An Ear To The Ground

The classic case here was the misreading of the changing marketplace in the 1970s by the Big Three US auto makers. The increased cost of gasoline and the changing demographics of smaller families were two of several factors that transformed the face of the US marketplace. American consumers had a pent-up demand for smaller cars and for cars with better gas mileage. They also wanted higher quality cars. While Detroit carmakers didn't respond to these needs, Japanese automakers employing competitive intelligence methods did. That led to their successful bid for the American auto market.

Anticipate actions of competitors.

Bell Atlantic Mobile systems regularly monitors its cellular phone coverage area with mobile vans that can pick up radio signals (not phone conversations!) from the towers of its competitor Metrophone. Listeners try to determine if Metrophone has turned on spare channels that are held in reserve for expansion. These extra channels would not only give customers better service fewer busy signals for instance but better coverage in outlying areas. If they have indeed activated these channels, it could mean that Bell Atlantic had better respond with its own plans to activate its bank of spare channels. If Metrophone is "heard" field-testing its extra channels, Bell Atlantic would have to respond by activating its spare channels or lose customers to Metrophone. If Bell Atlantic didn't have this early-warning system, it might not learn that its rival was using its spare channels until it was too late to retain customers who would migrate to the company with better service and larger coverage.

Discover new or potential competitors.

AT&T has one of the corporate world's most advanced competitive intelligence systems. One facet, known as "Access to AT&T Analysts," is a database of in-company experts, about one thousand people, who make themselves available to other employees in their area of expertise.

For example, an employee might be researching segments of the Chinese market. An inquiry might produce someone at the company who has lived in China.

One part of the service is a flagging system that tracks the ten companies in which employees have expressed the most interest or about which have asked the most questions. Usually, they are the competitors you would expect such as Sprint or MCI but not always.

According to Strategic Planning Manager Marty Stark a company he had never heard of suddenly appeared on the list. A study was commissioned to find out about the company and why AT&T employees were interested in it. After some research, it was discovered that the company was entering one of AT&T's lines of business. The competitive intelligence system warned AT&T's about the company's potential activity months before there was a story about it in the Wall Street Journal.

Learn from the successes and failures of others.

Sam Walton, founder of Wal-Mart stores, was brilliant at learning from competitors' mistakes and successes. He learned that customers were unhappy with retail giant Sears because they were often out of stock on items. Sears's poor distribution system was the root of the problem. So Walton decided to build a state-of-the-art distribution system, including his own fleet, which gave his customers the service they desired.

In another instance, Walton saw how poorly retail salespeople were treated by Wal-Mart management. He set out to build a programme to motivate and train employees, to built esprit de corps among his salespeople, who would now be called "associates." He instituted stock options and bonuses. Walton copied many of these positive aspects from a very successful retailer, JC Penney. Penny pioneered in 1913 the practice of calling salespeople associates and giving them a financial stake in the company's performance.

Increase the range and quality of acquisition targets.

Mike Meurisse of 3M United Kingdom PLC was looking at a company for possible acquisition because it was nibbling away at one of 3M's product lines. It was growing and gaining market share.

It was private company, run by a tyrannical owner who played his cards close to the vest. He had

several factories in Europe, but there was very little information available about the company or its operations.

Further sleuthing led Meurisse to believe that the owner had lied about his production capabilities. His products actually were coming from rock-bottom-priced factories in the Far East and not from his European facilities. In addition, although he was increasing market share, it turned out he was making very little profit-he was growing through low pricing. In that regard, he was a threat, but that threat would be short-lived, Meurisse concluded. "The bottom line is that he really wasn't making any low-priced European-made products despite the fact that originally we thought he was. Competitive intelligence saved us from buying the wrong company. It was not a threat after all."

Learn about new technologies, products, and processes that affect your business.

The pharmaceutical industry has unique challenges, including very long lead times-sometimes ten to fifteen years for certain drugs coupled with high research and development costs. The long time line allows continual tracking of competitors' similar projects and allows you to make strategic decisions along the way about your own projects.

