What is Competitive Intelligence in B2B firms?

June 27, 2014

Continuing on the theme of my last blog about the use of competitive intelligence in business-to-business (B2) firms, I want to add additional observation. That deals with the subject of benchmarking, more specifically competitive benchmarking.

Benchmarking, as it grew during the 1990s, was conceived as a business-to-business aide where firms measured their processes against best in class and eventually against best practice firms in any industry. The goal was to improve operations.

Of course, the biggest problem lay in benchmarking competitors, since, with the exception of protocols such as safety training, competitors were unlikely to sit down and explain to you how they manufactured items, improve logistics, or set prices. (Very big grin)

During the growth of benchmarking, Carolyn Vella, I, and others advocated a new type of benchmarking, competitive (or competitor) benchmarking[1]. To us, competitive benchmarking consisted of using the traditional benchmarking tools, but also using CI to develop the data on the processes to be evaluated. In other words, research by an in-house competitive intelligence unit substituted for direct contact with competitors about processes and activities.

What I found in the last year or so is that this process has been turned almost on its head. I increasingly find B2B firms that are engaged in competitive benchmarking, but do not realize that the data collection and analysis processes that they use to conduct that benchmarking is actually a kind of CI. To put it bluntly, they have backed into CI, through the desire to benchmark competitors, but without realizing it.

     “Good heavens! For more than forty years I have been speaking prose without knowing it.” Moliere, Le Bourgeois Gentilhomme.

I find it extremely interesting. This means that many B2B firms erroneously believe they’re not doing any CI. But their employees, tasked with testing their manufacturing, or logistic, or other processes against the competitors, are actually engaged in some CI. Hopefully they will extend that skill to other areas, whether or not they properly label it as CI.

[1] See, e.g., John J. McGonagle, Jr. and Carolyn M. Vella, OUTSMARTING THE COMPETITION: Practical Approaches to Finding and Using Competitive Information, 1990 (Sourcebooks Inc.); John J. McGonagle, “Benchmarking and competitive intelligence”, Journal for Quality and Participation, September 1992; John McGonagle and Denise Fleming, “New Options In Benchmarking”, Journal for Quality and Participation, July/August 1993.


Who is really doing competitive intelligence?

June 19, 2014

I recently ran a training session on competitive intelligence for non-competitive intelligence professionals, that is, people primarily involved in marketing, product development and the like.

Of interest was the fact that one of the attendees commented that at an earlier meeting, he was told that most business-to-business (B2B) firms didn’t engage in competitive intelligence. After discussing it with my partner, Carolyn Vella, I think I can understand what I think is a clear misconception.

The vast majority of large business to consumer (B2C) firms, our major retailers or consumer-products companies, conduct competitive intelligence through freestanding teams, internal competitive intelligence units. In the B2B world, many of the firms are not large, so immediately, we have to question parallels with the B2C firms. In fact, I would be willing to guess (not bet, as I do not bet) that there is a higher percentage of nonpublic and family-owned firms in the B2B market space than in the B2C market space.

That is a significant issue with respect to CI. In fact, I think that internal CI teams are more common with B2C firms than with B2B firms. That is not the same as saying that B2B firms do less CI.

Why? Smaller, particularly privately held, firms do not have the internal and external “churn” of employees, and even executives, that is common in the large B2C for market space. That “churn” carries with it the infiltration of new ideas and techniques. Thus, we can logically expect that the B2B market space may be less likely to be far along in developing internal competitive intelligence capabilities, than are firms in the B2B space.

There is another factor, one dealing not with existence, but with visibility. By this I mean that it is easy to identify a consumer goods firm with competitive intelligence when there someone in the firm carries the title “competitive intelligence manager”. However, in smaller B2B firms, and family-owned firms, the individuals doing CI do not carry such titles. They do CI as a part of everything else that they do, whether it is product development, marketing, research and development, or whatever.

Thus, they are truly the locus of the do-it-yourself CI revolution, which I think is spreading throughout the business community. While B2B firms may not be advanced in terms of creating freestanding units, they do conduct CI and I believe it will be more deeply embedded, simply because CI will become one of the necessary tools that every manager, in almost every department, will have to have and master. In the long run, I think this bodes particularly well for the B2B sector, and for CI.

So the presence of CI in the B2C space is more evident. But, being better (or more advanced) than CI in the B2B space, in the words of Eddie Wilson of Eddie and the Cruisers, “Hey! I didn’t say better, I said different. You oughta remember that.”

Locally Sourced and Organic

June 10, 2014

Locally sourced and organic. From farm to table. Sustainable. These are the buzzwords for today’s foodies, identifying the best places to get great, fresh food.

