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FUNDAMENTALS OF COMPETITIVE INTELLIGENCE

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Competitive Intelligence evolved in the last four decades not only at the level of its objectives, but also in what respects its organization and implementation approaches as an informational process built inside a company and linked to, and giving contribution for, the decision making process. In this article we will present and explore the historical background and the most important features of the Competitive Intelligence field and practice.
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Paulo Soeiro de Carvalho l IF Insight & Foresight
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FUNDAMENTALS OF COMPETITIVE
INTELLIGENCE (CI)
1
Paulo Soeiro de Carvalho
June 2021
1. CI - Historical Remarks
The Anglo-Saxon terms of Environmental Scanning, Competitive Intelligence, Business
Intelligence, and the French terms of Veille Stratégique and Intelligence Stratégique,
although not perfectly interchangeable and presenting some differences (not only semantic),
are used to designate the informational processes used by organizations to make the
surveillance of their environment.
This concept evolved in the last four decades not only at the level of its objectives, but also in
what respects its organization and implementation approaches as an informational process built
inside a company and linked to, and giving contribution for, the decision making process
(Gibbons, Prescott, 1996; Prescott, 1999; Cohen, 2000: 49).
Aguilar defined in 1967 the concept of Environmental Scanning as "(…) the activity of acquiring
information (...) about events and relationships in a company's outside environment, the
knowledge of which would assist top management in its task of charting the company's future
course of action." (Aguilar, 1967: 1)
The definition presented by Aguilar and all his work is a fundamental landmark in this area, since
he made a broader approach when compared to the majority of the studies made by that time
(Young, 1961; Wall, 1974; Cleland, King, 1975; Montgomery, Weinberg, 1979), strongly
anchored in the marketing intelligence field (Prescott, 1999: 40), having Aguilar developed an
exploratory study that was capable of connecting the conceptual approach of surveillance and
scanning to an important empirical component (observation) based on interviews to managers
of North American companies from the chemical industry (Aguilar, 1967; Prescott, 1999; Cohen,
2000; 2006).
Aguilar (1967) introduced the scanning as a tool to help the top management team of a company
and simultaneously as an approach capable of stimulate and co-ordinate the external strategic
diagnosis of an organization. The “scanning” activity is presented by Aguilar as a formal activity
of research of informal data on the business environment. For Aguilar (1967), environmental
scanning was a device aiming to facilitate the acquisition of information about events, trends
and the interactions in the business environment of a company, offering to top management
the knowledge to help them to identify and understand strategic threats and opportunities.
(Mevel, 2004: 195)
Aguilar proposes two different moments or periods in the “scanning” activity (Mevel, 2004:
195):
1
This paper is based on a chapter of the author’s PhD thesis “Scenarios as a tool to give context and sense to Weak Signals in a process
of Competitive Intelligence”, Université Jean Moulin III, Lyon, November 2010.
Paulo Soeiro de Carvalho l IF Insight & Foresight
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the first period is considered crucial for the researcher and is based on the search and
acquisition of information about the business environment;
the second period relates to a more specific recognition and understanding of the strategic
threats and opportunities.
It was from the precursor work made in the middle of the 1960s by Aguilar and other pioneering
authors that the term “scanning” gained more relevance and visibility in Anglo-Saxon
publications (Aguilar, 1967; Collings, 1968; Ansoff, 1975; Fahey, Narayanan, 1981, Hambrick,
1979), being also important the contribution given by private companies as the Washingtons
Researchers, Fuld and Company, and Find/SVP, which concentrated their efforts in the
information cataloguing, training and information brokering (Prescott, 1999: 39).
According to Prescott (Gibbons, Prescott, 1996; Prescott, 1999) the contributions of these
authors and the Competitive Intelligence practice in companies mainly involved, until the end
of the 1970s, the collection of data about the competition.
This author argues that this activity of Competitive Intelligence made in leading-edge companies
was integrated in informal, ad-hoc and passive processes. He describes these activities as
follows:
“Competitive Intelligence was primarily a library function although market research with
an orientation towards customers was well established. There was little in the way of a
formal CI process or network established throughout the firm. CI was done on an ad hoc
basis involving limited (if any) analysis. Overall, there was a generally low level of top
management involvement and relatively little input into the decision making process.”
