Karen Faust
karen@faustintel.com
T 708.305.0727
F 708.488.0971
415 Park Ave. Suite F
River Forest, IL 60305

The Market Research Advisor

Welcome to The Market Research Advisor. This blog is for any manager in a large company who uses competitive intelligence or market research to inform their decisions. Here, Principal Karen Faust shares 20 years worth of tips, strategies and ideas for running great research projects.

Competitive Intelligence Gathering: How Far Can I Go?

Posted on July 16, 2013 by Karen Faust

 

dumpsterdivingHow do you gather the competitive intelligence you need to make great decisions for your business without going too far?

The gathering of competitive intelligence is a form of acceptable market research and sets the stage for vigorous and fair competition.  In fact, sound management practices call for decision making based on a foundation of some market intelligence.  And while leveraging the best available information will not guarantee success, it will definitely contribute to winning strategies, market gains and any number of other advantages.

At the same time, the pressure to out-think and out-perform your competition might temp you to cross the line between the legal and ethical gathering of information, and something that could land you in real trouble.

So how do you gather the competitive intelligence you need to make great decisions without going to far?

Most competent managers are pretty clear about the extreme no-no’s.  For example, breaking and entering, outright theft of intellectual property, and bribing your competitor’s employees for inside information are pretty clearly off limits.  But there are some areas that are less clear.  And companies as successful and savvy as Procter & Gamble, Motorola, Nestle, Oracle and hundreds of others have gotten themselves into trouble by going too far when it comes to competitive intelligence gathering.

Following are some of the most common questions that my clients ask me about competitive intelligence gathering.

Dumpster Diving

Strictly speaking, the collection of trash from public property may not break the letter of the law.  However, laws vary from state to state and from country to country.  In some instances, trash is treated as abandoned property, making it ‘publicly available,’ and in others it may depend upon whether the trash is located in a privately owned or leased dumpster.

But even if using confidential information that was discarded by your competitor isn’t illegal, it is definitely unethical.  Whoever discarded that information expected that it would disappear – not that it would fall into your hands.  Further, companies that have been exposed as having collected information from their competitors’ dumpsters have generally received bad publicity for their actions when it came to light.

In a famous example, Procter & Gamble admitted in 2001 to a spying operation on its hair-care competitor Unilever that included the search for corporate documents in trash bins. The bad press that resulted when the 6-month spying scheme came to light was a major embarrassment, probably not worth whatever information might have been gained.

Posing As Someone Else (Customer, Student, Job Seeker, etc.): 

This is an easy one:  Don’t do it.  First of all, depending upon the jurisdiction, misrepresentation may be illegal.  But even if it isn’t, it would be unethical to falsely identify yourself, your company or the purpose of your call or meeting.

The industry’s leading professional organization, the Strategic Competitive Intelligence Professionals (SCIP) code of ethics states that its members must “accurately disclose all relevant information, including one’s identity and organization, prior to all interviews.”  This is one of the reasons that competitive intelligence is most often conducted by third parties.  A third party can accurately disclose its own company name without revealing its clients’ names.

Overheard Information and Found Documentation: 

Receiving confidential information in the form of found documents or overheard conversations can be a grey area.  Perhaps the best way to think about it is to ask yourself: “how would this look on the front page of the newspaper if it were to come to light?”  Usually, the answer is “pretty bad.”

In one rather infamous example, the two men who found the Apple iPhone 4 prototype that had been left in a bar in 2010 were each found guilty of misdemeanor theft and sentenced to 1 year probation, 40 hours of community service, and fined several hundred dollars.  As embarrassing as the incident was for Apple, it was the finders of the iPhone who paid the price for not returning or discarding the found material.  And we can safely assume that their sentence would have been far worse had they used the iPhone for corporate gain.

If you do receive this type of information, you should turn it over to your management or to your legal staff with an explanation of the circumstances under which it was obtained.

Stiff Consequences

Companies that choose to push the limits, either through their own employees or a third party, or simply choose to turn a blind eye to such practices, are opening themselves up to major lawsuits and multi-million dollar settlements and fines.  In addition to the legal costs involved, a company can expect to see its shares fall, loose market rating and loose investor interest.

