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Chapter 13: How to Build Your Own Intelligence System
Nathan Rothschild, the famous British Merchant banker, received
early warning of Napoleon's defeat at Waterloo through a message
sent by carrier pigeon from one of his correspondents on the Continent.
Making it appear as if he had heard Britain would lose the war,
he quickly dumped all his British-backed government securities on
the market. Other investors, following Rothschild's lead, did likewise.
However, as soon as Rothschild saw the market bottom out, he bought
back every piece of paper at fire sale prices and made a killing.
If Nathan Rothschild could receive early warning of Napoleon's defeat
at Waterloo in 1815 by using nothing more than his carrier pigeon
network, then the modern corporation -- large or small -- with lightning-fast
technology at its disposal, can do the same in today's corporate
battlefield. There is no excuse for competitive surprises. All any
company needs is an organized network of people.
This chapter offers a step-by-step approach for building a simple,
efficient intelligence system.1 The guidelines I am proposing
are based not on fiction, but on actual cases and experiences with
various clients. In most instances, the framework of a successful
intelligence system is built on and around the culture of each organization.
In other words, intelligence systems -- despite the all the potential
computer-based applications this concept conjures up -- are very
much a human issue. Note how the five stories below seem to reflect
this perspective.
Corning . . . Look, See and Learn
"A pallet of the competitor's ceramic product sat on the shop floor,
displayed for everyone at Corning's Erwin, New York plant to see.
Until that moment, most in the facility were satisfied with Corning's
equivalent product. Yet, after reviewing the competitor's sample
and its characteristics, Corning realized it had to improve Corning's
product to compete successfully . . . "2
Banc One . . . Turning Bankers into Shoppers
"Banc One has begun to regularly collect the direct-mail solicitations
sent by its competitors to the bank's own employees. The program
to date has yielded invaluable information on competitors' pricing,
new products, and target markets."3
Xerox . . . Hands On
"Evaluation begins as soon as the engineers lay eyes on a machine
. . . The engineers never try to fix a broken machine and, when
available buy a service contract. Servicemen from Kodak, for instance,
will install the Kodak 150 copier at Xerox, while Xerox engineers
stand by, watching every move, even photographing the process to
see what's involved."4
Canon . . . Reading and Reporting
"At Canon Corporation we have analysts, who have been trained in
British schools, to translate and interpret technical articles published
in the United States and in Europe."5
Kraft/General Foods . . . Finding the Pack Rats
"The Kraft CMIC group has created an in-house database called RECAP
(Research Capsules) that has fully indexed millions of dollars worth
of research purchased or produced for the Kraft organization. RECAP
is extremely flexible and allows the user to search for a report
by analyst, code word, title, date, or even the purpose of the research.
For the first time Kraft has a handle on the market research that
was becoming buried in its organization."6
The best-run intelligence systems highly leverage their people resources.
Some do so by incorporating a giant web of computer-based, client-servers;
some through low-tech means of intelligence storage and delivery.
Whatever path these successful programs have taken, they all have
done do so by following three basic steps. They are:
- Step #1: Prepare the organization
- Observation #1: You're Bigger than CNN
- Observation #2: Intelligence Never Travels in a Straight
Line
- Adopting the Three Part Philosophy
- Create a Ringmaster
- Step #2: Motivate the troops
- Step #3: Store and deliver the intelligence
Step #1: Prepare The Organization
Intelligence systems succeed because of people, not machines, not
computers. If you had to place the topic of intelligence systems in
a business school curriculum, you would place it under the category
of Organizational Behavior -- not under Marketing, Control, or Systems.
The successful intelligence system works because all employees are
primed to share, communicate and use their own hard-won market information.
Companies that place barriers to this information flow, or think that
a high-tech electronic mail network will substitute for good employee
communications, are mistaken.
You cannot just take a software package out of its shrink-wrapping
and hope that it will organize all your information. First you must
find ways to share and communicate vital information. Storing that
information comes later. If the organization does not share information,
no technology will help. On the other hand, if the organization has
begun to share and use its own vital intelligence, then a computer-based
system may be the next step in the process.
Observation #1: You're Bigger Than CNN
CNN may have hundreds of affiliate stations and scores of reporters.
Yet, this cannot compare to multinational conglomerates of the world
with their hundreds of thousands of employees. Such large corporations
-- General Electric, Fujitsu and Siemens, among them -- have armies
of well-trained individuals who are immersed in a market. These intelligence/news-gathering
experts include scientists, networks of independent brokers, sales
people, purchasing managers and many others. You need to harness this
capability both for the quantity and the quality of the industry news
these internal experts can offer.
In contrast, think about the intelligence potential represented even
in the smallest of companies. A 20-person firm spends each business
day dealing with customers, suppliers and competitors. Business
Week or The Economist may devote one article a year
to your industry and its competition. Who do you think will delve
more deeply -- and in a more timely manner -- into your market, you
or the news magazines for whom this is but one small item?
The reason many companies have problems establishing successful intelligence
programs is not a lack of internal knowledge, but the fact that they
have not yet figured out how to harness that knowledge to analyze
the competition.