(Prescott, 1999: 39)
The work of Porter, published at the beginning of the 1980s (Porter, 1980; 1985), was an
important landmark and led to a broader diffusion of the scanning activities of the business
environment made by companies, and influenced strongly this field, which started to emphasize
the analysis of the industry structure and competitors.
Porter (1980) insisted in particularly on the conceptualization of the “scanning” concept and
practice, that is, the set of resources placed at the disposal of the management in terms of
formalization and organization of surveillance activities, which in his view should be focused on
decoding data about the competitors. (Mevel, 2004)
Porter opens the period of the “Industry Competitor Analysis” which sees the concept of
industrial analysis to be anchored definitively in the company (Prescott, 1999: 40), situation that
is strengthened by managers (Sammon et al., 1984), taking the company to be even more
interested in the advantages it can obtain from the transformation of data in information.
Porter was also important for the contributions he gave to transform a static scanning concept
in a dynamic and proactive concept of intelligence (Mevel, 2004). Porter argues that the
organization should try to control the basic information that circulates in its market.
The evolution and some overlapping of terms and concepts also reflected the need to
incorporate a distinct set of features in these activities as well as the increasing multiplicity of
approaches or perspectives followed by researchers, consultants and companies.
In the French speaking world this evolutionary process followed a similar path, which, starting
from the concepts and activities of surveillance (scanning), found in the concepts of Veille
Stratégique (Lesca, 1986; 1994; Baumard, 1991; Mevel, 2004) the closest term to the
Competitive Intelligence concept used by the Anglo-Saxons.
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2. CI - Terminology and basic concepts
The recent history of Competitive Intelligence, characterized by an intense and dynamic
evolutionary process (Gibbons, Prescott, 1996; Prescott, 1999; Cohen, 2006), was a factor that
contributed to the coexistence of multiple concepts and terms used to describe the activities
and processes of scanning and intelligence of the organizational environment (Cohen, 2006).
The approaches and concepts developed in the 1960s and 1970s focused mainly on activities of
monitoring and gathering of market data and information. These were approaches with a
predominantly informal nature, occasional (not systematic) and without an explicit link to the
top management and the decision making process of the company (Prescott, 1999).
In 1967, Aguilar defines the concept of Environmental Scanning, articulating the acquisition of
information on the external environment of the company with the possibility of that information
leading to the creation of knowledge, capable of helping the top management in its task of
“charting the company's future course of action. (Aguilar, 1967) As mentioned above, this
definition was ambitious and very complete for the time, particularly in the way Aguilar bounded
the activities of scanning with the process of decision making.
Three decades later, Choo defends the concept and the definition used by Aguilar, arguing that
the organizations scan their environment with the purpose to understand the external forces of
change that allow them to develop effective responses, capable to contribute effectively to
defend or improve their future strategic positions (Choo, Auster, 1993; Choo, 1998; Choo, 1999).
According to Choo (Choo, Auster, 1993; Choo, 1998), Environmental Scanning is also a primary
mode of organizational learning”, since the capacity that an organization has to adapt itself to
its external environment depends on its ability of “knowing” and interpreting” the external
changes that are taking place.
Choo considers that the Environmental Scanning presents a broader nature when compared to
the approaches or processes mentioned above in the sense that Environmental Scanning
analyses information about all sectors of the external environment of the company (including
not only the competitors, the suppliers and customers, but also the technological, economic,
politics and regulatory domains) that are capable of helping the management to planning for
the future of the organization. (Choo, 1999)
In 1980, Michael Porter presents the concept of “Competitor Intelligence”, which is focused
basically on strategic movements (actions, behaviours and options) of competitors (current and
potential) in one given industry. According to Porter, a “Competitor Intelligence System” is an
“(...) organized mechanism for collecting, compiling, cataloging, digesting, analyzing and
communicating competitor data.” (Porter, 1980)
The concept of Competitive Intelligence gained more visibility in the last two decades, being
possible to identify different definitions elaborated by different authors and institutions in this
area. Sutton (1988) defines Competitive Intelligence in a way that is very similar to the definition
of “Competitor Intelligence” of Porter, but arguing that the definition should include not only
the analysis of competitors (understood here as the strategic actors of an industry), but also the
competitive conditions of a certain industry or region (Sutton, 1998).
