This document discusses competitive intelligence (CI) and how it can benefit firms. It defines CI as gathering information to avoid surprises, think ahead of rivals, and minimize uncertainty when making business decisions. The document outlines the basic CI process of securing buy-in, gathering secondary information from sources like websites and primary information from employees and clients, analyzing the information, and using it for strategic purposes like business development, scenario planning, and mergers and acquisitions. It argues that CI can give firms advantages over competitors by improving strategic decision making.

1. Managing for success February 2011
COMPETITIVE INTELLIGENCE6
D
oes your firm possess too much information on your
market and competitors, but not enough time to determine
what it all means? Do you want to invest in new markets or
regions, but are unsure about the competitive environment? Are
there new firms entering or merging in your market or region, and
you know very little about them? Do you struggle to compete with
your rivals’ moves, sometimes being surprised by their actions,
and do you find they often outperform you? When you lose out on
a piece of business, do you not really understand why, relying
instead on what your business development people tell you, or
assuming it’s ‘who you know’?
If you can relate to some of the above, then competitive
intelligence (CI) could benefit you. This article explains what CI is,
why it is important, how you can get buy-in for a CI-gathering
exercise, 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 does
not have to come through expensive or sophisticated processes,
using the latest software. Small firms can collect and use
intelligence just as well as larger firms.
As a CI adviser to professional services firms, I know that some
law firms are committed to CI. But that is not enough. All
professional services firms should be interested, and have their
competitiveness as a strategic priority. After all, it is highly likely
that 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 definitions
and terminology tend to be grand, varied and overly complicated.
However, put simply, CI allows you to avoid surprises, think
more moves ahead of your rivals, and minimise uncertainty when
you make business decisions. It gives you the ability to see
through or stay ahead of the competition, and in many cases, can
be 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 competitiveness
throughout the firm;
● develop a focused definition of the key questions you need
answered;
● collect secondary information (print / web) and primary
information (people);
● analyse the information to generate findings, isolate patterns
and 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 a
fact of business life, but it is not about rummaging through your
adversaries’ dustbins for discarded information. Snooping on
phone records and the theft of other sensitive information is not
only illegal, but also a world away from the ever-growing CI
Know your enemy
Your people may know their marketplace and their clients, but all that invaluable
information 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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2. February 2011 Managing for success
7
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 business
development consultancy that specialises in helping smarter
professional services firms to grow, says: “The smarter lawyers
realise that being technically competent is not enough. Marketing
savviness and business development capability are key, too.
“Intelligence-gathering is the first step. Would you go to a job
interview without first finding out something about the firm? So
why pitch to a prospective client if you don’t know who the current
advisors are and what criteria that business has in selecting its
external advisers? Competitive intelligence will improve the
effectiveness you have in winning new clients and improve
efficiencies in client acquisition.”
It will be no surprise to you that your firm does not operate in a
vacuum – you are not the only firm to offer what you do. You may
feel you have something better to offer than your competitors, but
other firms are targeting the same clients as you, and there is only
so much work to go around.
This is where CI comes in. It will transform your thinking and
how you do things, and deliver a better strategic direction to your
firm. If you are able to gather sufficient information about what
your rivals are doing and why they are doing it, understand their
business model, and isolate and take advantage of their strengths
and weaknesses, you will stay ahead of the game.
CI can improve your firm’s productivity by allowing you to
focus on winnable activities and reducing the influence of rumour
and industry experience.
Awareness of the competition will improve cross-functional
relationships, bringing teams together by getting everyone
involved in the information collection and strategic analysis.
It can give your firm early warning of competitive threats, so
you can make strategic decisions and actions based on valuable
intelligence, not the latest article in the local business press.
In short, CI offers unbiased news, views, truth and relevant
analysis 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, which
might previously have been filtered for them. In fact, that is the
beauty of good CI: it offers an unbiased viewpoint which is not
altered 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 described
above, it is essential that CI is conducted strategically, based on a
great deal of work undertaken at the start, in order to determine
what you really need to know and why. This means you need to
secure buy-in across the firm. In addition, the more people there
are in your firm gathering CI, the more effective it is likely to be.
To overcome resistance and gain hearts and minds, give all
individuals, from partner to administrator, ownership of objectives
and actions relevant to their role. One person has to be made
responsible 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 to
participating, it acts as a fantastic team-building exercise. It also
helps to build a culture of competitiveness, which can improve
performance across the board.
To get the process started, set up varied and interesting group
sessions designed to determine and develop CI awareness
throughout the firm. The next stage could be more ‘role-playing’-
based techniques, where the group is broken into teams
representing various rivals – as this is more time-consuming, it
may make sense for this stage to be limited to a smaller,
representative sample of people in your firm. These role-playing
techniques include ‘business war gaming’, which pits a group
representing your firm against others representing your rivals (and
which is sometimes offered as a computer-based game), and
‘shadow market planning’, in which specific teams are allocated to
monitor certain competitors and what elements contribute to their
marketing and market planning.
