Managing for success February 2011

COMPETITIVE INTELLIGENCE6

Does your firm possess too much information on yourmarket and competitors, but not enough time to determinewhat it all means? Do you want to invest in new markets or

regions, but are unsure about the competitive environment? Arethere new firms entering or merging in your market or region, andyou know very little about them? Do you struggle to compete withyour rivals’ moves, sometimes being surprised by their actions,and do you find they often outperform you? When you lose out ona piece of business, do you not really understand why, relyinginstead on what your business development people tell you, orassuming it’s ‘who you know’?

If you can relate to some of the above, then competitiveintelligence (CI) could benefit you. This article explains what CI is,why it is important, how you can get buy-in for a CI-gatheringexercise, how you can gather that CI, and how you can use it.

Smaller firms may think that CI is out of their league, but it doesnot have to come through expensive or sophisticated processes,using the latest software. Small firms can collect and useintelligence just as well as larger firms.

As a CI adviser to professional services firms, I know that somelaw firms are committed to CI. But that is not enough. Allprofessional services firms should be interested, and have theircompetitiveness as a strategic priority. After all, it is highly likelythat your rivals are utilising some sort of intelligence activity,ultimately against you.

WHAT IS COMPETITIVE INTELLIGENCE?The term originated and was established in the USA, so definitionsand terminology tend to be grand, varied and overly complicated.

However, put simply, CI allows you to avoid surprises, thinkmore moves ahead of your rivals, and minimise uncertainty whenyou make business decisions. It gives you the ability to seethrough or stay ahead of the competition, and in many cases, canbe the unspoken, hidden key to success.

The basic process for a CI-gathering exercise is:● secure buy-in by the senior team;● create and encourage awareness of competitivenessthroughout the firm;● develop a focused definition of the key questions you needanswered;● collect secondary information (print / web) and primaryinformation (people);● analyse the information to generate findings, isolate patternsand create scenarios;● communicate the intelligence to a relevant audience; and● review actions, source credibility and receive feedback.

It is important to debunk one myth: spying on competitors is afact of business life, but it is not about rummaging through youradversaries’ dustbins for discarded information. Snooping onphone records and the theft of other sensitive information is notonly illegal, but also a world away from the ever-growing CI

Know your enemyYour people may know their marketplace and their clients, but all that invaluableinformation could go to waste if you don’t collect and collate it effectively. Graeme Dixon looks at how competitive intelligence could benefit your firm

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industry. Activities should always be conducted in an ethical way. It is also worth noting that CI is not just about your competitors.

It can also give you invaluable information about demographics,the economy, other industries, technology, distributors, clients,substitutes, suppliers, government regulation, business prospects,culture and case law.

WHY IS IT IMPORTANT?Bernard Savage, managing director of Size 10½ Boots, a businessdevelopment consultancy that specialises in helping smarterprofessional services firms to grow, says: “The smarter lawyersrealise that being technically competent is not enough. Marketingsavviness and business development capability are key, too.

“Intelligence-gathering is the first step. Would you go to a jobinterview without first finding out something about the firm? Sowhy pitch to a prospective client if you don’t know who the currentadvisors are and what criteria that business has in selecting itsexternal advisers? Competitive intelligence will improve theeffectiveness you have in winning new clients and improveefficiencies in client acquisition.”

It will be no surprise to you that your firm does not operate in avacuum – you are not the only firm to offer what you do. You mayfeel you have something better to offer than your competitors, butother firms are targeting the same clients as you, and there is onlyso much work to go around.

This is where CI comes in. It will transform your thinking andhow you do things, and deliver a better strategic direction to yourfirm. If you are able to gather sufficient information about whatyour rivals are doing and why they are doing it, understand theirbusiness model, and isolate and take advantage of their strengthsand weaknesses, you will stay ahead of the game.

CI can improve your firm’s productivity by allowing you tofocus on winnable activities and reducing the influence of rumourand industry experience.

