Are there risks in competitive intelligence? (Part I)

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Competitive intelligence is not quantifiably more risky than any other type of market research. Competitive intelligence companies have worked on thousands of projects over the last three to four decades, without there being any evidence of questionable practices that have damaged clients. Much of the perceived risk comes from equating competitive intelligence with corporate espionage, but the two activities are very different from each other.

  • Competitive intelligence is the legal use of secondary and primary research to discover information. The formalization of competitive intelligence as a modern practice can be traced to the late 1980s/early 1990s. A lot of competitive intelligence relies on nothing more sophisticated than online searches. Even primary research within competitive intelligence may be equally standard: for example, calling a competitor’s customer to ask them whether they are happy with that competitor’s service.
  • Corporate espionage is mostly illegal, and includes techniques such as ‘dumpster diving’ and hacking into computer systems.


The known examples of companies who overstepped the mark in obtaining information about competitors have all involved corporate espionage. Companies that have found themselves involved in corporate espionage include respected names such as SAP and Procter & Gamble, and the activities may have involved vendors and employees.

It is also questionable whether corporate espionage is even necessary: enough information can be collected through mainstream competitive intelligence to benchmark against competitors and create winning strategies.

 

Carrying out competitive intelligence has not damaged companies

There is no recorded instance of competitive intelligence causing reputational or legal damage to the company using it.

What does damage companies is corporate espionage. For example, General Motors vs. Volkswagen over the hire of a senior employee; the disclosure of confidential Gillette designs; Oracle hiring a detective agency; Procter & Gamble dumpster diving or the theft of DuPont secrets.

Some of these involved a rogue vendor, but the majority has involved the company’s own employees, for example, selling information to a competitor. Where a vendor is involved, these are one of the many lesser-known agencies, for example private investigators or former law enforcement officers. There is no record of one of the recognized competitive intelligence agencies being involved in such activities.

 

How clients deal with the risks of competitive intelligence projects

Competitive intelligence is quantitatively no more risky than any other market research activity.

Companies can pre-empt the risks of using competitive intelligence by setting and maintaining expectations about what methods the vendor may use. Limitations may include:

  • No employees of competitors are to be contacted.
  • No material, such as brochures obtained at conferences, is to be delivered to the client.
  • The client’s name is never to be mentioned or disclosed.


Such standards can further reassure clients that competitive intelligence is not going to cause them legal or reputational damage. Managed properly, competitive intelligence is no riskier than any other field of market research.

(It should go without saying that we are not lawyers...)