According to Pat Bryan, Marion Merrell Dow's manager of global scientific competitive intelligence, the company continually monitors competitors' progress though public records at the Food and Drug Administration and through research journals and elsewhere. "Competitive intelligence helps us determine if we want to continue our own development, put in additional resources, or shut our program down because the problems are not worth the extra expense. In some cases, we have done just that and saved the company a lot of money which would have been wasted."

Learn about political, legislative, or regulatory changes that can affect your business.

A Samsung employee in Los Angeles read in the newspaper that one of America's last guitar factories was going to close mainly due to less expensive Korean imports. He sent that information to company head-quarters in Seoul, which engaged in the following analysis.

Guitars are symbols of America's independence and free spirit. It might be likened to the disappearance of the cowboy. Intelligence analysts thought that there would be a backlash against imported guitars and that Congress might set higher tariffs to protect a genuinely American industry and all that it stood for.

Samsung shipped all the guitars they could to US warehouses and stockpiled them. As they expected, Congress raised tariffs on imported guitars but Samsung had a huge supply on hand and was able to profit handsomely even after the tariffs took effect.

Enter new business.

Not only can competitive intelligence help you decide if you should enter anew business, it can give you a running start. For example, a Japanese naval architect who designed huge oil tankers was assigned to design Japan's first tourist ship, the Crystal harmony. He and two other designers took cruises all over the world. Just before dinner, they would take photos of the dining arrangements in luxury liner restaurants. After dinner they would count how many people were in the bar, how many were dancing, and how many were strolling along the deck. They checked out people at the pool and in lounge chairs. They took notes about everything they could visually inspect.

They worked every day until the early morning hours, at which time they went back to their rooms and put the numbers into a database for later analysis.

After several years of competitive intelligence cruising, the Crystal Harmony, a 49,000 ton version of the Queen Elizabeth 2 was on the high seas Japan's entry into the cruise ship business was successful.

Look at your own business practices with an open mind.

Many companies, especially large corporations, think internally. Methods become stale and outmoded. Competitive intelligence exposes you to new ideas and concepts. It causes you to become externally focused.

A good example of that is W Edwards Deming, the father of quality control manufacturing. When Deming's ideas were rejected by American firms after World War II, he went to Japan where he found an eager audience.

Even though his concepts were responsible in part for Japan becoming a world leader in the manufacturing of high-quality products, nobody in the United States was interested in implementing what he was advocating until decades later. It was business as usual for American firms even though old methods didn't work anymore. Now, Total Quality management (TQM) concepts are being implemented at many manufacturing facilities in the United States with excellent results.

Had US companies been looking at Japanese business practices with an open mind, or for that matter paid attention to Deming back in the 1940s, they would have seen the usefulness of his theories.

Help implement the latest management tools.

Lately, some companies have reported trouble implementing and sustaining valuable tools like TQM, reengineering, and customer satisfaction. One of the reasons is the lack of information. According to a 1993 survey of managers who were trying to implement TQM, most stated that a lack of information caused them to fail in their attempts to bring TQM to their companies. Their complaints mainly concerned what survey authors Fuld & Company called "internal information bottlenecks." Respondents said they couldn't get internal company information that they needed because they didn't know where to find it. Or when they finally located what they needed, the information wasn't timely.

In short, their companies tried to implement TQM without an intelligence infrastructure without a competitive intelligence system and failed.

The same could be said of tools like customer satisfaction, which is crucial to a company's success. Efforts there have also failed due to lack of information and an intelligence infrastructure.n

An ear to the ground

(Or what competitive Intelligence can do for your company)

It is a mysterious and often murky world inhabited by corporate spies, former

government gumshoes, and hard-nosed businesspeople. But thats no reason to shirk it, because if youre looking for an angle to beat the competition, a well-honed competitive intelligence system is your

best bet.

As former journalist Larry Kahaner says in his book Competitive Intelligence, you'll find that instituting a full-blown competitive intelligence system is neither costly nor disruptive and pays off in ways you can't yet imagine.

Although the main job of competitive intelligence is to support management decision making, having a formalised competitive intelligence system in place can help your company address many different issues.

A formalised competitive intelligence programme can:

Anticipate changes in the marketplace.

Companies that direct their intelligence efforts at tracking changes in the marketplace are rarely surprised by events that affect their businesses. On the other hand, not paying attention can exact a high price.