Gathering Competitive Intelligence
Hilary McLellan
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Information is endlessly available; where shall wisdom be found? Howard Bloom Intelligence analysts are swamped with data. Having been an intelligence analyst, I can tell you the information volume is just mind-boggling. There were studies that found that analysts can easily spend 80 percent of their time just fiddling around with monitoring or performing activities such as gathering and sorting data that don't involve interpretation and analysis. Mickey Byrne, Lucent Technologies The creative thinker is flexible and adaptable and prepared to rearrange his thinking. A. J. Cropley The visible world only becomes the real world by the operation of thought. Jean Metzinger The primary tools of the trade are exactly the same as intelligence in government service, We use human beings to validate and augment the printed competitive information. Jim Thomas, director of strategic intelligence at US West Media Group |
Introduction
The gathering of competitive intelligence consists of two types of activities: (1) surveillance and (2) research. Surveillance is a monitoring function which doesn't focus on a single objective, but rather observes multiple aspects of the environment in an effort to detect relevant changes. Another way of thinking about surveillance: it is human source information. U.S. intelligence agencies refer to this as "HUMINTEL (Human intelligence)." In contrast, research is deliberate, structured and investigative in nature. One can also think of research as secondary information. Competitive intelligence research is a process of filtering and analyzing huge volumes of information (Evans, n.d.).
Surveillance: Primary Information
The notion of surveillance sounds like spying, but it's not really. As Imperato (1998) explains, "Forget James Bond. And forget the occasional racy headlines about industrial espionage. We're talking about new approaches to good old-fashioned business dish: a heads-up on a new product, information on a rival's cost structure, a read on an ally's changing strategy." Instead one should think of surveillance as a receptiveness to information in the environment. Tracey Scott explains, "I distinguish between secondary information - stuff that you read on theWeb or in reports - and human-source information: stuff that real people tell you. Human-source information is more interesting and more accurate than secondary information. That's why I spend a lot of my time tracking people. I always look for "star talent" and think about what the comings and goings of those people mean. I also love conference proceedings. Most companies send their best people to speak at conferences. It's a great way to track talent and to track down people who might have useful information and insights." (quoted in Imperato, 1998)
Surveillance includes monitoring the internal environment as well as the external environment. Evans (n.d.) recommends sensitizing employees so that they will always be sensitive to the environment and will provide feedback on what they see, especially something they think is noteworthy. Evans (n.d.) advises, "Encourage your employees to provide feedback on the activities of competitors, customers, and intermediaries. Because of their proximity to customers, your sales personnel have the unique capacity to monitor and report competitive activity and shifts in customer needs. The key to tapping this internal resource lies in accomplishing the four tasks listed below.
Surveillance should be ongoing: it is characterized by a watchfulness, an openness to information and insights. As Louis Pasteur said, "Chance favors the prepared mind." The excerpt from Heath Row's Road Show presented below describes someone who is engaged in surveillance --- and who acts upon it.
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Road Show: Oct. 10, 1999 Heath Row for Fast Company Online. The drive from Austin to Houston didn't take long at all. Almost as soon as I left my friend Pableaux' cook out - he makes amazing gumbo and rice and beans - I was pulling up to the house of Dan Ridge, my host for my first night in Houston. Dan's an account manager for Analysts International a workforce services firm that specializes in IT staff placement. Analysts employs more than 5,000 IT contractors full time, offering them full benefits. Dan and I talked about the hiring process, how companies use the information they gather when interviewing, and what Houston can do to help revitalize its downtown. Here are some quick quotes:
Mileage 150 miles Reprinted from: http://www.fastcompany.com/roadshow/1999/101099.html. |
Surveillance is also characterized by communicating information beyond departmental boundaries within an organization. One important example of this is to encourage sales representatives and others who deal with customers to pay attention to feedback and report on what they hear to the CI department. In other words: pay attention to feedback.
Similar to this, professional employees attending conferences and trade shows may pick up valuable information. They need to develop the habit of reporting their experiences to the CI department in case they have information that is useful beyond their own professional interest.
