Intelligence gathering

Step 1: Determine who your competition is.

There are three types of competition. The first and most obvious is direct competition which is made up of those businesses which sell almost the exact same thing you do. The second type of competition is for the fulfillment of needs. People only need to eat so much; they only need so much light, etc. Once these needs are filled, anyone else trying to fill them is likely to fail. The third type of competition is for time. Even the richest person in the world can only be in one store at a time.

Competitors are anyone who replaces your product in the mind of the customers in one of these competitive areas. Porter’s model on threats to your strategy states that “…replacement products are one of the big seven dangers to any successful strategy.” For example, people read fewer newspapers because they spend more time online. They read less of the information in online portals because they go to Facebook more often. People stopped burning candles because of light bulbs, and people may start eating at fast-food restaurants less thanks to improved quality and decreasing costs of TV dinners. Because of this you could argue that a restaurant’s competition can include gourmet food stores and cooking classes not just other restaurants.

Things get a little more complex as you consider that people have a limited amount of money and time. People commuting to work take up time they could be spending in your store, as does Facebook, etc. I would argue that housing competes with almost every other job in the economy. Housing has taken up more time, more money, and works to supersede more needs than any other industry.

Step 2: Pick what you consider to be the biggest risks or the most crucial things you need to know based on your understanding of the business.

"Don't say, 'Find out everything you can about every competitor in the marketplace,' " says John Nolan, who spent 22 years as a military intelligence officer and is now a business consultant. It's far more productive to think of a specific question or problem that is crucial to your company's success. The goal of your intelligence operation will be to gather information to help address that one matter.

As with strategic planning in general, it’s important to get information quickly and in short, usable pieces. It’s impossible to know or track everything which means you must pick what to work on.

Step 3: Review your competitor’s mission statements if they are available.

Most of your competition will likely proudly display their mission or their vision somewhere. Think about what these missions and visions tell you about them and about the industry as a whole. Remember, good mission and vision statements tell you not only what a business is but the direction they are headed as well. The fact that Starbuck’s mission is to dominate anywhere that coffee is sold, for example, should let anyone who is going into this business know that Starbucks is thinking of new ways to compete with them wherever they’re selling their product.

Step 4: Think about your competitors’ brand image. How do they project themselves to customers?

Are they trying to position themselves as low-cost, as high-end, as a part of the local community? What is their personality like, and what are they really selling?

Step 5: Look at what your competitors are selling and what their price points are.

Step 6: Look at what competitors did in the past.

Your competitors’ past actions can give you important insight not only into how they think but into how consumers think as well. Did Pepsi Clear fail because not enough people were interested in buying it? Or perhaps if failed because Pepsi failed to differentiate it properly? If you’re creating a soda company, think about what this failure means. Notice that both Pepsi and Coke (New Coke) have had major and expensive failures changing their base formulas. They’ve also had real successes with changing formulas but only where it fulfilled a missing need such as with diet sodas or actual flavor changes such as cherry. Ask yourself what these failures mean about consumers. What do they mean about how your competitors will view the world in the future, and what strategies are they likely to try or avoid?

Step 7: Where are your competitors strong and where are they weak?

What are your competitors very good at and what are they bad at? Does being bad at something actually impact their business? McDonald’s, for example, has a very hard time projecting an image of health; however, they still enjoy healthy growth rates. Wal-Mart has had trouble projecting itself as a community business yet it’s also the largest retailer. Think about what this says about your customers.

Even when what a competitor is bad at doesn’t hinder their growth, it can help your own if you pick the right strategy. Subway, for example, chooses to focus on health and fresh food as a means of fueling its success against other fast food companies. Because it was different, both it and McDonald’s grew rapidly alongside each other. The fast food companies which suffered were the Me Too companies which followed McDonald’s strategy too closely (Burger King and Wendy’s).

Step 8: See who your competitors are hiring.

The types of jobs companies are hiring for, the expertise they are requesting, how much they are willing to pay, and how many people they are hiring says a lot about the direction they are headed. Some of these signals are clear. For example, when a series of companies recently started hiring touch screen interface designers, it was apparent that they were at least interested in touch screen technology. A restaurant that suddenly needs to hire a lot of servers has likely either had a lot of servers quit (which might signal that they have poor employment policies), or it could signal that they are getting ready to expand or have been expanding. Simply walking into their restaurant and ordering food would let you know if they have enough servers or not allowing you to make a fairly good guess as to the direction they are going.

Step 10: Review Competitor’s leadership.

Run a Google/Bing search of your competitors to determine what they’ve done in the past, and use other legal means to learn about them to see if they have any specific thoughts that would provide information on the direction they’re going.

Step 11: Go to their store, website, etc.

Shopping at a competitors’ store can give you a lot of information about them; how they handle customer service, what they are choosing to stock a lot of, if they have enough employees.

Step 12: Determine where your competitors might be headed given the above information.

There are three things that a company’s past can tell you about what they might do in the future. First, good companies learn from their mistakes and are going to be leery of repeating them. Second, companies and people often work within detectable patterns. There are things they like to do and don’t like to do. Third, good companies focus on the areas that they are strong. Review each of these to guess multiple directions that your competitors may go in.


Step 13: Think about how the competition is going to react to your strategy.

The moment you hit the radar, your competitors have the opportunity to react to what you’re doing. This is why it can be dangerous to sell low without some way of reducing costs because the competition only needs to cut prices to match your strategy. If you target a new market, your competitors might realize that they can target the same market as well. You need to guess how they might react and figure out how you’re going to deal with it. Some of the ways competitors’ reactions have been dealt with in the past include; simply being better than your competitors, getting them to wait to react until it’s too late for them to do so. Having your plan be such that reaction is essentially impossible, or being ready to adjust your strategy when they do react.