Prescott and Gibbons define Competitive Intelligence as “the process of acquiring, analyzing,
interpreting and diffusion of information with strategic value about the industry and
competitors (...) that it is transmitted to decision makers at a timely moment.” (Gibbons,
Prescott, 1996) This definition emphasizes three relevant questions: the informational feature
of the process; the fact that the information has to have strategic value; and the need that the
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process and the strategic information should be transmitted and communicated to the decision
makers in an appropriate timing.
The same concept is used by the Society of Competitive Intelligence Professionals (SCIP), which,
having been established in 1986, have defined Competitive Intelligence in the end of the 1980s
as “(…) the process of monitoring the competitive environment which (…) enables senior
managers in companies of all sizes to make informed decisions about everything from
marketing, R&D, and investing tactics to long-term business strategies."
2
(SCIP, 1998)
The concept of “Business Intelligence” is close to the “Competitive Intelligenceterm used by
some authors, being defined as "the activity of monitoring the environment external to the firm
for information that is relevant for the decision-making process in the company." (Gilad, Gilad
1988). According to this definition this concept has a broader amplitude than the Competitive
Intelligence approach in the sense that it includes domains as the analysis of potential mergers
and acquisitions, and the risk analysis for specific countries (Gilad, Gilad, 1988).
3
In the French speaking world the concept that emerged from the early works based in the
approach of surveillance stratégique (Lesca, 1986; Baumard, 1991) was the term of Veille
Stratégique(Lesca, 1986, 1994; Mevel, 2004).
Humbert Lesca defined Veille Stratégiqueas being le processus informationnel par lequel
l’entreprise se met à l’écoute anticipative de son environnement dans le but créatif d’ouvrir des
fenêtres d’opportunités et de réduire son incertitude et ses risques.” (Lesca, 1994).
In the same line of thought and evolving from the initial definition presented by Lesca (1994),
Lesca and Castagnos presented in 2000 the following definition of “Veille Stratégique«(…) la
Veille Stratégique est le processus volontariste par lequel l’entreprise (ou une partie de celle-ci)
traque et assimile des informations à caractère anticipatif concernant les changements de son
environnement socio-économique, dans le but de se créer des opportunités d’affaires et d’agir
vite et au bon moment.(Lesca, Castagnos, 2000)
In France, the concept of Intelligence Économique, although having a broader meaning has
some contact points and even some overlap with the concept of Veille Stratégique”.
Some authors argue that Veille Stratégique is a term more associated to the surveillance
activities and processes in the sense that those activities try to watch in a systematic but passive
way all the multiplicity and variety of changes in the external environment of an organization
(Baumard, 1991)
Rouach (1999) argues that “Veille doesn’t have the vocation to restructure the environmental
elements, privileging the function to inform the company about the variations that occurs in its
external environment. On the opposite, Intelligence Économique informs and tries to
reorganize the environment “au profit de l'organization. (Rouach, 1999)
Mevel (2004) argues that Veille Stratégique must be assumed as an obligatory passage, an
indispensable primary activity and a critical component, for the activities of Intelligence
Économique. This author distinguishes these two concepts as follows: La différence essentielle
entre Veille Stratégique et intelligence économique demeure centrée sur l’aspect téléologique
des activités d’intelligence dont la finalité demeure à terme la transformation de
l’environnement de l’organisation.(Mevel, 2004)
2
In 2007 SCIP had in his site the following definition of Competitive Intelligence: “CI is a necessary, ethical business discipline for decision
making based on understanding the competitive environment.”
3
Pirttimäki e Hannula (2003, in Mirva Peltoniemi, Elisa Vuori) define Business Intelligence “as an organised and systematic process by
which organisations acquire, analyse and disseminate information significant for their business activities. However, the term can refer to
processes, techniques or tools to support the making of faster and better decisions.” (Pirttimäki, Hannula, 2003) According to this definition,
BI seems to cover all information gathering and processing activities in an organisation. Thus, CI is implicitly included in this definition of
BI.
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In this research work we choose not to include the concept of Intelligence Économique,
justifying such option with the same argument used by Nicolas Lesca (2002), who argues that
Intelligence Économique is a broader approach that includes a very ample set of questions
that are associated to information management and where we can include, among others,
information protection, the organization and the management of networks of companies, or
even the State intervention in economy and society. This definition and approach have a scope
that largely exceeds the framework of the Veille Stratégique”, which is the concept we are using
in this work (Lesca, 2002).
