A casual perusal of many websites such as Gizmondo and Engadget highlights many similar leaks. These sites routinely report pre-launch information about new products. Sometimes the information sources are clear. In many cases, the sources are unnamed. Sometimes the information is detailed. Often, the details are sketchy.

How should competitive intelligence people deal with leaks?

Here are five important principles and cautions.

1. All organizations (especially public ones) leak information. Most of the time, they try to control or hide the leaks. This makes it harder for outsiders to draw definitive conclusions. Nevertheless, the interpretation of leaks is the bread-and-butter of a competitive intelligence person’s role. For instance, look for mandated leaks (e.g., financial reports), social leaks (e.g., social media activity of employees) and nuanced leaks (e.g., executive calls with analysts) to discover clues about a company’s strategy and direction.
2. Not all leaks are equal. In sports, it is very valuable to know your opponents plays. If you knew their plays a month in advance of the competition, you would orient your defense to thwart their specific goals. On the other hand, knowing a play moments before it occurs is less valuable. Timing is only one factor that determines the value of a leak. Other factors include the relevance of the leak to your plans, the degree to which the leak reflects board strategy and your ability to translate the knowledge of the leak into useful action.
3. Most leaked information is not surprising. This is true especially when a competitive intelligence person is already tracking the competitor. Take the Apple example, should any competitor be surprised with the recent revelations. No, because Apple is continuing a pattern established three years ago in their smartphone product and they are responding to easily discerned competitive pressures (i.e., need for better display, forward facing camera, faster processor). That is why most leaks should be confirmatory rather than revelatory for a prepared competitive intelligence professional.
4. Leaks are not always leaks. This point is less of a principle and more of a caution. A skeptical competitive intelligence person should always ask how and why the leaked information became available. There are multiple reasons for these questions. One, competitors can use leaks for distractions. You are looking one way while their main thrust is actually from another direction. Two, companies (and politicians) leak information to test concepts. Your response (if it is obvious) gives them information that you may not want them to have. Three, sometimes the leak is designed to drive interest (could Apple be doing this?) in something new. It is prudent to understand the possibilities to avoid over reactions or misinterpretations.
5. Counting on unusual leaks is a trap. It is spectacular when a bombshell leak concerning a competitor leads to a great competitive advantage for a company. That situation is akin to breaking the enemy’s secret codes in wartime and using the information to win a great battle. Sometimes it happens. Usually, it does not. The fundamental approaches to effective competitive intelligence are not spectacular, sexy or splashy. Instead, they are rooted in solid analytical models and techniques, effective primary research and trusted relationships with decision-makers.

The recent Apple iPhone revelations are a good lead story for Apple fans or casual business followers. However, they are not very useful for competitive intelligence purposes. The core value from competitive intelligence comes from less glamorous detailed work rooted in strong CI fundamentals.

Do you agree? How have you dealt with leaks?

For example, take the recent New York Times article, “Apple Buys Intrinsity, a Maker of Fast Chips” at http://www.nytimes.com/2010/04/28/technology/28apple.html, about Apple. Apple, flush with cash and the serial hits of the iPod, iPhone and iPad, purchased a chip design company. What does this mean? How does it fit with previous Apple moves? How does it confirm or change Apple’s perceived strategy? What might their next move be?

These questions are fundamental questions for someone competing with Apple and the core domain of competitive intelligence professionals.

To answer the questions, start with some background observations.

1. Apple processor choices are strategic decisions. Remember when Macs used Motorola (and then IBM) processors. As Intel processors began to outpace PowerPC in price/performance tradeoffs, Apple switched. The impact has been significant for Apple and its products. For the iPhone, Apple chose an ARM-based design (manufactured by Samsung). This was also strategic (but not differentiated) because the low power ARM architecture is the de facto standard for low powered, wireless devices.
2. Apple prefers to control design. Indeed, it is easy to argue that attention to design issues primarily differentiates Apple. This shows up in everything that Apple does from software to packaging. Related to design, Apple prefers a high degree of vertical integration. That control allows for specific performance and functional capabilities that are difficult for less integrated companies.
3. Apple has mastered media commerce. Starting with the iPod and music, now continuing with the iPhone (apps, video) and through to the iPad (eBooks), Apple uses the iTunes model to aggregate content, simplify the consumer experience and enable developers. Along the way, Apple takes its share of each transaction while driving sales of its own devices. The next logical expansion of selling ads to the captive Apple audience has already been announced.

What does all of this have to do with Intrinsity?

In 2008, Apple purchased PA Semiconductor. Even though PA Semiconductor specialized in PowerPC architectures, it was thought that Apple wanted their low power design expertise for future wireless device processors. Also in 2008, Apple purchased an architecture license from ARM. This meant that Apple has the rights to the internal design information for specific ARM cores and had the right to extend or modify those designs. (Others companies such as Texas Instruments and Qualcomm have architectural licenses for some ARM cores.)

