It is harder than ever for businesses to achieve and maintain growth. Profits are declining, markets are changing; new markets emerge within days rather than decades, while established markets are being disrupted overnight. Barriers to entry are lower due to technological innovations, a focus on services, and changes to the definition of “product”.
Today, over 80% of a company’s market value is defined by its intangible assets – the perceived market value of its brands rather than its physical assets. The only way to grow brand equity is to respond to customer and stakeholder needs better and faster than anyone else. Being a responsive business means deeply understanding your current markets and closely monitoring them for opportunities to better meet their needs, and for threats of disruption. It means scanning your environment regularly to identify new customers and markets that can generate new revenue streams. And it means you mobilise to respond quickly and effectively to these opportunities and risks. Responsiveness is critical to protecting and building business value, and it changes how businesses invest for growth.
To become a responsive business, you need to invest in Intelligence. To understand your operating environment, and to turn insight into action quickly, you need data, insights and analytics. Forget physical capital – the ability to collect, analyse, interpret and act on intelligence is now the most important competitive advantage a company can develop. Intelligence creates financial value and should therefore be considered as a form of capital.
We define “Intelligence Capital” as “a comprehensive knowledge asset coupled with the capability to use that asset to identify and activate growth opportunities.” It involves investing both in collecting and organizing the relevant information needed for decision making, and in the skills and expertise needed to deploy it effectively – building both an asset and a capability. The knowledge asset must inform the monitoring of the current and potential marketplace for growth opportunities, and the development of the activities you will use to capture those opportunities.
To help businesses, we have created the “Intelligence Capital framework” (authored by Andrew Curry and Julie Kollman). It has three components:
- Structural Intelligence: the data and insight (the knowledge asset) used to surface revenue opportunities. This helps you understand your current markets and scan for new revenue streams.
- Activation Intelligence: the data and insight used to develop and validate activities to capture those revenue opportunities (e.g. communications development and testing, NPD, retail or customer strategies). This knowledge asset feeds the ability to respond to the marketplace faster and more effectively.
- Human Intelligence: the capability to turn that knowledge asset into action. As data increases in both volume and complexity, the skills and capabilities needed in the business change. Today’s organisation needs expertise in customer research, data science, analytics, psychology/human behavior and technology, as well as commercial acumen, stakeholder engagement and influencing skills.
These three components of Intelligence Capital are all essential, and together create financial value in:
- Unlocking new revenue streams. Structural Intelligence identifies the new opportunities while Activation Intelligence ensures the business captures them effectively.
- Strengthening brand value. Brands with strong equity are less susceptible to competition and can charge higher prices, creating more stable and profitable revenue streams.
- Increasing speed to market. It is well proven that those who are first to market accrue and hold more share – at least until the market is disrupted. Speed to market also decreases development costs and improves the business’ ability to accurately forecast outcomes – resulting in less risk.
- Improving ROI. This is the most easily accessed form of value generation and can be a critical first step in changing the conversation around the investment in intelligence, as the line between the intelligence and the financial benefit is clear. Intelligence is an investment, not a cost. The level of investment in data, research and analytics should be weighed against the amount of value it will create.
What defines an intelligence-fuelled, responsive business?
- Intelligence is embedded in decision making processes – from strategy to activation to course correction. Information must be consistently and readily available to the business, not held within a single group.
- The investment in data and insight is consistently linked to the value created. Requests for investment are presented in light of the value of the decision the intelligence will support. Equally importantly, the business reviews the investments it has made to document the impact that the intelligence provided.
- Investment in the knowledge assets is aligned to business needs. A business in a slow growth category will need to invest more heavily in Structural Intelligence, while one trying to capture growth may invest more in Activation Intelligence.
- People. People with the right skills, business acumen and influencing skills to drive change. The best data in the world can’t make an impact by sitting in a database – it must be acted upon to create value.
The path to growth is to become an intelligence-fuelled, responsive organisation. An organisation that learns faster than the marketplace changes and faster than its competitors. An organisation that takes action quickly and with more impact.
Responsiveness is the vehicle for growth for businesses today. And Intelligence Capital is the fuel.