Competitive intelligence toolkitArticle added by Karen Rothwell on March 30, 2009
Karen Rothwell

Karen Rothwell

Joined: August 21, 2010

My Company

Many professionals in the insurance world who seek to deliver competitive intelligence (CI) wear various hats: underwriter, marketer, producer, researcher, actuary, analyst, etc. It can be difficult to determine what aspects of intelligence are most important to producing valuable CI, since many of us were not brought up with formal intelligence training. Because of this confusion about what good CI actually is, "intelligence products" often focus on repackaging published information instead of conducting analysis.

Unfortunately, the actual analytical work that provides value frequently takes a backseat to the other tasks, and you end up with incomplete intelligence. What would be more valuable to all of us seeking an edge in a soft insurance market is a piece of data uncovered in the street and accompanied by analysis that allows us to make better decisions or implement more competitive strategies. Analyzing a competitive situation, drawing out conclusions and implications, and making recommendations for your team, department or company is where competitive intelligence can really make a difference.

For those who are new to producing competitive intelligence, I will share three of the analytical tools I have come back to again and again in my CI career. These tools do not require CI-specific training. In fact, most of you are probably familiar with at least one of them from your business or insurance training, as well as even college courses. They may not be everything you require to fully answer a question or issue, but in my experience, they provide the foundation from which to launch a sound analysis on most issues.
    1. "Five Forces" analysis
    2. "Four Corners" model
    3. Thin slicing
Tool No. 1: Porter's Five Forces

Developed by Michael Porter, a professor at Harvard Business School, the Five Forces analytical model examines the competitive intensity of an industry and the relative strengths, weaknesses and leverage of the key players. At the heart of the model are five industry forces that Porter believes influence how industries behave, how they evolve and how companies posture within them. The forces are:
  • Bargaining power of buyers
  • Bargaining power of suppliers
  • Threat of substitute products or services
  • Threat of new entrants
  • Rivalry among existing competitors
In the insurance world, the implications of this analysis can help in shaping your strategy and market position. It is an exercise worth conducting with your team at your annual budget and planning meeting.

Tool No. 2: The Four Corners model

The Four Corners model, again developed by Michael Porter, looks at the behavior of an individual organization in order to predict competitor behavior. It does this by integrating an understanding of the four key components of a competitor, including its:
  • Assumptions (those a firm holds about itself and the market)
  • Strategies (how a firm competes)
  • Capabilities (strengths, weaknesses and core capabilities)
  • Drivers (goals and motivators)
With an understanding of what motivates and drives a company, you are in a better position to recognize the "why" behind your competitors' actions.

In the insurance arena, looking at the whole strategic picture of an insurance company or agency may help explain a sudden price decrease or change in underwriting criteria.

Tool No. 3: Thin slicing

Not all good analysis requires formal analytical models. Do not underestimate your first impressions and reactions to a situation -- they are grounded in your actual experiences. Bigger and more detailed analysis is not always better. In his book The Tipping Point, Malcolm Gladwell defines "thin slicing" as making decisions quickly by cutting through all the information available and focusing on only the most relevant data points.

For example, Army captains stationed in Iraq live and die by the intelligence they receive on a daily basis. They have no time to mull over the information they receive; they act on it immediately because lives are at stake. Although the end result is not as final in the business world, you will have occasions where you will have no time to apply lengthy analytical tools such as the first two described above. You may only have information gathered during a short conversation at an insurer visit or client meeting to turn into analysis. Thin slicing is a tool at your disposal that can be used in the right situations.

In closing

Take a stab at analyzing a competitive situation using these techniques to produce more valuable intelligence. Additional information on the Porter models can be found online or at any library. Do not be afraid to get training or help when occasions arise that require a more time-consuming process or a team effort. The key is to assess each analytical situation individually before determining the best approach.

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