Know Thy

Last year, a sales team at Rockwell Collins faced a rare sudden-death scenario. The aviation electronics supplier was bidding for a government contract to manufacture a particular kind of information technology. The catch was the technologies were changing rapidly, and this would be the final contract awarded under the old system. "Basically, this was the last shot," says Michael Thome, who at the time was a one-man competitive intelligence (CI) department at his division of Rockwell, based in Cedar Rapids, Iowa.

With such high stakes, Thome brought CI to the process. First, he interviewed his company's salespeople to see what they'd heard on the street about how their main competitor might bid on the project. Then he went deeper, tapping his contacts in the engineering department to get their take on how their rival might act. He even set up an internal team and asked its members to role-play the competitor, looking for possible motivations that could give him more insight. When his investigation was complete, he was able to tell the sales team that the competition planned to go into the bidding aggressive on price. So to counter, the Rockwell team prepared a killer pitch emphasizing its experience and stellar track record. The teams went head-to-head. Rockwell, with a higher price, but a stronger customer-service promise, won the contract. Had Rockwell not known the plans of its competitor ahead of time, it might also have used a price-based pitch—and lost to the lower bid. "Knowledge gave us an edge," Thome says.

Indeed, knowledge can make all the difference. In this weak economy where dollars are scarce and competition is fierce, an extra scrap of knowledge can mean the difference between a closed deal and a colossal mistake. Companies are increasingly turning to CI to determine the strategies of rivals and the needs of the customer. An SMM/Equation Research survey of 291 sales managers revealed that 89 percent ask their salespeople to double as information agents. Details on the competition's price and new products are most in demand. A recent study by PricewaterhouseCoopers (PwC) found that one third of CEOs consider CI more critical to success than a year ago; 84 percent consider it a prime driver of profit growth. "Our volatile economy has left businesses scrambling to neutralize or undermine whatever perceived advantages their competitors may have developed," says Steve Hamm, managing partner of PwC's middle market advisory services. "It's little wonder that competitive intelligence is valued more highly today—and why so many firms are focusing on ferreting out information about any new competitor initiatives."

They're also focused on the best and most creative ways to get that data. While CI is traditionally the task of an overworked sales force, more companies that make CI a priority are giving it a systemic makeover. Instead of simply relying on field staff to dig up good dirt, companies are instituting systems, embracing technology, setting up internal departments, and hiring outside experts—all to improve what they know and when they know it. "Know your enemy," says Steve Levy, a principal at Fletcher/CSI, a Williston, Vermont—based CI consulting firm. "It's the battle cry."

What new weaponry can you use to improve your own competitive intelligence? Some experts and companies are leading the way.

Embrace Technology

When discount brokerage Ameritrade wanted to know how its services were being perceived versus the competition's, new technology played a critical role. Instead of traditional phone inquiries, the Omaha, Nebraska— based online broker used a Web survey. "Somehow, when you get people on the telephone and say what you are doing, they get spooked," says Rob Steidle, director of CI for Ameritrade. "But a Web survey is less intrusive. They feel more in control, less on the spot. And we get good data."

Companies often underestimate just how much data on the competition can be gleaned through technology. Even companies with the most basic technology at their disposal can leverage it to gather intelligence, says Richard Wood, managing partner at Sand Hill Partners, a CI consulting firm in Redwood Shores, California. Keep tabs on your rivals' Web sites, and check to see if they have updated or altered their copy on any product lines. Have they redesigned the site or shifted its focus? What do search engines turn up on rivals? How is the press covering them? Your industry? Often, publicly accessible bulletin boards offer additional clues: Investors may log on to discuss rumors and tidbits of information. And keep watch for off-duty employees. They post, too. "Clients are often surprised that there's so much out there to know," Wood says. "They're busy with their day-to-day operations and they don't realize how much information can be obtained with a few strategic keystrokes." However, wandering around on the Internet can be time-consuming. If your budget doesn't permit an outside consultant, you might consider some of the many software tools and providers that have entered the market, all designed to make sense of the information. At eWatch, a Minneapolis—based Internet monitoring service, the client list has ballooned from fewer than 100 two years ago to nearly 1,000 today. "You can sit down and go into some of the general search engines like Google and find pages and pages. But you could sit there all day and still not find information you can use," says Nancy Sells, vice president of eWatch, a division of PR Newswire. "People don't just want information. They want information they can use."

Still, experts caution, technology can only take you so far. It can't think for you, warns Leonard Fuld, CEO of Cambridge, Massachusetts—based Fuld & Company and publisher of the Intelligence Software Report. There are many software programs that will help a company sort through the vast array of data available from the Internet, Wall Street, and other sources. "But it can't provide judgment." Fuld says. "That's still your job."



