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64 T h e I n f o r m a t i o n M a n a g e m e n t J o u r n a l March/Apr i l 2004

BusinessMatters

Competitive Intelligencein Action

How do organizations use competitive intelligence, and

what can it mean to their success? Two case studiesillustrate different approaches and results.

John J. McGonagle Jr. and Carolyn M. Vella

At the Core

This article

discusses the use of CI in two

companies

examines the strategic use of

internal information and records

within the two firms

explores the effect of CI on each

organization

ompetitive intelligence (CI)

is increasingly being consid-ered an important, if not

mandatory,piece of every business over-all strategy and functioning. If developed

and used in the right way, CI can boost a

business bottom line as well. But the key

is developing and using it in the rightway, based on a particular business

needs, organization, and competition.

This article presents two case studies

that illustrate real-world examples ofhow CI was developed and employed in

very different firms, answering such

questions as:

Where did the idea of CI originate

internally?

Who are CIs champions, and how

have they benefited?

What was CIs effect on revenue?

What approaches/strategies were used

internal, contracting out, consultants?

What has worked and what has not?

How were internal information/records used strategically?

The names of the companies involved

have been omitted for confidentiality

and competitive reasons, since knowing

how Firm A runs its CI program is, inand of itself, competitively sensitive and

valuable intelligence. The competitive

sectors involved are also not precisely

drawn because, in one case, identifying

the competitive market being served

would be the equivalent of disclosingthe firms name. Detailing the specific

market niche does not add to the les-sons to be learned, and may, in fact,

make it harder to clarify those lessons.

But rest assured, these cases are real,

current, and accurate.

Case 1: Financial ServicesThe first company is a large financial

services firm that has been a part of theU.S. business landscape for more than

100 years. This firm first became

involved with CI when marketing

managers in one of its key businessunits realized that the competitive

environment was becoming more diffi-

cult to deal with. They first hired a

manager who had been in charge of CIat a much smaller firm. His job was to

build the capacity to collect CI and to

educate management about its impor-

tance and use.

C


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Within 18 months or so, this managerbegan to see results. At first, he used

internal research assistance, searching

secondary literature for data and using

online databases to stay aware of break-ing news. As internal customers began to

see the value of CI, the manager recruit-

ed several experienced CI research firms

to provide supporting field research. Theconcept was that these firms would all be

pre-qualified to work on CI and that the

CI manager could offer projects to one

or more of them.This outsourcing of large, complex

CI research and analysis projects quick-

ly proved its worth. The CI research

firms were usually given projects entail-

ing significant field research, manyinterviews, and a competitive issue of

major significance and importance to

the firm. The mix of CI firms used var-ied over time as some were dropped and

others replaced.

Initially, the CI unit had been provid-

ing CI to the sales and marketing func-tions and assignments and CI targets

came to the unit through existing mar-

ket research channels. But over time, the

CI unit changed its tactics to dealdirectly with the sales function to better

determine CI needs as well as to collectraw data from it.

One key initiative was periodic com-petitive briefings given by the CI unit to

sales personnel. At those conferences,

which could be either in person or by tele-

phone, the CI unit also received first-handdata from the sales force and was able to

probe these individuals for data that the

CI unit would need for other tasks.

To supplement the briefings, the CIunit later established databases that are

still updated on a regular basis. Thesedatabases provide a self-serve supple-

ment to the regular CI research projects.Initially, they were not used often, but

now there are thousands of database

inquiries each month.

Since then, the CI unit has becomelarger, with individual CI professionals

assigned to serve particular product

groups. The CI unit, from an organiza-

tional point of view, remained grouped

with marketing research but has beenrecognized as a process apart from it.

This organizational change allowed bet-

ter coordination between the two units

and helped them recognize that, inpractice, CI is essentially a qualitative

process while market research is pre-

dominantly quantitative in its operation.

