Separating CI From the Sleaze

According to a recent article in USA Today, incidents of corporate espionage are on the increase, thanks to cheap, easy-to-use technology devices and increasing numbers of displaced and disgruntled workers due to the recession.

"Corporate espionage using very simple tactics — much of it carried out by trusted insiders, familiar business acquaintances, even janitors — is surging. That's because businesses large and small are collecting and storing more data than ever before. What's more, companies are blithely allowing broad access to this data via nifty Internet services and cool digital devices."

Meanwhile, the proper use of business and competitive intelligence by US companies is also on the increase. In a recent Outward Insights survey, more than seven out of 10 companies surveyed claimed to have an organized and systematic way to collect, analyze, and use competitive intelligence, a seven percent increase over results from a similar survey we conducted in 2005.

These two facts are completely unrelated to each other.

"Corporate espionage" will be with us in good times and bad. Any employee who feels she is "getting her due" by taking sensitive customer lists along after being laid off, or any sales rep who feels he is one-upping the competition by misrepresenting himself to a competitor at an industry trade show just to get information, are not emblematic of the thousands of companies that are practicing legal, ethical and effective competitive intelligence. These acts of lying and stealing are almost always one-off acts committed by ignorant people in the belief that they are securing valuable competitive knowledge, or exacting revenge on an employer who did them wrong.

And in most cases, the individuals committing these acts wind up unemployed, unemployable, or prosecuted. An individual cited in the USA Today piece who had infiltrated a competitor's email accounts was arrested. He subsequently pleaded guilty to felony wiretapping for tampering with the competitor's e-mail. He was sentenced last month to three months probation and ordered to undergo counseling. "There was nothing sophisticated about me getting into their e-mail," he said in an interview. "Honestly, I had no idea that it was illegal."

Individuals committing such foolish acts rarely are working within, or on behalf of, corporate competitive intelligence programs. Indeed, anecdotal evidence suggests that companies managing formal competitive intelligence programs are less likely to behave unethically, as these companies make clear what intelligence activities are acceptable and which ones are not.

The competitive intelligence industry has made great strides over the years disassociating itself from the sleaze of trade secret theft. But, occasional reminders are necessary that there is a stark difference between corporate espionage and competitive intelligence. The latter is an accepted and necessary business function; the former is just utter stupidity.

The Next Internet Revolution Isn't What You Think

Ask any automobile dealer, insurance broker, or retail store manager what has been the single greatest threat to their margins and the answer will most assuredly come back: the Internet. The greater transparency of information and competition engendered by the Internet has transformed some industries for the better (who actually still goes to their local bank branch?), while leaving others in tatters (when was the last time you booked a vacation through a travel agent?).

But just as the dawning of the 21st century saw the Internet dramatically lower, and in some cases dismantle, traditional barriers to entry in a variety of industries, as this decade comes to a close, a new generation of web-technologies threaten to shake-up and squeeze yet another industry: enterprise software.

By now, everyone has heard of ‘cloud’ computing, a concept based upon the conceit that our work need not be tethered to an individual computer or operating system when a universally accepted web-standard allows otherwise. And while many would argue that the Cloud is the future of computing (Google has even recently announced a browser-based operating system called ‘Chrome’ that presumably will support accessing applications in the Cloud), Cloud computing‘s ascension as a feasible alternative will likely be delayed until cheap, high-speed, internet access is as ubiquitous as running water and electricity. Until that time, broad proliferation of Cloud computing will remain a dream.

So if Cloud computing isn’t the software revolution of which we speak, what is? Simply put, it is the advent of sophisticated, free or nearly free web-based tools that can emulate, and often exceed, the features provided by large, often bloated, certainly expensive, software platforms. The maturation of the internet has resulted in free and cheap tools so powerful that many individuals and organizations are foregoing spending tens or hundreds of thousands of dollars per year on platforms designed to achieve largely the same results as free or inexpensive, Internet-based applications. Surprised? You shouldn’t be; if there is one thing history has taught us about the internet, it’s that it dramatically drives down consumers’ costs.