Fast forward to 2010 when the new iPad included an Apple-labeled A4 processor. It all makes sense. The PA Semiconductor team must have designed an ARM based processor for Apple. (Technical Intelligence, Product Teardowns, M&A Activity)

The people familiar with Apple’s situation say that efforts to create a new chip for mobile devices from the ground up are stalling. In 2008, Apple purchased another chip maker, called PA Semi, for $278 million. That start-up also specialized in making fast, low-power chips.

But wait. Maybe all things are not well for the PA team at Apple. (Key People Tracking, M&A Activity, Competitor Strategy)

But a number of the PA Semi employees have left Apple — many of them disgruntled about their compensation, according to people with knowledge of the situation who were not authorized to speak publicly. Google, in fact, bought a start-up called Agnilux earlier this month filled with PA Semi engineers.

And how did outsiders first notice that Apple might be doing something new or different? (Key People Tracking, News Tracking, Primary Source Relationships)

Word of the acquisition began to leak out after technology trade publications noticed earlier this month that a number of Intrinsity employees had started to list Apple as their employer on the social networking Web site LinkedIn. Neither company, however, would discuss their relationship.

Now things get a little clearer and two things become apparent.

First, it is important to realize that although Apple has marketplace momentum and popularity, they are not infallible. It appears that they have the common difficulty of integrating acquired companies successfully into their strong culture. A strong counter move for its competitors is to attract the key leaders of the acquired companies. Who is good at doing this? Google. Google does many more acquisitions than Apple and has a more open culture.

Second, Apple has shown a willingness to spend money to increase its vertical integration in ways that similar companies do not. For instance, RIM, arguably Apple’s biggest smartphone competitor, does not have chip design capabilities. Buying Intrinsity means that their technology is no longer available to Apple competitors. Locking competitors out of performance enhancing technology gives Apple a competitive advantage. The Intrinsity resources also may mitigate the people moves from the PA Semiconductor group.

What is next?

Remembering that Apple is a media company, look for them to purchase companies that enhance media delivery or performance. For instance, a prime target for Apple would be the vendor of the graphics acceleration core in the A4. Acquiring Imagination Technologies would have a profound impact in the mobile space since many other semiconductor vendors rely on their accelerators. (Technology Trends, Early Warning, Scenario Analysis)

The story goes on and on. Apple, Google, RIM, Samsung, TI, Qualcomm and others are engaged in a fascinating commercial contest in the Wireless business. Each makes moves and the others counter. All have patterns, capabilities and limitations. Wrestling with each results (hopefully) in a winning formula.

Competitive intelligence is critical throughout the process. It helps weave a story through the seemingly random events over time. It helps explain what is happening, why it matters and what counter moves are possible. It helps leaders lessen surprises, gain confidence in decisions and get better results for their companies.

Of course, these foods are not completely bad. Maybe if I ate a few chips or only one slice of cheese pizza, I would do better. Perhaps I could eat other healthier foods more often and combine them with better exercise habits. I need the whole package to reach and maintain the correct weight. Whatever else I do, I especially need to be aware of the common pitfalls to avoid (goodbye to deep dish pizza).

In competitive intelligence, it is my experience and observation that we have pitfalls that inhibit us from reaching the desired goal. That goal, in my opinion, is to help strategy leaders make better decisions. Nevertheless, the pitfalls distract the competitive intelligence professional from usefully satisfying the needs of strategy decision-makers.

Here are my five (least) favorite pitfalls that should be avoided. I wonder if you agree with me.

1. Gimmick analysis. There will be some argument with this point. However, I do not think that most senior management people are enamored with clever search skills or the latest Twitter details. Many competitive intelligence professionals, on the other hand, seem to spend a lot of time on such cleverness. It is seductive, for sure, because it is immensely interesting to find information that hitherto fore was unreachable. But, when we feature this type of “analysis,” senior management often dismisses our potential valuable contributions.
2. Pretending that the competitive intelligence function is important. Frankly, it is not important. At least, as a separate function, the value of its existence is shown regularly to be minimal. That does not stop us from asserting that all progressive companies should engage in competitive intelligence. No, they should not because they have businesses to run, decisions to make and goals to reach. Competitive intelligence is only important only to the extent that it helps senior management in those three ways. We are needlessly fooling ourselves to think otherwise. Senior management values value not functions.
3. Working timidly. Most people should not be in competitive intelligence. In particular, many analytical (introverted) types are ill equipped to fight the right fights within the company. The dirty secret that new people to competitive intelligence should be told is this. Unless you are prepared to stake out positions, argue them with powerful people in an organization and withstand all types of personal and professional criticisms, you are going to fail in competitive intelligence.  It is better that these folks move to some other role.
4. Expecting too much. In my experience, I am amazed at how little senior managers understand about the competitive environment. Many cannot adequately characterize the major competitors, explain how the company strategy uniquely positions it for success or how competitive information should or can influence strategy formulation. Thus, the value that they can reasonably get from the best competitive intelligence is limited by their own understandings. This means that the competitive intelligence person has to be alert to the education requirements of senior management. Missing that realization may cause one to deliver valuable but ultimately unusable information to an organization.
5. Giving too much of the wrong thing. This is my personal pitfall. I cannot help giving great amounts of information in pretty ways to busy executives. By the way, I have learned that they do not want, cannot absorb and do not respect this vast quantity of information. They would rather have three things. First, they want understanding of their problems. Second, they want meaningful interpretations of information. Third, they want to understand their options and risks. Everything else should be in backup.