Successful Initiatives

One extremely successful techniqueemployed by the firm was the eventualdevelopment of a standard set of com-petitive research information productsthat are pushed out to actual andpotential internal customers on a setschedule. The schedule ranges from

ongoing or as needed, to weekly, month-ly,and even annual, and the products arebranded and delivered by e-mail, via tele-conferences, and in person.

This technique helped the firm keepinternal business partners aware of thecompetitive research function andhelped them to understand what othertypes of competitive information areavailable. It also provides the CI unitwith a basic set of deliverables that sat-isfy most internal needs.

Creating and maintaining a good

relationship with internal customershas been critical to the units successes.The CI unit makes a point to allow theinternal customers of the custom stud-ies to review a rough cut of the findingsto ensure that both sides are workingtoward the same objectives.

As with so many successful CI units,

attributing specific revenue to its

actions is difficult. Because this unit

operates largely in support of sales andmarketing functions, its contributions

tended to be in qualitative areas such as

providing early warnings of competi-

tors new product introductions andmarketing initiatives as well as changes

in the way products come to market

identifying key competitors emergingstrategies that will directly impact the

companys sales and marketing tactics

serving as a source for flash warn-

ings to senior executives, giving notice

of critical changes in the businesses ofkey clients, and providing news of sig-

nificant legal changes impacting the

companys own business

providing reality checks for corporatestrategic planning initiatives through

CIs ability to predict what key com-

petitors will do in response to corpo-

rate moves

In other words, the CI units supportof sales and marketing bought time, acommodity that can be virtually invalu-able to sales and marketing efforts.However, the true value of that timedepends on what use the CI units inter-nal clients made of it.

Within the organization, the CI unitcontinuously receives feedback on itsperformance from various internalgroups.The feedback has, almost univer-sally, indicated that the CI unit is pro-viding a valuable service. In fact, theunits value is demonstrated, in internalterms, by the following two observations:

No significant marketing decision iscurrently made without consideringthe competitive intelligence providedby this unit.

As the unit has matured, the types ofstrategic and tactical intelligencerequested by senior managementhave shown that senior managementvalues the units work.

Lessons Learned

As it has matured, the CI unit hasmaintained and refined its approach tocollecting raw data. As it operates now,there are several interlocking approaches:

The CI unit itself regularly conductssecondary research and analyzes itsmeaning. The sources used can rangefrom press releases to governmentalfilings and from e-mails from salessources to bulletins in industry-spe-cific publications.

The CI unit uses outside contractors

on a regular basis to supplement this

research. Contractors focus on in-

depth interviews from customers, aswell as the media, regulators, and


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others. The results of these largeresearch assignments are then blend-

ed with the CI units own work.

The CI unit contracts out sporadic,

labor-intensive, data-gathering proj-ects that would overwhelm its ownday-to-day operations. It may thenconduct its own analysis of data thatthe contract organization provides.

The CI unit contracted with outsidefirms to be available on a one-, two-,or three-day turnaround to handleemerging, short-term research andanalysis on a continuing, open-endedbasis. All members of the CI unithave the ability to use this resource.Typically, the CI unit receives new

marketing materials and presenta-tions, as well as the results of inter-views with key individuals in themarketplace.

The CI unit purchases syndicatedresearch, which it may supplement byits own work and/or that of outsidecontractors.

The CI unit has also made changesin how it evaluates outside contractors.In the past, monthly reports outlinedwhat CI personnel requested from var-

ious contractors and what was deliv-ered. Then, as part of a corporate ini-tiative on all contracted work, the CIunit asked its outside contractors toassign a cost to each request. The con-tractors now provide a monthly reportof all work done on a continuingengagement, assigning both out-of-pocket costs as well as time-basedcharges to each task. This allows the CIunit to evaluate the cost-benefit ratioof each task, as well as to determinewhether any particular internal cus-

tomer has over-used this resource.The companys use of internal infor-

mation records has evolved over time.At the beginning of the units function-ing, there were no internal records ofany real use. Over time, having educatedthe sales force on the value of CI, the CIunit has been able to elicit cooperationthat involves sales personnel providingdata, competitive sales materials, andeven interviewing leads from their own

customer relationship management(CRM) records. While the CI unit doesnot have direct computerized access tosuch records, there are no technologicalreasons why that could not happen in

the future. The issue is not technical; itis cultural. Such direct access has beenused in firms outside this industry formore than a decade.