Another strategy is to include people with multidisciplinary backgrounds in any assessment of information in order to obtain insights based on different points of view --- and to encourage thinking outside the box.
3M is one company that tries to be prepared to recognize and make use of intelligence based upon surveillance. Ever since the legendary case when it took 3M a long time to recognize the value of the Post-It Note as a potential product, this company has emphasized this kind of surveillance to help identify potential products and exemplary practices. This process is called "managed innovation." 3M is currently exploring an approach to managing innovation called the "Lead User System" which was developed at MIT. For an in-depth explanation of the "Lead User System," see Managed Innovation? by K. John Pournoor (2000). As discussed in the first lecture for this course, Xerox Palo Alto Research Center has brought in workplace anthropologists to help with the kind of surveillance that helps the company perceive and build upon effective practices and ideas.
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Art Fry Innovation requires a fresh way of looking at things, an understanding of people, and an entrepreneurial willingness to take risks and to work hard. An idea doesn't become an innovation until it is widely adopted and incorporated into people's daily lives. Most people resist change, so a key part of innovating is convincing other people that your idea is a good one -- by enlisting their help, and, in doing so, by helping them see the usefulness of the idea. When I first started telling people about my idea for Post-it Notes, no one understood what I was talking about. People had never heard of a "repositionable note," and they couldn't conceive of such a phenomenon. So, of course, no one believed that there was a market for it. Formal research showed a potential for only about $750,000 worth of business. I had to launch my own campaign to get the project off the ground. I gave away repositionable notes to secretaries and other key people in the company, and I kept track of usage and feedback. If someone felt that the notes were unnecessary, then I'd stop giving away samples to that person. Within a short time, everyone realized how much they had come to rely on those notes: They had become addicted to them. We went through the same process in marketing Post-it Notes. At first, advertising didn't work -- because people had no idea what the product was. I had to plead with management not to kill the idea. In the end, we marketed the notes by giving out samples. We realized that people had to try the product in order to appreciate it. Art Fry ( alfry@mmm.com ) came up with the idea for Post-it Notes during church-choir practice. It's a story that has become almost a legend in the annals of innovation: The scraps of paper that he used to mark his hymnal would constantly fall out, and he felt the need for a more cooperative bookmark. At the time, he was working in new-product development for the retail-tape division of 3M and had been trying to figure out what to do with a new, low-tack adhesive that a coworker, Spencer Silver, had invented. The result, Post-it Notes, celebrates its 20th birthday this month. Reprinted from "Here's an Idea!" Fast Company (http://www.fastcompany.com/online/33/one.html) |
Research: Secondary Information
Research --- searching for secondary information --- can take many forms. As we started to see last week, the World Wide Web provides a wealth of information (together with the risk of information!). Kassel (1999)
Web links for some valuable web resources are presented below in the Internet Resources.
Leonard Fuld points out, "One of the great things about the Web is that it's a window on the world. But often the best sources of information on a competitor are the most local - the community newspaper in the town where a company is headquartered or has a big plant. If [IBM CEO] Lou Gerstner moves his elbow, the papers in Westchester County report on it. The Web can get you to these local sources; even the smallest papers have Web sites these days. But you have to work to find them. NewsLink http://www.newslink.org connects you to more than 3,600 newspapers and magazines from around the world - even college newspapers - and it's searchable by state. NewsWorks http://www.newsworks.com searches through and links to all the newspapers in nine of the country's biggest publishing chains."
Fuld also recommends company
home pages: "It's so obvious that I'm reluctant to say it:
If you want to find out about your competitors, spend time with
their home pages. Home pages are such an obvious resource that
people often don't take them seriously. I've been spending time
with the
home page for Unilever, the Anglo-Dutch consumer-products company
http://www.unilever.com.
It's a great place to gather intelligence on that company. It
includes all kinds of data about R&D operations: where they
are, what they specialize in. You can take that information and
go to the IBM Patent Server http://www.patents.ibm.com,
which archives 2 million patent citations. You'll make some interesting
connections and see how Unilever is using its scientific resources.
That's just one example."
