Page 107 -

CHAPTER 3 • THE EXTERNAL ASSESSMENT 73

A recent article in the Wall Street Journal detailed how computer spies recently broke
into the Pentagon’s $300 billion Joint Strike fighter project, one of the costliest weapons
8
programs ever. This intrusion and similar episodes of late have confirmed that any infor-
mation a firm has available to anyone within the firm online may be at risk of being copied
and/or siphoned away by adversaries or rival firms. A recent Pentagon report says the
Chinese military in particular has made “steady progress” in developing online-warfare
techniques, but rival firms in many industries have expert computer engineers who may be
capable of similar unethical/unlawful tactics.
Many U.S. executives grew up in times when U.S. firms dominated foreign competi-
tors so much that gathering competitive intelligence did not seem worth the effort. Too
many of these executives still cling to these attitudes—to the detriment of their organiza-
tions today. Even most MBA programs do not offer a course in competitive and business
intelligence, thus reinforcing this attitude. As a consequence, three strong misperceptions
about business intelligence prevail among U.S. executives today:

1. Running an intelligence program requires lots of people, computers, and other
resources.
2. Collecting intelligence about competitors violates antitrust laws; business
intelligence equals espionage.
3. Intelligence gathering is an unethical business practice. 9
Any discussions with a competitor about price, market, or geography intentions could
violate antitrust statutes. However, this fact must not lure a firm into underestimating the
need for and benefits of systematically collecting information about competitors for
Strategic Planning purposes. The Internet has become an excellent medium for gathering
competitive intelligence. Information gathering from employees, managers, suppliers,
distributors, customers, creditors, and consultants also can make the difference between
having superior or just average intelligence and overall competitiveness.
Firms need an effective competitive intelligence (CI) program. The three basic objec-
tives of a CI program are (1) to provide a general understanding of an industry and its
competitors, (2) to identify areas in which competitors are vulnerable and to assess the
impact strategic actions would have on competitors, and (3) to identify potential moves
that a competitor might make that would endanger a firm’s position in the market. 10
Competitive information is equally applicable for strategy formulation, implementation,
and evaluation decisions. An effective CI program allows all areas of a firm to access con-
sistent and verifiable information in making decisions. All members of an organization—
from the chief executive officer to custodians—are valuable intelligence agents and should
feel themselves to be a part of the CI process. Special characteristics of a successful CI
program include flexibility, usefulness, timeliness, and cross-functional cooperation.
The increasing emphasis on competitive analysis in the United States is evidenced by
corporations putting this function on their organizational charts under job titles such as
Director of Competitive Analysis, Competitive Strategy Manager, Director of Information
Services, or Associate Director of Competitive Assessment. The responsibilities of a
director of competitive analysis include planning, collecting data, analyzing data, facilitat-
ing the process of gathering and analyzing data, disseminating intelligence on a timely
basis, researching special issues, and recognizing what information is important and who
needs to know. Competitive intelligence is not corporate espionage because 95 percent of
the information a company needs to make strategic decisions is available and accessible to
the public. Sources of competitive information include trade journals, want ads, newspaper
articles, and government filings, as well as customers, suppliers, distributors, competitors
themselves, and the Internet.
Unethical tactics such as bribery, wiretapping, and computer break-ins should never
be used to obtain information. Marriott and Motorola—two U.S. companies that do a
particularly good job of gathering competitive intelligence—agree that all the information
you could wish for can be collected without resorting to unethical tactics. They keep their
intelligence staffs small, usually under five people, and spend less than $200,000 per year
on gathering competitive intelligence.