April 30, 2014
The wonderful cartoon Dilbert recently (April 27, 2014) had a panel where the pointy headed boss tells Wally to develop a new business strategy which “with any luck” will be intercepted and sold to competitors.
Wally then goes to Dilbert and asks for a “copy of our [own] business strategy”, on the basis that it will “save [him] a step”, that is actually generating a fake policy.
The lesson? Efforts to generate disinformation almost always backfire on the one seeking to do it. Whether it is “blowback”, where your own employees, who believe the disinformation are damaged, or, in the case of Dilbert’s boss, where the firm itself is going to be damaged, disinformation is not only unethical, but it is also bad business. Avoid it!
 Click here to see it: http://dilbert.com/strips/comic/2014-04-27/.
April 23, 2014
A recent article in Entrepreneur suggested that business owners “fraternize” with their competition. One of the key suggestions was “[w]hen speaking about your business with a competitor, [you] should give up 2% more information than you are naturally inclined to give up.” What?
Elicitation of competitors is a valid, even powerful, research tool in competitive intelligence. However, such work should be done very carefully and completely honestly.
First, realize that no one is that interested in what you are doing – unless it is to their benefit to collect your data. Never play games. For example, never use a contact with a competitor as an occasion to engage in disinformation. If you engage in disinformation, it is unethical, possibly illegal, and, in addition, it can mess up your own communications with your personnel, your customers and others.
Second, it is illegal and unethical to seek to appropriate trade secrets. No exceptions here.
Third, if you are dealing with competitors that are publicly traded, there is another obligation you have to respect: certain kinds of “commercial secrets” are protected under the concepts of “insider trading” under the federal securities laws. The scope of this obligation is well beyond a single blog; but as an outsider, you have a duty not to misappropriate such protected information. However, the boundaries of your obligations are not nearly as clear as one would like.
Two insider trading examples noted in a recent article in The Economist illustrate how this concept may impact competitive intelligence:
“[One] jury determined that there was nothing wrong with using [such] valuable information overheard when a friend was speaking on the telephone…. [Another] jury found for workers at an Illinois railyard who had bought shares in their company after seeing unfamiliar people in suits looking around. They concluded that a takeover was imminent.”
In other words, if you can develop competitively important data legally and ethically, feel free to and use it. However, do not try to engage in elicitation without proper training and without a clear understanding of the legal and ethical limits.
 Ross McCammon, “Behind frenemy lines”, Entrepreneur, May 2014, 28-29.
 For more on this, see the interesting article, Stephen J. Crimmins, “Insider trading: where is the line?”, Columbia Business Law Review, vol. 23:2, 330 – 68. For example, he notes that “[i]t has long been recognized that no duty [to avoid trading a stock] arises when material nonpublic information is simply overheard, in an elevator, a taxi, or elsewhere. But…the SEC has charged [in some complaints] that a duty may arise where the insider (who inadvertently discusses confidential information) and the listener happen to be friends.”” P. 338-39.
 “Knowing too much”, The Economist, April 12, 2014, p.71-72.
April 14, 2014
I recently began rereading Sherlock Holmes, actually Arthur Conan Doyle’s A Treasury of Sherlock Holmes. The difference is not only that this is shorter than the complete works, which I have read several times, but also that the selections in it were chosen by Doyle’s son.
Not far into “A Study in Scarlet”, I came across Holmes’ observation that
“They say that genius is an infinite capacity for taking pains….It’s a very bad definition, but it does apply to detective work.”
It also applies to competitive intelligence. No, I am not saying that everyone in competitive intelligence is a genius, or that you need to be a genius to do competitive intelligence. I am saying that you must have a good capacity for “taking pains”. By that, I mean for paying attention to detail, for going back one last time to check your research, your notes, or reach out for something you may have missed, overlooked, or misinterpreted.
This is not to say that you can obsess over your work, going back again and again to seek perfection. Always keep in mind that one difference between competitive intelligence and academic research, as Washington Platt said about governmental intelligence, is that “[t]ime is of the essence in intelligence, while it is usually a side issue in scholarly research.”(Page 24).
