Creating a Competitive Advantage Using Competitive Intelligence

Creating a Competitive Advantage Using Competitive Intelligence

Richard Teerlink is CEO of one of the most storied brands in the history of business—Harley-Davidson. Customer research drives Harley’s strategy. Harley’s customers aren’t merely buyers of its bikes; they feel like part of the company. “There’s a high degree of emotion that drives our success,” says Teerlink. “We symbolize the feelings of freedom and independence that people really want in this stressful world.” Because of these emotional links to the brand, customers tend to be extremely loyal. Even though the company has boosted capacity, Harley’s insistence on top quality means customers have to wait for bikes. Still, they rarely bolt for the nearest foreign motorcycle dealer to buy a high-speed machine. If anything, scarcity has added to the brand’s mystique. To help customers quell their cravings, Harley slaps its logo on merchandise from deodorant to throw pillows.

Harley owners are a diverse bunch, from CEOs to construction workers. How could the company talk to them all? “We needed to give people a reason to use our products, and we needed to be there with them,” says Teerlink. So Harley created Harley Owners Groups—HOG, for short. Their members now number three hundred sixty thousand, and local chapters organize frequent road rallies. Teerlink and other executives get to as many rallies as possible, and they always carry a pad and pencil. Why? Well, a great new idea might pop up. A rider approached the company in the 1970s about some design changes, and the bikes that emerged as a result are today among Harley’s most sought-after models.1

The key to Harley’s long-term success is its competitive advantages. What is a competitive advantage? What types of competitive advantages has Harley achieved? What role does competitive intelligence play in creating a sustainable competitive advantage? What are the sources of competitive intelligence?

Global Perspectives

Global Databases Are an Excellent Source of Competitive Intelligence

The role of the global database producer is changing as we move into the next century. Driven by new technologies and increased expectations, new groups of information users are evolving, resulting in rapid change and expansion of the information industry. Search software and interfaces are also evolving in response to these needs, as are delivery systems that provide true “desktop access.” The evolution provides both challenges and opportunities for the information industry, which is turning to increased alliances to meet user needs.

During the 1980s, the vast majority of competitor intelligence, product, and market information passed through information professionals such as librarians and on-line specialists. Today, through the direction of top management or chief information officers (CIOs), companies are seeking ways to more broadly distribute important information directly to those who use it. Despite major penetration into major corporations in the 1980s, most decision makers are still unaware of the vast information resources available to them through electronic products.

A primary role of the global database producer will be to serve these new and existing markets with critical, timely, and comprehensive information—the type of information that drives informed business decision making. These new end-user needs are function-dependent and focused, placing new demands on information providers.

One such critical application is the sifting of vast amounts of information to identify the few critical pearls of information that answer competitive intelligence questions, which are then delivered to the electronic mailbox of the business executive.

Alliances among publishers, database providers, search software designers, and database environment providers will increase to meet these needs. We will see linkages among these players to deliver intelligence, not just data, directly to end-users.

Global database producers will provide better, not more, information. Added value will be accomplished via managed information integration both in individual organizations and through alliances. The information industry will make its valuable content the bulk of the traffic on the information superhighway as information users seek ways to increase productivity and profits.16

Explain the concept of better, not more, information. Why do you think that more database producers are “going global”? Do you see global databases playing a larger role in CI?

Entrepreneurial Insights

Using the Internet to Collect Competitive Intelligence

Our client was an information-systems executive who had contracted with a software development firm to produce mission-critical programs. After several setbacks, the client wanted to better understand the development firm’s inner workings and the potential for future problems. Not unexpectedly, the target had a well-stocked Web site with a wealth of pertinent information.

One of the first things we look at on a target company’s Web site is press releases. They are also available at BusinessWire ( businesswire.com) and PR Newswire ( Press releases are rich in detail that often does not make it into print, due to reporters’ limited space. Having access to the original mate-rial helps us form “actionable intelligence” from which we can draw solid conclusions. News releases often provide details not published elsewhere—as well as names of people who can comment on some aspect that’s important to our client; all it usually takes is a phone call. Press releases can also yield interesting insights into a company’s progress (or lack thereof), particularly when we have the better perspective of analyzing two or three years of releases at once.

Another important category of information at the target’s Web site in this particular assignment proved to be the officers’ biographies. Although the biographies are usually carefully crafted, the information can be telling, especially if there is inconsistency between the biography and other semiofficial documents or public assertions. Our client was dealing with a key executive of the company and wanted a careful evaluation of his capabilities. We took information from the Web site bio, cross-checked it against other official sources, and were able to put together a good overall picture.

In this case we found that two brief stints in executive positions at other companies were not mentioned in his “official” bio. This mismatch between the current bio and other listings in the CorpTech reference library was significant. It provided further insight into the client’s original questions regarding the target: management resolve; the resources to complete the task; and the internal communications within the target company.

We knew that our target company had been involved in contract litigation, but we didn’t know the details. Although we couldn’t access most court records via the Internet, we turned to the federal court’s Public Access to Court Electronic Records (PACER). PACER allows any user with a personal computer to dial in to a district or bankruptcy court computer and retrieve official electronic case information and court dockets, usually in less than a minute. User fee charges ($0.60 per minute) for this service have been instituted in most courts. People who want to use this service must first register (call toll-free: 800-676-6856). For additional details see PubAccess.html. Hopefully the federal court’s example of electronic access will help lead the way for other jurisdictions.

A Lexis-Nexis search turned up U.S. District Court records regarding a recent lawsuit against the target. These records provided the names of the judge and the attorneys for both sides. These names were provided to my client and he had the option of contacting them to discuss the matter, within the bounds of the attorney-client privilege rule of course. Internet access to these types of records may be possible in the future, but for now, both Lexis-Nexis and PACER remain fee-based systems.18

Ethics in Marketing

Is Competitive Intelligence Ethical?

Virtually all scholars who study business ethics agree that the practice of competitive intelligence is an ethical practice. The purpose of CI is to make a business more effective, efficient, and profitable. Efficiency benefits not only a company but society as a whole. Thus, if one can conclude that the end is acceptable, then the ethics question focuses on the means. The question becomes: Which of the specific methods of collecting and using CI are ethically acceptable and which are not?

CI data collection plans that rely on publically available information, such as in the Wall Street Journal, are completely acceptable. At the other end of the scale, activities such as theft, bribery, and trespassing are illegal and unethical. Many activities, however, fall in between the extremes. Going through someone’s trash is dirty and unappealing, but may not be immoral. Sitting outside a competitor’s main gate and counting the number of trucks and rail cars is clandestine, but most agree it is not unethical.28 Does a competitor’s supplier have an obligation to protect trade secrets of its customer? Most ethnicians believe that the supplier does not have that duty unless there is a specific signed agreement to protect such secrets or unless the supplier voluntarily assumes the duty. The primary responsibility for keeping a trade secret safe lies with the owner of the secret.

Do you agree that the practice of competitive intelligence is an ethical business activity? Go over the various ways discussed in this chapter that a researcher can gather CI. Which do you think are generally ethical or unethical? Defend your answer.