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Competitive Intelligence: Where Spies Go After the Cold War


Steven L. Clayborn, CPCM, C.P.M.
Steven L. Clayborn, CPCM, C.P.M., ManagerWestinghouse Savannah River Company, Aiken, SC 29808, 803-952-6139,

84th Annual International Conference Proceedings - 1999 

Abstract. At the end of the Cold War, literally thousands of government workers in the intelligence communities were suddenly laid off, their services no longer required by their governments. Unlike many others in government service, these people, and their specialized skills, were quickly rehired by major business corporations such as Xerox, IBM, and others. These companies began using competitive intelligence as a means of improving their market share and competitive position in the fierce competitive marketplace.

Purchasing professionals have been using competitive intelligence tactics and techniques for years but know it by other names such as benchmarking, source selection, market research, pre-award surveys, etc. However, we have not developed a systematic process for collecting this type information on a recurring basis and determining how best to use it in our day to day operations. This presentation will focus on answering the following questions:

  1. What is competitive intelligence and how can I use it?
  2. Where can I find competitive intelligence?
  3. How can I protect my company's information?
  4. What are the ethics of collecting and using competitive intelligence?

What is Competitive Intelligence and How Can I Use It? Competitive Intelligence (CI) is often confused with the cloak and dagger operations of corporate espionage. While both have the same goal, collecting key information about competitors, the methods employed and ethics involved are different. Corporate espionage involves collecting information using any means necessary. This includes using illegal and unethical techniques such as wiretapping, burglarizing offices to steal information, and bribery of company officials. CI, on the other hand, uses publicly available information and critical analytical skills to identify the same information.

While only a small percentage of U.S. companies have full-blown CI programs, companies in other countries such as Japan, France and Israel have been using these programs for years. For example, Mitsubishi has approximately thirteen thousand employees in more than two hundred offices worldwide. They are responsible for collecting more than thirty thousand pieces of business information daily. This information is then filtered, analyzed, and disseminated to companies within the Mitsubishi family to be used as ammunition in the fight against competitors.(1)

There are several different definitions of CI. For our purposes, CI can be defined as "the systematic process of collecting and analyzing information about our suppliers and the marketplace to further your own company's goals and objectives." The CI process includes the following four phases.

  1. Planning and direction
  2. Collection of information
  3. Analysis of the information gathered
  4. Dissemination of intelligence or knowledge

Too often, we are caught unaware when a supplier fails to deliver on promises, introduces new, innovative products, declares bankruptcy, or suddenly increases prices. The problem is not that we have too little information about our suppliers but that we have too little intelligence about our suppliers. Most purchasing professionals feel they are overwhelmed with too much information. But there is a major difference between information and intelligence. Information is factual in nature but does not provide a basis for action or decision-making. Intelligence, on the other hand, is information that has been filtered, analyzed and formatted in such a manner that it answers the key questions. When this happens, the decision-making process is easy.

By developing and using a systematic process for collecting and analyzing competitive intelligence we can improve our ability to:

  1. analyze the marketplace concerning changes in trends, technology, regulations and new, innovative products or services,

  2. analyze our suppliers strengths and weaknesses and their ability to provide us the products and services our company needs at competitive prices, and

  3. improve our ability to meet our customers needs by identifying new, innovative products and services which are available to satisfy their requirements.

Where can I find competitive intelligence? Because CI only uses information in the public domain we first need to define what information is deemed to be in the public domain. Public information includes not only information in electronic or print media, it also includes information that can be obtained via rumors, interviews, discussions, observations, pictures, etc. The Internet has become the primary method of searching electronic documents and databases because of its ease of use and low cost.

Because we live in a country that values open disclosure about government operations and publicly traded companies, there is a wealth of information available. In our bureaucratic system everything a company does leaves either a paper or electronic trail that can be accessed by anyone who understands the system. This is especially true for companies in industries that are highly regulated such as medical research, high technology, utilities, airlines, etc. As such, by accessing these paper trails, we can learn a great deal about a company's operations and future plans.

