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Applying Competitive Intelligence in the
Public Sector
 By Barend van de Kraats, Annalise Market Intelligence

applying CI in the public sector

provinces in the Netherlands have no legislative power and
only limited tax authority...
applying CI in the public sector


   Shock                      •	 Technology breakthroughs...
applying CI in the public sector

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Applying Competitive Intelligence in the Public Sector


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Look for the organizations with a well implemented competitive intelligence function, and you will likely find only companies, most of which are large. However, the public sector interest in competitive intelligence is definitely increasing. Governments competing for foreign investments must understand what differentiates them from other countries in the eyes of investment managers. Cities or countries that want to attract tourists need to know their unique selling points compared to other touristic hotspots.

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Applying Competitive Intelligence in the Public Sector

  1. 1. Applying Competitive Intelligence in the Public Sector By Barend van de Kraats, Annalise Market Intelligence Look for the organizations with a well implemented PROVINCE OF SOUTH HOLLAND competitive intelligence function and you will likely find Located on the west coast, the province of South only companies, most of which are large. The non-profit Holland (Provincie Zuid-Holland, PZH) is the most densely sector interest in competitive intelligence is definitely populated province of the Netherlands (see Figure 1). The increasing, however, and includes a wide variety of province’s capital is The Hague; the largest city is Rotterdam. organizations. International aid organizations such as the PZH aims to position itself among the top economic World Wildlife Fund or Médicins Sans Frontières are well regions in Europe. To achieve this, PZH wants to establish a aware of their competitive position in the “market for gifts” competitive, innovative and durable economy by focusing on and continuously monitor the competition. Governments two main issues: competing for foreign investments must understand what differentiates them from other countries in the eyes of • Ensuring a strong economic structure and optimal investment managers. Cities or countries desiring to attract climate for company establishments (“Kwaliteit in de tourists need to know their unique selling points and how basis”). they compare with other touristic hotspots, as the National • Strengthening those economic sectors that contribute Historic Museum case in Sidebar 1 demonstrates. most to the international competitive position of the In the past few years, we have been performing province or those with the potential to do so in the significantly more competitive intelligence analysis for future (“Excelleren in sterke clusters”). governments. The intelligence approach governments require is quite different from what traditional market research Annalise supported PZH on the second issue, also called agencies and management consultancies offer. At least in the “cluster policy.” The study focused on four sectors where the Netherlands, central and local governments have begun PZH expects to have the most added value and where “return to make their way toward understanding and applying on policy” is likely to be highest: 1) Greenports; 2) Transport competitive intelligence. and Logistics; 3) Life and Health Sciences; and 4) Water and Although the basic need is the same for governments as Delta. For these clusters, PZH defined the following goals: for companies – to maintain and improve their competitive position -- providing competitive intelligence to government • Maintain the competitive position for Greenports and organizations requires a different intelligence approach. The Transport and Logistics. tools applied by governments to achieve this often differ • Expand the market position of Life and Health from those used by companies. While companies can directly sciences. influence their products and pricing, and promote them, • Promote market share growth of Water and Delta. governments have more indirect ways of improving a region’s competitive position: subsidies, taxes, lobbying, and – not Given the increasing competition from other regions in unlike companies –PR. the Netherlands as well as from other countries in Europe, A good case study is the intelligence project we North America and Asia, what can PZH do to maintain and completed last year for the Province of South Holland. improve its competitive position in these sectors? That the 20 Competitive Intelligence Magazine
