My wonderful son stood in front of me excited to be retelling the adventures he had at church camp last week. He was full of words and stories. I just love hearing him talk about his experiences and answer questions. I asked him about his favorite food, the friends he made, the different play activities, the bus trip and so on.

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?