And Fuld emphasizes the "people factor." In addition to surveillance, "You can't reduce competitive intelligence to a spreadsheet. One exercise we like to do is to profile the top managers in a company or business unit. What's their background? Their style? Are they marketers? Are they cost-cutters? The more articles you collect, the more bios you download, the better you get at creating these profiles. All this material is on the Web."
Help-wanted ads are a source of often-overlooked information, according to Fuld: "They offer great clues about where a company is heading in its pursuit of markets and technologies. CareerPath.com http://www.careerpath.com and the Monster Board http://www.monsterboard.com are two sites that our analysts use all the time. Companies are between a rock and a hard place here. Most of them desperately need talented people, so they have to advertise their openings aggressively. But the more jobs they post, the more they expose themselves to people like us, who know how to analyze the postings. If you examine the kinds of backgrounds that a company looks for in its systems people, you can get a good sense of its technical infrastructure."
These are just a few examples of the resources that are available for conducting CI research. Information is available from different government agencies, for example the U. S. Securities and Exchange Commission. And companies publish annual reports as well as a wealth of other information. Market research is available (or it can be commissioned). Lithwick (1999) identifies these sources of information:
Types of Information
Finegan (1998) highlights the growing complexity of information that must be captured through intelligence-gathering. This includes texts, numbers, video, radio, news reports and analyses, satellite photography and "open source" material --- publications, studies, wire feeds and documents pulled from the Internet. The tragedy of the Russian submarine Kurst illustrated the gathering of intelligence via sonar and even via earthquake monitoring sensors. Weather reports and forecasting may be an important source of information to throw into the mix. Professional conferences, trade shows, and other gatherings of professionals and interest groups are a focal point for competitive intelligence gatherers.
Increasingly, law enforcement agencies and other entities concerned with security are watching and actually participating in online communities, chatrooms, and other electronic arenas in order to track patterns, gossip, and individuals. There are companies that track hacker gethering places online in order to create profiles of potential troublemakers.
Finegan points out that the Central Intelligence Agency is a good reference point for seeing the future --- and the growing complexity --- of competitive intelligence. As Finegan reports, John Dahms, the Chief Information Officer at the CIA, "predicts private sector companies increasingly will have to contend with the same tough processing issues that the CIA has dealt with for years, and the smart information executive needs to get the techniques down now." The private sector is dealing with intelligence that is very structured and that can be accessed and manipulated in very structured ways. By contrast, "Intelligence processing of unstructured data is messier. The U.S. intelligence community deals daily with information that not only comes from a variety of media--texts, video, radio, journalism--but also arrives in a Babel of languages. At the CIA, information comes from a variety of sources, including reports filed by agents in the field, satellite photography and reams of "open source" material--publications, studies, wire feeds and documents pulled from the Internet. Somehow, all that information has to be converted to knowledge by the agency's many analysts, then sent up the chain to the CIA's ultimate customers--the president, the Cabinet, law enforcement agencies and war fighters at the Pentagon."
The CIA has found that there are technological tools that can help with analyzing all of this data, but nothing that can fully replace human analysis. According to Susan M. Gordon, director of the CIA's Office of Advanced Analytic Tools, "Technology is not yet good enough to make sense of all this data coming in. We're still at the point where a person has to think of the right construction of a query, or a way to array the data, to yield results." (quoted in Finegan,1998)
Information Distribution
Information distribution is an important factor to consider in competitive intelligence. In addition to being aware of different sources of information, it's important to understand information distribution patterns. Increasingly, distribution takes place electronically. This speeds up the process of information distribution considerably. It may also enhance information security by reducing the number of paper copies that might go astray. Even a fax or a voicemail message can be sent as an email attachment with services such as Efax and Jfax.
Sources of Intelligence
According to Burwell (2000), important sources of intelligence include the following:
Of course, you must work within your budget. Some of this information is quite expensive. Other types of information are relatively inexpensive. And a great deal of information has migrated from print to the Internet. We have already started to examine some of the information resources that are available on the Internet.
