Strategic Intelligence & Competitive Performance Analysis

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Anticipating Competition Behaviour:
Role of strategic intelligence in examining competitive performance

20 Aug 2021
- admin
Anticipation of a competitor’s behaviour and the vital role that strategic intelligence plays in analyzing competitive performance relates to the influence of cognitive capabilities on competitive performance in a perfectly competitive market.

Strategic intelligence is defined as the “ability to anticipate a competitor’s behaviour and pre-empt it” (Sheen Levine, Mark Bernard, and Rosemarie Nagel, March 2017) Touted as one of the most important cognitive skills, strategic intelligence deeply focuses on comprehension of the competitor’s behavior in an external environment. In a perfectly competitive market – a platform where the price is equal to the cost added by producing one additional unit of a product or service, the performance of an individual is based on the level of strategic intelligence. So, in a perfectly competitive market, where there is no room for the payback to be earned by a market participant even after having a high market setting (where there is no competitive advantage and normal profits still) competitors with high SI outperform other market participants. Based on these arguments it can be conceptualized that, SI and market performance are interrelated – the more the level of strategic intelligence, better is the performance in the market and vice versa.

Why is strategic Intelligence measured?

As a whole, if we see in the top bracket market, SI not only benefits market participant performance in the market independently but also makes the participant respond more in the market. People who have high IQ (intelligence quotient) levels or analytical skills, are the ones who derive the most satisfaction from strategic intelligence. Based on what one feels to be true even without intentional reasoning to supersede in a contest, the competitor must anticipate and feel one’s strategic environment. It is much better if one can anticipate the competitor’s next move and seize them. Therefore, strategic intelligence is considered important.

To recapitulate, strategic intelligence and market performance are positively correlated and there is a strong regression. Based on the experimental research relationship between both the variables is found to have an R-Square value of 0.2. Fundamentally, if the person has good strategic intelligence, it is very likely that he will succeed in the market situation.

A person may be having the best domain knowledge about the market but the winner holds the cognitive ability known as Strategic Intelligence.

How does strategic intelligence benefit you and how one can develop a cognitive skill?

Whether it is an individual or an organization, cognitive skill would benefit any market participant as skill is not something that can be learned from someone’s experience. The development of the reasoning starts by changing your own “mindset”. If we believe that strategic intelligence can be only acquired if we are experts in market analysis then we need to do some re-thinking. We need to ask tough questions to ourselves. It is easy to answer the prompted questions by a listener, however it is a problematic task to ask high-level questions to oneself. Secondly, what we observe plays a key role in forecasting the current market. Just knowing the market trends is not enough, one needs to draft a routine exercise to explore and produce the internal trends in their daily work. For instance, one can focus on present issues that get raised in an organization and synthesize the common impediments that our colleagues face. Certainly, such steps can be taken to develop this ability.

To conclude, the thirst for strategic skills can be uncomfortable. Initially, an individual or a firm might feel like that they are kicking up sand in the ocean. In the beginning, their vision will be unclear as they manage the disturbance that comes with challenging our conventions. Once the dust settles down, and we can contribute at a higher level that means we have strategic intelligence as our new ability.

Mudit Krishna Vasal
PGPM, Class of 2022