Spy Away

Room For Improvement

Even Bloom can improve in some areas, McGonagle contends. The expert likes to see as much attention paid to protecting your own information as to learning about others. Requiring customers to keep materials confidential helps, he says, but you should take it for granted that if you can get your competitors' materials, they can get yours. "Never assume the competition isn't as smart as you are," he warns.

Verifying information is another area Bloom may need to emphasize. For instance, a customer could be telling you about a competitor's offer in hopes you'll try to beat it. "They give you information for a reason, and you have to understand that," McGonagle says. "Especially if you don't have documents, make sure you check on it."

Along those lines, Bloom needs to verify papers such as provider contracts aren't being obtained improperly. "Make sure the documents are not marked confidential and for the use of the recipient only," advises McGonagle.

McGonagle is somewhat concerned that it took a customer to alert Bloom to a lawsuit against one of his competitors. Careful monitoring of regulatory actions and reports, especially in a highly regulated area like insurance, might well have revealed the issue sooner, he says. Timely awareness of a lawsuit is crucial, McGonagle explains. There may be limited opportunity to see court documents, many of which are full of valuable information, before a competitor arranges to have records sealed from public view.

Entrepreneurs in most industries can get surprising amounts of information from the government, adds McGonagle. Tax assessments might reveal the quantity and type of machinery behind a rival's factory walls. Bids on government contracts and applications for environmental permits might do the same.

One last key to operating an effective CI program is to involve employees as much as possible. McGonagle likes to see active incentives for workers to take part. This can be as simple as letters of praise in their personnel files. "People die for that kind of stuff," he says, "because it can mean a promotion."

For entrepreneurs themselves, competitive intelligence can mean the difference between teaming up with the right partner and getting trampled by an unseen opponent. Bloom, whose company has gone from start-up to a 22-employee firm in three years, is a believer. "You're not in a position to compete without competitive intelligence," he says. "It's like running a race without looking at the other runners."

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This article was originally published in the March 2000 print edition of Entrepreneur with the headline: Spy Away.

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