3. CI - An Informational Process
The recent history of this field, which evolved very rapidly throughout the last decades, and
where basic questions as terminology, definition and key features in its approach are not enough
stabilized, make it relevant to try to identify and analyse its distinctive attributes, using for this
purpose the contributions of different authors.
Competitive Intelligence (or Veille Stratégique) must be understood as an informational
system or process (Aguilar, 1967; Lesca, 1994). In fact, the majority of the authors define
Competitive Intelligence as a set of activities that are organized in a more or less sequential or
systemic way (Lesca, 1994; Lesca, Blanco, 2002; Mevel, 2004), which aim the acquisition and the
use of a specific type of information (Aguilar, 1967; Lesca, 1994; Gibbons, Prescott, 1996; Choo,
1998).
The stages that constitute this process can present variations according to different authors and
perspectives (Chapter 4 is dedicated to the comparative analysis of different conceptual models
of Competitive Intelligence).
In this context, Gibbons and Prescott (1996) distinguish the following stages “(...) acquisition,
analysis and interpretation of information (...)”, while Porter (1980) organizes his “Competitor
Intelligence system around the stages of collecting, compiling, cataloging, digesting, analyzing
and communicating competitor data.
Thiétart presents the surveillance process as a dynamic process which renewals itself in a
systematic way including all the data from the different sources that a company can use. (Mevel,
2004).
Thiétart (1991) identifies six stages in the process of surveillance of the enterprise
environment:
information collection;
information treatment;
information analysis;
communication of strategic information;
study of strategic information for decision makers;
identification of the “exclusively” strategic information.
According to Mevel (2004) the difference between the procedural model proposed by Porter
and the process described by Thiétart relates only to the activity of information analysis that,
for the French researcher, should be an activity that must be made before the communication
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of the information to the decision maker and not, as Porter defends, an endorsement of that
phase of communication (Mevel, 2004).
Nicolas Lesca (2002) identifies five critical phases in processes of Veille Stratégique, which,
according to the author, are common to several authors (Wilensky, 1967; Stubbart, 1982; Gilad,
Gilad, 1988; Thomas et al., 1993; Lesca, 1994; Choo, 1997):
le ciblage de la Veille Stratégique;
la traque;
la sélection des signes d’alerte précoce;
la stockage et diffusion dans l’organisation;
son exploration en vue de son éventuelle utilité pour l'action.
Nicolas Lesca (2002) argues that there are few authors who define and deepen the processes of
Veille Stratégique in its global sense. Lesca refers explicitly the works of Bright (1970), Gilad,
Gilad (1988), Jackobiak (1991), Lesca (1994) and Choo (1998) as being the most complete. Lesca
(2002) also highlights that these authors don’t use the same terminology in a systematic way.
Being the Competitive Intelligence an informational process, this must not be confused with
individual activities of information seeking. According to Correia and Wilson (1997) “information
seeking is an individual activity undertaken to identify and select information to satisfy a
previously detected information need, the satisfaction of which will enable the individual to
solve a problem or make a decision.” (Correia, Wilson, 1997)
The same authors argue that the activities of scanning and Competitive Intelligence not only
include the “search” of information, but also the more exploratory exposition of companies to
information without a specific purpose.
However, as Aguilar (1967) mentions, the relevance and importance of scanning depend in great
measure from the importance or strategic nature of the decisions that must be made.
4. CI - Information Properties
Being Competitive Intelligence an informational process, it’s important to understand in what
kind of information those activities are focused on and what type of information they try to
obtain and diffuse (communicate).
Competitive Intelligence processes must be capable to identify, analyse and diffuse information
about the organizational environment (Aguilar, 1967; Choo, Auster, 1993; Choo, 1998) being this
information based on the industry (Porter, 1980; Sutton, 1988; Gibbons, Prescott, 1996), on the
more or less generic competitive conditions (Sutton, 1988), or on the competitors (Porter uses
the term “competitor data(1980)). Lesca (1994) alerts for the fact that the environment of
companies must not be faced as an abstract concept, but rather as something that is constituted
of multiple concrete actors, which have specific and distinct objectives and different strategies.
