Competition has become so intense that, in some industries, "simply doing your best does not cut it anymore because your best can be mimicked too quickly and easily," says Faye Brill, president of the Society of Competitive Intelligence Professionals in Alexandria, Virginia. "A company's competitive advantage can be eroded more quickly now than ever before."
To protect your edge, you've got to know what the competition is doing. The key? Competitive intelligence. It may sound like something out of a James Bond movie, but "in a business setting, competitive intelligence means taking information, analyzing it and recommending strategies to help companies become and remain competitive in their individual marketplaces," says Brill.
Competitive intelligence can help you define your market, avoid wasting time and money on projects that others have already tried and abandoned, and outmaneuver your competitors on a variety of fronts. Effective competitive intelligence is a formal process that goes well beyond traditional market research. "It's about understanding all the external forces that might impact your company," Brill explains. Those include competing organizations, suppliers, unions, customers, environmental issues, government regulations and more.
"Ask yourself what you need to know and who has the answer," Brill says. "There are so many possible sources of information. You have to gather the pieces and fit them together like a puzzle."
Sources of information include competitors (check out their brochures and other marketing materials), customers, vendors, people in similar industries who are not direct competitors, trade shows, college professors, professional associations and the media.
Your goal, Brill stresses, is to carefully and accurately observe what others are doing in the marketplace so you can plan your competitive posture. And though the term "competitive intelligence" has a cloak-and-dagger ring to it, the information can and should be gathered ethically.
"It is always unethical and generally illegal to try to get a company's proprietary information," says Brill. She adds that internal documents often do not give you the information you need anyway. You may manage to obtain a copy of a competitor's five-year plan, but if the plan isn't working or they're not following it, it won't do you any good. What's more, decisions based on incorrect information can be expensive mistakes.
An acceptable and fair competitive intelligence method is reverse engineering, which is the process of examining a product on the market to determine how it was made and to identify its competitive advantages. Also, Brill says, when you're talking to your sources, be honest about who you are and the company you're with. "We encourage people not to lie and say, for example, that they're just doing research," she says. "People will still talk to you if you tell them the truth."
Whatever approach you choose, be sure it's one you are comfortable with. "If you do something to obtain information and you can look your family in the eye and tell them you did it, it's probably ethical," says Brill.
Once you have the information, be prepared to act on it. "A lot of people gather data and it's meaningless because it's not tied to a strategy," Brill says. "You have to ask yourself, 'If I get this information, so what?' Information has to have some sort of action tied to it, or it isn't worth getting."
Jacquelyn Lynn is a business writer in Winter Park, Florida.