The availability of free or low-cost web-based software tools are now widely available for competitive intelligence applications. When organizations evaluate traditional competitive intelligence software packages (which can run into the hundreds of thousands of dollars), they typically have many overlapping needs including: article summarization, automated competitor website tracking, government regulation tracking, team-based or work-group portals for sharing intelligence analysis and notes, CI workflow, and keyword search trend analysis.

While most CI software vendors can address most, if not all of these needs, few vendors are able to deliver every capability well. In software development, just as anything else, trade-offs are necessary and resources are often allocated towards those features that are most marketable, not necessarily those that are most useful.

That said, with a little research, CI professionals can likely piece together a suite of stand-alone, browser-based, platform-agnostic products that can often be easily integrated into existing workflows that address most, if not all, of their software needs. Indeed, we’ve found that nearly every capability that is offered by the large CI software vendors (including those functionalities listed above) can be easily and cheaply replicated (and in some cases even surpassed) by free or low-cost software offered online.

Granted, this method won’t be suitable for every organization, and it does come with its own drawbacks (such as lack of integration), but for the right CI group on a budget, free and nearly-free online applications can often replicate the features of larger, pricier options, providing an adequate substitute at a fraction of the cost.

Which is the Better Strategy?

According to the New York Times, sales of GPS Navigation Systems -- devices that mount to an automobile dashboard or windshield that tap the Global Positioning System of satellites to determine directions and provide audio turn-by-turn directions and other features -- are on the decline as more smartphones are equipped with GPS capabilities (“Sending GPS Devices the Way of the Tape Deck?” July 7, 2009). Apple’s iPhone, for instance, comes with a map application that uses the phone’s GPS capabilities to do largely the same thing as larger, and often pricier, navigation systems.

Indeed, more than 40 percent of all smartphone owners use their devices to get turn-by-turn directions, according to Compete, a web analytics firm. For iPhone users, the figure is higher at more than 80 percent. Shipments of smartphones in North America are expected to grow by 25 percent this year, with more than 80 percent of them equipped with GPS, according to ABI Research.

Not surprisingly, sales of traditional GPS units from companies like TomTom, Garmin, and Magellan have fallen sharply. TomTom reports that it shipped 29 percent fewer GPS units in the first quarter compared with the same period in 2008. Garmin said that unit sales fell 13 percent in the first quarter compared with the previous year.

Garmin and TomTom, the two leaders in GPS navigation systems, have adopted radically different strategies to deal with this competitive threat. TomTom has announced plans to offer a portable navigation application for the iPhone that would include turn-by-turn directions and audio prompts. Unlike existing GPS apps for the iPhone, TomTom intends to charge a one-time flat fee rather than require users to pay a monthly subscription fee, according to the Times. Doing so makes TomTom available across different platforms, extending the product’s reach.

Garmin, meanwhile, has plans to develop and launch its own combination navigational device and cellphone, called the Nuviphone, later this year. It essentially intends to turn its navigation system into a mobile phone, with sophisticated navigation features that should far outpace current smartphone map applications. In doing so, it will leverage its expertise at developing, selling, and maintaining devices.

Which is the better strategy? On what assumptions do you believe each company’s strategies are based? What obstacles might each encounter as it attempts to respond to the decline in its core business? We’d love to hear your thoughts.

Don't Let The Recovery Catch You By Surprise

It might be hard to imagine now, but a recovery will follow the recession in which our economy has been mired for the past 18 months. And, just like the onset and the severity of the recession caught many business leaders by surprise, so too will the extent, nature, and pace of the recovery. Is your business prepared?

It is impossible to predict the future, and any business that sets its strategy on a single vision of future market conditions knows one thing: that strategy will not withstand the uncertainty inherent in the future, because the hoped-for conditions will not materialize in the ways your company wants them to. Trying to predict precisely when the economic recovery will begin, how resilient it will be, and how competitors, customers, and other players will behave when it starts is foolish. A scenario planning mindset to the recovery will most likely better
position your company to benefit when it occurs.