Are there other pitfalls that you work to avoid?

Your job is to champion one or more products for your company. Each product needs to be successful in a marketplace crowded with existing competitors. New threats emerge over time that you have to anticipate and proactively manage. Development teams count on your guidance to build the product with the right features. Your general manager relies on you to help deliver the needed revenues and profits. All along the way, you have to understand the environment, explain your recommendations and justify the company’s investments for your product. This is not a job for the timid.

Competitive Intelligence Helps With the Challenges

• Understand the market need. Every product attempts to fulfill a need in the market. Sometimes features represent this. Other times, the segmentation is determined more by price, distribution or something else. Often, a complex combination of market characteristics makes success possible.
  Competitive Intelligence paints a market landscape showing major forces and trends that affect your company’s strategies.
• Characterize the competition. There are products that do much of what your product hopes to do. There are companies that are established, customers that have made choices and strategies that are being executed that affect your potential success.
  Competitive Intelligence illuminates the formulae used by others (including their weaknesses) allowing you to refine your market understanding.
• Define the product. Feature lists are important. More than that, you need to define what is important and compelling about the product. Then, there is a process to document and present this to internal teams for their comment.
  Competitive Intelligence compares products and explains the critical differences to justify product directions.
• Develop the product. Nothing ever goes exactly as planned. Your task during development is to guide the teams responsible and answer a myriad of questions. Decisions and tradeoffs are constantly required of you.
  Competitive Intelligence supports decisions making during product development by constantly supplying updated market and product information to you.
• Promote the product. Even before the product development is complete, you have to talk with prospective customers, ecosystem partners, distributors and press to promote the product. Your messaging is critical to proper positioning and a positive reception.
  Competitive Intelligence answers the question of why your product makes more sense than the competitors’ products for your prospective customers.

It is hard to be a good product manager. Why not take every advantage of competitive intelligence information? See an expert and get started.

Alice was miffed. Bob was 15 minutes late to a meeting that he had asked for earlier in the day. Ostensibly they were going to discuss his upcoming meeting with his boss where Bob had to explain how to recover from various competitive attacks. Now that he had shown up, he was distracted by what appeared to be an emergency.

Alice had to admit that he seemed different from earlier that day. The tentativeness was gone and the energy that most associated with Bob was evident. She could understand why he was successful with his product line for so long. He was decisive, passionate and hard working. She waited from him to finish his call.

Bob finally hung up the phone and looked at her. “Come in, Alice,” he said.

“Sounds like you had an emergency today, Bob,” ventured Alice.

“You might say that,” replied Bob. “Do you know about the conference coming up in a couple of weeks? Well, we had some plans to make a splash there by announcing a new product. Guess who just preempted up.”

“I suppose it would be one of our competitors,” Alice answered.

“Yes, and not just any competitor. It’s those guys over at Advanced Products. They seem to delight in sticking it to us. This isn’t the first time that they have pulled a stunt like this. Seems like they are determined to keep the press focus off of us,” Bob said with a hint of anger.

“May I ask you a question?” asked Alice. Without waiting for an answer she continued. “You say that this is not the first time that Advanced Products has done this. What would you have done if you knew a month ago that this was coming? Would anything have changed in your plans?”

“That’s more than one question, Alice,” Bob said. “But, yes, we would have done something different. The only problem is that as far as I know it is impossible to tell the future. Sometimes you just have to learn to react quickly when something like this happens.”

“No doubt that responding quickly is important, Bob. You and your team are good at this,” said Alice.

Bob looked at Alice and sensed that she was making a point. “Alice, why does that observation not seem like a compliment to me?”

Alice replied, “Bob, Advanced Products has disrupted your plans for the conference and it is no accident of timing. Furthermore, with high confidence, you could have known about this 3 months ago.” She paused to let this sink in for Bob.

