Create a Lifeline to Business Strategy: Employ Competitor Intelligence

Know the enemy[1] and know yourself; in a hundred battles you will never be in peril.

When you are ignorant of the enemy, but know yourself, your chances of winning or losing are equal.

If ignorant both of your enemy and of yourself, you are certain in every battle to be in peril.

Sun Tzu

Chapter 3 placed strong emphasis on acquiring market and competitor intelligence when searching for a comparative advantage and for locating a decisive point on which to concentrate. Similar advice was stressed in Chapter 1, in the discussion on maneuvering by indirect strategy.

As an extension of these topics, and within the framework of Sun Tzu’s sage comment that “you will never be in peril” by knowing your competitor and knowing yourself, the central aims of this chapter are to provide you with compelling reasons to, first, raise the priority level for acquiring competitor intelligence, and second, integrate the findings into developing your competitive strategies.

Consequently, given the scope of information required to develop competent strategies, it is up to you to look at a competitor with a 360-degree view. That is, use a circular approach to open your eyes to a changing marketplace of evolving technologies, environmental trends, and shifting buying patterns among your customers.

In this panoramic scene, seek information and insight that can impact your decisions about selecting markets, launching new products, and devising competitive advantages. You will improve your chances for establishing a formidable defense in those segments that represent your core business.

In all, reliable intelligence helps you outthink, outmaneuver, and outperform your competitor before he can react to your movements. It also helps you assess the level of risk associated with going after an opportunity.

All warfare is based on deception.

Sun Tzu

The intelligence-gathering approach begins by looking at a particular category of competitor intelligence that feeds three foundation components of strategy: (1) indirect strategy, (2) concentration at a decisive point, and (3) surprise. That category is deception. It is one of the earliest and most basic parts of the intelligence-gathering process. Sun Tzu and other sages considered it a key factor for success long before the beginnings of organized intelligence.

For business application, the purpose of deception is to create a diversion or distraction; in that way you reduce a competitor’s resistance against your efforts.

The essential points: If you know your rival’s plans and are able to monitor his moves, then you can estimate with some degree of accuracy which strategies are likely to succeed and reject those with minimal chances of success. You are then in a better position to concentrate your efforts at a competitor’s decisive point.

You also improve your chances of establishing a formidable defense in the segments that represent your core business. In all, it helps you out- think, outmaneuver, and outperform your competitor before he can react in time to interfere with your movements.

Creating a diversion that borders on legal deception may even cause discomfort for some individuals. Certainly, if deception is carried to extremes, it can potentially impact some aspect of corporate ethics and even lead to legal issues.

The most successful soldier will always make his attack not so much by open and regular approaches as by ... deceiving our enemies.

Thucydides

Today, “deceiving our enemies” takes many forms: hackers break into government and corporate databases with regularity, offices are bugged, employees steal secrets and sell them to any competitor for pure monetary gain, managers pass on confidential information about new products through surreptitious agreements with a rival company. In addition, there are foreign governments that sanction cybercrimes by stealing intellectual property as a part of their national policy. The most blatant illegal examples include the following:

Apple Computer: A global supply manager at Apple was caught sending drawings, pricing information, and projected sales figures on various Apple products to suppliers in China, South Korea, Taiwan, and Singapore. Suppliers paid kickbacks totaling more than $1 million to the individual.

Dow Chemical: A research scientist who worked at Dow for 27 years stole trade secrets for making chlorinated polyethylene and sold them to Chinese companies.

DuPont: A research chemist working on organic light-emitting technology secretly downloaded files to an external drive. He then covertly took a job with Peking University, which was working on the same technology. He went on to make personal presentations about commercializing the research.

Ford Motor Company: A product engineer, before leaving Ford, copied 4,000 documents, including design specs. As he was about to leave the United States on a one-way ticket, the data turned up on his laptop when it was confiscated at an airport.

Goodyear Tire & Rubber: Two engineers at a Goodyear supplier were convicted of entering a Goodyear plant, photographing a device used to wrap cable for a tire’s inner thread, and transmitting the photos to a rival company.

Motorola: An engineer was charged with economic espionage for stealing trade secrets to benefit a foreign government. The individual was caught at a U.S. airport with 1,000 Motorola documents and a oneway ticket to China. Among the papers were confidential documents relating to Motorola’s mobile-phone technology.

Boeing/Rockwell: An engineer was caught with 300,000 pages at his home, including technical information on a U.S. space shuttle, F-15 fighter, B-52 bomber, and Chinook helicopter.

Other victims of espionage include Google, Lockheed Martin, Chicago Mercantile Exchange, American Superconductor, and Dow AgroSciences.

I make the enemy see my strengths as weaknesses and my weaknesses as strengths.

Sun Tzu

What implications do these cases of deception have for competitive strategy? From a macro viewpoint, stealing a company’s technology, seizing advance research, and accessing any other area that converts data to a product or service advantage can seriously jeopardize a manager’s strategy options and the ability to concentrate at a decisive point. At the micro level, such outrageous acts explicitly place a manager in a high-risk situation by blocking him or her from building strong defensive barriers to protect an existing market position.

From your viewpoint, similar situations can realistically gut your efforts for developing expansion strategies by stripping away at the uniqueness of your product—or other parts of the marketing mix.

Deception is a two-pronged issue: First, maintain security and guard against rivals stealing your competitive advantage and turning it around to their benefit and against you. Second, within legal and ethical bounds, use deception as a way to maneuver by creating surprise, finding the decisive point of concentration, and developing an indirect strategy.

In the context of deception, therefore, where secrets are embezzled by individuals who are driven by assorted motivations, it is appropriate to discuss the people part of intelligence gathering. In turn, that leads to the use of people as agents for acquiring and disseminating information.

Engaging in such stealth activities is usually contrary to the type of practices most managers care to undertake. Yet, as pointed out above, within ethical and legal bounds and in a highly competitive world, deceptions for diversion and distraction purposes are legitimate weapons. And employing agents is an essential component of the competitive intelligence process.

Agents serve a highly credible role in interpreting industry events, organizing stray pieces of competitive information into coherent intelligence, and flushing out information about a competitor’s plans. They also contribute to disseminating deceptive information so that the competitor “sees my strengths as weaknesses and my weaknesses as strengths.” Consequently, it is in your best interest to use the following guidelines when employing agents.

Secret operations are essential; upon them the army relies to make its every move. An army without secret agents is exactly like a man without eyes or ears.

Sun Tzu

  • [1] As in previous quotes, substitute enemy with its business equivalent, competitor or rival.
 
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