Early Warning

I am a proponent of the “early warning” use of competitive intelligence. However, any early warning program requires an inclusive, rather than selective, definition of competitors and what constitutes potential competitors.

Let’s look at a recent event from the perspective of the health insurance market.

“Two mega-health insurance mergers terminated” [1].

Would/could early warning pick that up? Almost certainly. Why? Because these transactions involved the 4 dominant players in the group health insurance market. Any/every health insurer should have been watching all 4 of these firms and should have been on top of the legal and financial drivers which might enable/hinder these transactions, probably without much additional research.

What about these two other recent events impacting the same market?

 “CVS Health [owners of the pharmacy company] to Acquire Aetna; Combination to Provide Consumers with a Better Experience, Reduced Costs and Improved Access to Health Care Experts in Homes and Communities Across the Country”[2].

“Amazon, Berkshire Hathaway, JPMorgan Chase to tackle employee health care costs, delivery”[3].

I doubt that any early warning mechanisms in this market  picked these up, for any one or more of several reasons (disclosure, before coming to CI, I previously worked in the health insurance industry):

It is unlikely that most firms in this market have heavily invested in early warning activities because their regulatory structure establish high barriers to entry. Firms regard this as virtually eliminating the entry of new or expansion of existing competitors, at least without some notice from monitoring filings with state regulators.

People move relatively freely from one competitor firm to another, producing an underlying sense that “we sort of know what is probably going on”. That undermines the effort to advance early warning, at least by limiting its focus to the “usual suspects”.

The focus of the industry has been on monitoring the political and regulatory activities at the state and federal level, inducing and supporting a short-term vision of structure and marketing. Short-term stress does not work well with long-term early warning.

The same focus would preclude any early warning system from considering the likelihood that non-insurance firms could/would take steps that might fundamentally change the health insurance industry.

The CI focus in the industry is most often on new products and their marketing, technology acquisitions, and changes in relationships with brokers and agents. Did you see the concept of structural change or existential threat? I didn’t.

Lesson? Come to an early warning system with as few preconceptions as possible. Recall the analogy of the lookout at sea: the lookout surveys all directions (not just on either side), constantly (not only periodically), and for anything that could become a potential threat (not merely any anticipated and identified threat).

[1] https://www.bizjournals.com/milwaukee/news/2017/02/14/two-mega-health-insurance-mergers-terminated.html.

[2] https://cvshealth.com/newsroom/press-releases/cvs-health-acquire-aetna-combination-provide-consumers-better-experience.

[3] https://www.usatoday.com/story/money/americasmarkets/2018/01/30/amazon-berkshire-hathaway-jpmorgan-chase-tackle-employee-health-care-costs-delivery/1077866001/. This event reportedly caused an immediate 5% drop in the stock prices of major health insurers.

Covering Tracks

January 25, 2018

I have been running into an interesting phenomenon – more and companies are taking steps to conceal their major construction/renovation filings made with local governments. It has been going on for a while, but seems to be increasing in the last 2-3 years.

That raises two, no, three questions: Why, How, and What Can I Do About It?


Major construction/renovation filings with local governments, such as building permits, zoning applications as well as applications for state waivers, such as dealing with highway/rail access or environmental issues, are all “tells”. That is, they indicate the coming of an important action which the target, your competitor, does not want the public, and certainly its competitors, to know.

To be fair, such actions usually do not prevent the release of such information – but they substantially delay that release, whether to competitors or to the local press.


Here we are not talking about abusing open records acts by tactics such as improperly claiming ordinary data is confidential or a trade secret. What is done is making the filings under other names, to foil inquiries for or even attention paid to these records. That is done in at least two ways. One is to make them under the name of a subsidiary not identified with the parent. Another is to have another party to the transaction, such as the company managing the construction project, make the filings under its own name.


What Can You Do About It?

Well, not a lot. If you suspect that a competitor is going to engage in such a project on an existing site, you can ask the local government for filings covering the current address, as well as adjacent properties. If the issue is a competitor which may be building a new facility at a new address, then try to determine what areas are likely sites, and then follow real estate sales and leases on a micro level – checking local papers every week for “suspicious” transactions, and then drilling down at the municipal or county level, as appropriate.

Defense against CI is always improving which is why our CI strategies and processes must always try to get better, too.

More Skills?

January 9, 2018

In Time, Harvard Professor Steven Pinker recently wrote about how the media impact human cognition (don’t yawn). Specifically, he points out that people tend to “see their lives through rose-colored glasses”. Yet, when discussing others (people, countries, etc.), they see “everyone is miserable…and the world is going to hell in a handcart.”

He attributes these “biases”, his word not mine, to the “bad habits” of the media as well as our own “morbid interest in what can go wrong”. The cure? Numeracy – literacy about numbers. That skill, he contends, helps to develop and maintain a quantitative mindset, which is not just “smarter” but “more enlightened:”.

Does this mean that quantitative skills should be added to the list that CI analysts, collectors, and even end-users should consider as “must haves” and not just “useful”?

I vote yes.

Staging CI Development – From the Now to the Future

December 6, 2017

So, you want to grow your personal competitive intelligence expertise, or maybe grow what your CI team can do for your company? Doing that often takes you and your team through several stages of development, each of which requires additional skills and work, but which also provides increasing benefit to the ultimate end users of the CI.

Stage One

This is where you produce and use of CI to understand what and who is going on – here and now. You would be surprised (then, maybe not surprised) how little some companies know about their competition, or even who their major competitors are. Don’t believe me? Let relate a real experience with a client.