But they also represent something quite different, sources of competitively sensitive information that are “not” technically on the Internet, but can be among the best places for certain types of raw data.

What do I mean?

I mean articles that appear in small, local newspapers where the text of the newspaper is not directly searchable through Google or Bing. To search the archives of these newspapers, you first have to determine that there is such a newspaper, and then go to the home pages. Once there you will find that you may be able to search some recent parts of the archives, but usually that access may not be available unless you are already a subscriber.

But their stories are locally sourced, and come from the source to your table. Their coverage of local businesses is often unmatched even in trade publications. (Note: some of the more detailed articles that you may read in trade publications often have their origin in such local newspapers.) That is because they are reporting on local events which are critical to their community, but which, to national publications, are not very interesting.

These articles, such as one that I just read, can be incredibly detailed. The one I’m thinking of, in a local weekly newspaper in the Midwest, actually was made up of three separate articles about the expansion of a local factory. One section included numerous pictures taken on a plant tour. A second section dealt with the revitalization of the plant, its customer base, its sales, and future expansion (read future local jobs). The third section was written by the managers of the plant (!) for the uninitiated: a description of the production processes of this particular plant. It was not general, but highly specific, including input details and production rates, current material volumes, etc. This one alone ran to over 12 column inches, and all three were over 36 column inches!

For competitors, this was truly “locally sourced” and could come direct to their “table”. And it certainly was sustainable, because this local newspaper will also carry advertisements for future hiring at this plant, giving its competitors, if they are looking here, additional insight not only into the costs of the plant, but also on its growth in customer base.
All in all, a delightful competitive intelligence feast.

Oh, I have not provided you with a citation to this article, since you cannot read it unless you are subscriber to this weekly newspaper. It is part of what some people have called the “hidden Internet”. I prefer to think of it as locally sourced, organic CI data.

la Familia

June 5, 2014

The names flow across our current headlines –

Lewis Katz, the new co-owner of the Philadelphia Inquirer newspaper, dies in a plane crash. Questions quickly arise as to the future of the deal. Will his son replace him on the Board? What will that mean for the sale?

Donald Sterling, engaged in a long fight, finally agrees to the sale of the LA Clippers. But the sale is actually through a family trust, of which his wife is sole trustee. His lawyer claims he has to sign off, but there are reports that his wife claims Sterling is not capable of making the decision to sell. What does that mean for the deal?

Go back in time and you can see how events seemingly affecting only one person can impact an entire organization as well. In competitive intelligence, with organizations and businesses that are dominated by one person, the fate of that person is intimately intertwined with the fate of the organization. But in competitive intelligence, it goes further than that. It goes to the family, in ways not always obvious

Let me give you two examples.

    The Supply Chain

The first dealt with a family-owned company. A client was concerned about many changes that this Competitor had instituted and about its improving competitive position. One question was, “Where did the Competitor get its inputs?” Initial research turned up no leads.

So, we went back to what we had already found. As a part of the assignment, we had developed a history of the Competitor. The Competitor was truly family-owned, several generations down from the sibling founders. A close look at the business today showed the presence of children, grand-children, and in-laws of the founding siblings throughout the firm.
What was interesting was that there were several members of the founding family involved with the business at the very beginning. However, after several years, one of the founding siblings left the business. That was an anomaly.

As we’ve said before, when you see an anomaly. Stop, look around, and think. In this case, the question became what happened to this sibling? We determined that he had created a company that processed the raw materials of the same kind that his former company now used. Digging into that company, it soon became clear that the people running the company today were members of the family of its founder, a sibling of the founders of the other company.

That meant we had found the likely supplier. Just as the running of the competitor was kept within “the family”, the supply chain was also run on the same basis.

    New Funding

In another case, we were profiling a rapidly growing, and possibly soon to become public, Competitor threatening the client. There were rumors that the founder would be selling a minority interest in the Competitor, which our client felt would provide the Competitor with substantial funding to come more directly at its market.

However, as is the case in privately held companies, and in some public companies as well, we had already dug into the founder’s background. What we found is that there was a long-running dispute with a former spouse about the division of the marital estate. So? One issue was that the former spouse was claiming that this new rapidly growing business was actually founded with her money and that she was entitled to a piece of it.

This changed the potential consequences of the rumored sale. It meant that, if in fact a minority interest were sold, the former spouse would at least be asserting a claim on it, if not in fact receiving some or all of it to settle a decades-old lawsuit. That, in turn, meant that our client was not going to face a well-funded, rapidly growing Competitor, but probably one which had finally put its own “family” house in order.