Scenario-based strategic planning is a tool that enables organizations to create strategies by considering multiple plausible future environments in which the organization could be forced to participate. It operates under the premise that the future is unknowable and unpredictable, and setting strategy for a single-point vision of a “desired” future is risky. Doing so locks a company into pursuing a set of goals and objectives that may be out of sync with future conditions, and hampers a company’s ability to adjust to future market realities. Fundamental questions surround the nature of the economic recovery, and multiple answers exist to each of
them, underscoring the need for strategic resiliency and flexibility that a scenario-based approach can provide. For instance:

• Will consumer attitudes toward thrift remain post-recession, or will consumers revert to the mass consumption lifestyles that characterized the 15 years before the recession?
• Will long-term investment strategies become more risk-averse, or will investors assume the recession is a "once-in-a-lifetime" occurrence and quickly revert back to high-risk, high-reward strategies?
• Will business trends that were in vogue before the recession, such as environmental sustainability and corporate social responsibility, return? Or, will companies shy away from activities they perceive as superfluous to their core business?

More broadly, how will your business even know when the recovery is in full force? The severity of the recession has led some economists to believe that the recovery, by necessity, will be long and slow, and that there will be several head-fake economic improvements that will not, in fact, represent an honest recovery. The prospects of a “W” shaped recovery could be very real; have you considered the implications of a second downturn to your business strategy?

Our scenario planning work at Outward Insights has recently confronted these and other questions, and has helped our clients prepare for a range of circumstances. For instance, a financial services industry client has explored the conditions that would suggest a consumer
and investment “return to normal” -- with pre-recession mindsets toward risk, consumption, and spending returning -- alongside scenarios that build a case for a lasting thrift mentality long after the recovery is in full swing. By strategizing for both circumstances, the firm is
discovering strategies resilient under both sets of conditions -- suggesting that they will work almost no matter how the future unfolds -- while also preparing contingency plans to be deployed once there is greater clarity as to actual future industry and economic developments.

Don’t be caught unprepared by the economic recovery. Employing scenario planning to set a post-recovery strategy now can make your company more well equipped to thrive when the economy improves.

Good Reasons to Survive

Competitive intelligence functions are in a fight for survival. While competitive intelligence has always seemed to require an above average dose of justification to top management, it is now in a life-or-death battle with other corporate functions for an increasingly limited pool of budget dollars.

Over the past several months, I’ve written about the need for CI functions to make fundamental changes to what they produce and how they operate so that the can demonstrate value and survive the economic crisis. This month, I want to highlight what a few corporate CI functions are doing to not only weather their organizations’ budget cuts, but to thrive and expand their impact. Most of the examples that follow are taken from a lively discussion currently underway in the CI social networking platform Ning (http://competitiveintelligence.ning.com).

First, ensure that competitive intelligence is embedded in multiple, critical business practices and operations. At one European-based multinational company, the competitive intelligence function is interlinked in several crucial business planning processes, including pricing programs, marketing planning, customer relationship management procedures, and the like. The company’s Key Intelligence Topics are defined by standard business planning processes and are integral to the company’s market monitoring and early warning systems. These CI activities have become so crucial, 93% of its users have said that they cannot do without them, according to an internal survey conducted by the CI team. The result? Despite a 30% head-count reduction in the Corporate Marketing Group, the CI function has experienced no staff reductions and no cuts to its six-figure budget.

Second, CI programs may have to temporarily suspend their focus on the long-term and shift attention to current needs. Just like there are no atheists in foxholes, there is no “long-term” in severe global recessions. One CI practitioner who contributed to the discussion described how he identified where current external uncertainties are the greatest, and intervened immediately. Doing so requires a high degree of flexibility. For his CI function, identifying the most urgent, current needs has CI supporting pricing programs one day, and then supporting deliberations regarding a prospective M&A opportunity the next.