This information about the company’s environment integrated in Competitive Intelligence
processes can (and must) be of different types, including events, trends, uncertainties, Weak
Signals or wildcards (Aguilar, 1967; Lesca, 1994; Gibbons, Prescott, 1996; Choo, 1998),
presenting also distinctive properties, including its strategic value (Gibbons, Prescott, 1998) and
its anticipative nature (Lesca, 1994; Lesca, Blanco, 2002; Lesca, Castagnos, 2000; Lesca, 2002),
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“(…) annonciatrice d'événements qui n'en sont qu'à leur début. En d'autres termes, elle
concerne le futur et non pas le passé.(Lesca, 1996).
Lesca (1996) distinguish two families of information to be integrated and analysed in processes
of « Veille Stratégique »: 1) information of potential (information de profil, Thiétard, 1991),
which is based on the potentialities, being forces or weaknesses, of the pertinent actors (acteurs
ciblés) and able to be found in the origin of changes. According to Lesca, these information is
relatively stable in time and accessible from formal sources; 2) Weak Signals, which allows the
anticipation of important changes (informations " amont"). This information is frequntly
informal and volatile.
An uncertainty reduction process
According to Aguilar (1967), one of the major reasons that leads an organization to monitor the
external environment is the reduction of uncertainty during the decision process.
Lesca (1994) argues that Competitive Intelligence is usually associated to specific missions or
mandates aiming to reduce uncertainty that charactherizes decision making.
According to Galbraith (1974), "If the organization is faced with greater uncertainty, due to
technological change or increased competition, the amount of information processing needs is
increased". So, a major consequence is the necessity to reduce that uncertainty by ensuring the
"fit" between information-processing needs and information-processing capabilities. One of the
approaches identified by Galbraith is to increase the information-processing capabilities until
they fit the amount of information-processing needs. It consists of creating processes and
mechanisms to acquire and exploit the information required by the considered task. (Mevel,
2004)
The Link to the Decision Making (and the Decision Making Process)
The strategic value and anticipative nature of the information to be integrated in Competitive
Intelligence processes only materialize effectively if, beyond its intrinsic properties, there is the
capability to link or transmit that information to the decision maker and to the strategic decision
process (Aguilar, 1967; Gilad, Gilad, 1988; Gibbons, Prescott, 1996).
Besides the effective link or transmission of this information to the decision maker and to the
strategic decision process of the organization, it’s also important the timing or the moment
when such information is made available or assimilated (Aguilar, 1967; Ansoff, 1984) as well as
the capability of that information to contribute for the acceleration of the decision making
(Lesca, Castagnos, 2000; Pirttimäki, Hannula, 2003). This question is highlighted in the statement
that “L’intelligence est partie prenante du processus de décision.(Mintzberg et al., 1976, in
Lesca, 2002)
According to Michael Porter (1980) a competitor intelligence system must be capable of
anticipating the strategic movements of each competitor (current and potential) and the
respective potential consequences for the company, based on the industry transformations and
in more general changes that can happen. This capability of anticipating the actors strategies
(including here the competitors and other stakeholders) through the anticipative listening to
the company environment (Porter, 1980; Lesca, 1994; Lesca, Castagnos, 2000) is considered a
critical element for companies to identify and open new opportunities (Lesca, 1994), answer on
time to strategic threats, opportunities and “surprises” (Aguilar, 1967; Ansoff, 1975; 1984; Choo,
1998, 1999; Lesca, 1994), and also to reduce the degree of uncertainty and risks in their
competitive landscape (Lesca, 1994; Lesca, Blanco, 2002).
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Individual Scanning versus Organizational Scanning
The research work based on scanning and Competitive Intelligence processes (Cohen, 2000,
2006) allows the identification of differences between individual and organizational (or
collective) scanning and intelligence activities.