Alice continued, “They have done this three times in the past two years. Plus, as you know, Greg Simpson has taken over their product line and you know how aggressive he runs a business.” Greg had come from another competitor to Advanced Products and was well known throughout the industry. “There’s more. They have been ramping up their marketing communications in the past year. There also has been a noticeable increase in press contacts and a change in the tone of the content. Their executives have been regularly courting analysts more than ever. This is just the tip of the iceberg.”

“How do you know all of this?” asked Bob. “We know about Greg, of course, but no one on my team has said anything about your other points.”

“It is possible that you and your team have been focused mostly on products, Bob,” Alice said. “And emergencies.” Bob cringed at the gentle dig she delivered.

“My team looks at more things. In competitive intelligence, we try to see the whole of the competitive environment including the strategies of competitors. That’s why we might notice signals that you miss,” offered Alice.

“You’ve made a good point, Alice,” Bob conceded, “but I don’t see how you have certainty about predicting the future.”

“Certainty, no. High confidence, yes. The reason is that all of our competitors, including Advanced Products, are slaves to patterns, capabilities and people,” Alice said.

“You better explain that to me, Alice,” replied Bob.

“Okay. Every company has patterns of behavior driven by their culture and processes. Their patterns are necessary to enable a company to thrive in business. Without patterns, a company does not have a coherent, repeatable way to be successful. Does this make sense?” Alice asked.

“I think so. You are saying that patterns are a bit like habits but more powerful?” Bob said.

“Yes. If you know a competitor’s patterns then you can project their next actions better. Also, you can eliminate certain actions that are clearly incompatible with who they are. Capabilities, on the other hand, determine the range of things that they can do. For instance, specific product knowledge, market position, financial state and more are capabilities that similarly enable and limit a company. Finally, specific leaders give an organization a bias for certain types of decision making. Greg is a great example because we already know that he prefers an aggressive posture toward decisions.”

“Alright, I am catching the drift. Just for fun, play all of that out for this latest crisis. How could I have known three months ago what Greg and Advanced Product were up to?” Bob asked.

Alice began, “Let’s establish the context first. Advanced Products is behind us in the market but they are gaining fast. They are attacking us at the low end of the market that usually does not get the attention of our existing customers. Moreover, other competitors are following a similar strategy and our overall market share is in trouble.”

“Don’t remind me,” said Bob as he remembered that he was due to explain all of this to his boss next week. Alice waited for a moment and then continued.

“We know from Advanced Products earnings calls with analysts, their executive presentations and their recent influx of new managers that they are determined to grow the company. We also know that coming from a small share, they are concerned about the market awareness and respectability of their company. Those things are critical for our industry. As you said yourself, they have already established a pattern of disruptive announcements. Now, why would we have guessed that another disruptive announcement would have come before the upcoming conference?” ask Alice.

“You have my full attention,” said Bob.

“Simple, because just as Advanced Products has patterns, capabilities and people, so do we. And they know it,” she said. “If my memory is right, don’t you usually introduce the latest product line addition at this conference each year? And, don’t you count on the press momentum to propel your plans for the rest of the year?”

“I suppose you are right, Alice. That’s always worked out well for us. We have been the ‘top dog’ in the market for so long we assume that we will get most of the attention,” Bob explained.

“Maybe our success has made us too predictable? Reactionary instead of proactive? Maybe the market share results are the accumulation of many such instances of not seeing early what our competitors are doing? Is that possible, Bob?” Alice asked as she looked steadily at him.

“This discussion isn’t why we were going to meet this afternoon, was it?” Bob asked.

“Actually, Bob, it was the perfect subject to illustrate how the competitive intelligence team can help you make better decisions and to eliminate unnecessary emergencies” Alice answered.

“Alice, once again, you have effectively made your point. May we try again to have the meeting that we planned? If I remember, you were going to help me settle on some key questions. Tomorrow at 8 AM?” Bob asked.

“8 AM it is,” Alice said, “Sharp, this time.” They grinned at each other.

There was much to do.

Did he remember the things that his mother told him before he left on the trip? For instance, did he always put on sunscreen (the Texas sun is bright and very hot in July)? Yes, he assured me that he always had done so.

Did he remember to always wear his swim shirt to the lake? That’s when he averted his eyes, shifted his feet and changed his tone. “Well,” he said “I only went to the lake twice.” And then he grinned at me and I knew. TRANSLATION: Dad, I forgot about the shirt.

When you know someone really well, you can often sense their message from many cues that are more telling and accurate than their words. All of the other signals give them away. In fact, in a strange way, the actual words are distracting as often as they are informative.

Interpersonal signals abound among those we know best (and that know us). I use this often with close friends.

