Competitive Intelligence: What's Unethical About It?

In Good Company: Vault's CSR Blog
Posted on Tuesday, March 8, 2011 6:11:23 PM GMT 
Where would you draw the line at collecting intelligence about competitors?

A new survey by consulting firm Fuld & Co. shows that while financial services firms and tech companies might be the most aggressive in collecting intelligence, other industries aren’t that far behind. As reported by the WSJ, "104 business executives were presented with hypothetical scenarios that gave the executive an opportunity to collect intel about a competitor, but straddled the ethical line. Participants could rate the scenario as "normal," "aggressive," "unethical" or "illegal.""

The results seem partly on target, but mostly worrying.

For example, "One scenario asked whether it was all right for the executive to remove his identification badge during a trade show, which would make it easier to speak to competitors without them knowing his identity."

The result: "Most industries rated removing the ID badge as aggressive, while health-care and pharmaceutical executives thought it was unethical."

But the report didn’t restrict the questions to public forum etiquette. "The executives were asked if it was alright to sign up for an interview at a rival company's job fair to see what they could learn from a recruiter."

Result: "Every industry thought the tactic was unethical except for government, which merely found it aggressive."

While I'll let you get over the fact that this scenario suggests our government has a completely different outlook on ethical behavior, overall the report seems to give health care and pharmaceutical brownie points for being squeamish about their approaches.

One factor detailed by the Journal: The level of regulation weighs heavily on the consequent level of squeamishness.

While each industry seems to be toeing its own line of ethics vs. competitive intelligence, risk for most means higher profits, and as Larry Kahaner, author of Competitive Intelligence says in the report, "The more money that's involved, the less squeamish people become. "If companies have gotten away with stuff over the years, they don't clean up their act."

Is it then okay to assume that the surveyed companies probably have some sort of written guidelines on intel collection?

A third, says the report, neither have guidelines nor do they share them with employees. What you don’t know doesn’t hurt. Right?
WSJ

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SEC Votes to Restrict Wall Street Bonuses

SEC Votes to Restrict Wall Street Bonuses
Posted on Wednesday, March 2, 2011 9:22:09 PM GMT   |   VAULT.COM

Mary Schapiro and the rest of the SEC might soon wield a ton more power on Wall Street.

Today, the SEC passed a proposal requiring large banks, asset managers and hedge funds to "disclose their bonus figures to the SEC, which could then ban any 'excessive' awards." The proposal, which narrowly passed SEC vote (it won 3-2, with two Republicans voting nay), "will now enter a 45-day public comment period, after which the commissioners must vote on a final version of the rules."

The move, one of many proposed today by the SEC, followed a similar one in January when the SEC "enacted so-called 'say on pay' rules that give shareholders a nonbinding vote on corporate salaries, bonuses and golden parachutes."

In the past two years, since that pesky little financial crisis thing nearly crushed the world's economies, Wall Street bonuses have come under white-hot fire, as many industry observers (including this one) believe incentive pay was largely responsible for the excessive risk taking that led to the crisis.

Of course, the big banks (such as Goldman Sachs and JPMorgan Chase), asset managers and hedge funds that stand to have to answer to the SEC if the aforementioned regulation passes would disagree these observers, and are no doubt, right now, readying their full-court lobbying presses to get that message out over the next month and a half.

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The Five Habits of Great Innovators

REPRINTED FROM: Fastcompany.com March 2, 2011
By Kaihan Krippendorff
For more than a decade I've studied history's most creative strategists--from Napoleon Bonaparte to John Boyd--and compared their thinking habits with those of their modern peers--Grameen Bank founder Mohammad Yunus or Tesla CEO Elon Musk. I have found five thinking habits that stand out:

• Mental time travel
• Seeing the interconnected system
• Frame-shifting
• Disruptive mindset
• Influence

Mental Time Travel
As Albert Einstein once said, "It's not that I'm so smart, it's just that I stay with problems longer."

Interview someone who has had a major impact on their industry or the world and bring them back to the early days when they built belief in their cause. Ask them what was going through their mind, and they are likely to take you along a mental time machine that starts at the beginning and then fast-forwards to a desired future. These "outthinkers" are able to hold their minds at that hypothetical moment, exploring everything that would need to be true for their vision to be realized.