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Analyzing
Your Company It is not possible to understand a competitor unless you understand your own company first. Many of the people who join the intelligence function have experience in some functional area such as marketing or R&D, but they have little familiarity with other functional areas... Take a tour of your company. If it makes a product, walk through the process from start to finish. If it makes a product, walk through the process from start to finish. If it provides a service, folow the process from the initial input through to the delivery of the service. Here are some steps to take, and questions you should ask:
Next, try to answer the questions for your own company that you would like to ask about your competitors. Consider the following: If you have questions about the competitors' distribution practices, learn how your company distributes. Does it sell directly to the final customer, or does it use distributors or representatives? What kind of sales force does it have, and how are they compensated? If you have questions about competitor operations or costs, what are the major cost factors in your own company? How much downtime and scrap is there in the process? Do you see a lot of computerization? Who supplies that technology? How well does it work? Is there excess capacity? If the business is seasonal, how does your company staff up during the busy season? If you have questions about the competitors' strategy, what is your own strategy? What factors were considered in developing it? Do you think it's a good strategy for your firm? Based on what you observed when you toured your own company, hat resources does it have (or not have) that affect its ability to implement the strategy? You don't need to go through this exercise more than once, with an occasional update. Once you have copleted it, you should know many of the specific questions you need to answer in order to understand the competitors. You also should have identified some potential sources of information for getting the ansers. You'll also be able to envision what the competitor's operation looks like in broad form. (pp. 78-79) |
Definitions
resource gap analysis: Conducting an analysis to determine where there is a gap in the resources that are available.
triangulation: In navigation, surveying, and civil engineering, a technique for precise determination of distances and angles for location of a ship's or aircraft's position, and in such endeavours as road building, tunnel alignment, and other construction. It is based on the laws of plane trigonometry, that if one side and two angles of a triangle are known, the other two sides and angle can be readily calculated. In competitive intelligence, this refers to attempting to identify one piece of information by comparing two other sources of information and seeing where they overlap.
multimethod: Using multiple methods to obtain and/or analyze data.
multi-source approach: Obtaining data by multiple means in order to crosscheck and thus further validate the data.
hypothesized assumption: You approach a problem with assumptions and a hypothesis in mind at the outset.
open assumption: You approach a problem or research issue without pre-assumptions.
References
Baatz, E. B. The
Quest for Corporate Smarts. CIO
Clearbridge Publishing. (2000). Competitive
Intelligence Gathering Techniques from The Art of War.
Evans, M. (n.d.). Competitive Intelligence Research. (http://www.exinfm.com/comp-f.html)
Finegan, J. (1998). Licence
to know. CIO.
Imperato, G. (1998, April). Competitive Intelligence - Get Smart!
Fast Company.
Kassler, H. (2000). Information Resources for Intelligence. In:
Miller, J. P., etal. Millennium Intelligence. Medford,
NJ: Cyberage Books.
Kassel, A. (1999). The Internet for Competitive Intelligence.
http://www.freepint.co.uk/.
(Reprinted at the bottom of this page).
Lithwick, D. (1999). Competitive Intelligence Insures Suppliers
an Edge in Business Development. Imprints. (http://strategis.ic.gc.ca/SSG/mi04660e.html)
Lucy McCauley. (1999, May). Measure
what Matters. Fast Company.
Miller, J. P., etal. (2000). Millennium Intelligence. Medford,
NJ: Cyberage Books.
Cathy Olofson. (1999). Let
Outsiders in, Turn Your Insiders Out. Fast Company.
Pournoor, K. J. (2000, April). Managed
Innovation?. Visions Magazine.
Polly Schneider. (2000, May 4). Learning
to Love Lumps. CIO Magazine.