We might be listening to a speaker when one of us will signal the other with a lifted eye brow (TRANSLATION: can you believe this speaker?). A casual flicker of the hand (TRANSLATION: this is not important), a half smile (TRANSLATION: I’ll tell why it’s amusing later) or rolling eyes (TRANSLATION: we are wasting our time) can all be quite meaningful when interpreted correctly.

In competitive intelligence we can use the same signals (except that our subjects are other companies).

Don’t you think that competitors have one message that they want you to have but another that can only be discerned by those that know them best? There is a good article on Yahoo (Big tech earnings week will reveal economic trends) about interpreting financial information. The value of the article is that it makes predictive interpretations about the results to be reported by some important companies. For example, when talking about Apple, the article translates the possible company results to its macroeconomic meaning.

Why it’s important: Apple is the closest thing the tech sector has to a luxury brand, and its performance might hint at how many people are feeling flush enough to spend extra on style.

You’ll know the economy is improving if: Mac computer revenue rises, or average sales per retail store increase. Apple’s iPods and iPhones have been selling well despite the recession, but people have been choosing cheaper computers and spending less in Apple’s stores.

You’ll know the economy is not improving if: Sales of iPhones miss expectations. Apple just put out new hardware and a software upgrade, and cut the price of its cheapest iPhone in half, so the gadget should be selling briskly.

The key to accurate translation is intimate knowledge of at least two “languages.”

In CI, there are multiple ways to slice and dice languages. It could literally mean human languages (e.g., Spanish, English, Mandarin). On another level, it could refer to functional languages (e.g., finance, marketing, technology). Both of these are examples of dimensions that are important to understand and interpret. (There are many more similar dimensions.)

However, within CI, the most important translations that occur are “company cultural.”

That is, what is it about another company that directs it activities, influences its decision making and ultimately affects how it competes? What is about their cultural DNA that leads toward one thing and away from another, that governs the level of risk that they can tolerate, the determines the goals that they aspire to and empowers them to accomplish what is important to them? Knowing these answers gives an outsider (i.e., a competitive intelligence professional) great insight into what might be coming next for the company. The translation occurs when you take those cultural signals and make them relevant to your competitive actions.

Just so we don’t get ahead of ourselves, there is unlikely to be a completely neat, consistent answer to these questions. But there will be strong tendencies and patterns that show up in a myriad of signals. Knowing the signals and being ready to relate them to a company culture greatly enriches your interpretation of a company’s plans.

So what are these signals and how do you assemble them into meaningful patterns? Here are four lessons that I have learned.

The first and most important lesson is that you have to watch the company over time.

This means that it will be unreasonable to complete especially meaningful competitive intelligence analysis based on one time looks at a company. Why? Because it’s like trying to understand a movie by only looking at an advertising poster. The poster is an image but the movie represents the “story in motion.” It conveys rich interaction, plot lines, visual elements, background music and conversations that tell the story more completely. Companies (and their actions) have a discernible plot line, too. The CI professional assembles the “movie” for a competitor.

The second lesson is to assume that there is more meaning available.

Just as my son’s words were an incomplete answer to my camp question, it is important to assume that a company’s words (e.g., press releases, annual report, analyst calls) are an incomplete representation of the company. This doesn’t mean that they should be ignored. Rather, it means that they should be correlated with other things that you are learning about the company. For instance, Apple is famous for disparaging a market segment before they enter it with their own solution. An Apple competitor would be wise to not place too much faith in Apple’s public pronouncements (e.g., “netbooks make no sense”).

The third lesson is to practice interpretations.

This means that you should regularly seek to understand what a competitor will likely do and keep track of your predictions. Over time, your successes and failures will refine your learning. One of my MBA professors taught me this lesson. He was always making predictions about the actions of companies. Though it was easy to spot his mistakes, it was harder to match his learning without practicing predictions myself.

The fourth lesson is to know the people.

Maybe the company is a monolith with a host of automatons running it. I doubt it. Companies are collections of people with leaders that have biases, preferences, ambitions and fears that explain them fully. That’s why it is important for a CI person to know about the people intimately. Knowing that the current CEO is the son the founder can be very significant (see Qualcomm). Realizing that a company largely promotes from within also says something about the current and future leaders. Mapping the links between people (inside and outside) the organization identifies key shaping relationships. All of these things are clues to the culture.

The translation part comes in when you take what you have learned about a competitor and relate it to something in your own company.

That is what moves this study from a trivia exercise to one that results in concrete actions. For instance, if you know that the leaders of your key competitor are conservative, slow moving decisions makers, then you can better plan your new product introductions for maximum effect. Perhaps your competitor tends to be very egotistical. Might they be tempted into hasty reactions and decisions? Maybe their abrasive culture is leaving an opening with common suppliers and customers? And on and on …

There are rich veins of information to mine for those that are accomplished translators. Luckily this skill can be learned. My guess is that you will be far ahead of your competition if you do so.