Cognitive scientists call this "mental time travel" and believe it serves as a key distinction between humans and animals. Most animals show no ability for imaging future states but most humans exhibit this capacity by the age of four. I believe that the greater capacity you have for "mental time travel," the better chance you have for impacting the world.

Seeing the Interconnected System

When Scipio Africanus took on the seemingly impossible task of defeating Hannibal in 205 B.C., he resisted the head-on assault that other Roman military leaders had tried before him. Instead he took in a bigger picture, and looked not just at the players but at their inter-dependencies.

By understanding the system, Scipio Africanus saw a master-stroke that would weaken his enemy with minimal effort. Rather than confront Hannibal head on, he turned his men to the ancient city of New Carthage (now called Cartagena), took the city, and thereby cut off Hannibal from his chief supply route.

In the West, we might call this "systems thinking" or talk of the "butterfly effect." The Taoists began speaking of this ability five millennia ago, advocating the point of seeing the interconnectedness of all things.

As I mentioned in my last blog [3], "outthinkers" seem to think in terms of a system, often a simplified one that keeps them focused on what is most important. The CEO of Knoa software, for example, follows a four-step process for building a business: get a customer, make them happy, get a referral, and repeat.

Regardless of how far you are willing to take this--from building a simple map to embracing the Taoist view that everything is connected--it is worth taking a pause before you begin problem-solving to look at the system, looking at what depends on what, building out the web until you see clearly the fronts of your battle, the levers you must turn, to realize your vision.

Frame-Shifting

I was running late, but I could not find my car keys. I looked in all the usual places but they were simply gone. Desperate for ideas, I dropped to the floor and looked around. They were right there, under the couch.

Sometimes just changing your perspective reveals the answer.

Innovative thinkers shift their perspectives more often, drawing from a more diverse set of experiences, than the rest of us. They are able to handle more complexity and ambiguity because they recognize more patterns. Grandmaster chess players, for example, recognize ten times as many situations as expert chess players. By bringing more perspectives to their game they are more likely to see that winning move when their opponent freezes in confusion.

I've found that if you can shift a group's perspectives seven times on a single problem, they can produce between four and ten times as many possible solutions to that problem.

Disruptive Mindset

How did Rosetta Stone emerge from relative anonymity to become the leading provider of language-learning software in less than ten years? They saw the white space--the opportunity that no one with the capability would be willing to pursue. They saw that technology would be better used to replicate the immersive, natural experience of learning a language than as a tool to replace the classroom. They knew that existing language-learning players were too invested in the old classroom-based model to pursue this opportunity quickly.

It is this same thinking that transformed Sony from a maker of electric teapots into an electronics giant, or RIM into the leading smartphone maker, or Google into ... Google.

"Outthinkers" think not just about what customers will want but also about what competitors will not pursue. Understanding both allows them to see the white space, the uncontested territory.

The higher up I go when working with a good organization, the more often I hear conversations about the competition, what they will and won't do, what they will and won't defend. It is not enough to know your customer. You must grow equally acquainted with your competition and then focus on the few unique opportunities your competition will not defend or respond intelligently to.

Influence

The fifth habit is a big one. Innovators are nothing more than dreamers if they cannot convince others to live out their dreams. It is only when others believe in and act upon their dream that it becomes reality.

I don't have space here to dig into the key aspects of influence--I believe great innovators do at least four things differently here--but if there is one thing that stands out more starkly for me it is that "outthinkers" step into the minds they are seeking to change. They speak in the same language, use the same metaphors, appeal to the same values of the people they are seeking to win the support of.

The rest of us do the opposite. Rather than stepping across the line into "enemy" territory, we stand on our side of the line, use our language, metaphors, and values to lure people over to our side.

Follow @FastCoLeaders for all of our leadership news, expert bloggers, and book excerpts. [4]
There are five specific habits that innovators seem to have in common. If you are willing to retrain yourself to think in these terms and adopt these habits, then you too will achieve true success.