 Washington Platt, Strategic Intelligence Production: Basic Principles. Frederick A. Praeger, 1957.
April 11, 2014
Historically, one very useful competitive intelligence tool has been asking government units, federal, state and particularly local, for information from their records. This is done thanks to a variety of laws known as open records, freedom of information, etc., which required governments to provide information and documents following a written request. They all operate in the premise that the records of government are to be available to the citizens except for certain, limited exceptions.
In the past, this was particularly useful tool for CI, particularly when dealing with existing or planned manufacturing, production, or distribution facilities. Then came 9/11. Since then, the utility of making these requests has declined rapidly.
The media has been filled with reports over the years about the “transparency” of the US government, a nice way of saying that it is no longer transparent. Requests take longer to be filled, they are less likely to be filled completely, etc. This is not new and is not restricted to this administration, nor to the response to 9/11. At the federal and state and local levels, the previously few and limited exceptions have grown to the point where in some cases, it seems the exceptions are bigger than the mandate.
For example, some open records laws now not only prevent the release of information important to national security, but also protect third party trade secrets. Now that is understandable as the key to trade secrets is a requirement that the claimant of the trade secrets diligently protect them. Now other categories such as personal information as protected. But that exception has been interpreted in some states to include the direct dial phone numbers of employees of businesses, limiting the release of official documents which include such numbers. Some have added an exception barring the release of business confidential information, a particularly vague, and for those of us in CI, a rather troubling exception.
Now, logically, that should mean that the company or institution seeking to limit the release of information filed with the government must make a prior claim that certain specific data, information, floor plans, photographs, or whatever should be protected from disclosure because they fall in the category of [fill in the blank].
However, many jurisdictions have interpreted this to mean they are now to contact filers to ask the filers if they want this material released. You can just imagine the difficulty there.
Let me give you one additional twist. Certain kinds of documents, particularly plans associated with construction, renovation, or expansion, are very large. Local governments that deal with these plans require them to be filed. But, frankly, they do not want to store them because they are just too big and bulky. So what they do is return them to the companies that file, leaving the companies, on application obliged to produce them. If a freedom of information request about them is filed, what this actually does is leave in the hands of the company, the filer, the decision whether or not to release them. You can imagine what that decision is.
There are no indications that these laws will be restored by removing or at least limiting these expanding exceptions. In fact, governments have shown little inclination to do so. Look at an analogous area: open meetings laws. Consider articles in your local paper, wherever that is, about the failure of some unit of government that failed to comply with an open meetings requirement, that is, to allow citizens and reporters to attend certain kinds of meetings where decisions are made, which by law must be held open, but which the governmental unit sincerely wishes to keep closed. Haven’t your seen these? Have you seen any evidence of this changing?
What we have in competitive intelligence, and unfortunately elsewhere, is that these “transparency” laws no longer support transparency of government, but rather force our access to the workings of the government “through a glass, darkly”.
April 4, 2014
When you’re looking to see what’s going on with the competition, sometimes you have to look beyond the competition. But where?
One place you should always consider, even if it’s done infrequently, is at key suppliers to your competitors, as well as your own key suppliers. It is a well-established competitive strategy principle for firms to consider expanding downstream or upstream. That means a next generation of competitors may be coming from just inside your industry rather from outside of it.
Let me give you one real example. A company was faced with a problem. A very large company, operating in an adjacent industry, was reported to have just acquired a small manufacturing plant from a competitor. The company was, needless to say, distressed – this meant that a small competitor might be suddenly transformed into a new, powerful competitor –without notice!
But there was notice – this might’ve been anticipated. Going back several years, research would have disclosed that a key supplier to the plant that was sold had been purchased. Who purchased it? The very same large company that later purchased the plant. And that big firm indicated, at the time of the relatively low profile purchase, that it intended to expand its new business.
So in terms of doing your competitive intelligence, remember to look around. But also raise your head and look beyond your competitors. Look over that boundary, at your customers, your competitors’ customers, your suppliers and your competitors’ suppliers, for that is often where the next generation of your competitors will come from.