Are there risks in competitive intelligence? (Part II)

 

All categories of market research carry some level of risk. For example, social media monitoring, used in consumer research as well as in competitive intelligence, can be portrayed as Orwellian, posing a reputational risk. Telephone surveys require an understanding of consumer privacy laws. Competitive intelligence is quantifiably no more risky than any other type of market research.

Perhaps the main risk of competitive intelligence is reputational. Even if competitive intelligence is carried out in the cleanest way, it could be misleadingly painted as corporate espionage. To the public, there may seem little difference between a researcher legitimately attending a trade show, and corporate espionage at such conferences.

In fact, competitive intelligence is a low risk activity. There are no recorded examples of reputational damage caused to a company by using competitive intelligence. Occasional articles may refer to ‘spying on your competitors’ in an attempt to glamorize what is otherwise quite ordinary market research, but in such articles, individual companies are not singled out for accusations about ordinary competitive intelligence such as public search or executive interviews.

Reputational risk is a consideration if competitive intelligence enters the public domain. This could happen in a number of ways, for example:

  • One of the company’s competitors may come to know that competitive intelligence research has been done about them, for example, as a by-product of hiring an employee away from that company (although most major companies have strict policies on not obtaining competitive intelligence from new hires) or through the communication lines that many companies have with their competitors for collaboration purposes. In such cases, the competitor will typically be pragmatic about the fact that competitive intelligence is just a standard and common market research activity – it is a normal part of business.
  • The most likely source of a leak is an employee with a grudge who may publicize the fact that their employer conducts competitive intelligence, hoping to have a negative reputational impact. While every company tries to hire employees who are deemed trustworthy, and employment contracts include confidentiality and similar clauses, rogue employees cannot be completely ruled out. This remains a hypothetical scenario, as no such case has been recorded.

 

Any reputational risk of competitive intelligence can easily be avoided. Established vendors operate discreetly and well within any ethical or legal boundaries. That is how they stay in business.

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