The Pros and Cons of “Do It Yourself” Competitive Intelligence
I can say with confidence that 99% of companies in the world practice some form of competitive intelligence (CI). It may not be a formal, sophisticated process, but almost all companies have some way of trying to figure out what their competition is up to.
Often when I am explaining what our company does, individuals will tell me, “Oh we do that. My boss had me call all the competitors to try and get their price list.” This is what I call DIY CI, or Do It Yourself Competitive Intelligence.
In some ways doing competitive intelligence yourself is like trying to build a deck yourself:
A few years back my wife and I bought our first home. It was a nice, modest, three-bedroom, two bath house on a cul-de-sac. One shortcoming of our new house was the deck; a small, dilapidated structure clinging to the back of our home. At the time I was still employed by Uncle Sam so cash was pretty tight, if I wanted a new deck I was going to have to build it myself. I had helped a friend build a deck once, so I wasn’t completely inexperienced, and, as most men will claim, I am pretty handy with power tools. If I was going to build a new deck, I didn’t just want a boring, run of the mill deck; I wanted something special. I took some time, and some chances, and drafted a nice big deck with an attached, screened-in gazebo. I borrowed some tools from my neighbor and set out in earnest. I’d like to say that my hard work and planning paid off, but the fact is, I am not a professional contractor; it was, after all, a do it yourself project. In the end we ended up with a lopsided, oblong octagon gazebo with a crooked roof and a door that scraped when you tried to open it. (To my credit, in addition to being fairly inexpensive, it was also pretty sturdy.)
Every company has competitors. Even if no one else does exactly what you do or makes exactly what you make, you still have competitors. Knowing what your competitors do, what they sell, how they sell it, how much they charge and what they are going to do next is important. Understanding even just these basic things about your competition will enable you to better position your company. Should you add a new product? Change your prices? Adjust your marketing? It is exceedingly difficult to compete in any market if you don’t know what the other players in that market are doing.
This is a pretty basic concept, of course. But how do you get that information? Oftentimes managers know what they need to know, but don’t know exactly how to go about getting it. In the absence of a formal process for gathering competitive intelligence they typically just task someone to ‘get’ the information. Because of requests like this there are probably 50,000 people online right now Googling their competition: browsing their competitor’s website, poring over financial reports, surfing through message boards, and sifting through press releases.
There are both pros and cons to DIY CI. Let’s talk about the pros first.
PROs of DIY CI
It’s cheap.
If your company or department does not have a budget for competitive intelligence, then the easiest way to get information on your competitors and market is to do the research yourself or have a staff member ‘get it’. You are leveraging the resources you have available and, in some cases, that may be your only option.
It’s fast… usually.
Browsing a competitor’s website and reading through their quarterly reports does not take long. With a little practice and perseverance, you can put together a very high-level snapshot of a competitor in less than a day. That is pretty fast. Of course, the devil is in the details; there are limits to what you can learn with this approach. One pitfall to avoid here is what we call the rabbit trail. It is very easy to get so caught up in following every little twist and turn, every subtle hint of information, that before you know it, you look up at the clock and realize you have just spent an entire day Googling a competitor and all you have to show for it is 120 bookmarks and a lot of disconnected bits of data. This is not intelligence and is seldom helpful for planning strategy.
It’s better than nothing…usually.
Knowing a little about your competition is better than nothing at all. Trying to run a business without knowing your competition is just plain dumb. At the very least, DIY CI can provide you with a basic snapshot of your competition. If nothing else, this overview will help you identify your knowledge gaps, facilitating more efficient follow-on research.
CONs of DIY CI
Limited Information.
What happens when you can’t find the information you want through Google? What if your competitor does not publish their price list? What if their quarterly report does not say when they plan to open the new plant or how big it will be? This brings us back to where I started with this post.
It’s unethical.
People often tell me how they ‘just called their competitor and pretended to be a customer’. This is a great idea in theory, but also highly unethical and, in some cases, even illegal. What I just described is known as pre-texting which was outlawed under the 1996 Economic Espionage Act. To some this might just sound ‘resourceful’ or ‘shrewd’, but by claiming to be someone you are not for the purpose of gathering information, you are in fact putting yourself and your company at risk of being sued, or worse, prosecuted. What I tell my clients is ‘there is nothing you are going to get by breaking the rules that is worth the risk.’
So, what does this mean? It means that a company conducting competitive intelligence internally should limit itself to secondary research, or primary research that is focused on customers and subject matter experts, not competitor employees.
Lack of expertise.
It is one thing to spend a day Googling your competition and building a nice little PowerPoint deck for your boss that provides an overview of your competition, but how useful is that? Believe it or not, there are big, multinational companies that make game-changing strategic decisions based on little more than the PowerPoint overview I have just described. DIY CI is limited by the expertise of the individual doing the research and the means that they have to gather the information.
As a competitive intelligence firm, we do not provide our clients with just data, or information; we provide them with intelligence. Intelligence is actionable, it is insightful. What we provide our clients is forward-looking and predictive. It is based on fact and analysis, not speculation and projections. Do you see where I am going with this? DIY CI can seldom produce the level of depth or granularity that you will need to make well-informed tactical and strategic business decisions.
If you can’t convince your boss or your senior executives to give you the budget you need to do real competitive intelligence, then it is imperative that you explain the limitations of what you can legally and ethically do within your skill set. If you really want to know what your competitors are up to, what they are doing today, and what they plan to do tomorrow, then you need primary competitive intelligence. Hiring a professional competitive intelligence vendor might help you avoid building a lopsided business strategy with crooked walls and a door that scrapes when you try to open it.
Note: DIY CI does not refer to companies that have sophisticated internal competitive intelligence functions. Generally, these CI functions are responsible for overseeing the secondary research efforts, managing CI vendors, interfacing with internal clients, and conducting tactical and strategic level analysis on the competitive intelligence that is collected.
Heath Gross