How to Keep Tabs on the Competition

Keeping a close eye on the competition is often thought to be = a big=20 boys' game. Many Fortune 500 companies have entire departments devoted = to=20 competitive intelligence, or CI, and there's a whole subindustry of = CI-focused=20 management consultants to serve those departments. Small companies, on = the other=20 hand, are thought to be too busy minding their own businesses to mind=20 others'.

In fact, competitive intelligence may be more important to small = companies=20 than to large ones, because small businesses feel the impact of = competition more=20 immediately and more deeply. "All small-business owners do CI in some = way or=20 another," says Craig Fleisher, a management professor at the College of = Coastal=20 Georgia in Brunswick and a former president of the Society of = Competitive=20 Intelligence Professionals.

Not all of them do it well, though, and Fleisher says research = increasingly=20 demonstrates that the lapse is holding these companies back. At = successful=20 companies, he says, "competitive intelligence is part of the day-to-day=20 operation -- part of the fabric of the enterprise."

The pages that follow are an introduction to keeping track of your = rivals. It=20 will require some dedication, but it need not cost a lot of money or = take too=20 much time. And you won't have to resort to employing spies or = subterfuge.

Competitive Mapping

1. Getting Started
Before you can begin to understand the=20 competition, consultants say, you have to be able to articulate your own = business's goals and strategy -- knowing both where you stand in the = marketplace=20 and where you would like to be. "You've got to find ways to clearly put = yourself=20 side by side with your competitor," says Anne House, an Arlington,=20 Virginia-based competitive-intelligence consultant. "Because it's in the = difference between the two of you where opportunities lie."

Determine who matters. Keeping tabs on your rivals, formally = or=20 informally, usually occurs one of two ways. Either you are monitoring = them=20 regularly, updating your store of information as circumstances warrant, = or you=20 are suddenly faced with a surprise -- in the form of a new challenger, = say --=20 that requires a prompt response.

The latter case often reflects a failure to think broadly about who = your=20 competitors really are. Though most business owners can identify their = current=20 top direct competitors, they "assume what exists today is going to be = true=20 tomorrow," says Fleisher. Leonard Fuld, principal in the Cambridge,=20 Massachusetts, CI consulting firm Fuld & Company, recommends "war = games" --=20 in other words, anticipating moves by existing competitors or new = entrants that=20 could rearrange the market.

Still, don't watch more than five companies at any one time, or you = may find=20 yourself overwhelmed. "Spending too much time on competitive analysis is = spending too little time on truly being competitive," says Rick = Galbreath,=20 president of Performance Growth Partners, a small-business consultancy = in=20 Bloomington, Illinois. "How do you become a dominant factor in your = marketplace=20 if you're looking over your shoulder 24 hours a day?"

Focus on what matters. According to popular CI theory, a = thorough=20 investigation into a competitor will analyze four aspects of its = behavior (or=20 "four corners," in the jargon): 1. its goals (or "drivers," often = expressed in=20 terms of revenue or profits); 2. management's assumptions about the = market; 3.=20 its strategies and tactics to achieve those goals; and 4. its = capabilities for=20 meeting the goals.

In practice, most companies are mainly interested in the third and = fourth=20 elements, tracking strategies and tactics and capabilities. For the most = part,=20 that boils down to collecting information on your competitors' products, = marketing, and operations. (See "Gathering Intelligence," below.)

Formalize the process. "Part of making competitive = intelligence a=20 discipline is discipline," says Fuld. Start by designating someone to = oversee=20 the effort. (It need not be you, but your employees must know that you = back the=20 effort.) Establish a repository of competitive information -- folders on = the=20 server or mail server, for example -- that is accessible to anyone on = staff who=20 could contribute to or benefit from it. Finally, executives should = review and=20 analyze the data that are collected periodically, say, once a quarter.=20 "Competitive intelligence in and of itself has no intrinsic value," says = House.=20 "The value accrues when you use it to make better decisions."

2. Gathering Intelligence
Businesses have always watched = their=20 rivals closely, but the advent of the Internet -- and especially search = -- has=20 changed the game. Not only are vast sources of data instantly available, = but the=20 process of collecting data can be largely automated.

In the news. First, sign up for e-mail alerts about the = search terms=20 of your choice from Google News (news.google.com), = which=20 tracks hundreds of news sources -- when one of those terms appears in a = news=20 article, you will know about it. (Choose search terms carefully to avoid = a flood=20 of needless messages.) CI investigators say the best sources are very = often=20 small-town newspapers or local business papers that avidly cover = hometown=20 companies, particularly when they are big fish in a little pond. Google = News=20 does not always reach those outlets, but you can often sign up directly = with=20 those news sources for e-mail alerts or daily digests of stories.