NOTE: This week (MARCH 2, 2011) I am preparing for a presentation to the Columbia Business School Alumni Club of New York, titled "The Five Habits of Great Innovators." The event is open to the public, but you must register to join [1]. (Watch my blogcast on this topic [2].)
Links:
[1] http://www.cbsacny.org/article.html?aid=956
[2] http://www.youtube.com/watch?v=pefidB7XUqY
[3] http://www.fastcompany.com/1730917/four-steps-to-success-keep-it-simple-stupid
[4] http://www.twitter.com/FastCoLeaders

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4 Ways to Block Brand Competition

Is your company's brand unique, innovative, and rock-solid enough to not only capture and hold customer loyalty, but also to dominate the market by knocking out the competition?

By Gabrielle Blue |  Feb 28, 2011

It takes a lot more than a good product to ensure customer loyalty—and even more to maintain a competitive edge in the marketplace. Consumers today associate with a product or service through their connection with a company's brand. That's why it's more important, as a business owner, to make sure your company's brand is unique, innovative, and rock-solid enough to not only capture and hold customer loyalty, but also to dominant in the market by knocking out the competition.
David A. Aaker, vice-chairman of Prophet Brand Strategy, and professor emeritus of marketing strategy at the University of California-Berkeley's Hass School of Business, has spent more than a decade on writing books and articles about brand strategy. In his new book, Brand Relevance Making Competition Irrelevant, Aaker explains why the time spent on accurately developing your brand identity is crucial to the overall success of your company in the market.

"It's important because brand preference competition is so expensive, so wasteful and so futile," Aaker says. "You can almost never change the competitive landscape by engaging in, 'My brand is better than your brand.' The only way you get to really change things, to get sales growth and profitability is to create a subcategory or category."

In other words, instead of being focused on being the superior brand in an established category, such as computers or snacks, create something so innovative that it surpasses your competitors, thus creating your own category or subcategory.

Aaker's book describes the four key steps to doing just that and becoming the dominating player in your market. Inc.com's Gabrielle Blue spoke with Aaker to get his tips on handily beating out your brand rivals.
Concept Generation

"You need to observe customers like the Marriott Hotel, be a customer like Zappos did, [and] partner with customers like P&G and Walmart did," Aaker says. "There is no one route...different routes will work in different contexts."

Companies that are leaders in your market have great ideas, ideas that took time, commitment, research, creativity, and funding to fully develop. Aaker's book notes that the idea-generation process consists of two aspects that help produce promising results for your company's brand: identifying an unmet need and promoting organizational creativity.

The best ideas will address and provide for any unmet needs in the marketplace. Aaker suggests making a list of five-to-10 unmet needs, and then categorizing them by type: unmet needs that are clear but hard to execute and unmet needs that are known but for which it's incorrectly assumed to have a small demand or a lofty investment.

"Some companies are so focused on their existing business [while] other companies are blessed, or cursed, with a whole host of ideas," he says. "The problem there is the second step: evaluation, to identify the ones that are going to win and to discard the ones that are not."
Dig Deeper: How to Conduct Competitive Research


Concept Evaluation

Having a handful of solid ideas is a great start to clearly identifying what opportunities your brand can pursue to make it stand out in the marketplace. But now it's time to hone in on ones that show the most promise.

"Evaluation is complicated, because there's a lot of dimensions, and every concept is different and every organizational context is different," Aaker says. To make this process easier, Aaker suggests going through both a screening and final-choice steps. The screening step will help you better determine which ideas actually have legs, and requires you to answer three questions:

1. Is there a market for the concept?
You have to be able to forecast the changes in the market as precisely as possible and determine whether your idea is strong enough to influence and shift customers buying habits.

2. Can we compete and win?
If the idea has the support of top management, fits perfectly with your company's overall strategy and can create synergy within your organization, then perhaps it warrants some serious attention.

3. Will a market leadership position win?
An overcrowded market is ripe for fierce competition. Analyzing your competitor's strategies is the best way to ensure your company's lead in the market. Timing is everything, Aaker says.

After completing the screening process, it's time to pick your pony.

"In the final analysis, you still need these three criteria but a decision usually has to be made at the very top of the organization so resources and commitment can be directed," he says.
Dig Deeper: How to Bring Your Invention to Market


Creating Barriers to the Competition

Answering "yes" to the three evaluation questions can put your company in a position to begin creating the barriers necessary to becoming an industry leader.

