These industries are interested to know where the disposable income resides by geography, occupation, age, income group and so on, so that they are better able to target their products, sales efforts and marketing campaigns.

Long term trends in demographics, income distribution, sector growth rates, regional growth rates, etc. are therefore of interest to them.

Going a step further, it is also interesting for them to know if there are temporary spikes (or drops) in disposable income. For instance, in India, the Sixth Pay Commission is a much discussed event, as it will lead to an increase in disposable income in the hands of the beneficiaries, the central government employees. Their pay scales have been revised with effect from 2006, and they expect receive the arrears in installments.  They are attractive prospects for the above industries.

Other events that have a similar impact on spending power are land acquisitions, either by the government for building roads, bridges, industry parks, etc. or by builders for developing large townships. The recipients in these cases are generally farmers.

Certain industries also get windfall gains once in a while, as a result of changes in exchange rates, commodity prices, government regulations, etc.

In agriculture, there are smaller spikes on a regular basis. The variability in agricultural incomes arises from variation in area under cultivations due to weather, prices, availability of inputs, etc.; or variations in yield due to irregular monsoon, outbreak of diseases, floods, etc.  Macro level performance of agriculture is often widely reported, but even in a “bad” year, there are small pockets of abundance. And these could be of interest to companies as they can target their sales efforts in the “right” areas rather than spreading them thin across the country.

Of course, not all of the above may be worth tracking. Organisations need to balance the impact of the event for its business, and the effort required for monitoring the event.  For instance, the weak rupee has delivered windfall gains to many, but it is perhaps not worthwhile trying to identify them as they are scattered, and hence hard to target.  Monitoring of regional patterns in agricultural incomes is possible, but could be a little bit painstaking as the information is dispersed.  Land acquisitions, on the other hand are limited in number,  impact concentrated groups of people, and are relatively easy to monitor.

What are other sources of spikes in disposable incomes you have noticed?

According to the ISI emerging markets database the calendar year 2011 saw M&A deals in India fall by more than 50% over the last year, as only 195 deals were announced.  Compared to this nearly 400 deals were announced in the calendar year 2010. Even the net deal value fell to ~USD 18bn as compared to ~ USD 45bn in the previous year.

The biggest deal of the year was British Petroleum taking over 30% stake in 23 oil and gas blocks of Reliance Industries Limited for an aggregate of USD 7.2bn, followed by Tata Steel selling its 26% stake in Australian miner Riversdale to Rio Tinto for USD 1.1bn. Other big deals included Bain Capital and GIC, the investment arm of the Government of Singapore buying a 30% stake in Hero Investment (P) Ltd, which owns 17% of Hero Honda Motors for USD 0.8bn and Piramal Healthcare purchasing ~5.5% of the issued equity share capital of Vodafone Essar Ltd from ETHL Communications Holdings Ltd for a cash consideration of USD 0.6bn.

Out of the total deals announced this year, 95 were domestic deals amounting to a deal value of ~USD 4bn, 38 were outbound deals where Indian companies acquired a foreign target (deal value ~USD 3.5bn) while 50 inbound deals saw Indian companies being acquired by foreign firms (deal value ~USD 10.5bn). Biggest decline was in inbound deals where they fell by ~65% in comparison to the last year.

Deal breakers

As the actual performances have tended to swerve from the projections estimated by the companies and Investment bankers before the start of the takeover transactions, buyers are getting more and more jitterier and due diligences have become much more rigorous. Because of this M&A deals are now taking much more time to conclude.  The Sensex has declined by nearly 20% this year, as FIIs sold USD 500m worth of Indian equity. The economic growth estimate by the Government has been pulled down to around 7.5% from earlier projections of 9%. Even the Indian rupee has fallen by more than 15% since June 2011 making outbound deals a challenge. The debt crisis in Europe, along with the US financial woes has also cast its gloom on the Indian markets. To add to it the current high interest rates in India are making, funding an acquisition very difficult. All these factors are really compelling the players to adopt a wait and watch policy.

Fingers Crossed for 2012

Looking at the current scenario, I think we’ll really have to keep our fingers crossed for the next year. While some courageous mid-sized Indian organizations might still scout around for small strategic overseas buyouts, the next year could see most Indian companies cutting back on overseas acquisitions (Thermax and Marico have already postponed their M&A plans). And as there will be uncertainty in both the outbound as well as inbound markets, the coming year could see a fair amount of increase in the percentage of domestic deals. But we will continue to see some amount of interest in inbound deals in the next year as the western world continues to be seduced by the ‘India growth story’ and for most of them the option of not being in India does not really exist!

World  economies are so intricately interconnected today, that it is not possible to talk about the business climate in India in isolation. And most of the rest-of-the-world is not expected to do too well next year. A possible collapse of the Euro zone is a scary prospect, but it cannot be dismissed. The US is doing a little better, but not enough to bring cheer.  Even the emerging economies such as India and China are faltering, though less so, than the developed countries.  Uncertainties in one part of the world are propagated globally in form of market sentiment and this in turn affects the “real” economy.

