by: Christian Sarkar

Leonard Fuld talks about how companies are using technology to gather competitive intelligence about their markets.

Competitive intelligence may be one of the hot, new techno-phrases for the millennium, but Leonard Fuld has been touting the benefits of intelligence gathering for years. An acknowledged intelligence expert, Fuld founded his eponymous company back in 1979, when the Internet barely existed. The Cambridge, Massachusetts-based Fuld & Company offers a variety of services – market analysis and surveys, teaching intelligence-gathering methods and helping companies set up internal intelligence monitoring systems – that focus primarily on competitive intelligence.

In fact, competitive intelligence has become so de rigueur in the business world that last year, the company produced The Fuld War Room, reportedly the first multimedia CD-ROM competitive intelligence training and applications tool. Fuld spoke about how the recent developments in e-business and ERP have ushered in a new era of competitive intelligence.

In your book, The New Competitor Intelligence, you discuss "basic" primary and secondary sources and then "creative" primary and secondary sources. What are they and how do they figure in the search for competitive intelligence?

Look at a company like Unilever – they employ thousands of scientists. We did an analysis of the patents that Unilever has issued and discovered that a handful of scientists may be the prime drivers of research in a certain area of Unilever. We did a scan to update some material and came across one of these scientists, who was looking to employ a Ph.D fellow in the lab. Through the ad listing itself, you begin to learn what this particular scientist is working on. This is the power of the Net. It allows you to peek into a company's activities through many other doors that you wouldn't have gotten access to before.

What about large global companies that have their employees gather intelligence across their company intranet?

The head of our Intelligence Systems Practice builds intelligence systems and practices for corporations. He came from a telecommunications company, where he built a large intranet that was used not just to connect other specialty users but also to bring together all of the information resources of the company. It was one-stop shopping for a question. This intranet connected everybody in the company with everybody else as well as allowed them access to outside information and news sources so they could compare and contrast rumors or participate in activities in a certain region of their marketplace.

Technology may expedite your ability to win a market. But it is only as good as the people who use it. If it's used to tie people together, to allow them to better use information expediently, then companies need to do it. That's what makes the difference between a good competitor and a poor competitor.

But a company can have the intelligence and still not act.

You can have the information. Let's distinguish between "intelligence" versus "information" and "data" versus "knowledge." Data is just raw pieces of knowledge – the number of employees at a plant or cars in a parking lot. Intelligence is when you learn the implication of it all. There's a huge difference between saying 'There are 500 cars in the parking lot' versus saying 'Let's buy them.'

Networks and companies carry a lot of data, but very seldom do companies put intelligence together. General Electric is an astute user of intelligence and has disciplined its work force through something called Workout Sessions, where they throw information at a problem. Compaq is another good user of intelligence. They have been reported over the years to have regular meetings with senior managers every week. All the data is thrown on the table and they make decisions. So they don't wait for analytical reports, which they don't have time to wait for anyway.

So you're talking about continuous intelligence gathering rather than a periodic strategic planning approach.

Right. It's kind of an arrogant assumption that, during the strategic planning cycle, you're going to gather information on your competitors and they've been waiting all year for you to do that. Clearly they haven't.

There's another key here that goes beyond the technology: Companies need to focus on what their critical information needs are with regard to competition and the competitive environment. They need to create channels to get that information to the people who need it [and] ship the data around. That's critical here – you should never fear to send good data around.

Good data is under everybody's control. A company could, for example, put into effect a rating system for the information they send around their network. A very simple system with a three-tiered code: [1] it's a fact and has two sources of information to back it up; [2] it's somewhat believable with one source of information and needs verification; or [3] it's a rumor.

Do you mean a sort of meta-data about intelligence?

It's preliminary intelligence. When you get your car repaired, you don't want to use defective parts. You use cheap parts, you come out with rotten cars. If you make decisions based on partly false information, you might be making a very big decision based on very bad data and then come out on the wrong side of the market.

What are some leading companies doing in terms of competitive intelligence systems?

The intelligence at Xerox Corp. was driven through its benchmarking initiative. The company has done things like buy competitor's copiers and display them in the lunchroom so that employees can touch and feel the machines and see how they work. That was a great educational tool for them. Xerox is very good at exposing people to what the competition is doing.

What should a company do to create a systematic process for keeping abreast of developments?

Number one on my list is to attend trade shows. That's probably the hottest platform of information exchange on any industry. Think of the cardinal intelligence rule: where money is exchanged, so is information. That should drive the thinking of every businessperson out there. You follow what the money does and the trail it leaves behind. There's a big afterglow after the money departs.

Trade shows are venues for a lot of information exchange, primarily because there's a lot of business being conducted there. Even if the business isn't hard cash. It's a possible lead toward a sale or closing of a deal. All that is part of the same process. A trade show or conference is probably the richest opportunity for business information.

Has the Internet really changed the way competitive intelligence works?

It's allowed a person who's looking for information on a company greater access to information possibilities regarding that company. It doesn't mean that the information will be any better. In fact, in many cases, it's very unclear what's accurate versus what's inaccurate because it's such a democratic medium.

Even if you eliminate all the alternative sites, you're still left with propaganda in the form of companies promoting their own ends. People use PR Newswire and BusinessWire thinking it's a democratic type of site. What they don't really know is that those [sites] are paid advertising sources. Companies pay to have their press releases placed there.

Then there are the discussion groups that have a lot of experts discussing a topic, but these experts are opinionated and they'll pick and choose their topics based on their likes or dislikes. Again, there's tremendous bias without any editorial controls. So you have a lot more information out there, it's just not necessarily better information.

Now that many companies have been focusing on business intelligence with enterprise resource planning (ERP) and optimizing how they work with each other, are you seeing an increased use of competitive intelligence?

I wrote an article for CIO Magazine about six months ago about "data slam." People are getting slammed with so much data that it's paralyzing them. That's a problem. Before you get to the outside world, people are often ignoring their own best information filters: people inside their own company.

That's another issue we need to deal with: folks don't believe their own neighbors at the same company. I tested this and ran surveys. For the same piece of information, if you change the attribution from an external to an internal source, people don't believe it. Say the same quote, the same statement, came from an unnamed manager inside the company versus Computerworld or BusinessWeek. BusinessWeek would get a higher rating than the manager in the company.

Why is that?

Human nature. But companies can't afford to let that go on, especially if there's going to be more of this information flooding inside a company. Your company's engineers, scientists and salespeople have been out there for 20 years. They are very good information filters: Is it real? Is it rumor? Is it hype?

If they want to verify something, they have a Rolodex of sources that can verify the information for them. And an internal network built up to an intranet can identify these people inside the company who know those answers. Technology will play a strong role. But that role is to link the people and the expertise.

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