Have you heard the following statements?
Have you thought or said them yourself?

"Nothing goes on in this industry that I don't already know about."

Humbleness isn't a characteristic that we see in many American managers. There's a tendency for executives and managers to read the Wall Street Journal, the local newspaper, skim a few trade journals and think they know everything that's going on in their own particular industry. Worse yet, managers think they know what's going on in the general marketplace by reading a few magazines.

For anyone who has visited Japanese companies, one of the biggest eye-openers is how much Japanese managers--even at the highest levels--read. They peruse their competitors' publications, their annual reports, technical publications, everything they can read to understand the competition. How much does the average U.S. manager read outside his company's own reports? Very little in comparison to his Japanese counterparts.

Surveys of U.S. upper management show that they get much of their information from their peers, hobnobbing with other CEOs. While this is a good source of information, it's skewed. It's not the whole picture, simply one view from the rarefied world of upper management.

"Nothing goes on outside this company or outside this country that's worth watching."

You laugh, but many company managers believe this one. The U.S. character often is one of misplaced superiority compared to the rest of the world. The "everything is better in the United States" attitude does exist and this belief spills over into business. How many years did it take for American carmakers to believe that the Japanese were making better cars than Detroit? How long did it take before American steel companies realized that Japan and other countries could make better steel? Was it because American business people were stupid? No, it's because they had blinders on to the world outside the United States.

Fortunately, this superiority complex is fading and American industry is beginning to learn from those in other countries.

Most multinational companies understand this, but companies that are not in the global arena--who are very local or regionally focused--can also learn from what's happening in other countries. However, they rarely look outside their immediate area for information that could be useful.

"Competitive intelligence is spying. It's unethical."

Many high level managers don't understand that 85 to 90 percent of the information your company needs can be found legally and ethically. Unfortunately, they equate competitive intelligence with industrial espionage--two separate and different pursuits. The only answer is education.

"It's not taught in business school, therefore it's not vital."

I can't refute the core argument except to note that schools in other countries teach competitive intelligence. In Sweden, for instance, you can now obtain a PhD. in competitive intelligence. In Japan and France there are government affiliated schools and courses of study dedicated to competitive intelligence. A person can obtain a master of business administration degree in the U.S. without ever taking a class in competitive intelligence. In fact, several professors have said that they have tried to institute these courses and ran into resistance. This is to be expected with something new. Schools, like other institutions, don't embrace change. On the other hand, as you'll see in later chapters, some U.S. schools are making a start. Awareness among academics is spreading albeit slowly.

"Competitive intelligence is a cost center, not a profit center. It's too expensive to implement a program."

What CEOs are really saying is, "I can't quantify the benefits of competitive intelligence." The effects of competitive intelligence are indirect. "No simple correlation exists. Everything works through an intermediary," says Bernard Jaworski, a professor at the University of Arizona who tried to quantify the effects of competitive intelligence programs. According to Jaworski and others, competitive intelligence leads to increased quality, better strategic planning, and a greater knowledge of markets. However, putting a dollar figure on those facets is difficult if not impossible in many cases.

Looking at it another way, though, how much money did your company lose by not doing something? For example, how much market share did you lose by not knowing your competitors' activities? How much did you lose by not getting that contract? Was it because you didn't have enough information about your competitor?

"We tried doing some competitive intelligence, and it was a failure. I didn't see results."

Many companies jump on the competitive intelligence bandwagon because of something they read or heard about the subject. The CEO decides to get a clipping service and maybe asks the librarian to subscribe to an online databank service or two. Someone is pulled out of marketing to work on competitive intelligence in their spare time. Surprise. It doesn't work. Everyone is disappointed, and the thought of doing competitive intelligence disappears.

Because competitive intelligence is such a powerful process, companies see large returns with even a small, informal, sometimes ad hoc effort. This leads them to believe they're doing all they can in that area. This can lull managers into a false sense of security about their competitors.

Then, one day, they get a nasty surprise.

Copyright © 2010 Larry Kahaner