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The Internet for Competitive
Intelligence The Internet has made a major impact on competitive intelligence (CI) activities during the past two years. Briefly, competitive intelligence involves gathering data about direct and indirect competitors and industries in which a company operates. CI can also be characterized as the "purposeful and coordinated monitoring of your competitor(s), wherever and whoever they may be, within a specific marketplace... CI also has to do with determining what your business rivals WILL DO before they do it". (Arik R. Johnson, Aurora WDC) [http://aurorawdc.com/whatisci.htm] Competitive intelligence has been used primarily by major corporations as a way to identify and act on opportunities - as well as avoid those that could prove detrimental. At one time, it was too expensive and time consuming for small and even mid-sized businesses to collect, classify, organize, and distribute competitive information. With the advent of the Internet, however, more businesses are both aware of information and can now afford to access a wider range of sources than ever before. Moreover, many information professionals have become involved in providing business intelligence information on behalf of users or clients. According to CI expert Leonard Fuld [http://www.fuld.com] "The Internet has dramatically accelerated the speed with which anyone can track down useful material, or find other people who might have useful information. Before the Net, locating someone who used to work at a company - always a good source of information - was a huge chore. Today people post their resumes on the Web; they participate in discussion groups and say where they work. Recently, we were asked to determine the size, strength, and technical capabilities of a privately held company. It was hard to get detailed information. Then one of our analysts used Deja News, a search engine that tracks online discussion groups. The company we were researching had posted 14 job openings onto a Usenet newsgroup. That posting was like a road map to its development strategy. You couldn't find that sort of thing five years ago". (Competitive Intelligence - Get Smart! by Gina Imperato, Fast Company, April 1998) [http://www.fastcompany.com/online/14/intelligence.html] Other examples of the type of Web information useful for CI include:
Why use the Internet? Several other reasons for using the Internet to gather competitive information are described below with resources and tips for finding necessary data as quickly as possible. 1. Company Web sites describe products and services and contain information that can be used to evaluate corporate structure and market positioning strategies. Resources and Tips: 2. Electronic discussion groups may uncover controversies, conflicts, or rumours about competitors and these are starting points for further research that must then be explored and validated. Resources and Tips: 3. Company financial, corporate management, and marketing information are necessary parts of every puzzle for learning about competitors. Resources and Tips: Wright Company Profile: Reuter Manufacturing, Inc. (United States) Wright Company Profile: Reuters Group plc (United Kingdom) Wright Company Profile: Reuters Group plc- ADR (United States) Hoovers Profile: Reuter Manufacturing, Inc. (United States) Yahoo! Finance News and Information: Reuters Group plc- ADR (United States) FreeEdgar Filings: Reuters Group plc- ADR (United States) Hoovers Profile: Reuters Group plc- ADR (United States) PR Newswire: Reuters (United States) CAROL Corporate Reports: REUTERS HOLDINGS PLC (United Kingdom) SwissFirms Profile: REUTERS SA (Switzerland) Prospects Web Company Profile: Reuters (United Kingdom) Virtual Career Fair Company Profile: Reuters Information Services (Canada) Limited Information Industry Association Company Profile: Reuters America, Inc. Information Industry Association Company Profile: REUTERS Canada Ltd. Internet Sourcebook Profile (Internet Section): Reuters Holdings PLC (United States) Search results are limited to 200 entries with only substantive sites that "tell you something about the company". Brief sites with just company address, or stock quote are omitted. 4. A key use of the Internet is to track, monitor, and provide current alerting about competitors. Press releases and news stories contain a wealth of information about a competitor's services, products and markets. Resources and Tips:
Word of Caution As we have seen, new methods and new resources for competitive intelligence research are now available on the Internet and the sources discussed here are just the beginning of more to come. BUT a word to the wise: It goes without saying that a company controls the information it places on the Web. To round out CI research, it's necessary to use other sources that add depth and perspective. Although the Internet is a starting place, it is extremely important to continue using trusted vendors who provide much more in the way of analytical and historical information and peer reviewed professional and trade articles. Moreover, other research methods such as telephone research and knowing how to read between the lines are involved in the "art of competitive intelligence." Company Sleuth uncovers a lot of clues that may contain "pure gold" and provide genuine insight into a company's operations. Nevertheless, they also admit that some of what is found may be "fools gold" and lead to a dead-end. Further, it's the user's job to determine the validity of information and draw conclusions. There is no question that the Internet has become a significant tool and may be the only source to supply needed parts of a puzzle. Yet, it's also essential to proceed with caution since the quality and reliability of Internet information, for that matter - any information - must be questioned and confirmed for quality and reliability. You might like to check out the article in Free Pint No. 30 about information quality on the Internet at |