Make sure it is simple for people to report information they
have gathered to a central source. There are some excellent
pieces of software on the market, but it would be a good start just
to set up a specific email address, directed to an individual who is
made responsible for collation and analysis of the information into
a spreadsheet.
Make use of your current librarian service, but super-charge
them with intelligence skills to get a fantastic return of investment
from them.
Once the project has started producing valuable results,
communicate these results (and credit for the good work that went
into achieving them) to make sure people understand that their
efforts have not been wasted and to encourage them to continue
to provide information. There are many ways of reporting
intelligence; some firms have different reports depending on the
readership, 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, and
even offered to your own clients. Here are some suggestions to
think about.
BUSINESS DEVELOPMENT AND MARKETING
By answering questions such as how the demand for your
services is currently being met and by whom, how satisfied buyers
are with those services, how credible you are, and what criteria
clients use to select a supplier, you could stand yourself in better
stead for success (or the avoidance of a big mistake!).
Assist your business developers by preparing briefing packs
for meetings and tender opportunities, varying – depending on the
client or the opportunity – from a basic briefing report to in-depth
and 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 stay
locked away in people’s heads.
SCENARIO PLANNING
You might think no one could have foreseen ‘Tesco law’, but some
did; and yes, they have CI functions.
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3. COMPETITIVE INTELLIGENCE8
By narrowing potential outcomes and building plans for them
now, you can be better prepared for the impact on future business.
CI allows firms to future-proof themselves by not only isolating
their vulnerabilities and knowing what’s ahead, but also, and more
importantly, by creating a great place to encourage creative and
innovative 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 could
offer a substitute service?
● What actions / positions, taken now, would increase your
chances of success in the majority of these scenarios?
● What early warning signs would be apparent when / if each of
these possible futures were coming to pass?
● What other actions / positions should you take, as
soon as possible, if it looks like one of these
scenarios is coming true?
MERGERS AND ACQUISITIONS
CI will not prevent a merger between your
rivals from taking place, but it might help
you to know about it beforehand, so
you can determine what to do about it,
with a focused and prepared mind.
It can also assist you (and your
clients) in making decisions about your
own potential acquisition candidates
and investment opportunities, by
providing a framework for identifying,
assessing and understanding potential
problems, strategic and cultural fit across the
associated companies, potential predators or
rival bidders, and the regulatory climate.
CORPORATE GOVERNANCE
CI, by providing the senior team with critical independent
information and analysis to help them to understand and interpret
the external marketplace, allows you to establish a strategic
transparency within your organisation, thereby offering safeguards
against unethical, questionable or otherwise poor actions and
decisions.
NEW SERVICE OR REGIONAL OFFICE
If you are thinking about expanding into a new geographical
market or business arena, or introducing a new service or product,
CI can help you to understand and anticipate the moves of your
rivals and key individuals in those new market segments or areas,
and, most importantly, the impact such moves may have on your
current and future client base.
APPOINTMENT OF A NEW TEAM MEMBER
Why wait until the interview to find the best candidate? You could
improve your recruitment strategies by monitoring who the best
practitioners are, where they are, and what it may take to get them
in your team.
BUSINESS PLANNING
To reduce the possibility of expensive mistakes, build your
strategic direction, marketing plans and specific projects upon a
foundation of decisions based on intelligence, not rumours or
guesswork.
GATHERING CI: SECONDARY SOURCES
So you have decided you want to undertake some sort of CI
activities and you have isolated what you want to know. Now you
need 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.
WEBSITES
The first place you will look is probably the internet, but relying
solely on it has a number of disadvantages, including the obvious
one: most companies tend not to publish information
that would be really valuable to you. You may find
news on your rivals and industry, but it is likely
to be very general, historical and of little
use. Even if you do find a source of
information which is useful to you, it may
be very time-consuming to collect;
software and outsourcing collection
and specific projects will significantly
reduce the time taken.
MARKET RESEARCH PORTALS
These can provide answers to simple
questions such as who the key market
players 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 purchase
multiple licences to such sites, only to do very little
with the information; in some cases, the cost of this would
easily pay for a CI operation!
PRESS RELEASES
Thousands of press releases are published every day. Very few
actually become news. By reviewing press releases, you can learn
about important developments regarding merger and acquisitions
activity, takeovers, management changes, new products, new
financial offerings, earnings, restructures and so on. But
remember: what a press release does not say is sometimes just as
important as what it does.
TRADEMARKS
Trademark activity could indicate your rivals’ future development
activities, ownership issues, and foreign market strategies. You
can also monitor how litigious your rivals are and how successful
they have been in their actions.