Find what is often lost (or ignored) in the translation and you will prosper.

Do you agree with this notion? How do you practice cultural translations for competitive intelligence?

Coke is a valuable brand. It got that way because many years ago there was a vision for the product, an explicit way to market the vision and scrupulous enforcement of the brand that emerged. Brands are powerful shorthand ways that we assign value to or judge the worth of something. They help us cut through the noisy clutter of life to make simpler decisions. If we are associated with a “good” brand, then we find our pathways smooth and clear. Conversely, few things are harder to overcome than a “bad” brand (if they were still being made, would you consider a Yugo?).

Of course each of us establishes a personal brand. Personal branding is a bit of a rage in corporate life today. Establishing a brand, the thinking goes, ensures that your unique value is recognized. (Translation: you get to keep your job.)

It is also important when starting a new Competitive Intelligence program. The CI brand that you develop will empower you to accomplish great things. In previous entries in this series, we have already talked about Setting Some Standards and hinted at branding elements at the Tease The Vision step. Now it is time to make the critical branding elements explicit. So, here they are.

Three critical branding elements for you Competitive Intelligence program include:

A logo.

Yes, a logo. This may seem trivial to you but it is important. At first, the fact that the logo is there or not will matter little. However, over time this will become the mark that says “I reviewed this material, I stand behind the data and I stand up for the interpretations that are included.” You will use this logo on email, presentations, white papers and newsletters that you produce. In the meantime, many other people will present competitive information but none (except you) will have the “seal of approval.” It is incumbent on you to produce work that is worthy of the seal.

A target.

It is possible to define your target market broadly (e.g., “everyone in the company”). If you do so, then your marketing campaign will reflect that audience. But, we have already covered in Find The Pain that your primary audience should be senior strategy leaders. This is a small group that shares certain characteristics (e.g., busy, value oriented, longer term thinkers, pressured, smart, skeptical, etc.). Your marketing efforts have to be focused on them and what they care about most. The challenge is to identify how they prefer to communicate, how they arrive at decisions and key things that drive the timing of their decisions. Once that is understood, you have your “target.” Now aim your arrows accordingly.

A method.

Although much of what I am conveying is to the CI person (or group), the plain fact is that the success of the CI effort depends on relationships outside of the CI team. Thus the method of working with others successfully is paramount. The challenging aspect of this method is that you will find yourself involved with a wide range of experts and personalities. Giving value to get value, crediting others lavishly, orchestrating stimulating discussions to clarify meanings, having quiet conversations in safe settings and so on will distinguish you beyond measure. Your method is your intense “people orientation.”

Okay, introducing the brand means that you are just starting. You won’t be perfect and all of the pieces won’t be in place immediately. Nevertheless, over time and with constant attention, the competitive intelligence brand that you are introducing will become recognized and valued throughout your organization.

How do you accomplish the tasks that are ahead? Get the right tools.

Next topic is “Accumulate The Tools”.

Here are the 15 steps that we are walking through. Which ones do you think are especially important?

The Human Side of Competitive Intelligence

1. Find The Pain
2. Get The Job
3. Tease The Vision
4. Frame The Foundation
5. Setting Some Standards
6. Introduce The Brand
7. Accumulate The Tools
8. Back To The Vision
9. Secure The Budget
10. Build The Presence
11. Expand the Brand
12. Go For the Value
13. Recruit A Staff
14. Go On The Offense
15. Evangelize The Mission

Slab foundations are solid blocks of poured concrete on top of which the structure is erected. There are several important characteristics that a slab foundation must have in order to support the house that is being built.

• It must be shaped correctly for the house. It is costly and difficult to alter the basic shape after it hardens.

• Although it looks like a solid mass of concrete, it actually conceals a great deal of infrastructure including electrical conduits, plumbing and cables (which provide strength).

• Everything attached to or embedded in the foundation must be in the right place (again, it is hard to change things fixed in concrete). For example, the plumbing for sewage should emerge where the bathrooms are planned to be.
• Finally, after doing all of the necessary things, it is important to preserve your flexibility for all of the remaining elements of the home. For instance, the placement of the second story wall for the guest bedroom is not to be tied to something in the design of the foundation.

The foundation serves its purpose even though it is not a visible feature of the home. The structure above obscures what is beneath it and many people give little thought to what they don’t see. However, you absolutely must pay attention to your CI foundation. And the quiet time after your first management presentation is a good time to establish what will support all that you do later.

Skip the foundational work, however, and the compliments will quickly be replaced with sympathies for the expensive rework that will be required. After the sympathy, you will start to hear the whispered questions about how could someone forget the foundation?! This can cause damage to your prestige and credibility. It’s embarrassing, expensive and (this is the good news) avoidable.

