Chapter 2/Competitive Intelligence Handbook


The Axioms of Competitive Intelligence

Most of the information needed for a given project is available through publicly-available channels.

The percentage most practitioners place on this kind of public information varies from 80% to 90%. Given the amount of information available in our age, this 80% to 90%, if analyzed and presented carefully, can be more than adequate for most needs. The remaining % is insignificant.

Information is where you find it.

This caveat simply means that while you may have your cherished sources and resources for certain kinds of information, vital information is often found in unlikely places. We once found sales and profit numbers for a large privately held company that were included in the transcript of an Environmental Protection Agency hearing. The company was trying to show that it couldn't afford a large EPA fine, and in doing so had sent its CFO to testify at the hearing. He brought along his spread sheets for the prior three years, which became part of the hearing, and subsequently became a matter of public record through the minutes of the hearing.

CI projects pass through phases that are best described with a U-shaped curve.

At the beginning of the project the researcher is filled with optimism about accomplishing it. Soon after actually starting to research the project the researcher's enthusiasm bottoms-out and he or she feels the material to complete the project successfully will not materialize. Time passes and data and information begins to accumulate, and as the project takes shape the researcher starts up the far side of the curve.

Someone else cares about the subject.

No matter how small, obscure or esoteric the subject, it is undoubtedly of interest to someone besides yourself and your client. This someone may be a newspaper editor in a small town where the company is located, or it may be the editor of a specialty newsletter, or an industry specialist in government, or a competitor of the company you are scanning, or a distributor of the product, or a warehouse manager, or the head of an association. In one case involving production of a speciality material so small it wasn't tracked by the usual sources, the investigating firm located the man who had invented the product twenty years ago when he worked for a large multi-national corporation. He had been running his own business for fifteen years, but had developed his own sources for keeping track of his brain-child. The investigation had led to someone who was interested.

Single sources of information are unreliable.

Information gleaned from one source of information may be absolutely correct, but again it may not be. It is, on the face of it, unreliable for the purposes of competitive intelligence. In CI work the primary use for information from a single source is as something to be confirmed by a second source. Corroborated information from two or more sources is probably reliable. Information that cannot be corroborated must be treated as a rumor. It may still have its uses to the client, who may think the rumor is as good as gold, and it may be. But if it is a rumor and is presented as a fact, the matter of your professional judgment may be called into question.

Real market share is harder to find than it would appear to be.

This wouldn't matter if clients weren't trying to find it so eagerly, but it does, because they are. Part of the problem is that share of market is often sought for small privately-held companies or divisions of large privately-held companies, where only the CEO and two other people may know the answer during certain times of the year. Part of the problem is the unknowability of total market size for smaller industries. Part of the problem is dissimilarity of product lines, even in large companies, so that even two companies that seem to be making the same product often aren't. Product line and share is also complicated by the way SIC numbers (Standard Industrial Classification codes that are used to categorize industries) are used by manufacturers and others. Also, companies tend to be identified by SIC numbers in three or four digits, rather than out to the more precise seven or eight digits. Use of four-digit codes amplifies the imprecise nature of the SIC numbers themselves. Some hard-copy sources, such as directories, limit their market-share lists to publicly-held corporations, which nearly always distorts the picture of the market and the key players. A number of information products (including the recently-acquired TriNet database) propose to display market-share for their readers or searchers, but regrettably, it doesn't usually happen in such a way that is usable. If the market is small enough, no one may have bothered to break it out, and it may have to be built laboriously brick-by-brick. Building market size and share in this way can take months, and involve interviews with a considerable number of industry participants.

Companies, like individuals, leave a paper trail as they go about their business.

For every action there is a reaction. If a company wishes to produce a new material involving the use of different chemicals, it will need to file with a number of regulatory agencies. Such a filing is a public document. If a company wants to expand its plant, it must file for building permits, and these too become public documents. Later, when such corporate agents as construction engineers and architects file their supporting documents and blueprints for the plant expansion, these become public documents as well.

REMEMBER: The job of CI is to understand the corporate world well enough to find the paper that company actions generate.

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