A business development manager at the client, a new hire, wanted us to help identify the firm’s top competitors in each of its 4 key markets. What she wanted to see was what strategic moves they had made in the past few years, and how well those efforts turned out. The goal was to learn from their successes and failures.

She told us that, when she went to senior managers, what she got was confusing and conflicted. (Everyone who is surprised, raise your hand) The executives did not agree among themselves who they were competing with and in which market niche.

So, we did our research and gave her a list of the top ten current competitors, by gross sales, for each niche. The results were interesting.

Of the 10 competitors, the senior managers, as a group, identified 6 or 7 in each niche. So far so good.

In each niche, they had identified 1 or 2 firms as competitors who were not currently competitors and had not been in that niche for a minimum of 2 years. Bad. Obviously, they were not paying close attention to what was happening in niche by niche.

What about the others, the missing 1 or 2 in each niche? They were firms that were current competitors that no senior manager, let me repeat that, no one, identified as in the top 10. Even worse, in 3 of the 4 niches there was one of these “stealth” competitors among the top 5! Talk about blind spots.

Stage Two

Now you begin to understand the history of the key competitors, which can lead to at least a partial understanding of its culture and its view of the world. Businesses and their executives and managers are molded by what they have succeeded (and failed) at. This stage should include a look at key executives, particularly those who have joined the firm in the past 2-3 years. They were hired for a reason. What was it?

Don’t think culture is important (or even real)? Consider the attempt by Kraft Heinz to acquire Unilever. According to a report in Fortune, one of the several reasons that the Unilever board rejected the offer was the radical difference in corporate cultures. [1]

Stage Three

This stage involves identifying the capabilities or potentialities of your competitors. What can they do that they are not doing how? How skilled is the workforce? How good/efficient is its supply chain? What strategic alliances do they have or might they logically create?

Stage Four

The final stage involves ascertaining your key competitors’ intentions. That is, now that you know where they came from, what they are really doing, and what they can do that they are not yet doing, you start analyzing available evidence to determine where they are going to go tomorrow. Now you are at the top of the CI food chain. Congratulations! From here, lies the world of early warning systems – another important topic.

[1] “Change World”, Fortune, Sept. 15, 2017, p. 82. “Unilever’s board rallied behind [the vision of ‘making sustainable living commonplace’] to help stymie an unsolicited takeover bid from Kraft Heinz.”

The Big Picture (7 of 7)

November 29, 2017

As I have noted, in our experience, there are usually 7 major issues involved in creating or adding a new competitive intelligence unit:

  • financial and personnel
  • guidelines
  • training
  • internal marketing
  • networking
  • customers and their needs, and
  • products and feedback.

In this blog, I have previously discussed the financial and personnel issues, guidelines , training, internal marketing, networking, as well as internal customers and their needs.

Several of the (masked) cases in Competitive Intelligence Rescue – Getting It Right, our newest book, deal with CI products and feedback as do several chapters in Bottom Line Competitive Intelligence. Here are a couple of the key high-level issues you should consider:

  • What products are you providing now? Who uses which products? Why don’t others use them?
  • Are you providing a newsletter? Is it really providing value to the readers or is it just a convenience for those readers?
  • Your product mix should change as your targets – and customers – change. And you should be changing your targets. They are not going to stay static just for your convenience.
  • Feedback from your customers is critical. Get it on a project by project basis, if possible, and, in any case, quarterly. And get it from ALL customers. If they are too busy to talk about your work, how much time do they have to absorb and use it?
  • Feedback should include reviewing what products to add as well as which ones to stop providing.

Also check out this past blog. among others: Answers and Questions.

The Big Picture (6 of 7)

November 14, 2017

As I have noted, in our experience, there are usually 7 major issues involved in creating or adding a new competitive intelligence unit. They are

  • financial and personnel
  • guidelines
  • training
  • internal marketing
  • networking
  • customers and their needs, and
  • products and feedback.

I have previously discussed the financial and personnel issues, guidelines , training, internal marketing, and networking issues earlier in this blog.

Several of the cases in Competitive Intelligence Rescue – Getting It Right, our newest book, deal with managing internal customers and their needs, as does chapter 5 in Bottom Line Competitive Intelligence. Here are a couple of the key high-level issues in that process:

  • Who are your customers? Who else should be customers?
  • What do they really need? How does that differ from what they say they need?
  • How are you helping your customers determine their needs? Small investments here can pay big dividends in the long run.
  • How good is your direct access to your customers? How can you improve that?

Also check out this past blog – Ten Things Outside CI Consultants Do Not Want to Deal With.

Toxic Environments for CI

November 7, 2017

In the past I have commented[1] on the fact that competitive intelligence cannot thrive in contexts where there is imperfect competition or an outright monopoly situation.

Now consider this observation from a recent issue of Time:

“[T]he leaders of other emerging powers – not just Russia but also democracies like India and Turkey – are following China’s lead in building systems where government embraces commerce while tightening control over domestic politics, economic competition, and control of information.”[2]

So, to the above environments where CI cannot thrive (or perhaps even function), add those situations where government is not only involved in controlling commerce, even without the presence of oligopolies and monopolies, but where it is also controlling much of the data, the raw material from which CI is developed.

“Withholding information is the essence of tyranny. Control of the flow of information is the tool of the dictatorship.” author Bruce Coville.

[1] See It Is What It Is and  Why No CI?

[2] “Advantage China”, Time, November 13, 2017, p 42.