DOMAIN NAMES
Having the right domain names is becoming an increasingly
important part of an organisation’s image; most organisations have
a number of domain names representing their products, associated
firms, brands and divisions. Monitoring can reveal future strategies
and associated new products. Look for evidence of cyber-squatting
and bad faith.
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Managing for success February 2011
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4. February 2011 Managing for Success
9
ANALYST REPORTS
Analysts are paid to gather actionable information on their
industry. You can source reports and information on rivals in terms
of revenue, market fluctuations and predictions, profit margins,
growth, sales, expenses and earnings forecasts.
GATHERING CI: PRIMARY SOURCES
You already have a number of excellent sources of primary
information, some of whom you talk to every day. Your employees
are not only your greatest asset; they are also your greatest
source of CI. They may have previous experience of working with
your rivals or know people in other firms and, of course, they have
day-to-day dealings with your clients who have been pursued by
your rivals. Without compromising any restrictive covenants, your
employees may know details of a rival’s pricing or have a copy of
their sales literature.
KNOWLEDGE-BEARERS
People in your firm who have specialised skills or contacts are
very important sources of information. They may not have
significant interaction with anyone in the firm, but they can have
the kind of information at their fingertips that you would otherwise
have to pay for.
HUMAN RESOURCES
These people meet fellow human resources professionals at
events run by the Chartered Institute of Professional Development
and the like. They also receive valuable information every day, in
the form of CVs.
CLIENTS
If one of your rivals is cheaper or does a bad job, you will hear
about it one way or another. How useful would it be, when your
customer is drilling you down on price, claiming that your rival is
offering to do the same thing for 30% cheaper, for you to know
what that rival’s pricing strategy is?
SUPPLIERS
Suppliers are the people in the know within your industry. It is in
their interest to know their customers and their goings-on. They
are an excellent source of information on your industry’s outlook,
performance and trends.
TRADESHOWS, CONFERENCES AND EVENTS
These events are an excellent source of CI, especially if you find
companies happy to talk about and promote themselves, and your
people are trained to listen for the right intelligence. People love
talking about themselves: don’t stop them!
Networking is an excellent source of information, provided you
let people speak without causing them concern. One excellent
technique is to turn off the ego switch and just assert something
that is clearly wrong about your rival or the industry; just watch the
other guy correct you with their views!
You can learn other elicitation techniques, but a simple chat
over a coffee will reveal a lot of information, which you can then
piece together and analyse, to create the basis of usable CI.
The information your rivals themselves would rather you didn’t
know is the best intelligence, and is surprisingly available for the
taking if you know where and how to look.
SUMMARY
CI can give you real advantages over your competitors in terms of
business development, merger and acquisition activities,
corporate governance, recruitment, strategic decision-making, and
many more areas. And it is not just for larger firms with endless
resources; it is well within the reach of any firm, as long as that firm
is strategic in its approach, effective in its implementation, and
patient, to allow it to develop and start getting real results.
I have one more caveat for firms looking to start such a
process for themselves: do not expect 100% of the picture. After
all, if you need 100% of the information with 100% accuracy, you
don’t need a CI consultant. You need a historian.
What is clear is that, given the increasing competitiveness of
the legal marketplace, particularly in light of the licensing of
alternative business structures later this year, the uptake of CI
among law firms will only increase. What is also clear is, that if you
do not get CI and make it a strategic priority, it will not be long
before your rivals do.
Graeme Dixon (gdixon@castintelligence.co.uk) is director of
Cast Intelligence, a professional services-focused competitive
intelligence / research firm, and of Greyberry Performance,
which provides strategy, competitiveness and competitive
intelligence training throughout the UK.
A recent merger by a larger law firm and a smaller regional firm
caused a number of firms in the area to worry about their
business and react to it
One firm with a marketing manager who also conducts CI
activities looked at the merger at a strategic level.
The firm’s partners, when networking, were given specific
topics to look out for and asked to report back any information
on the key players and the merger partners. Secondary
searches were undertaken, and the resultant PR was analysed,
Building on the information the firm already had, and talking
to a friendly recruiter and accountant, it soon become apparent
that it was not a merger of two strong rivals, but an acquisition
of a distressed law firm, and that some of the best lawyers of
that firm were already on ‘gardening leave’, having chosen to
leave once the merger went through.
In the meantime, another firm with an established CI function
was already aware of the acquisition, had built a plan of action
based on facts, not PR and rumour, and had just appointed the
distressed firm’s best up-and-coming employment lawyer,
saving thousands of pounds in recruitment fees. By the time
other firms had learned about the merger, this firm had analysed
the consequences and even assessed whether they might want
to purchase the distressed firm themselves.
Most local firms will have had people in their organisation
who will have known about the merger or the struggling law
firm. Emails may even have crossed the firm about the merger,
but no one was responsible for collating the information, so it
was not utilised.
Law firm case study
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