Get the inside scoop on competitors with just the click of your mouse.
Though they may not realize it, all business owners and managers participate in some form of "competitive intelligence." Their actions may not be intentional, but when they ask inquisitive questions and listen intently to competitors' employees and customers, it is known as gathering competitive intelligence. While this business strategy has many definitions, they usually involve analyzing information that brings insight to business decision-making and understanding the competitive environment by gathering information from internal resources, secondary research and interviews.
According to the Society of Competitive Intelligence Professionals, competitive intelligence enables business owners and managers of companies of all sizes to make informed decisions about everything from marketing, R&D, and investing tactics to long-term business strategies. Effective competitive intelligence is a continuous process involving the legal and ethical collection of information, analysis that doesn't avoid unwelcome conclusions, and controlled dissemination of actionable intelligence to decision makers. Because of this, competitive intelligence practitioners rely heavily on technology. The Internet, for example, lets businesspeople read newspapers in their competitors' communities and peruse help-wanted ads and patent databases to catch a glimpse of other companies' strategies and technology. And many companies disclose reams of product and strategy information on their own Web sites.
Because all of this valuable information is displayed on a mainstream medium like the Internet, successful competitive intelligence no longer means industrial espionage and spying. Today, the Internet has put vast amounts of information at everyone's fingertips, while also dramatically accelerating the speed at which that useful information can be tracked. Just ask Brad Woods of Fuse Technologies, Inc. in Madison, Wis. As president of a custom software-engineering firm that serves the healthcare field, Woods says his company uses competitive intelligence on the Internet on a daily basis. In business for a year and a half, the company employs nine and analyzes competitive pressures by examining competitor activities (hiring of employees, new product announcements, press releases, and so on) and also finds intelligence from competitors' clientele via e-mail and newsgroups.
"I've used Dejanews to look at what our competitors' employees are talking about on the Internet," says Woods. "In our high-tech, highly competitive industry, we have to stay one step ahead of 99 percent of our competitors. Typically we're using solutions that have just been made available, so we like to know exactly where our competitors are at, what techniques they're using and what they're pitching as the latest and greatest." With the bulk of their business coming from referrals, Woods says fine-tuning marketing strategies is not as important to him as is simply "keeping an eye on his competition."
Interestingly enough, Fuse Technologies isn't free from the watchful eye of its own adversaries. "We have a tremendous amount of traffic [on our site] from our competitors," says Woods, explaining that every time someone visits a Web site their identification address is logged by the Web server. "There are even settings in Internet Explorer 4.0 that will go out and check for any changes to a site, and our competitors use them. From the server log, I can tell if someone's been to our site day after day, and it definitely raises suspicions."
The term "competitive intelligence" has a broad scope and can include information related to nearly any product or activity. It can be driven by something as simple as the need for background information on a newly appointed corporate executive, or something as vital as the news that a competitor is making investments on R&D. It's a relatively new tool available to marketers and senior management; only about half of large American corporations have a full-blown internal competitive intelligence function, most of which are only about five years old.
David Vine of Princeton, N.J.-based David Vine and Associates is a management consultant and SCIP member who specializes in computerized business intelligence for strategic planning. Vine has been online since 1982 and has lectured and published on competitive intelligence since the mid-1980s. "Competitive intelligence is a subset of business intelligence," he says. "Both concepts are important for small business owners and managers because in order to compete with larger businesses, you have to be smarter. It's a rare company that has a complete lock on a patent, particular market or specific niche. If they do, they'd better watch out because someone else may come along and snatch it away from them."
Arik Johnson, managing director for Chetek, Wis.-based Aurora WDC, a leading global professional services firm, says the ultimate result of effective competitive intelligence is the successful transfer of market share away from competitors and right through the doors of your own company. "I don't think there's anyone in business today who doesn't use some form of competitive intelligence, although most small businesses are involved with 'informal' methods," says Johnson, citing the example of a business owner who peruses a competitor's Web site, sales literature and products for information.
According to the SCIP, an organization that grew from a few dozen members in 1986 to more than 6,000 today, the pace of technological development and the growth of global trade mean that today's business environment changes more quickly than ever before. Executives can no longer afford to rely on instinct or intuition when making strategic business decisions. In many industries, the consequence of making one wrong decision may be to see the company go out of business. Executives at many global companies, like Xerox, IBM and Motorola, have already realized the importance of competitive intelligence and have developed their own operations. But small businesses, like large corporations, must compete in the marketplace, and it's just as important for decision-makers in small businesses to know what lies ahead as for CEOs at Fortune 500 companies.
