Spies Like Us

By Daniel Franklin

Should your firm start a competitive-intelligence department? A 1995 study by professors at the University of North Texas found that companies that place a high emphasis on CI earn an average of $1.24 a share annually, while their competitors that do not stress CI lose 7[cents] a share. There may be a chicken-and-egg dynamic at work: successful firms have a lot more cash to invest in CI. But it seems clear that watching your competitors closely can help boost your bottom line. Cliff Kalb, senior director of strategic business analysis at MERCK, says his division recently helped the pharmaceutical giant outmaneuver a competitor set to introduce a new drug. Merck established a stronger position in the market that translated into $150 million to $200 million in revenue over the past three years.

How to begin? The first step is recognizing that your firm probably has an enormous amount of data on your competitors already. The trick is collecting and analyzing that information so it can inform executive decisions. Some firms, like MOTOROLA, hire an outside intelligence expert to design a department from the ground up. Others build on a few inquisitive employees with a breadth of industry knowledge.

The Society of Competitive Intelligence Professionals scip.org can recommend consultants or training programs specific to your business needs. If you're looking to send an employee for training, several business schools have begun to add intelligence courses to their curricula, including Simmons College in Boston; Brigham Young University in Provo, Utah; Thunderbird in Glendale, Ariz.; and Mercyhurst College in Erie, Pa. A few leading consultancies specialize in specific industries or intelligence skills:

CIPHER SYSTEMS is a consultancy based in Glastonbury, Conn., that teaches companies to get ahead by using information technology cipher-sys.com)

FULD & CO., the grande dame of the industry, can help with all aspects of competitive intelligence and offers special expertise in pharmaceuticals, energy and retail fuld.com)

Ben Gilad, an Israeli consultant and academic, is a specialist in creating early-warning systems bengilad.com)

HERRING & ASSOCIATES, based in Hartford, Conn., is built on Jan Herring's knowledge of the high-tech fields.

PHOENIX CONSULTING is expert at personality profiling and eliciting information and has defense and aerospace clients near its base in Huntsville, Ala. intellpros.com)

Don't let the consultants do all the work for you. Successful intelligence operations create both an appreciation and a capacity for intelligence throughout an organization--from the top on down. Many companies tell their workers in the field what details they should look out for and what questions they should ask. Some even offer small rewards.

Most important, CI needs to be driven from the top, says the director of competitive intelligence at a FORTUNE 100 company: "If the chief executive is asking good questions, he will get good intelligence. I can build an intelligence operation around that." --D.F.