In India, in addition to the economic slowdown and inflationary pressures, the political situation is contributing to the lowering of business sentiment. The policy inertia of the government and its inability to “manage” politics to push ahead with the reforms agenda is the single largest cause for low business and investor sentiment.  Politics has become more critical for Indian businesses than it has been in the last few years.

What does this mean for companies in India? First, they will have many more developments and areas to keep track of. Early warning competitive intelligence will therefore become increasingly important.

Second, they will have to work harder to maintain their top lines and bottom lines. And what does working harder mean? It means coming up with smarter and better (than the competitors) strategies for raising funds, selling their services, delivering at a lower cost, and so on.  Superior competitive intelligence is certainly one of the ingredients required for this.

Ensuring that there are enough resources for the increased level of CI that will be required, will be tricky, as companies are likely to go into a cost-cutting mode. Further, it is always harder to establish the ROI for early warning CI than for strategic CI.

CI practitioners will therefore have learn to do more with less. While items such as travel and conferences may find less place on their agendas than before given their budget constraints, they cannot afford to cut down on hardcore CI. They will need to work smarter, faster and produce better analysis than before. Since CI is a new discipline in India, they will need to move up the learning curve very fast. Luckily, the SCIP India Chapter has been formed in time to facilitate interaction and learning.

What do YOU think 2012 will bring for CI in India?

Competitive intelligence is all about gaining competitive advantage (for your organization). For doing this, you have to be doing something different from what your competitors are doing.

You need to look for more and better intelligence than what is available to everyone else. What you can find on the internet and other secondary sources is also available to every other analyst in your  industry. Talking to (the right) people is the only way to get more than what everyone else has…

Besides, not all the inputs you need for decision-making  are found from secondary sources. This is true in under-documented sectors or unorganized industry segments, particularly in emerging markets like India. There is simply no data being collected on large areas of economic activity in India.

Deep insights on industry and customer dynamics are almost never found documented neatly on easily accessible web pages. When they are, they are generally outdated. Further, hearing it from the horse’s mouth has much more value than reading it in a report. Here is one example… You may read a report on a financial services company that tells you that its customer service is poor. On the other hand, a customer may tell you that “The people at the company’s office are very arrogant. They act like they are doing you a favour by giving you a loan.” The customer may go on and in the same breath tell you contrasting experiences with couple of the company’s competitors.  The latter certainly gives you more insight into what the customers experience on the ground.

Yet, I have seen that most competitive intelligence analysts shy away from reaching out and talking to people they don’t know. There are several reasons for this.  You feel diffident if you are approaching the wrong person for the information you need. Why will my competitor tell me anything about himself? He wont. But you can ask someone else, who knows the competitor intimately.

Another common reason is the fear of talking to strangers – what if they reject your approach? Making a stranger comfortable talking to you, is not easy for everyone. Some people naturally put others at ease and are able to chat with almost anyone. Others are not able to do this. But talking to strangers to collect competitive intelligence is not all art. You can learn how to do this, by systematically planning who to approach, and how to approach them.

So don’t miss the most valuable source of competitive intelligence… talking to strangers.

Competitive intelligence in India is a very new discipline. There are few educational courses that lead to a career in CI. But even in developed countries, where CI has been practiced for over 30 years, there are very few formal educational courses for CI. Only a handful of organizations (including SCIP) offer courses in CI.

Most of the respondents of the above survey started with a varied basic degrees,  got into CI by accident, took a few courses along the way and mainly learned on the job. One respondent came from an army and government background, where he got intelligence training – he applied this to the private sector.

It is difficult to get into the CI function in an organization with absolutely no experience in CI. So how does one get this experience?

The key common characteristic of CI practitioners is their passion for the discipline. And that is really the key to a successful career in CI. It requires a huge amount of curiosity, an analytical bent of mind and an eagerness to find answers to business questions.

It is possible to pursue CI in an organization even without necessarily getting into a formal CI function. So anyone in any function will find that they can do their own job better and contribute to enhancing their company’s competitive advantage by talking to  people from other companies, by reading up on what the competitors are doing and  analyzing the implications of this for their own company.  Sharing this work with the seniors/ CI function can be one way to move towards a CI career within the organization.

Another way is to first work with a CI service provider, get some experience and on-the-job learning in CI techniques and then move to the client side in the CI function.

Of course, it is possible to do all of this more efficiently and effectively, with some training on key competitive intelligence techniques and methodologies.  Such training was not easily available in India – till now. ValueNotes has recently introduced a series of workshops and programs precisely to enhance the capabilities of those who have the passion for competitive intelligence.

Do you have a passion for competitive intelligence? Do you have any unmet learning needs in this field? What are they?