Awareness of the competition will improve cross-functionalrelationships, bringing teams together by getting everyoneinvolved in the information collection and strategic analysis.

It can give your firm early warning of competitive threats, soyou can make strategic decisions and actions based on valuableintelligence, not the latest article in the local business press.

In short, CI offers unbiased news, views, truth and relevantanalysis for your strategic and operational decision-making.

Be aware that CI will challenge some of your firm’s beliefs, and offer the senior management team undiluted content, whichmight previously have been filtered for them. In fact, that is thebeauty of good CI: it offers an unbiased viewpoint which is notaltered to fit a political perspective or to support company beliefs.

HOW CAN YOU ACHIEVE BUY-IN?To make sure your CI process brings all the benefits describedabove, it is essential that CI is conducted strategically, based on agreat deal of work undertaken at the start, in order to determinewhat you really need to know and why. This means you need tosecure buy-in across the firm. In addition, the more people thereare in your firm gathering CI, the more effective it is likely to be.

To overcome resistance and gain hearts and minds, give allindividuals, from partner to administrator, ownership of objectivesand actions relevant to their role. One person has to be maderesponsible for the day-to-day running of the project, but every

job description should contain information-gathering as a key requirement. This is one of the best bi-products of a good CI-gathering project: because seniority or job title is no barrier toparticipating, it acts as a fantastic team-building exercise. It alsohelps to build a culture of competitiveness, which can improveperformance across the board.

To get the process started, set up varied and interesting groupsessions designed to determine and develop CI awarenessthroughout the firm. The next stage could be more ‘role-playing’-based techniques, where the group is broken into teamsrepresenting various rivals – as this is more time-consuming, itmay make sense for this stage to be limited to a smaller,representative sample of people in your firm. These role-playingtechniques include ‘business war gaming’, which pits a grouprepresenting your firm against others representing your rivals (andwhich is sometimes offered as a computer-based game), and‘shadow market planning’, in which specific teams are allocated tomonitor certain competitors and what elements contribute to theirmarketing and market planning.

Make sure it is simple for people to report information theyhave gathered to a central source. There are some excellentpieces of software on the market, but it would be a good start justto set up a specific email address, directed to an individual who ismade responsible for collation and analysis of the information intoa spreadsheet.

Make use of your current librarian service, but super-chargethem with intelligence skills to get a fantastic return of investmentfrom them.

Once the project has started producing valuable results,communicate these results (and credit for the good work that wentinto achieving them) to make sure people understand that theirefforts have not been wasted and to encourage them to continueto provide information. There are many ways of reportingintelligence; some firms have different reports depending on thereadership, to protect sources and the now-valuable intelligence.

HOW CAN YOU USE CI?CI can be used in a number of areas of your organisation, andeven offered to your own clients. Here are some suggestions tothink about.

BUSINESS DEVELOPMENT AND MARKETING By answering questions such as how the demand for yourservices is currently being met and by whom, how satisfied buyersare with those services, how credible you are, and what criteriaclients use to select a supplier, you could stand yourself in betterstead for success (or the avoidance of a big mistake!).

Assist your business developers by preparing briefing packsfor meetings and tender opportunities, varying – depending on theclient or the opportunity – from a basic briefing report to in-depthand ongoing analysis of the company and individuals.

People in your firm may already know a lot of this information,but if you do not actively and strategically collect it, it will staylocked away in people’s heads.

SCENARIO PLANNINGYou might think no one could have foreseen ‘Tesco law’, but somedid; and yes, they have CI functions.

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By narrowing potential outcomes and building plans for themnow, you can be better prepared for the impact on future business.CI allows firms to future-proof themselves by not only isolatingtheir vulnerabilities and knowing what’s ahead, but also, and moreimportantly, by creating a great place to encourage creative andinnovative thinking.

These are the basic questions you should consider:● What will the future of your industry look like in five to 10 years?Who will be the key players and influencers? Which industry couldoffer a substitute service?● What actions / positions, taken now, would increase yourchances of success in the majority of these scenarios?● What early warning signs would be apparent when / if each ofthese possible futures were coming to pass?● What other actions / positions should you take, assoon as possible, if it looks like one of thesescenarios is coming true?