When looking for information we need to segregate our sources into two categories: primary and secondary. Primary sources are where the information originated directly from the main source such as a speech from a company's CEO. Secondary sources provide almost the same information but often alters the original information through filtering, analysis, or editing.

Primary sources include annual reports, government documents, speeches, live television and radio interviews, company financial reports, and personal observations. Secondary sources may include newspapers, magazines, books, taped or edited interviews or programs, and third party analysts' reports.

Secondary reports often provide the best available information since they may include an analysis of the situation. For example, a company's CEO may give a speech in which he states his company will grow at a 20% rate of return this year. The newspaper article covering the event may also include an analysis of the market that suggests that a 20% return for any company in the industry is very optimistic and unreasonable in the current market.

Some key areas to look for information include the following:

Federal Government Agencies. All publicly traded companies are required to submit quarterly (10-Q) and annual (10-K) financial reports to the Security and Exchange Commission ( These reports, which can be accessed using the Internet, include income statements, balance sheet, breakout of sales by product line, debt structure, depreciation, an analysis by management, list of properties, a description of the industry and a discussion of the industry's future (from management's perspective). These reports are critical since you can get a good picture of where a company is headed by comparing its current report with past year's reports.

In additional to the SEC filing, companies must also submit reports and filings to other government agencies that may be industry specific such as the Federal Communications Commission, Food and Drug Administration, etc. Many of these reports are available through the Internet or they can be obtained under the Freedom of Information Act request submitted to the government agency.

State and Local Government Agencies. Most states require every company to register with the state government every year (usually the secretary of state). Depending on the state, much of this information is available to the public. Additional information which may be available include company articles of incorporation, environmental impact studies, uniform commercial code filings, vehicle registration, labor information, etc. In addition, most counties and local municipalities routinely collect information about companies and may be excellent sources of information for reviewing property records, building permits, maps, aerial photographs, surveys, and complaints about a firm's products or services. These records, permits and filings are part of the public record and can be viewed just by asking.

On-Line Databases. With the expansion of the Internet, access to on-line databases have become easy and economical. Although most of these databases are fee based, their fees are very reasonable when compared to the detailed level of information provided. Some of the most frequently used databases include Dialog(, Datastar(, and Lexis-Nexis(.

Human Intelligence. One important source of information often overlooked is human intelligence or "humint". Humint includes any information you learn from other people. This area is often overlooked by many in the intelligence gathering community because of its labor intensive nature. I have found from personal observation that human intelligence provides the most beneficial information available for purchasing professionals especially when dealing with local suppliers. Some of the best ways to gather information using human intelligence are discussed below.

Ask for the Information. One of the best ways to find out information about suppliers is to ask other customers. Current customers are often eager to talk about their experiences, especially if it was a bad one, with someone else in the industry. Customers are often key sources of information on product compatibility, support services, and customer responsiveness. Another valuable source is the supplier. There is nothing illegal about calling the company to ask for a brochure, its pricing on specific products, or what support services they provide. These are questions a regular customer may ask in deciding which product to buy. If a supplier brags about its 24 hour service, call them in the evening or on the weekend.

Salespeople. Purchasing professionals often look at visits from salespeople as being a nuance instead of the opportunity it provides to learn more about the supplier and marketplace. Salespeople love to talk about their products, their company's capabilities, and to demonstrate how their products are superior to their competitors. Use these opportunities to ask probing questions about their operations.

Plant Visits. We and our technical counterparts frequently have an opportunity to visit a supplier's facility. The visits provide a unique opportunity to learn through personal observations some critical elements of information that may not be available from other sources. When visiting a supplier's facilities you need to look for some of the following elements of information and talk to several of the people (not management).

  1. How well is the equipment maintained.
  2. Do the people appear productive or are they standing around talking about social activities.
  3. What is the general appearance of the facilities (maintenance, cleanliness, cluttered, etc.).
  4. What information is shown on walls and charts.

Based on visual observations and close questioning you can often determine whether the facility is operating smoothly or if there are hidden problems.