In 1997, The Futures Group's third annual business intelligence survey revealed the following information about the current state of business intelligence:
Only three-fifths of the respondents had business intelligence systems, but all of them gather intelligence in a wide variety of areas, according to The Futures Group. The methods they use vary, and some are valued much more than others. When asked what were the two most valuable sources of information, 37 percent responded "suppliers/customers" and 35 percent said the "publications they read." Interestingly, respondents without an organized business intelligence system rely most heavily (45 percent) on publications they read. Publications are also the top choice for companies with revenues below $1 billion (49 percent).
The Internet's Role
"The Internet has made the competitive intelligence delivery mechanism more fluid and flexible," says Johnson, whose company has worked with many technology-intensive startups. "You can use a least common denominator point of access - a Web browser and e-mail - as a means of collecting that information and delivering it to the decision maker." Johnson says that it has also provided firms such as his a means of "getting the word out" to more people, and has created an environment amongst the business competitors themselves.
"There's much more activity, which by its own nature, creates opportunities for competitors to glean information," he warns. "Many companies tend to put a little too much on their Web sites or allow their employees to speak too freely, which opens an opportunity to collect intelligence."
Johnson adds that no casual investment of resources will produce the value-added benefits that competitive intelligence requires. He advises business owners and managers to answer the following seven questions as they prepare to invest time, money and manpower in the collection and processing of intelligence:
According to Vine, the Internet can help executives predict, plan for, and deal with change by giving them current specialized information. Often, he says, they can use the Internet to interact with opinion leaders and other experts. For example, it is possible to correspond with staffers in many government departments via the Fedworld gateway, a link to dozens of computer bulletin board systems (BBS) run by the U.S. government. The Federal Highway Administration operates one such BBS on which many public servants and industry personnel exchange news and views. "For the CEO of a small- or medium-size trucking firm, for example, one critical piece of information or insight into future trends gleaned from this site could be invaluable in day-to-day or long-range decision making," Vine adds.
What You Won't Find on the Net
Experts warn not to put all your eggs in one basket when it comes to competitive intelligence. As with any strategic business move, the most successful ones are based on a variety of sources and research: Though you may think the Internet is providing you with enough information to help you gain your fair share of the market, there's more information out there within your grasp. "The bulk of information we collect includes items that people voluntarily publish," says Fuse Technologies' Woods. "Some of the more interesting information on small businesses - like growth trends and financial information - reveals little about exactly how a company is doing.
Vine, who led a Business Intelligence Roundtable discussion in Washington, D.C., recently, recalls that the first question to come up at the meeting, which was attended by 40 industry experts, dealt with how to get information on private companies. "It's difficult because there's no requirement for private companies to report or make public their financials or other information," says Vine.
Adds Johnson: "On the Internet, you're not always dealing with primary sources, which are really the bread and butter of getting good competitive intelligence. When using the Internet, the stuff you won't find is often the stuff you need. The nature of the Internet is that it's a publicity medium more than anything else, but the most value comes in finding the things that companies shouldn't be saying." The Internet, he says, won't give you who your competitor's number-one customer is, and exactly what they don't like about the competitor's product so you can steal the customer. "That kind of information can only be found in primary research, which is by far the most valuable," Johnson adds. "This includes the times when you can actually get your competitor's top R&D person on the phone to talk to you."
The Competitive Intelligence Pros
According to the SCIP, outside agencies that perform competitive intelligence for businesses of all sizes run the gamut from public relations firms to consultants to companies specifically devoted to competitor analysis and industrial research. Individuals working in the field, which has only recently emerged as a distinctive career choice, range from public, legal or corporate librarians and information center analysts to management personnel and strategic planners. Regardless of who is doing the collecting and disseminating, all agree that the "information explosion" has led to an increased interest in competitive intelligence; at the same time, the '90s is the first decade to present so many dangers and opportunities to business owners. This selection, collection, interpretation and distribution of publicly held information has strategic importance and can prove extremely useful for small business owners like Fuse Technologies' Woods, who says: "All small businesses should use the Internet for competitive intelligence, simply because it's there. There's no reason not to use the information that's right there at your fingertips."
Starting Your Competitive Intelligence Search on the Net
Not sure where to start your own competitive intelligence search on the Internet? Try these business-related sites:
Edgar Database- A comprehensive database of corporate information on companies required to file with the SEC.
PR Newswire- Daily press releases, headlines and features that focus on the business world.
AJR NewsLink- A site that connects you to over 3,600 newspapers and magazines worldwide.
CorpTech- A site that provides information on 45,000 high-tech companies and more than 170,000 executives.
Deja News- A search engine that tracks online discussion groups.
CareerPath.com and The Monster Board - Two sources for help wanted ads that offer clues about where companies are heading in their pursuit of markets and technologies.
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