Get Creative With Staffing

Who are your best CI staffers? Do you rely on your salespeople? Your account managers? Your database managers? Increasingly, companies are expanding their definitions of CI staffers. While the practice of information gathering was once primarily the work of the sales force and field managers, today more firms are giving the task status and stability by making it a regular department. Who works there? That depends.

For PalmSource Inc., a company based in Sunnydale, California, which provides technology for handheld computers, the answer comes from some unlikely corners. Michael Mace is the company's chief competitive officer and he looks for staffers who are, well, annoying. "When I go into a company, I start looking for people who have an itch they can't scratch. These are the people who can't shut themselves up," Mace says. "They keep trying to tell the company what to do." Often these jabber jaws are in field sales support or another sales support position. "These are the ones that keep sending the executives spontaneous e-mails," he says. Usually, these are bright people who just don't have the right outlet for their ability to spot trouble. "These are people that management says, 'Oh, yeah, him. He can't stay focused on his job. He's busy telling everyone else their problems,'" Mace says.

Mace's solution is to put that person in a position where troubleshooting is the goal. His team consists of market researchers and ex-field salespeople with a desire to tell other people what's wrong and how to fix it. This team helped provide data to PalmSource that, among other tasks, supported the firm's shift to begin licensing its operating system. "We're very much an education function," he says. "This was a very hard switch for PalmSource, and we helped grease it. We helped show what this transition would bring. We're a small team, but what we can find out helps draw the battle map."

Rockwell Collins' Thome looks for an able conversationalist. His team sports an English major, a finance expert, and a member with a master's degree in international relations. But when he interviews for a position, he's looking for people skills. "I look for a personality," he says. "They have to be able to make other people feel comfortable talking to them. They have to be able to create a feeling of trust that will allow others to share information. That's what really counts."



Update The Ethics Policy

Perhaps the most timely topic in CI circles is ethics. The business community is reeling from a series of ethical crises, from Andersen to Enron to WorldCom. Because CI requires a certain amount of snooping, the issue of ethics is an important one, and even more crucial to address today. Examples of CI ethical breaches abound. Oracle was nabbed rifling through Microsoft's dumpsters. Princeton had to apologize to Yale after an overzealous admissions staffer hacked into the rival's Web site to peruse scholarship offers. "You need to be clear and draw the line for your employees," says John Di Frances, managing partner of CI consulting firm Di Frances and Associates, based in Wales, Wisconsin. "That's especially important when it comes to the Internet. It may not have seemed like breaking and entering to that Princeton staffer, but it was. At best, it was fraudulent. People have to know where you stand legally, and also morally."

At Dallas-based Texas Instruments, where 30,000 people all over the globe might at any time find themselves conducting CI work for the company, the key is constant and specific ethics training. "We formally teach it. It starts when you join the company and it's ongoing," says Jeffrey McCreary, senior vice president for sales and marketing. There's also a small, but permanently staffed ethics office that will take any call—including anonymous ones—to discuss ethical issues. And finally, the consequences are clear. "People can definitely lose their jobs over ethical lapses," McCreary says. "All the folks here know that."

Managers need to be clear on the boundaries of propriety in CI gathering, but that need not be complicated, says Paul Dishman, a professor of CI at Brigham Young University and current president of the Society of Competitive Intelligence Professionals (SCIP). SCIP offers a code of ethics for CI practitioners. Dishman also urges companies to advocate what he terms The Mommy Rule: "If your mother saw you, would she approve?" Dishman asks. "If you told her, I dug this out of the trash and now I have an edge, would she be proud?" Some members of SCIP like to call it the 60 Minutes rule—as in, if you were on 60 Minutes explaining your recent CI efforts to all the world, would you feel confident? Or would you be the one running from Mike Wallace and his camera?



Don't Forget the Basics

For all the new technology and new ideas surrounding CI, experts say it's important not to forget the trade basics. Clearly, selling is the top priority for your salespeople. But remember that it's in the field, in conversation, that the best intelligence can be found. Reps should ask their clients, partners, and vendors what they have heard. Perhaps this won't turn up the hard facts that will drive a new strategy, but they could get you thinking in a new direction. Remind your sales force to view every interaction as an intelligence-gathering opportunity, as well as to sell a product. Trade shows and conferences also are great places to pick up your rivals' brochures and hear their presentations. But don't stop there. Quiz the reps staffing the booth. Step up to the microphone during the question-and-answer session. Ask audience members what they think of your rival's outlook.

Most important, experts say, managers should not overlook any opportunity to gain some insight into their competitors. Keep tuned to possible targets. They turn up when you least expect them. TI's McCreary likes the Admiral's Club (American Airlines' executive lounge)—or other airport waiting areas where executives tend to hang out. "You never know what people are going to say," he says. EWatch's Sells prefers the unbridled chatter of online newsgroups. "There's a lot of good debate out there and lots of sharing of information. You never know when someone is going to post the one thing you always wanted to know."