In his book, Aaker explains that while it's possible for competitors to copy whatever new, unique, product or service your company develops, your brand can never be duplicated.

A solid concept will create a new category or subcategory, and may ultimately go through two phases in the competitive market. The first, which Aaker notes doesn't have an expiration date, gives your business time to dominant in the market with little to no competition. The second phase starts when competition is introduced but it's trailing so far behind you that your company has the opportunity to widen the gap by creating additional subcategories.

To keep your competitors at bay, Aaker notes in his book to create four different types of barriers:

1. Investment: making it financially and economically impossible for other to compete, such as P&G's Pringles

2. Owning benefits: developing persuasive benefits will attract customers to your product, such as Apple's iPod nano.

3. Customer relationship: building customer relationships based on personality, common interests and passion, such as Avon's Breast Cancer Crusade.

4. Linking your brand: establishing a clear link between your brand and the category/subcategory will allow you to become the exemplar, such as Weight Watcher's and weight-control programs.
Dig Deeper: How to Manage Your Company's Brand


Define and Manage Your New Category or Subcategory

If you've successfully followed the first three steps, you're well on your way to becoming the exemplar in your market; now it's about following-through and maintaining your relevance.

"The key to that is being the early market-leader, you don't have to be the first in the market: Prius wasn't the first, iPod wasn't the first," Aaker notes. "You have to be the authentic brand, the thought leader and the one that's given credit for first defining the subcategory."

Keep an eye on swift changes in your market to make sure customers aren't loosing interest in your brand. Aaker notes that the most successful companies are always prepared to reposition its brand to maintain relevance.

"The most successful subcategories are dynamic and the brands that are driving them are dynamic," he says.


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REPRINTED FROM: Inc.com

March 2, 2011

Firing Talent to Save the Brand

French fashion house Dior was forced to fire its creative director after he allegedly made anti-Semitic remarks, plus the rest of today's news.

Posted by Eric Markowitz @EricMarkowitz  at 11:26 AM

                    What do you do when your star employee becomes embroiled in scandal?Television producers have Charlie Sheen to deal with; the fashion industry now hasJohn Galliano, Christian Dior's creative director known equally for his fashion genius as well as his flamboyant persona. But when it came out that Galliano had allegedly made anti-Semitic remarks in a Parisian restaurant (a crime that could carry jail time in France), Dior decided it had enough, and canned Galliano. Clearly, Dior's decision to deal swiftly and directly with Galliano made sense in order to protect the brand. But it also underscored a broader question for CEOs: when does an employee's personal life endanger the overall health of the company? Earlier in the month, Googleannounced its support of Wael Ghonim, a leader of the revolution in Egypt, which provoked a wide range of emotions among Google users. By acting quickly, some posture that Dior even improved its brand image by firing Galliano; Ronald Frasch, the president and chief merchandising officer at Saks Fifth Avenue, told The New York Times, “My initial reaction is they gained respect by dealing with this directly."

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Raising Money is Like Kissing Frogs

Posted by Nolan Bushnell @NolanBushnell  at 6:26 PM

Even in this market, there are new companies getting funded, but the process of raising money can seem at first to be quite unpleasant. You have to kiss a lot of frogs before you find your prince--and you will sometimes despair at the companies that you see getting funded while you're still in the hunt. Over the course of my career, I have seen hundreds of entrepreneurs that are on the money trail. Many business plans that I thought were marginal wound up raising huge amounts of money. I have also seen great plans that never got off the ground for lack of funding.
In most cases, success at raising money had to do more with persistence than it did with any other quality. The entrepreneur that would simply not give up always got funded in the end. He or she would often modify a plan, and the ultimate business may have been very different from the original concept--but, nevertheless, they got the money and they got their start.
Even though raising money is like kissing frogs, it's not all bad. Like that search for your true love, the prep work can actually be rather enjoyable. Venture capitalists and angel investors can provide an entrepreneur with a great deal of insight and experience. Look at the process of pitching investors as an education and, even if a group doesn't invest try, to learn something valuable from each of them.



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