So where are we in our journey to create a competitive intelligence function?

You have taken the initiative to build a competitive intelligence function. Spotting a “pain” (step 1) you approached a senior manager to offer your services (step 2). They are interested! Show me something they say and off you went to respond. Since you are just starting, you know that you cannot provide the ultimate benefit immediately. Making virtue out of necessity, you figure out how to provide some value and, more importantly, you whet the appetite of your senior leader by giving them a tease (step 3) of what could be done. The meeting is a success and you are pretty sure that you will be doing more CI work for the senior leader. You have some time to reflect about what to do next

The next step is to frame the foundation for all that is to come. There are three things to do to make sure that your foundation is what is needed for long term success.

1. Create the Blueprint

This is where you begin to imagine what the full vision for the CI function will be. One thing for sure is that it will be customized to your environment. That is, it will be constructed to meet the needs of the people of the organization. Like an architect does before designing a home, you will begin asking people about what their hopes are for competitive intelligence. How do they like to get information? What are the critical times for receiving intelligence? What do they already have or know? When and why have they been disappointed in the past? All of the answers help you to identify how to construct the program. They will suggest the mechanisms for delivering information, the schedules that make the most sense, the sensitivities to avoid and the dreams that the leaders have for their success.

Don’t make this too hard. Simply talk to people and record their responses. List the concrete responses to what they have told you. In most organizations, common culture and experiences will help you because the responses will cluster so that you can focus on a smaller number of items. Note that you are not implementing all of this now. You are simply making plans so that what you do in the near term will not preclude something important that comes later.

2. Establish Your Principles

Make sure that you know what is important. These are your principles that are relevant throughout the lifetime of a CI function. Among the many reasons that principles are important is the simple fact of pressure. As you become known for your CI contributions, you will begin to feel great pressure. The pressure to produce valuable interpretations will exist, of course. You will also be confronted by other pressures such as ethical issues (“can we use this information that I got from a former employee?”), shortcuts (“we don’t have time to double check our sources”) and misuse (“it just needs to look pretty, I don’t care what it says”). Here are some principles to consider.

• I will always focus on value to senior leaders and the business strategies. This doesn’t mean that others won’t benefit but it does establish priorities.
• I will conduct myself according to a code of ethics (see the SCIP code of ethics). Now is a good time to identify who can give you legal support as issues arise.
• I will properly and consistently characterize (e.g., assumptions, facts, speculation, recommendations) the content that I provide. This establishes and maintains your credibility.
• I will orient all I do toward helping effect positive change. A CI function implicitly challenges what is happening inside your company as you analyze the competitive environment.
• I will always remember that people (i.e., leaders, colleagues, others) matter most. People are the source of the best information, they are required to support and accept competitive intelligence and all change comes through the efforts of people.

3. Make Broad, Fruitful Relationships Possible

This may seem redundant. And, it is.

Your success or failure will be based on your personal relationships. This may seem counterintuitive in the age of complex information systems, databases, web searches, analytical tools and academic research. All of these things have a place but in absence of a robust foundation of relationships, your failure is more likely than not. Here is a partial list of relationships that will be critical. You need to begin now thinking about how to nurture each set of people.

• Sponsoring management/leaders – do you understand their needs?
• Other managers – who owns what strategies and might be overly sensitive to what you are doing?
• Peers – how can you provide value to them so that they willingly contribute information and reflection?
• Sources – how can trust and reciprocal value be established?
• Support – how can you get their help to build the information infrastructure and provide other (e.g., legal) services

Three steps for framing a solid foundation – blueprint, principles and relationships.

Next topic is “Establish Some Standards” because just doing the work is not enough.

Here are the 15 steps that we are walking through. Does it seem like a lot to do?

The Human Side of Competitive Intelligence

1. Find The Pain
2. Get The Job
3. Tease The Vision
4. Frame The Foundation
5. Setting Some Standards
6. Introduce The Brand
7. Accumulate The Tools
8. Back To The Vision
9. Secure The Budget
10. Build The Presence
11. Expand the Brand
12. Go For the Value
13. Recruit A Staff
14. Go On The Offense
15. Evangelize The Mission

Plan A will lead to 30% sales growth this year! Our new product will blunt Competitor X’s market share and result in 10% incremental profit. All we have to do is get everyone on board with the new strategy, shift the execution focus and convince the potential customers and we will win!!

We do similar things in competitive intelligence. We start with a noble goal of understanding what every significant competitor is trying to do. Add to that knowledge of the market forces at play. Then, almost magically we hope, the organization will snap to attention to devise the tactics needed to overcome the competitive gaps (leading to the 30% sales growth, of course). More than that, we will be universally welcomed for our valuable contribution to the organization. Let the praise rain down on our heads.