Data sharing and CI-specific record-keeping have grown, with the CI unittaking the lead. The CI unit created andimplemented an internal CI database inan effort to build credibility with thesales function. One goal of that effort isto induce the sales function to captureand then share potentially valuable data.However, because of the nature of its

business, the firm is subject to strict pri-vacy rules aimed at protecting the vastamounts of data it collects and keeps onindividuals. These regulations have lim-ited internal data-mining efforts.

Case 2: TransportationThis firm is a major player in its mar-

ket niche. Its involvement with CI beganin the 1990s, when it was considering amajor investment in a Web-based mar-keting and sales initiative. That initia-tive would, if successful, enable it to

make major inroads against its largestsingle competitor in that competitorspreviously secure market niche.

The project managers quickly real-ized that,if the key competitor were firstto market with a similar initiative, thecompany would lose much of themomentum it expected to obtain. Inaddition, if the company were second inthe market, it would have to change itsentire marketing strategy a changethat would have to take place quicklyand that could not be made effectively

after the fact; it would have to be startedin the very near future.

The firm had no CI capability,so it con-tracted with a major CI research providerto conduct the needed research and analy-sis.That project provided the firm with thecritical analysis it needed on its competi-tors intentions and capabilities in thisarea. The project was a success. The newinitiative was launched without the com-petitor being able to respond quickly.

In part as a result of this success, thefirm created its own small CI unit.Rather than serving the sales and mar-keting functions, the unit focused moreon corporate long-term strategy. The

small unit did most of its own research,initially starting with secondary researchsources. Over time, it added interviewswith individuals whom the firm hiredfrom competitors or customers.

Gradually, the CI unit began to sharesome of its work with the sales and mar-keting units through ad-hoc briefings;the unit later provided access to anintranet site containing links to researchsources as well as short profiles on keycompetitors, customers, and related

competitive issues.

Key InitiativesMore recently, the firm began a series

of initiatives to enable it to competemore effectively. The impetus for thiswas its key competitors increases in themarket share of critical market niches.The firms goal was to understand exact-ly how its key competitors approachedselling, what worked, and what did not.

Internal managers first began a seriesof interviews and surveys that included

their own sales force, headquarters andregional managers, and customers of allsizes. The specifications for the associat-ed CI project gradually emerged as inter-nal sales and marketing research person-nel began to identify reasons why exist-ing customers transferred a part, or evenall, of their business to competitors.

The research indicated that severalimportant reasons for that lay outsidenormal market forces. They includedmanagers involved in their sales forcesdaily performance and interaction with

the firms competitors. As a result, theresearch personnel concluded that theywere facing an issue for which CI skillswould prove invaluable.

After starting its own internalresearch, the marketing and sales teambrought in the CI unit as a partner. Allsoon realized that the scope of the CIwork involved would overwhelm avail-able staff as it involved more than sec-ondary research and could entail dozens


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from sales-related activities than were itscompetitors. According to one source,planned reductions in micro-manage-ment, including numerous associatedreports, may be equivalent to adding

from 10 to 20 percent more sales person-nel at no cost.

There are some indications that thisproject may result in internal changeswith respect to CI. One option underconsideration is that the sales and mar-keting functions develop their own CIunits. The other is to re-position andexpand the existing CI unit to serve bothstrategy and tactical internal customers.

The Value of CIAs with so much in CI, any projects

ultimate value lies in what a firm even-tually does with the intelligence. If usedwell, CI results in better performance inthree key areas:

Acquisition of new business

Retention of existing business

Improvements in sales-force per-formance and morale

As these two case studies show, CI ismuch more than a management discipline.

