Competitive Intelligence and the Balanced Scorecard Methodology

Popularized in the early 1990s by Robert Kaplan and David Norton, the Balanced Scorecard methodology (BSC) is a system of interdependent, strategically derived goals, measures, and activities that summarize a corporation, its strategy and its actions. Said another way, the BSC methodology is an integrative instrument for strategy execution comprised of a communication system, a measurement system, and a management system. The BSC helps an organization translate its often vague and easily misunderstood mission and vision statements into specific, results-oriented actions. Doing so engenders transparency, responsibility, and accountability within the organization with a view towards creating satisfied shareholders and customers, effective and efficient processes, and a motivated and engaged workforce aligned with the company’s strategic goals and objectives.

If one of the goals of a company’s competitive intelligence function is to inject intelligence into the strategic plans of the organization, it is important to position competitive intelligence as a critical component of the company’s balanced scorecard initiative. Because the initial stage of the BSC model requires that the organization identify specific strategies, measures of success, goals and targets, and activities required to reach those targets, positioning CI as an important component of organizational success is important.

For example, assume that an organization has identified four strategic goals: improving revenue mix, creating a “cutting edge” image for its customers, becoming the leader in industry research and development, and improving operational capabilities. In this organization, competitive intelligence can help evaluate competitor channel and promotion strategies, helping the organization optimize its revenue mix. CI can also help monitor and evaluate customer perceptions of the company compared to its competition, as well as identify competitor product pipelines so that the firm keeps on top of competitive research developments. Finally, CI can also help the organization evaluate the production efficiencies of its competitors to help the company establish operational baselines.

Competitive intelligence frequently supports the development of strategy in an organization, but if management fails to realize that CI can help the organization achieve its strategic objectives, then the organization is only realizing half the potential value of competitive intelligence. By integrating CI findings and outputs into the application of the BSC methodology can forge a stronger link between CI and the strategic success of the company. The Balanced Scorecard methodology thus provides a framework to measure the contribution and value of competitive intelligence in not just helping set strategy, but also from the company’s ability to meet specific strategic goals and objectives.