The only problem is that things are not that simple. Much as turning an ocean liner is a slow process that cannot be abbreviated, establishing an effective competitive intelligence system to deliver significant results is not a fast process. Aside from the knowledge and techniques that are required, there are many human elements that affect progress. Would it be surprising to you that many of your assumed allies and supporters are not rooting for your success?

For instance, competitive intelligence needs the sponsorship of a senior leader in the organization. That leader may or may not recognize such a need. Indeed, perhaps they think that asking for help would be viewed as a sign of weaknesses. Why don’t they already know what their competitors are doing? Is the identification of a competitive gap an indictment of their strategy?

Sometimes the ownership (and presentation) of competitive information is embodied in a person or organization already. If that is true, then an attempt by someone else to furnish competitive intelligence information may be viewed as threatening. Preserving their position easily can take precedence over supporting the common cause of effective competitive intelligence.

Maybe there will be a sense that competitive intelligence has already been tried once and the results were not helpful. (It’s worth noting that almost any overhead function is subject to such criticisms. Going back in time will always uncover a related failure.) Organizations have institutional memories that can be used for many purposes and there will be in-house experts that can use those memories to slow or block most any new move.

And the list can go on. People and their response to change are probably the largest determinants for the success of a new competitive intelligence program. The people within the organization are more important than the tools, computer systems, training, presentation techniques, insightful interviewing and any other element of the competitive intelligence system.

Over the next month I will take you through the major steps in establishing a competitive intelligence system. At each step, I will explain all of the details (which I just said were less important than the people). But (and this is a big “but”) I will focus on the impact on and role of the people in the organization.

Here are the 15 steps.

The Human Side of Competitive Intelligence

1. Find The Pain
2. Get The Job
3. Tease The Vision
4. Frame The Foundation
5. Setting Some Standards
6. Introduce The Brand
7. Accumulate The Tools
8. Back To The Vision
9. Secure The Budget
10. Build The Presence
11. Expand the Brand
12. Go For the Value
13. Recruit A Staff
14. Go On The Offense
15. Evangelize The Mission

Stay tuned.

“I don’t need the exact figure. Just give me the ballpark number.”

This is how I sometimes do business when I am trying to buy a new car. When I am early on in deciding which car to buy, knowing that one of the candidates is about $25,000 and the other one is about $40,000 is enough information for me. The ballpark number is a useful approximation for my initial purpose. (Later I will bargain about the exact car and sales price.)

In competitive intelligence, we are often asked to assign a number to something a competitor is doing.

For instance, our management might want to know how much research and development money has been spent on the latest product from our competitor. This isn’t a number that most companies will report publicly. So what do we do? Give up? No, rather we fall back on the article of competitive intelligence faith that there is always an ethical way to give a good answer.

We find a credible way to estimate the number.

We might start with the company wide R&D number (which typically is reported). Then, we apportion it among the product lines by tracking how many new product introductions have been made in the year. A further refinement is made by overlaying the typically product cycles (e.g., 24 months from conception to marketing). That suggests that the product introduced this year was partially funded by R&D funds from previous years. Next, knowing something about where the new product fits in the product line helps us understand if it is a wholly new product or a derivative from a previous product. (Derivative products will usually require less R&D dollars than completely new products.) It is often straightforward to estimate the percentage of new design or features in any product. Putting all of this together means that we can report a ballpark number to management about the R&D money spent on a new product.

Sometimes the method is as useful as the answer.

Working through the previous example illustrates how the method teases out information and assumptions. This clear thinking has two main benefits. First, it answers the inevitable question from management about how you got to the answer. Second, and more importantly, it lays bare the reasoning in a way that allows others to challenge and improve your assumptions. When a CI professional manages this well, the ownership of the answer passes from the CI person to management. This is how it should be once they (management) are equipped with the right information.

The method also conveys the risk in the estimate.

A recent article in BusinessWeek entitled Digging Up Amazon’s Numbers is a wonderful example of a useful approximation. According to the article, Amazon is generally unhelpful in providing information to analysts that track the company about future prospects. So, Marianne Wolk (analyst at Susquehanna Financial Group), used warehouse information reported by Amazon to create a leading indicator of their future sales. That is, if Amazon increased their warehouse square footage, then that meant they were expecting higher sales. Correspondingly, a decrease in warehouse space meant declining sales expectations. This approximation will have to be tested over time to validate its usefulness. Nevertheless, it is a clever way to link something that is known with something that one wishes to know.

Public companies are sieves of information.

One recurring realization is that public companies cannot help but signal their intentions. The challenge is to use what is public to estimate what is not public. We don’t have to arrive at exact numbers. Most of the time a useful approximation (with the methods and assumptions described) will be quite valuable to management.

Do you agree?