push for sharing the information horizontally and vertically.Another conclusion from the results in Figure 17 was that CI managers may not feel that they had the support of the senior management to make CI prosperous.From the point of view of the firm, as long as the CI managers were provided with immediate information, it was good enough.
Figure 18 The improvement of the culture of sharing of information.
Although the CI managers did not think that sharing information was one of the KSFs of CI as we saw in Figure 17, actually the results of Figure 18 showed that while CI was active in the firm, it still had a significant effect on the development of the culture of the sharing of information, as one of the by-products of this activity.
Figure 19 The use of analytical tools (such as: 5 forces, SWOT, scenario analysis, benchmarking/gap analysis, financial analysis, profiling).
This question referred to the use of one (or more) of the analytical tools that are the most familiar and practical (Figure 19).The results were very disappointing as most of the CI managers (67%) admitted that they did not use even one of them on a regular basis.The question which was left unresolved was how they still fulfill their analytical objectives.Most of the CI managers (75%), have indicated that they did not spot any changes in the magnitude of the competition in the various fields where they were competing since the economic slowdown (Figure 20).However, 23% have felt more competition since the recent economic events.
In the "global study on large companies (2009)", 45% of respondents felt strongly that CI activities have increased significantly after the global downturn in their industry.The average increase across all industries is 17%, almost similar to the results acquired in Figure 20.Most of the replies (65%) in Figure 21, suggested there were no changes in the character of the needs and products these CI units produced.These results were in correlation with the results of Figure 8, which showed no indications of significant changes in the volume of the competition.The results in Figure 22 show that the recent global downturn had almost no effect on the size of the CI functions.Those CI units that have been downgraded (20%) were affected by the general downsizing of many organizations due to the slowing of the world economy.It seems that CI units did not have to make internal modifications in their modus operandi, while most of them were successful in protecting their staff against dismissals.

CONCLUSIONS
As a result of the recession into which the global economy slipped in 2008, budgets have been cut in most corporate functions, with intelligence activities being no exception.Yet simultaneous with the thinning resources, the demand for high quality information has stayed intact.
We have learnt from the results of this research conducted in Israel that CI units are operating mainly inside large companies in almost all the main sectors in the Israeli economy.Most of the companies (75%) have had CI functions for less than five years.It is evident that CI is growing slowly in Israel.
According to the results, CI in Israel is considered to be mostly a tactical tool to identify immediate threats.Around 70% of the responses mentioned this as the prime advantage the companies were gaining from CI. CI directors thought (77%) that they were successfully fulfilling this task.After following CI in Israel for several years, I have noticed that CI is not considered to be a meaningful tool for strategic decisions.This may also be a result of the relative weakness of the performance of strategic planning in Israel.In the US and Europe (Kahaner 1997;Prescott & Miller 2001), intelligence management is a business needs oriented process that transforms data into intelligence allowing companies to make better strategic decisions.It is a key task for the overall company's strategic management focusing on the observation of the external environment.This does not take place in Israel.Business strategy literature emphasizes the crucial need to monitor the competitive environment to utilize information more effectively (Grant 2005(Grant , 1997) ) while competitive intelligence is the major tool used to fulfill this fundamental management challenge (Herring 1992).
Almost 80% of the respondents assessed CI as performing fair or satisfactory and only less than 20% thought that the overall performance was high.This is another indication that CI managers are not aware of the need to improve their contribution to the corporate decision making process.Still, around 70% of the CI directors indicated that they were not participating in major decisions, and it is hard to say why the rate of involvement of CI was so low.CI managers had to be bothered as these results were possibly projecting their unsatisfactory performance.The position of the CI unit under the VP of marketing and/or sales, as seen in almost 70% of the firms, did not have any impact towards better performance of the CI as a second tool for better comprehension of the marketplace.The CI function has to become part of the firm's organizational structure as other units and thus conclude the forums and crossroads in which it officially participates.This research did not enter into CI's ROI through a deeper survey, by using different models (Rouach & Santi 2001).
The process of carrying out CI is performing well -75% of the companies declared they had a systematic process of setting up key intelligence topics, meaning that their gathering efforts are well in place.Unfortunately, the use of primary sources, mainly the internal network, was found to be not good enough, and it may be an outcome of a lack of awareness by the CI directors and/or a result of insufficient resources.Still, 77% of the CI managers thought that they were playing a major role in expanding the organizational culture of sharing of information internally.Thus, it is necessary to improve the collection of information, through a better use of primary sources and the internal networks.
This research reveals multiple phases of creating meaningful intelligence within the process.It also discovered that the practice of competitive intelligence, while strong in the area of information collection, was weak from a process and analytical perspective.
The research identified an actual problem in the performance of the analysis by the CI function.The use of analytical tools was relatively low but these results did not stop CI managers from mentioning strongly that CI functions were a valued investment and that their contribution to the decision making process and the understanding of the external environment was fairly good.
CI directors were not satisfied with of their involvement in major decisions.The low rate of the use of CI dedicated IT tools (36%) could not be just a result of a lack of budget, but instead a result of a lack of pressures on the CI managers who may think that they can manage with ordinary tools instead of using advanced ones.There is a need in Israel to fulfill advanced tools such as dedicated software for gathering, analysis, and dissemination to improve CI performance.The CI global survey has achieved different results, presenting data that show 64% utilize technological CI tools and 9% intend to do so.
And finally, CI managers firmly declared that they noticed only a small amout of growth in their activity since the recent downturn.Most of them kept their staff while the profile of their tasks remained intact and the magnitude of the competition had almost no influence on them.The global survey on CI (2009) indicated different results.From this, 45% of the respondents felt strongly that CI activities have increased significantly after downturn in their industry.The average increase across all industries was 17%.
And a final note -Israel is unique in the sense that many of the executives have been exposed to the benefits of the intelligence discipline in their military service.Thus, one could expect that the penetration of competitive intelligence would be faster and its influence on strategic moves in addition to tactical ones would be more visible.However, the results are different.Maybe this is a result of an Israeli business culture marked by high self-confidence, by strong capabilities of fast adjustments to changes instead of careful planning and by believing that they are actually utilizing informal CI in their daily performance and thus do not perceive the benefits of CI as a strategic focus function.

Figure 1
Figure 1 Sectors (industry type) of responding companies.

Figure 2
Figure 2 Annual revenue (2013) by company.A company with annual revenues exceeding 100 million USD (100 m$) is usually considered to be a large corporation in Israel.

Figure 3
Figure 3 Number of employees by company.

Figure 4
Figure 4 Primary markets where the companies compete.A few companies operate in both markets: global and local.The questionnaire instructed the respondent to indicate the primary market.

Figure 5
Figure5Where CI is done (internally or externally)

Figure 6
Figure6The size of the CI unit: number of employees per unit.

Figure 8
Figure 8 To whom the CI director reports.

Figure 10
Figure10To what extent does the CI provides added value to the firm?

Figure 11
Figure 11The advantages the firm is gaining from CI.

Figure 12
Figure 12 Primary users of CI products.

Figure 13
Figure13The existence of a systematic process of establishing KITs.

Figure 16
Figure 16 This figure relates to three questions: 1) Return on investment (ROI) of the CI unit (financially), 2) the contribution of CI to the decision making process, and 3) the contribution of the CI to the understanding of the competitive environment.

Figure 17
Figure17The key success factors of CI function.

Figure 20
Figure 20 Changes in the intensiveness of the competition since the downturn.

Figure 21
Figure 21 Changes in the demand for intelligence products as a result of the economic slowdown.

Figure 22
Figure 22 Did the CI function change since the global downturn?