Competitive intelligence, or CI, is a widely misunderstood discipline among small businesses. It's not corporate espionage (which is illegal), and it's not market research (which isn't actionable).
“Competitive intelligence is designed to help companies make decisions,” says Bob Fox, head of a government-sponsored CI training program for Alberta entrepreneurs. That means you must first figure out what you need to know, and how soon you need to know it in order to do something about it. Will my competitor set up a distribution centre in my market? With whom should I partner in Africa? What will be the hot new colour for scooters?
“All these are real questions I've had companies bring forward,” says Fox.
Collecting competitive intelligence is closer to what a journalist does than a spy, in that there are laws and ethics of conduct. CI practitioners use a rule of thumb: If having your actions reported on the front page of a newspaper would embarrass your company, don't do it. That still leaves grey areas, and some businesses opt to hire CI consultants to investigate more sensitive issues.
That said, CI for entrepreneurs is fundamentally about effective internal communication. “You're small,” says Jonathan Calof, a professor of business at the University of Ottawa who is one of Canada's top CI consultants, “so you get your people together and say, ‘If we were doing this, what signs would we give out?'”
Here are five common questions businesses ask – often too late – and some ideas on how to use CI techniques to ferret out the answers.
Is my rival developing a new product?
Even top-secret plans tend to leak out through gaps in communication strategies. Inconsistent public statements by company staffers can point to new initiatives, so it's critical to monitor your competitors' comments in the media, on industry blogs, at conferences and on social networks like Twitter and Facebook. When CEOs make speeches to chambers of commerce, they will often hint at future plans as they plug their companies' achievements, says David Blenkhorn, a marketing professor at Wilfrid Laurier University who specializes in CI. Help-wanted ads can be another clue: Is the company seeking new types of hires? Is it looking for R&D staff? Your local city hall can be a fount of valuable data. Has your rival filed any zoning requests or planning applications – information the public can access – that suggest a facility expansion?
Economic trade and development officers can likewise tell you about new plans by companies in the area. Public libraries in major cities, as well as university business schools, have research groups and sector specialists on staff who can help you to search patent databases around the world for any filings by your rival. Trade shows are great opportunities to verify rumours, allowing you to talk informally with your (and your competitors') customers and suppliers about new products hitting the market. Manufacturing companies often offer public facility tours; other businesses host open houses and social activities.
Which of my competitors' top people are ripe for plucking?
When applying CI to recruitment – known as sourcing intelligence – start with your employees' professional networks, says Jonathan Calof. Tell your staff to feel out colleagues at rival outfits to see if someone's looking to jump ship. Waiting for signs of problems at competing companies before head-hunting their employees can be counterproductive, he says. “The really good people will have already left.”
Once you've homed in on a particular individual, Calof suggests identifying all the people with whom he comes into contact and talking to as many of them as possible about his plans and career prospects. It's called “boxing the target,” and it allows you to craft a recruiting strategy before you make the approach.
Is my competitor having financial problems?
To get the scoop on private companies' fortunes so you can capitalize on their troubles before they become public, look for changes in patterns, says Calof. It can be as simple as monitoring the parking lot of a rival's plant to see if it's full for two shifts or just one. But there are more subtle signs. David Blenkhorn suggests checking whether your competitor has sought any financial assistance from government programs, such as subsidies, grants or loans. The applications, along with the applicants' financial filings, are often made public on government websites.