  2. 2. applying CI in the public sector provinces in the Netherlands have no legislative power and only limited tax authority only complicates the situation. This implies the need for significant creativity when developing an effective cluster policy. PROJECT PLAN To make the execution of the cluster policy as effective as possible, Annalise proposed a market intelligence approach. Before answering the bottom line question – what can PZH do? – we first wanted to evaluate the national and international competitive position of each of these clusters. Only when their current position was clearly understood would it make sense to further investigate the role the government and, more specifically, the province played in maintaining or strengthening the competitive position of these clusters. For the first phase of the project, we recommended a combination of primary and secondary research based on Figure 1: Location of Zuid-Holland SIDEBAR 1: NATIONAL HISTORIC MUSEUM interview with their internal experts and the numerous reports already available within PZH. This alone is of In 2007 three major cities in the Netherlands competed tremendous value in that clients often already possess much for the new National Historic Museum to be located information relating to a proposed project. This information within their city borders. Although everybody expected is very fragmented, however, and must be pieced together Amsterdam or The Hague to win, it was the city of from many different reports and the input of employees. Arnhem that came off best. It turned out that Arnhem Bringing it all together provides an overview and creates a had developed a strong business case built on solid competitive intelligence. The city studied its strengths basis for further decision-making support. and weaknesses against those of The Hague and In this first phase, we applied two analytical tools to Amsterdam and came to the competition with some completely understand the competitive position, trends, and convincing arguments. developments for each cluster. SWOT (strengths, weaknesses, opportunities, threats) analysis is a well-known tool that First, Arnhem maintained that their location was best every CI professional is likely to apply on a regular basis. Less for the new museum’s target groups: school classes and familiar is the S-C-P (Structure Content Performance) analysis families. Accessible by car and school bus, the proposed we conducted to understand the competitive behavior of location of the museum is in the woods surrounding the competing regions within each sector and the effects of that Openluchtmuseum (open air museum of Dutch history), behaviour on the performance of South Holand companies the zoo, and other attractions of interest to schools and within that particular cluster. The basic tenet of the S-C-P families. paradigm is that the economic performance of an industry Second, Arnhem involved the Openluchtmuseum staff is a function of the conduct of its buyers and sellers which, in the museum plan. This initially appeared to be a in turn, is a function of the industry’s structure. (For further disadvantage, as both museums focus on Dutch history. explanation see Tables 1 and 2.) The S-C-P paradigm facilitates By winning the Openluchtmuseum’s support for the our understanding of an industry’s competitive behavior and city’s plan, however, clear financial and content-related helps identify the key issues responsible for the (relative) synergies could be incorporated in the business proposal. performance of that industry. Last but not least, Arnhem presented an early stage concept for the museum based on international research. Arnhem took a close look at museums like the Abraham DELPHI Lincoln Presidential Library & Museum,Vasu Museum This first phase provided a good starting point. in Sweden and the Museum of Civilisations in Ottowa, Canada. Perhaps without even realizing it, the city of But additional work was required to establish a solid Arnhem produced a best practice example of a CI effort. understanding of the issues in each sector and how PZH could address them, thus strengthening the competitive Volume 12 • Number 2 • March/April 2009 21
  3. 3. applying CI in the public sector TABLE 1: S-C-P OVERVIEW Shock • Technology breakthroughs. • Changes in government policy or regulation. • Changes in tastes or lifestyle. Structure • Economics of Demand: market failures, availability of substitutes, differentiation of services, rate of growth. • Economics of supply: private vs public supply, market failures, diversity of producers, fixed/variable cost structure, technological opportunities. • Chain economics: bargaining power of input suppliers, bargaining power of customers, information market failure, vertical market failure. Conduct • Marketing: pricing, promotion, distribution. • Capacity change: expansion/contraction. • Vertical integration: contract out, joint ventures, PPP. • Internal efficiency: cost control, logistics, organizational effectiveness. Performance • PSA attainment. • Social welfare. • Technological progress. position of each cluster. As a next step, we proposed a Delphi smaller companies in each cluster. We also sought the input analysis (see Table 3 for Delphi strengths and weaknesses). of local government and branch organization employees. We This interactive research method obtains forecasts or completed rounded out the Delphi group with experts from identifies issues from a group of independent experts. Each science and education. selected expert answers questions in two or more rounds; Because we were free to be completely open about our after each round a facilitator provides each person with an client and the project itself, the Delphi participation response anonymous summary of all the experts’ replies. The experts can then revise their previous TABLE 2: S-C-P KEY FEATURES answers on the basis of the responses of the others. After one or more of these feedback Determine what to Focus on major issues. rounds, the expert group converges toward a look for Avoid looking for ‘anything about the consensus, or at least two or more scenarios. industry.’ The purpose of the Delphi research in Start with overview information. this project was twofold. First, it challenged Only get raw data once issues identified. the research results obtained from phase I. Did Most useful if accomplished early in study. the experts identify the same primaryissues in each cluster? Second, the experts offered their Collect desk and field Gather overview data first: identify key opinions regarding how the government – more data industry players, look for industry studies, specifically, PZH – could provide support consult public sector reports, consult with to address these issues and thus improve the department and external experts competitive position of each cluster. Other published information: make smart use of search engines, trade associations, For each of the four clusters, we trade magazines, business press, approached about ten experts with a set of 15 international government sources. to 20 questions. To form the expert groups, we relied on PZH’s network, but also did some Interpret data in Examine unusual or particularly influential cold calling. One advantage of working for industry analysis elements. governments as opposed to companies is that it is actually much easier to get cooperation from Source: The Strategy Unit experts. We interviewed managers at leading and 22 Competitive Intelligence Magazine
  4. 4. applying CI in the public sector In a plan published last October, PZH formalized its role TABLE 3: PROS AND CONS FOR as coordinator, vision shaper, stimulator and supporter. THE DELPHI METHOD LESSONS FOR THE CI COMMUNITY Pros Cons As a discipline, CI is relevant not only for commercial enterprises, but to every organization—including non- Possibility to investigate Participation of profits and governments. Most governments, in fact, are complex issues in a experts required to already performing some type of competitive intelligence. structured manner. be effective. This effort, however, is not as well structured as in “best-in- Possibility to go into Relatively long class” companies, and often the function titles of the people depth, look ‘beyond the timeline before involved in the effort look very different. For example, within surface.’ sensible results are PZH one person is fully focused on the Greenports cluster. obtained. This individual maintains an internal and external network Elimination of group of experts and stakeholders, keeps the province’s cluster thinking. Determination knowledge up to date by investigating all relevant trends and of representative developments, and continually thinks about how to improve Elimination of hierarchic sample of experts is the position of the cluster both nationally and internationally. differences. subjective. Such activities come very close to what we could call a CI role. The CI profession has a substantial opportunity to was very high. Only one expert declined to participate, as expand into non-profit and public sector support. Although he thought this should not be the business of the province. the specific objectives of these organizations are quite (Note that this too is important information concerning the different from those of companies, we are talking about role of PZH.) essentially the same issues to which we can apply the same We limited the Delphi research to one feedback round. research and analytical tools. This PZH case is just one of For each cluster we obtained a Top-3 ranking of issues, many potential opportunities. including the experts’ opinion on the government’s role in each issue (see Figure 2: Delphi Process). At the end, we integrated the outcomes of the Delphi research with the phase 1 desk research to develop clear outcomes per cluster. Barend van de Kraats is Managing Director of Annalise For most clusters the dominant issues were availability of Market Intelligence, a Dutch research & consultancy firm business locations, infrastructure, durability, and education. focusing on competitive intelligence. Barend has over ten Based on the Delphi round and additional desk research years of experience in research and intelligence with a on the responsibilities and power of provinces as compared primary focus on the financial services industry and public with that of local and central government, we drew the sector. Before joining Annalise, he worked for the Dutch following conclusions on how PZH could support the asset management company Robeco and was head of research clusters’ competitive positions: at McKinsey & Company. He can be reached at barend@ • PZH can optimize its competitive position by cooperating closely with central and local government. • PZH can be very effective in public relations and lobbying given its position as an impartial representative. • PZH can be an active participant, stimulating and initiating innovative initiatives within the clusters. Figure 2: Delphi Process Volume 12 • Number 2 • March/April 2009 23