Individual scanning happens mainly in activities of scanning made by managers, being focused
in particular on the following questions (Correia, Wilson, 1997):
identification of information sources used (Aguilar 1967; Keegan 1974; Smeltzer et al. 1988;
Culnan, 1983; Ghoshal, 1985; and Choo, 1993);
sectors of the enterprise environment to be scanned (Aguilar 1967; Kefalas & Schoderbeck,
1973; Hambrick, 1979; Ghoshal 1985; Lester & Walters, 1989; Maier, 1992; & Choo, 1993);
approaches and methods of scanning (Aguilar, 1967; Keegan, 1974; Fahey & King, 1977; &
Thomas, 1980);
the influence of the role and the tasks performed upon the scanning activity (Aguilar, 1967;
Kefalas & Schoderbeck, 1973; Keegan, 1974; Hambrick, 1979; & Choo 1993).
According to Correia and Wilson (1997) the research focused on organizational scanning has
centred the attention on the different degrees of formalization of the scanning and intelligence
activities, as well as on the respective evolution patterns. These authors highlight that
organizational scanning processes present some important gaps, referring specifically to the
following aspects:
the way information flows is organized inside the company;
the type of integration of this information with the information that already exists and which
is generated internally in the company;
the identification of internal conditions from the organizational level to the individual
nature - that can influence the access to, and the use of, information in companies.
To some authors, Competitive Intelligence is a process of intelligence (in the Latin etymologic
sense of the term) that it is collective in its nature (Lesca, 1994; Lesca, Castagnos, 2000; Lesca,
2002). “L’intelligence Collective Stratégique est le processus collectif volontariste par lequel des
individus unissent leurs efforts pour discerner et acquérir des informations anticipatives
(notamment des signaux faibles) et pour en tirer du sens utile pour la prise de décision de nature
non-répétitive et pour l’action rapide au bon moment.” (Lesca, Castagnos, 2000)
Nicolas Lesca (2002) presents a model of a process of exploration of anticipative information,
which includes and distinguishes a stage of sense-making (Construction du Sens), which is
understood as an individual cognitive process. After this, the same author identifies a second
phase based on a socio-cognitive process of sense-making (in the same line of thought of Weick,
1995) which is focused on what he calls “signes d’alerte précoce”.
A Generic Term with Multiple Perspectives
Beyond the questions regarding the existence of multiple terms and similar concepts, Lesca
(1996) argues that «Veille Stratégique» is a generic expression that includes several dimensions:
« Veille Technologique », « Veille Concurrentielle », « Veille Commerciale », etc.
Lesca (1996) argues that information characteristics are different according to those multiple
approaches. They are more formal and easier to access in the case of the technological scanning
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(Veille Technologique ), and more abstract and with more informal and diffuse sources in the
case of the competitive or commercial scanning. The problem highlighted in Lesca research
(1996) is the selection of strategic information for scanning with an anticipative nature.
The generic concept of “Veille Stratégique” has been recommended by other authors as Calori,
Atamer and Laurent (1988) that have been insisting on the possibility of organizations to
differentiate specific components of the Veille Stratégique”. Martinet and Ribault (1989)
support a similar concept of Veille Stratégiquecapable of identifying the relationship that links
the five forces of Porter’s Model to the different forms that “Veille” can assume.
Martinet and Ribault (1989) conclude that it is possible to extract (décalquer) different types of
Veille” from the model of the five forces of Porter (1980).
Figure 1: Multiple Types of Scanning (Veille)
Source: Verna, 1993
The Figure above presents the four types of scanning (Veille) associated to the five domains of
Porter’s Model according to Martinet et Ribault (1989) (figure in Verna, 1993).
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14
About the Author
Paulo Soeiro de Carvalho is a Professor, Researcher and expert in Strategic Foresight,
Innovation and Entrepreneurship, with more than 20 years of experience in these fields, .
Paulo has a PhD in Management Sciences from the Université Jean Moulin Lyon 3, focused on
Scenario Planning, Weak Signals and Competitive Intelligence.
Paulo is an Invited Associate Professor at ISEG School of Economics and Management,
University of Lisbon. He is the Scientific Coordinator and Professor of the Post-Graduation in
“Foresight, Strategy and Innovation”, the Director and Professor of the executive program
“Futures, Strategic Design and Innovation”, and from January 2020 the Executive Director of
the ISEG MBA.
In 2019 he founded the company "IF Insight & Foresight" a consulting studio that blends
Foresight, Strategy, and Innovation to create lasting value and meaningful experiences for
people and organizations.
paulo@ifforesight.com
https://www.linkedin.com/in/paulosoeirodecarvalho
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