How much does it cost to conduct competitive intelligence?

As a competitive intelligence expert, one of the most frustrating part of my work is dealing with clients, who once decide to engage in a conducting competitive intelligence, want to get it done right away and get exactly the information that is needed.

I have to then spend a great deal of my time educating my clients that this is not how it works and emphasizing to them the importance of have an ongoing competitive intelligence program.  Pretty much like the spy agencies are always collecting intelligence and even keep track of the information that may not seem relevant, any company that takes its business seriously must always keep a tab on the competitive landscape.

If you do not have a competitive intelligence program in place or the competitor is new to you (this can happen for many reasons), there is no guarantee that you can get all the answers in a defined time window.  In my experience, I have gotten lucky in some cases, but competitive intelligence, like any spy or private investigator will tell you, requires time.  One must wait for the right individuals to find and interview so that information can be triangulated and we can tell you with a high level of confidence that what we have learned.  Unfortunately, this adds up in costs as well.  Many clients expect that they can get actionable insights on their competitors by merely surfing the web (I typically hire a teenager to do that and you can too).  In my opinion, though, the best insights comes from speaking to people up and down the supply chain who are knowledgeable about the target.  This requires waiting for the right professionals to be identified and be available and no smart CI consultant will do these interviews over the phone.  My preferred mode is to hire these individuals for a short-term engagement (it can be as simple as paying them for a few hours of consultation or even hire them for a few days) and then work through the details in a conference room.

To conclude, if you are serious about competing in the marketplace, you cannot cut corners on gathering competitive intelligence.

Can all the competitive intelligence be conducted online?

For competitive intelligence consultants like me, the Internet has been a blessing.  It has lowered our cost of doing business and has improved the quality of our output.  Not only are companies providing a lot of information online (oversharing is a problem not just among regular folks — even smart business professionals are engaging in oversharing, and giving away valuable information to their competitors, merely to gain followers or fans on social media or receive minor bump in sales), a lot of documents that we needed to make photocopies at remote town halls are now accessible with just a few clicks and maybe tens of dollars (rather than thousands that it cost us to get on a plane and then spend all the time in driving to town halls and often waiting for a day or two to receive copies of documents).

So is it really true that there is no need to leave your desk and you can do it all yourself?  This is a very tempting feeling but the competitive intelligence business would have been dead by now if the Internet had all the answers.  I always encourage my clients to find whatever they can on the web if they have the resources to do so cost effectively themselves (we can do this part of the research quite cost effectively because I have low-cost, trained colleagues who specialize in this work).  It is better to use this as the base research to build on with help from consultants like me.  The value consultants like me provide is our ability to connect with industry insiders and make sense of all the public information.  It is through these discussions that we can develop a context for whatever is reported online.  It is also through these discussions that we can verify if press releases and media coverage is accurate (it is fairly routine to release confusing and/or misleading information for competitive reasons).

Is it legal to collect competitive intelligence?

This is one of the most common questions that I receive from business managers who confused competitive intelligence and industrial/economic/corporate espionage.  The former is a perfectly legal activity when conducted by professionals like me who follow a code of conduct.  The latter is a crime.

What is the difference between corporate espionage and competitive intelligence?  In answering this question to my very confused clients, I use a simple example.  Let us say that you are a gas station owner and you compete mostly with the gas station across the street.  If you would want to collect competitive intelligence on your competitor, it is perfectly legal for you to

  1. Watch their prices daily from the sign and enter into a spreadsheet.
  2. You could even hire an intern to count the type and number of vehicles pumping gas (an easy way to calculate how much gasoline is sold everyday by assuming that the average amount of gallons pumped at your station is no different than theirs; from the type of vehicles, you could develop customer profiles, for example, Lexus-owning rich mothers who prefer full service versus bargain hunting cheapos).
  3. You could even go to your local town office and file a request for all the documents filed by the business (typically it is best to do this through a consultant since the owner of the business will eventually have access to individuals who has viewed their records).  These documents can give you details on layouts, equipment, etc.
  4. You can also contact various government agencies to inspect documents filed by the business (yet again, something that should be done through third parties).
  5. You can hire their current or ex-employees.
  6. You can interview their customers and suppliers.
  7. You can conduct searches online to read what their employees, customers, suppliers, and others are saying.
  8. Since the station is open to the public, you can visit as often as you like.

What counts as espionage?  What you cannot do are hack into their computers/phones, surreptitiously install cameras on their property to monitor something, bribe or threaten employees/customers/suppliers to divulge proprietary information or trade secrets or provide documents to you, or use deceptive methods to pry information out of them.  All these actions amount to espionage and are illegal.

Obviously, the data collected through competitive intelligence is not exactly what you want but experts like me are trained to comb through several data sets and develop fairly accurate models.  In any case, you should not want to access confidential information on your competitors.