Tradeshows. Tradeshows are a buyer's dream. No only can you pickup free give-away items for the office, you also have the opportunity to visit several suppliers under a single roof. Japanese companies have developed the art of intelligence gathering at tradeshows to a high level of expertise. At tradeshows, salespeople are encouraged to talk about their new products and services to whomever visits their booth. Many of the barriers found in other situations have been removed. In order to take the best advantage of tradeshow information gathering you must plan ahead. In preplanning, you identify which booths you plan to visit, what printed material you need to collect and what questions you need to ask. Another valuable advantage of visiting tradeshows is in observing the kinds of people who are visiting the supplier's booth and what their level of interest is in the product or service. By listening to what kinds of questions other potential buyers are asking, you gain a feel for whether the supplier's market is growing or shrinking.

How to Protect Your Company's Information: We have learned how to obtain competitive intelligence about our suppliers using public source information. Now we need to look at how to protect our company's information from your suppliers and their salespeople. One program which evolved from the military is called "operational security or OPSEC". OPSEC is a process that protects information without creating a wall around your company. It provides a mechanism for weighing the importance of protecting the information against the cost of losing it to a competitor.

Some key areas you need to assess in developing your OPSEC program include the following:

Press releases and public filings. While it is illegal to withhold essential information in reporting public filings one should not elaborate on specific areas when it is not mandatory. Often these documents provide more information than is required by law.

Technical papers, speeches and presentations. One of the key areas for leaks is through publication of technical papers, speeches and presentations delivered at conferences and in trade publications. These papers often provide suppliers and competitors insight into our current operations and future plans. All papers, presentations and speeches should be formally reviewed prior to releasing the information to the public.

Plant tours. Visitors should never be allowed unlimited access to your facilities and operational areas. All visitors should be escorted and the escort briefed on specific areas of conversation to avoid. Prior to the visit remove all information or clues which could provide information to suppliers or competitors.

Employees. Employees should never discuss details of their work in public places and should never disclose information to outsiders (i.e. journalist, visitors, etc.) without first clearing the information with your public affairs organization. When employees receive a call from someone they do not know they should remember they do not have to answer every question. Another frequent problem is remembering to cleanup after meetings (erase whiteboards and remove all extra documents) since people using the room later in the day can learn valuable information.

The keys to an effective OPSEC program are (1) to keep the rules and guidelines simple and (2) constantly train your employees at all levels.

What are the ethics of collecting and using competitive intelligence? Companies do not need to use the illegal techniques of corporate espionage to gain information about their suppliers or competitors. Virtually everything we need to know is available from public sources and observations. By using publicly available sources of information such as the Internet, Freedom of Information Act requests, reverse engineering, and other legal techniques we can obtain approximately 90% of everything we need. Through critical analysis we can infer the additional 10% of the information we are missing.

Illegal activities are automatically considered to be unethical. However, if an action is not illegal, does that automatically make it ethical to use. For example, going through a supplier's trash. The courts have ruled that once a company or individual places trash out on the sidewalk or public place for collection it is no longer considered private property and therefore not illegal for someone to plunder it for clues. For most within the CI community this type action is not considered ethical behavior.

One of the best tests for ethical behavior is to use the New York Times (NYT) litmus test. This involves asking yourself the question: If this action was discovered and published in the NYT, would I feel embarrassed about the action or would it send the wrong impression to my suppliers. If the answer is yes, the action is probable unethical. If in doubt, don't do it.


Kahaner, Larry, Competitive Intelligence, New York: Touchstone, 1996 Fuld, Leonard M., The New Competitor Intelligence, New York: John Wiley & Sons, Inc., 1995 McGonagle, John J. and Carolyn M. Vella, Protecting Your Company Against Competitive Intelligence, Connecticut: Quorum Books, 1998 Tyson, Kirk W., The Complete Guide to Competitive Intelligence, Chicago: Kirk Tyson International, 1998

  1. Kahaner, Larry, Competitive Intelligence, 1996, page 17

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