In 2000 the Oracle Corporation admitted to paying janitors for the trash they removed from the offices of a group lobbying on behalf of Microsoft in its federal anti-trust case.  Following the public revelation of this incident, the CEO of Oracle quit, Oracle’s share prices fell 13% and a JP Morgan analyst downgraded Oracle’s rating to ‘market performer’.

But the damage goes beyond the board room and the stock market.  Not only must a company maintain its reputation within the business community, but it must also establish a strong relationship of trust and honesty with its stakeholders.  These stakeholders include your employees, customers, suppliers and government regulators.  When that trust is lost, the future growth and success of the company is in jeopardy.

So What CAN I Do?

Fortunately, most of what you need to know about your competitors can be found using legal, ethical means.  A mix of secondary (publicly available) and primary (not publicly available) research will get you most of the information you seek.  And the rest can usually be deduced or estimated.

Today’s technology puts a wealth of information at the finger tips of the researcher.  Company web sites, conference proceedings, fee based information services, media coverage, search engines and government sources (court documents, patent filings, OSHA reports, government studies) are just a few examples of publicly available resources.   Also, you can take advantage of on site observations during press/consumer tours, open meetings, trade shows, and observations of retail space.

But as you undoubtedly know, some of the best and most compelling findings usually come from primary research.  That is, information collected from talking directly with individuals who know it.  Employees of suppliers, distributors, customers, other competitors, consumer groups, regulators, academics, analysts and advisors are all great sources of primary information.

So reach out to these primary research sources as often as possible – either directly or through a third party that specializes in competitive intelligence gathering.  Just be sure to follow some basic legal and ethical guidelines when you do so.  And remember, if you aren’t sure, ask an expert!

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Ask This Question Before Starting Your Next Research Project

Posted on February 13, 2013 by Karen Faust

change.dial.faustmarketintelligence

Congratulations!  You are about to launch a research project.  You have clearly defined your objectives, you have assembled a crack team to execute the work, you have champions and internal customers who are looking forward to the report, and you have wrangled the necessary funds to pay for it.  But have you asked yourself this question?

“What will I change once I have the information?”

This is one of the most important questions you can ask before starting a research project.  Because if you aren’t sure, then you should probably take the time to figure it out before you invest precious resources in your project.

There are hundreds of possible answers to this question.  Will you adjust your merchandising efforts?  Alter your brand strategy?  Make a tough decision regarding an initiative?  Communicate with shoppers differently?  Advocate for a change in business practices?  Test and compare different theories and approaches?  Alter existing processes?  Invest in new infrastructure, personnel or training?  Change entrenched cultural viewpoints?

But maybe your answer is ‘nothing’ or ‘I’m not sure.’  If you think you will be unable or unwilling to alter your course based on research findings, then you should reconsider the investment.

In my experience, it usually isn’t a lack of information that keeps companies from capitalizing on opportunities.  It is the challenge of making necessary changes once that information comes in.  So take a hard look your situation and be sure you can at least influence or advocate for some change should it be indicated.

But I Just Want To Sleep Better At Night

There are plenty of justifiable answers to this question that don’t involve major company overhaul.  In fact, I occasionally execute research projects for clients with the aim of helping them to internally justify a course of action or to sway leadership opinion.  Other fine answers to ‘What will change?’ include:

  • I will begin a dialog about internal practices within my division
  • I will justify a recent or planned decision to my superiors
  • My team will build the case for change in the organization
  • I will be more confident in my position and decision making
  • I will sleep better at night

Sleeping better at night is a perfectly good answer to the ‘What will change’ question.  Your entire organization benefits when you can make decisions with confidence, justify recommendations, or know that the current course of action is on target.  Just be sure you know ahead of time what you are really paying for.

The ‘All You Can Eat’ Approach

Early in my career, I advocated that competitive intelligence was not a luxury, but a playing stake.  That the best companies knew everything there was to know about their competitors.  But over the years I saw too much of my work relegated to rarely used file sharing databases and the ubiquitous binder shelf.

I can’t tell you how many times I get a call from a client asking to know “everything” about a competitor.  I used to respectfully ask reasonable questions like: Why that competitor? Why now? Why everything?  And I usually got fairly reasonable answers.

But not all knowledge has relevant value.  While it may be useful to monitor your competition in order to keep abreast of what is happening in the field, it is only worth the investment if you can envision how your own decision making will change as a result of knowing it.