The Prime Philosophy: Your Are Your Own Best Consultancy
Observation #2: Intelligence Never Travels In a Straight Line
Chances are that a vital piece of intelligence will have entered your
company many different ways and take many different directions as
it travels through the organization. A piece of news is seldom known
by only one individual. Noting this fact, you need only try to capture
that piece of intelligence once. You can do so by building a broad
network of communications vehicles that can capture and speed along
the critical intelligence. Like a fisherman who is generally far more
successful throwing a wide net into the ocean than casting 20 individual
fishing lines, each with its own hook, you too need to spread your
corporate information net wide. Remember, you only need to capture
the intelligence once. Lay down a wide enough net and you will be
able to do so. Later in this chapter I will describe the types of
electronic and manual nets you want to consider.
Adopting The Three-Part Philosophy
In a two-year study my firm conducted in the mid-1980's and in subsequent
consultations, three immutable principles guide any successful intelligence
system or program. They are:
- Constancy: You must gather information constantly, day-in,
day-out, and not just during the traditional strategic planning
cycle. Most corporations will spend a great deal of time and money
for three months of ever year trying to understand their competitive
environment. The purpose of this effort is to develop the yearly
corporate plans. Yet, your competitors are not so polite as to
wait till next year at the same time to once again compete. They
compete every day and their intelligence-savvy management urge
employees to look for and gather critical information every day.
Companies such as Corning, Canon and Banc One recognize the importance
of alerting employees to critical news, all the time.
- Longevity: You must invest in the intelligence program
for the long term. Six months, one year, or even two years may
not be enough to prove the worth of a program. The most successful
intelligence systems have taken three to five years to mature.
As a result, cost becomes a major issue. The more expensive, more
costly the system, the more difficult it will be to maintain over
the long run. From my experience, the longest-running, most successful
programs have been allowed to grow and mature over many years
just because started out as relatively low cost and low maintenance
endeavors.
- Involvement: One way to control intelligence system
costs and at the same time create a broad-based system is to spread
the responsibility for collection and analysis of information
across the entire organization-- from sales people, purchasing
agents, market research to senior management. The more people
see the development and use of intelligence as part of their jobs,
the more readily available the intelligence will be and the more
it will be used.
Create a Ringmaster
Should the system be centralized, or decentralized? This is probably
the most frequently asked question I hear from clients interested
in establishing an intelligence system. It is also the most misunderstood.
If this were thirty years ago, when information had to be controlled
from a central location, I would advise a client to adopt a centralized
system, where all files -- electronic and manual -- would be kept
in one place. I say this because of the way information was maintained.
Mainframes controlled the data flow, there were few terminals available,
electronic mail was in its infancy and the few photocopiers that existed
were tightly controlled by the print shop or copy manager. In short,
information had to be kept in one place in order for it to be managed
and ultimately found.
Today, the information flow has reversed itself. The individual now
controls the flow and --to a large extent -- the storage of information.
Personal computers (stand-alone or networked through client-servers),
personal copiers, electronic mail, voice mail and other personalized
technologies allow anyone to manage his or her own information base.
The corporate intelligence system must recognize this fact of life
and build a system that leverages the dynamics of this new information
age.
Because your company's experts are literally everywhere your company
is -- in the field, the R&D labs, the shop floor, the customer
service desk -- you need to coordinate the information flow, not create
a bottleneck by centralizing it.
The intelligence system manager needs to take on the role of a circus
ringmaster, recognizing the system's goal as that of an information
traffic cop. The intelligence system needs to provide the company
with a means to find the information already located within its own
walls.
Examine the two charts below: The organization chart and the intelligence
chart. The organization chart describes a typical, vertical company
structure, where employees report to superiors or speak to subordinates.
The intelligence chart describes the same organization that removes
the strict vertical barriers and creates an atmosphere of information
exchange.
The great irony of many large corporations, is that by encouraging
individual business unit profitability, management often ends up building
information barriers. As a consequence of employees wanting their
own business unit to succeed, they will often withhold information
from another business unit. In such instances, good business practice
can work against good intelligence practice.
The intelligence system manager, or Ringmaster, can break down these
barriers and foster healthy information exchange by:
- Creating and distributing an "Intelligence Directory" of all
files and experts within the company, cross-indexing them by expertise.
- Using the company's voice mail or e-mail to distribute important
information, or information requests
- Bringing together internal experts to hash out critical competitive
issues
- Encouraging senior management to recognize intelligence contributions
of subordinates -- particularly if those contributions directly
benefited the company.
For a more detailed review, I refer you to:
1 Monitoring The Competition: Find Out
What's Really Going On Over There (Leonard M. Fuld, John Wiley
& Sons, New York, 1988).
2 "Achieving Total Quality through Intelligence," Leonard
M. Fuld, Long Range Planning, Vol.25, No. 1, pp. 109-115.
3 Monitoring The Competition: Find Out What's Really
Going On Over There, Fuld, John Wiley & Sons, 1988, page
28.
4 Rochester NY(USA), Democrat & Chronicle, January
29, 1984
5 Fuld & Company "Intelligence Sources, Techniques
& Systems" Seminar
6 Monitoring The Competition: Find Out What's Really
Going On Over There, Fuld, John Wiley & Sons, 1988, page
131.
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