Competitive intelligence, (CI) or business intelligence is what the cynics might once have called industrial espionage. Practitioners abhor that particular phrase, because it implies they might use unethical or illegal techniques and practices. And this is a myth the professionals are very keen to dispel.
The semi-covert practice of gathering legitimate information about competitors and business partners is an important part of modern business—especially in North America. While it still carries an aura of espionage and secretive operations, the function has growing professional recognition, and practitioners can command high salaries and direct access to top decision makers in many global corporations.
SCIP (Society of Competitive Intelligence Professionals) says CI is, "the legal collection and analysis of information regarding the capabilities, vulnerabilities, and intentions of business competitors, conducted by using information databases and other open sources and through ethical inquiry. "
Despite a desire to throw off the cloak and dagger image, it appears that many practitioners have previously worked in security or military roles, and many at senior levels. Here is what one practitioner (who works for a big-name international corporation) had to say:
I have a couple buddies who are former CIA operatives (big time operatives). These are the guys that were able to get me a ***** (competitor's) phone book a few years back. Each one is a country specialist. One does Eastern Europe, another does Western Europe, another does Japan and I have one for Latin America. The one guy headed up Operation Phoenix in Cambodia during the Vietnam War. Another was the former Director of the Defense Intelligence Agency. A retired Lt. General.
On the side, I do some contract work for them at trade shows and in a couple other areas. Don't know if you've ever heard of an organization called SCIP. I've been a member for about 10 years. What a wonderful organization. They have a SCIP Europe and this year they launched a SCIP Japan. My one CIA buddie heads it up. The contacts you can make through the organization and the information you can get are unbelievable. There is even a place one of my CIA buddies runs called the Centre. It's a place you go to learn real-world elicitation skills. Most intense program I have ever been through. Beats anything I had in the military. Runs for 5 days from 6 a.m. until midnight. Really intense!
So much for the training. What exactly is CI? And more critically, why do companies need it?
According to John A. Nolan, founder of the Phoenix Consulting Group, and a leading figure at the Centre for Business Intelligence, it is all about collecting information by legal and ethical means which, when added together and counted as a whole, "can provide the same kinds of information as might otherwise have only been available through such illicit means as theft".
CI, at heart, then is using legal and ethical means to obtain information, which appears to be available only through illegal or unethical means.
The basic technique
Trade shows are ideal places to do some CI work. Also seminars and conferences where relevant professionals meet and talk. But it can be just as easy to do it over the 'phone or in a face-to-face meeting.
According to Nolan, his standard opening line runs like this, "Hi, Fred. My name is John Nolan and I'm calling from Phoenix Consulting Group in Huntsville, Alabama. I'm working on a project and I was told that you're the smartest man who ever wore hair concerning XY and Z. Is this a good time to talk?" Roughly half the people who hear this will go right ahead and talk about project XY and Z with no further debate, said Nolan. The other half will ask who Phoenix consulting is, or why Nolan wants this information and what he intends to do with it.
After Nolan says he is a consultant working on behalf of an un-named client, only about 15 percent of the original total will refuse to talk any further (these are the clever people), the others will continue to answer Nolan's questions. Think about this: it means about 85 percent of people will continue talking to the researcher, with no explanation of who he is working for, or how the information will be used. (These are the not-so-clever people). Those questions can be very penetrating, up to—and beyond—the point where they are risking commercial security.
In fact, the CI professional tends to use the same techniques as military intelligence experts, and a few journalists: it's called elicitation. Eliciting information from the target, without directly asking the question.
According to Nolan, "Techniques that range from a seemingly common exchange of information, certain kinds of provocative statements, disbelief, feigned naiveté, criticism, encouraging snivelers and whiners to cry on our shoulders, and many more." These include making deliberately false statements, in order to get the target to make a correction; encouraging the target to get involved in one-upmanship (or one-downmanship). When trying such techniques, the researcher makes a note of which technique worked best and how much information the target was able to give, for future reference.
Nolan describes more techniques familiar to journalists and researchers around the world. He says the questioner has to know when to stop, before pushing the target too far. The researcher will also expect to confirm many of these snippets of information through other sources, and to fill in more details from other correspondents using a similar set of elicitation techniques. One of the critical aspects of this is expecting to speak with many different people, each with a slightly different perspective on the issue, and getting their ideas about what is going on. It is very rare for one single person to have all the facts or all the ideas. Instead, it is much more common to get an overview only after many fairly similar conversations.
The CI professional can call customers, suppliers, trade journalists, professional societies, other consultants and other researchers, as well as the target company itself. And within the target company, there are many different divisions: purchasing, technical, accounts, maintenance, sales, and many others. In each there will be one or two people who know about the ‘project’ under investigation. Five or ten minutes with each person could be enough to build a good picture of the project.
It is not illegal to sit in a car outside a competitor’s factory, counting the number of deliveries and noting the suppliers, or counting the number of employees going in and out, or counting the number of trucks leaving with finished goods. This kind of research can give insights into production volumes, deliveries, and staff numbers.
Patent searches should be routine for most companies, but the CI community thinks relatively few companies put enough time and effort into patent research.
it is possible to get certain government documents under the Freedom of Information Act (in the United States at least). Local authorities keep factory blueprints, available for public examination. Combine these with an infra-red satellite image, and it is a short step to working out the precise layout of the plant and the manufacturing process being used. (Thanks to Sylvar)
Some companies allow the public to go on a factory tour of their plants. There are many stories of overseas visitors being observed counting seam welds, or photographing strange bits of machinery, or noting pressures and temperatures on control panels. Every little snippet can add up, when assembled together. (Thanks to Professor Pi)
There are many such public domain sources of information, from trade magazines, to the staff newspapers and websites of competing companies. The CI professional will monitor them all for snippets of relevant information.
- Private e-mails