The art of corporate spying

To go without “competitive intelligence” would be like going into battle without a weapon

By Derek Mellon
Ottawa Business Journal


BEFORE YOU READ this article, shut down your computer, put away that file folder in the new product launch, and tell your spouse to keep quiet – someone is watching and listening.

The Cold War may be dead, but a new war is taking place in corporate boardrooms across North America.

It’s called competitive intelligence (CI) or, in the words of its detractors, “corporate espionage”. But whatever the moniker, the fact remains that most tech companies – including those in Ottawa-Carleton – practise the art of corporate spying.

To forego it “would be like going into battle without a weapon” says George McTaggart, director of enterprise workflow product marketing for JetForm Corp.

Like other tech firms, JetForm tries to track and follow each move the competition makes.

“There are some you compete with directly and you stay up late at night worrying about them,” says McTaggart, who estimates there are close to 200 JetForm competitors in the workflow marketplace alone.

But while high-profile corporate espionage cases often make the news reports, the large majority of those who gather information on companies do so legally, ethically and with relative ease.

Michelle Cook, a partner with Global Trade Solutions, says companies that break the law and dabble in espionage are in fact those which fail at good competitive intelligence.

Schoffro’s company has done CI for 15 local companies over the past year. She says 95 per cent of company information can be found in the public domain.

From job postings and annual reports, to white papers and web sites, finding information about your competitor is as easy as clicking on your web browser. But Schoffro is quick to point out that competitive intelligence is much more than information gathering; it’s the ability to analyse data in order to help make educated decisions.

“Good competitive intelligence gives companies the ability to anticipate and analyse threats before they materialize,” says Schoffro.

CI is becoming an integral part of business operations. Membership in the Virginia-based Society of Competitive Intelligence Professionals has doubled over the past three years. The society now includes over 6,400 professionals in 44 countries. One survey of Fortune 500 companies showed that 55 per cent make use of CI in formulating business strategy.

In the ever-changing world of high-technology, knowing what the competitor is planning to do is much more important than knowing what it has done.

“If we are curious to know when Microsoft is launching its next office product, we can read it in the paper or try finding out from other sources,” says Jim Orban, senior vice-president of marketing at Corel Corp.

Each of Corel’s product divisions has employees whose duties include keeping tabs on its competitors. Orban says Corel has also begun using CI to decipher what consumers want from their products. Through surveys and feedback from sales staff, Orban says Corel keeps track of what works and what needs to be improved.

But Orban admits that Corel still spends plenty of time tracking the competition.

But how do companies get that hard-to-find information?

Everyone agrees it’s pretty easy – if you know how.

For high-tech companies, trade shows and web sites have become havens for intelligence gathering.

JetForm’s McTaggart often approaches a competitor’s booth and starts asking questions. More often than not they talk, McTaggart says. Of course, McTaggart notes that shielding a name tag with a notepad helps the cause.

Colin McAlpin, director of market research and strategies at Cognos Corp., once came across a poster of a competitor’s soon-to-be released ad campaign in full view at an exhibition booth. He took note.

Cognos has two employees who work strictly on competitive intelligence. The duo surf the web in search of patent and trademark registrations and insider trading reports.

Another favourite tactic of CI practitioners is tracking news groups over the Internet. If your company is mentioned, it will probably appear on the web site. Comments regarding internal strife at the company headquarters is like gold for the corporate spy.

But there are other ways to gather information.

Popular methods include reading analysts’ reports from U.S.-based firms such as Gartner Group and PC Data, and talking to a firm’s unsuspecting junior engineer at trade shows. Other techniques: listening to conversations on planes, especially on trips to the high-tech centres of California or Boston; and, reading local newspapers of the city where a competitor is based, since even the smallest announcement is probably followed by the local media.

Bookmarking a competitor’s web site and scouring the classified ads to see if jobs are being posted there are also ways to learn about the enemies.

Schoffro notes that classified ads can be a good indicator of what is happening inside a company. If the firm is looking for 12 engineers says Schoffro, it’s about to start developing a new product. If it wants to hire 12 marketing specialists, then Schoffro assumes they are ready to launch that product.

Some of the best sources of information are company clients, who often hear sales pitches from the competition. In the end, if there is information being passed on or posted somewhere, it is likely it will be gathered.

But what makes CI different from simple information gathering is how it’s used.

Most tech firms say they use the information for a number of reasons, including research and development activities, developing marketing strategies and helping their sales teams battle the competition.

McTaggart says – CI is vital to JetForm’s sales staff, who often are the ones doing head-to-head battle with the competition.

“You don’t want them going out there and being unprepared for what (the competition) has in store,” says McTaggart.

But more and more, CI is being used to help companies ward off takeover attempts and prepare, for acquisition offers.

Cognos’ McAlpin admits part of his company’s CI activities include scrutinizing potential acquisition targets.

To no one’s surprise, tech firms are also hiring executive search firms with strong CI skills in their efforts to lure hotshot executives and engineers to their company.

Mere is nothing more arduous or beneficial than doing good research,” says David Perry, whose Ottawa-based executive search firm, Perry-Martel International Inc., has worked for local tech company Simware Inc.

Perry says he earmarks two-thirds of any project budget for CI activities.

Research ranges from finding out what patents an engineer has filed, to what a person’s hobbies are, to even knowing what kind of job their spouse has.

“It’s important that know what they’ve done and connect with them,” says Perry, who insists the in-depth research is part of doing business for an executive search firm. Perry says the more information you have the easier it is to convince an executive you understand his or her needs.

“It allows me to speak to them with credibility and knowledge,” says Perry. But for those doing CI, there is always the risk of also becoming the target of competitive intelligence from rivals.

With the Internet becoming a key component to CI research, company web sites have become number one targets for information.

“You have to take an outside approach, look at (your) site as if you were your competition and ask yourself if you want to air your dirty laundry the same way (your competitor) does,” says Adrian Salamunovic, business manager of Media Wave Web Solutions, which helps design and develop web sites.

Salamunovic says other safety tricks include using password-protected areas and posting only the names of the firm’s executives instead of listing all the company employees.

But despite all the efforts to protect themselves, companies are being watched. And, they realize, there is no surefire method to ensure that sensitive information doesn’t get into the hands of the competition.

“There’s really not a whole lot a company can do to limit information getting out,” says Cognos’ McAlpin. He says for the most part, competitors have the same information on Cognos as the Ottawa-based company has on them.

So, like the classic “Spy vs. Spy” scenario from MAD magazine, competitive intelligence – and trying to decipher a rival’s next move – are certain to continue.

Schoffro warns that those who ignore CI do so at their own peril.

“If you are waiting to know what’s happened, it’s too late. They’ve already done something.”