Online. A competitor's website is an obvious place to begin. = After=20 you study it, deconstruct it using Fagan Finder, a bare-bones but very = useful=20 research site. Plug the address into the search box at faganfinder.com/urlinfo. You will be able to = quickly=20 learn, for example, the other sites that link to it, which can reveal = alliances,=20 networks, suppliers, and customers. "Sometimes you'll see directories = they're=20 listed in -- perhaps you should be in that directory, too," says Robin = Lasher,=20 director of the Navarro College Small Business Development Center in = Corsicana,=20 Texas. Fagan Finder also links to trackers, like the free site WatchThatPage.com, that monitor specific pages and = alert you by=20 e-mail when they are changed. "When a company changes its website, it = certainly=20 speaks to how their messaging is changing and how they prioritize what = they're=20 communicating," says Toni Wilson of MarketSmart Research Services in = suburban=20 Dayton, Ohio. For example, the online bio of a new manager might hold = clues=20 about a competitor's new direction.

Business data aggregators such as Dun & Bradstreet (dnb.com) and = InfoUSA (infousa.com) provide detailed company = information,=20 including financials, although the services are not cheap. Often, = however, local=20 academic and public libraries have subscriptions (in libraries, InfoUSA = is=20 branded ReferenceUSA) and a willingness to share them -- and other = resources --=20 with local small businesses. Ditto Small Business Development Centers = and other=20 economic development organizations.

From the bureaucracy. Government agencies hold a store of = public but=20 often unpublished information, available simply through a Freedom of = Information=20 Act request (or its local equivalent). Wilson, for example, once = requested=20 Occupational Safety and Health Administration accident records from = landscaping=20 companies competing with her client. "It just provided a wealth of = information=20 about where these companies did business and what their safety records = were=20 like," she recalls. "And ultimately, it helped our client position = itself as=20 more conscientious about safety."

Model Madness

Consultants are perennially devising new analytic models for = evaluating a=20 business and its competitive landscape, often with catchy names or=20 abbreviations. But Craig Fleisher, the management professor, argues that = these=20 tools are not interchangeable -- they work best, he says, when put to = specific=20 uses.

For strategic planning: Particularly popular is SWOT, which = stands for=20 "strengths, weaknesses, opportunities, and threats." SWOT divides these = into=20 quadrants on a grid. The challenge of using this tool, says House, is = that "it=20 requires you to be somewhat dispassionate about strengths and = weaknesses, and=20 most people aren't with their own organizations."

To analyze new market opportunities: A simple, if crude, way = is to=20 draw up what's known as a strategic group map. You plot your company and = your=20 competitors on a grid, against two variables that most define success in = your=20 field, such as pricing and product quality. The grid, which is divided = into=20 quadrants, illuminates the strategic space that remains open.

To anticipate how competitors might react to your next move: = Fleisher=20 suggests returning to the four-corners analysis. As discussed on the = second=20 page, you match up your company against the competition in terms of = goals,=20 assumptions, strategies, and capabilities.

Several websites offer detailed descriptions of various analytical = tools for=20 intelligence. Start with mindtools.com, quickmba.com/strategy, and 12manage.com/i_s.html.

Ask Your Staff

"A lot of times, your sales folks know a lot about the competition, = but=20 nobody ever asks them," says MarketSmart's Toni Wilson. These employees = don't=20 always see collecting intelligence as part of their job description, so = company=20 leaders have to institutionalize it, in part by fully embracing it as = well as=20 recognizing employees who contribute. Consultants recommend = encouragement such=20 as regular contests that are perhaps more fun than profitable -- say, a = "scoop=20 of the month" party that rewards good tips with certificates for free = ice=20 cream.

"As long as you keep the feedback loop coming, it builds on itself = without=20 adding costs, because they're doing their jobs anyway," says consultant = Leonard=20 Fuld. "In fact, it makes their jobs more interesting." Make it easy for=20 employees to participate, with simple forms (that are perhaps part of = the=20 standard reporting process) in addition to a central repository.

Resources

The Society of Competitive Intelligence Professionals (scip.org) offers = articles,=20 resources, and a list of leading practitioners to members (membership is = $295 a=20 year); individual articles cost $25.

The market research firm Polson Enterprises offers a detailed = procedure for=20 researching an industry or company and extensive links, at virtualpet.com/industry/howto/search.htm.

Financial management consultant Matt Evans (exinfm.com) offers = several=20 useful introductions to CI. And consultancy Fuld & Company (fuld.com)=20 provides many free CI resources.