MERGERS AND ACQUISITIONSCI will not prevent a merger between yourrivals from taking place, but it might helpyou to know about it beforehand, soyou can determine what to do about it,with a focused and prepared mind.

It can also assist you (and yourclients) in making decisions about yourown potential acquisition candidatesand investment opportunities, byproviding a framework for identifying,assessing and understanding potentialproblems, strategic and cultural fit across theassociated companies, potential predators orrival bidders, and the regulatory climate.

CORPORATE GOVERNANCECI, by providing the senior team with critical independentinformation and analysis to help them to understand and interpretthe external marketplace, allows you to establish a strategictransparency within your organisation, thereby offering safeguardsagainst unethical, questionable or otherwise poor actions anddecisions.

NEW SERVICE OR REGIONAL OFFICEIf you are thinking about expanding into a new geographicalmarket or business arena, or introducing a new service or product,CI can help you to understand and anticipate the moves of yourrivals and key individuals in those new market segments or areas,and, most importantly, the impact such moves may have on yourcurrent and future client base.

APPOINTMENT OF A NEW TEAM MEMBERWhy wait until the interview to find the best candidate? You couldimprove your recruitment strategies by monitoring who the bestpractitioners are, where they are, and what it may take to get themin your team.

BUSINESS PLANNINGTo reduce the possibility of expensive mistakes, build your

strategic direction, marketing plans and specific projects upon afoundation of decisions based on intelligence, not rumours orguesswork.

GATHERING CI: SECONDARY SOURCESSo you have decided you want to undertake some sort of CIactivities and you have isolated what you want to know. Now youneed to understand how to find it out.

There are two sources of information: secondary (print) and primary (people). The following are some common secondary sources.

WEBSITESThe first place you will look is probably the internet, but relyingsolely on it has a number of disadvantages, including the obvious

one: most companies tend not to publish informationthat would be really valuable to you. You may find

news on your rivals and industry, but it is likelyto be very general, historical and of little

use. Even if you do find a source ofinformation which is useful to you, it maybe very time-consuming to collect;software and outsourcing collectionand specific projects will significantlyreduce the time taken.

MARKET RESEARCH PORTALSThese can provide answers to simple

questions such as who the key marketplayers are, which can help put your firm

into context. However, we find that they rarely live up

to the sales hype, and that some firms purchasemultiple licences to such sites, only to do very little

with the information; in some cases, the cost of this wouldeasily pay for a CI operation!

PRESS RELEASESThousands of press releases are published every day. Very fewactually become news. By reviewing press releases, you can learnabout important developments regarding merger and acquisitionsactivity, takeovers, management changes, new products, newfinancial offerings, earnings, restructures and so on. Butremember: what a press release does not say is sometimes just asimportant as what it does.

TRADEMARKSTrademark activity could indicate your rivals’ future developmentactivities, ownership issues, and foreign market strategies. Youcan also monitor how litigious your rivals are and how successfulthey have been in their actions.

DOMAIN NAMESHaving the right domain names is becoming an increasinglyimportant part of an organisation’s image; most organisations havea number of domain names representing their products, associatedfirms, brands and divisions. Monitoring can reveal future strategiesand associated new products. Look for evidence of cyber-squattingand bad faith.

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ANALYST REPORTSAnalysts are paid to gather actionable information on theirindustry. You can source reports and information on rivals in termsof revenue, market fluctuations and predictions, profit margins,growth, sales, expenses and earnings forecasts.

GATHERING CI: PRIMARY SOURCESYou already have a number of excellent sources of primaryinformation, some of whom you talk to every day. Your employeesare not only your greatest asset; they are also your greatestsource of CI. They may have previous experience of working withyour rivals or know people in other firms and, of course, they have day-to-day dealings with your clients who have been pursued byyour rivals. Without compromising any restrictive covenants, youremployees may know details of a rival’s pricing or have a copy oftheir sales literature.