So now I ask my clients:  “what will you change once you have this information?”  It alters the whole conversation.   Many aren’t immediately sure although more often than not they consider the questions and come up with solid responses.  But in some cases, clients decide to allocate scarce resources differently.

Don’t get me wrong, research is a vital tool in strategy development and decision making.  In fact, it keeps a roof over my head, and food on my table.  But to be sure you are getting the most for your research dollars, don’t forget to ask ‘what will I change once I have this information?’ And then be prepared to change it.

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Using Wikis to Collect and Share Data for Under $10

Posted on January 2, 2013 by Karen Faust

wiki.neon.sign.faustmarketintelligenceBefore you scrap a great market research or competitive intelligence project because it couldn’t be funded, consider how you might use a wiki to get at least some of the information you need.

Today’s managers face a variety of demands for obtaining up to date market data while also keeping an eye on the company’s bottom line.  And that means that sometimes, desired projects have to be postponed, or even shelved.  But obscene amounts of information are available to us – either through the internet or through an untapped network of people who know things.  Getting to that information in a quick and cost effective manner might help.

Let’s face it, your performance and success is in part dependent on being able to gather critical data, translate the information into a comprehensible plan and make it actionable.  So how do you get to the information you need to make great decisions without that perfect project you envisioned?  How do you turn your company’s employees and other outside constituents into your own person intelligence troops?  How do you actively engage and communicate in real time with people who might have the answers you seek? And how do you do all this with no real budget allocation?

A wiki can be the answer you are looking for.  Since its introduction to the social media world, wiki (the abbreviated form of the Hawaiian word ‘wiki wiki’ which means quick) has emerged as an efficient and effective means of collecting data internally and externally.  A wiki is a document or collection of documents hosted on the Web or an intranet.  It allows employees, team members and, in selected cases, customers to log into a specified web site to edit information, add content, make comments and insert links to external pages.  For small companies and large corporations alike, a wiki can become a ‘common knowledge repository’ for the business providing an efficient means of collecting, storing and managing information.

A well-known example of a wiki is Wikipedia, the web based encyclopedia that is written by visitors with contributions submitted worldwide.  Newspaper publishers have also come to appreciate the value of the wiki for gathering and sharing information, allowing visitors to submit comments and contribute news articles.  Another large scale example of a well- known wiki is Intellipedia, an online system for collaborative data sharing used by the U.S. Intelligence community.

Because they are so easy to use, the wiki is becoming a more successful data collection tool in corporate America.  Wikis provide a convenient means for companies to collect and share information from employees across the value chain of the organization – from sales and marketing to manufacturing and distribution.  Depending upon the nature of the information being collected, suppliers, customers and end users can get in on the action as well.

Many Fortune 500 companies have created their own wikis for both internal and external data collection.  American Express, The Disney Corporation, IBM, E-bay, Microsoft, Pixar, Nokia, Sony Ericson, The National Institutes of Health and Sun Microsystems are just a few of the many corporations and institutions using wikis for internal knowledge management while also soliciting customer and colleague input through their external wikis.

There are also many independent wiki sites not associated with one company or institution.  Shopwiki provides information on a variety of retail products on the market,  Productwiki allows consumers to publish their own unbiased products reviews, AskDrwiki features reviews, clinical notes and images for those professionals in the medical field,  Healthwikinews is another medical related wiki site and Medpedia is an on line medical encyclopedia wiki.  By keeping an eye on these already established wiki sites, managers might spot trends or identify emerging issues that would otherwise have been missed.

But wikis don’t have to be as large as these examples.  Technically, wikis are fairly simple and cost efficient to set up and manage.  There are a variety of affordable, and in some cases free wiki tools available on the Web that make it easy for managers to set up a wiki.  Such tools as MediaWiki, Tikiwiki, Dokuwiki and Wikia are all designed to allow for interactive communication and data collection and storage among company employees and if desired outside resource groups (such as your customers, suppliers, end users, etc.).

A wiki allows managers to tap into an interactive source group of untold knowledge.  The immediacy and relevancy of the information gleaned from a wiki site is a valuable commodity for any company.  We all know that nothing can replace a well designed custom research project.  But before you let your project idea sit on a shelf collecting dust, start a wiki and see wow it goes.  A well targeted wiki might get you enough information to move forward and compete effectively when other options are not available.

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