Third, CI needs to stay close to the company’s revenue stream and help management focus on serving existing customers. Cost cutting alone won’t help most companies weather the economic downturn; protection of the top line is critical. Two CI functions are helping their organizations manage the top line by helping protect and secure more revenue from existing customers. CI functions can do so by examining whether current customers and revenue sources are threatened by competitive or other external forces, and whether existing rivals have any immediate weaknesses that can be exploited in ways that capture revenue from customers.

Fourth, CI functions should reexamine the utility of their CI products in the eyes of their C-level consumers. If top-level CI users find your existing deliverables too long, not actionable, or simply unusable, the perceived value of the entire CI function is damaged. I have a consumer products industry client that fortuitously transformed its CI reports from long, ponderous market studies to short, warning alerts that provide actionable insights on emerging competitive and industry trends. The CI function aggressively marketed these products to the C-suite and within a matter of weeks had the company’s entire strategic leadership team addicted to these reports.

The current economic crisis need not spell the automatic decline of competitive intelligence. The examples offered here illustrate opportunities for CI functions to not just survive but thrive, and emerge from the current turmoil even more integral to the success of their organizations.

Change and Innovation

Innovation is a competitive advantage that even the worst economic conditions in decades can't take away. Want proof? Take a look at the movie theater industry. Pundits for years have predicted the death of movie theaters as they came under threat from cable movies on demand, Netflix, pay-per-view, and Apple TV.

However, the movie industry today is on a tear. Ticket sales this year are up 17.5 percent, to $1.7 billion, according to Media by Numbers, a box-office tracking company. And, this surge is not due just to increased ticket prices. Attendance has also jumped, by nearly 16 percent. If that pace continues through the year, it would amount to the biggest box-office increase in almost 20 years.

Movie theaters have been able to defy their own death predictions and thrive in a deep recession by installing stadium seating, high-quality sound systems, better food, and abundant parking. They are also renting out theaters for other uses, such as comedy clubs and major sporting events. Answering complaints about cell phones ringing during movies, the industry is also looking into cell phone jamming and emergency-call-only technologies.

Creativity and innovation are corporate assets that can't be taken away, either by competitors or tough economic conditions. You cannot hope to succeed without being open to change.

Is The CI Industry In A Rut?

More than 500 CI professionals have gathered in Chicago for the 2009 Society of Competitive Intelligence Professionals Annual Conference and Exhibition. On the program are sessions on how to build a CI process, common analytic models, ethics -- the usual fare. Which begs the question, are we in a rut?

Earlier this year, a question was posted to an online competitive intelligence network asking this very question. Few participants in that discussion -- and at an "active dialog" session that I led yesterday at the SCIP09 conference -- could point to any new innovation in our field in the last 20 years.

Does that mean that innovation is not occurring, or that it is occurring but not being shared within the profession? In some sectors -- consumer products, for example -- CI practitioners seem more willing to share their new tools and techniques than others, such as pharmaceuticals. Different industry norms regarding the nature of competition, assumptions about how industry participants operate, and other factors seem to influence the openness of CI innovation.

Still, forums do exist where CI practitioners come together in small groups to learn from each other. Examples include the Conference Board's Competitive Intelligence Council, and the Intelligence Leadership Forum. The existence of these groups, and the experiences of many seasoned CI professionals, suggests that innovation is shared only among small, semi-formal networks, not in large conference sessions. To innovate, then, is to be a superior networker, making personal connections with other practitioners with whom you can share and learn innovative ideas and practices.

Still, after 20+ years, isn't there a need for some new innovation that would benefit the entire CI profession? The answer is yes. The holy grail of CI innovation, I believe, is in determining a method to accurately measure CI's value. Several sessions at this year's conference have addressed this, but the general consensus is that our profession does not have a credible methodology for communicating the quantitative value CI brings to an organization. Whoever can offer such a model will truly advance our profession's innovation.