KNOWLEDGE-BEARERSPeople in your firm who have specialised skills or contacts are very important sources of information. They may not havesignificant interaction with anyone in the firm, but they can havethe kind of information at their fingertips that you would otherwisehave to pay for.

HUMAN RESOURCESThese people meet fellow human resources professionals at

events run by the Chartered Institute of Professional Developmentand the like. They also receive valuable information every day, inthe form of CVs.

CLIENTSIf one of your rivals is cheaper or does a bad job, you will hearabout it one way or another. How useful would it be, when yourcustomer is drilling you down on price, claiming that your rival isoffering to do the same thing for 30% cheaper, for you to knowwhat that rival’s pricing strategy is?

SUPPLIERSSuppliers are the people in the know within your industry. It is intheir interest to know their customers and their goings-on. Theyare an excellent source of information on your industry’s outlook,performance and trends.

TRADESHOWS, CONFERENCES AND EVENTSThese events are an excellent source of CI, especially if you findcompanies happy to talk about and promote themselves, and yourpeople are trained to listen for the right intelligence. People lovetalking about themselves: don’t stop them!

Networking is an excellent source of information, provided youlet people speak without causing them concern. One excellenttechnique is to turn off the ego switch and just assert somethingthat is clearly wrong about your rival or the industry; just watch theother guy correct you with their views!

You can learn other elicitation techniques, but a simple chatover a coffee will reveal a lot of information, which you can thenpiece together and analyse, to create the basis of usable CI.

The information your rivals themselves would rather you didn’tknow is the best intelligence, and is surprisingly available for thetaking if you know where and how to look.

SUMMARYCI can give you real advantages over your competitors in terms ofbusiness development, merger and acquisition activities,corporate governance, recruitment, strategic decision-making, andmany more areas. And it is not just for larger firms with endlessresources; it is well within the reach of any firm, as long as that firmis strategic in its approach, effective in its implementation, andpatient, to allow it to develop and start getting real results.

I have one more caveat for firms looking to start such aprocess for themselves: do not expect 100% of the picture. Afterall, if you need 100% of the information with 100% accuracy, youdon’t need a CI consultant. You need a historian.

What is clear is that, given the increasing competitiveness ofthe legal marketplace, particularly in light of the licensing ofalternative business structures later this year, the uptake of CIamong law firms will only increase. What is also clear is, that if youdo not get CI and make it a strategic priority, it will not be longbefore your rivals do.

Graeme Dixon (gdixon@castintelligence.co.uk) is director ofCast Intelligence, a professional services-focused competitiveintelligence / research firm, and of Greyberry Performance,which provides strategy, competitiveness and competitiveintelligence training throughout the UK.

A recent merger by a larger law firm and a smaller regional firmcaused a number of firms in the area to worry about theirbusiness and react to it

One firm with a marketing manager who also conducts CIactivities looked at the merger at a strategic level.

The firm’s partners, when networking, were given specifictopics to look out for and asked to report back any informationon the key players and the merger partners. Secondarysearches were undertaken, and the resultant PR was analysed,

Building on the information the firm already had, and talkingto a friendly recruiter and accountant, it soon become apparentthat it was not a merger of two strong rivals, but an acquisitionof a distressed law firm, and that some of the best lawyers ofthat firm were already on ‘gardening leave’, having chosen toleave once the merger went through.

In the meantime, another firm with an established CI functionwas already aware of the acquisition, had built a plan of actionbased on facts, not PR and rumour, and had just appointed thedistressed firm’s best up-and-coming employment lawyer,saving thousands of pounds in recruitment fees. By the timeother firms had learned about the merger, this firm had analysedthe consequences and even assessed whether they might wantto purchase the distressed firm themselves.

Most local firms will have had people in their organisationwho will have known about the merger or the struggling lawfirm. Emails may even have crossed the firm about the merger,but no one was responsible for collating the information, so itwas not utilised.

Law firm case study

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