It is a practical, useful, and changingmethod of determining where a companystands in the business world and how it cancompete more effectively and more knowl-edgeably in its marketplace.CI is becomingmore and more necessary to ensure notonly success but also survival.

68 T h e I n f o r m a t i o n M a n a g e m e n t J o u r n a l March/Apr i l 2004

BusinessMatters

of internal and external interviews, aswell as analysis.

The new team arranged to contractwith one CI company that was selectedin a competitive bid process. At first, the

firm provided the contractor a list oftopics to explore. It then developed inconjunction with the contractor addi-tional, subsidiary questions to beanswered and deleted duplicate ques-tions. The internal team conducted reg-ular debriefings with the outside team,aprocess that generated additional ques-tions and even changed the priorityassigned to existing issues.

As the project developed, the CI con-tractor soon found that some of thefirms internal records were invaluablebecause they contained raw data criticalto the overall assignment. For example:

Research conducted by the strategicCI unit for senior management previ-ously not available to the sales andmarketing team

Memos of the CI units interviewswith new employees who had comefrom competitors and customers

Memos produced by the sales forceabout customer calls, detailing the

kind of sales tactics faced by key cus-tomers. These memos were routinefiles but were not previously used byanyone other than sales personneland their managers.

Interviews of individuals applying forsales jobs in local and regional offices;these records were the typical noteskept on employment interviews

Lessons LearnedIn this firm, there was no relationship

between the CI unit and internalrecords and information management(RIM) staff. However, the CI researchrevealed that the sales force had data ofsignificant value to the overall assign-ment in its own records. That findingspurred an internal effort to improvethe sales forces records, as well as toexpand access to those records by non-sales personnel. Such an effort will nec-essarily involve the RIM staff.

John J. McGonagle Jr. is Managing Partner andCarolyn M. Vellais Founding Partner of

The Helicon Group, a competitive intelligence consulting, training, and research firm in

Blandon, Pennsylvania. Together they have written seven books on competitive intelligence,including Protecting Your Firm Against Competitive Intelligence, and Bottom Line

Competitive Intelligence. Each is a Society of Competitive Intelligence Professionals award

winner. Vella was awarded the Meritorious Award in 2003, and McGonagle received the

Fellows Award in 1998. The authors may be contacted [email protected].

ReferencesMcGonagle Jr., John J. and Carolyn Vella. A Case for Competitive Intelligence. The

Information Management Journal36 (July/August 2002).

___. The Managers Guide to Competitive Intelligence. Westport, CT: Praeger

Publishers, 2003.

___. Bottom Line Competitive Intelligence. Westport, CT:Greenwood Group, 2002.

At the end of the process, the internaland external teams generated a list of keyfindings from the project. The internalteam then developed a summary of whatthese findings meant to the firm and how

the firm should respond to them.The payoff of the CI project is that

the firm now knows what it is really fac-ing and what underlying sales and mar-keting strategies exist. That translatesinto a new, unexpected ability for thefirm to protect existing key clients fromthe competition, as well as to learn new,previously unsuspected, vulnerabilitiesin the competitors likely future salesapproaches. In this case, due to thecompanys market position, these les-sons learned could translate into mil-lions of revenue dollars, including thatwhich can be gained and that which canbe protected from likely loss.

In addition, the assignment providedthe firm with a clear understanding ofcompetitor pricing models as well as theunderlying pricing tactics competitorsplanned to use. It also provided a roadmap of the companys own sales andmarketing operations, benchmarkedagainst its key competitors,which illumi-nated not only known strengths but also

previously unknown weaknesses that thefirm can now correct. For example, onlywhen the firm actually saw a side-by-sidecomparison of how it managed its salesforce and how its competitors managedtheirs did it finally appreciate that itwas draining significantly more time

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