Newsletter: Small company CI: a case study.



	Friday, February 10, 2012	VOLUME 1 ISSUE 15

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Small company CI: a case study.

Daniel Shirtz, dannynaftali@hotmail.com

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Summary: CI is often viewed as primarily benefiting larger companies. In this detailed case study Daniel Shirtz reflects on how using CI technique, even in a small company, can help it increase sales to become a market leader, overcome competition, and find new suppliers. His ten implementation recommendations are also valid for CI efforts in companies of all sizes.

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In 1995-6, I was a sales person in an Israel-based company that specialized in providing marketing reports to its clients, primarily business intelligence professionals employed by local companies. We were information brokers, representing a variety international research companies who were involved in different fields.

Our company was small, but it had a very good reputation, and was firmly entrenched in the information market. In this field we faced strong opposition, and we had to develop ways to provide ourselves with a competitive advantage in the market. Our use of CI, even on our small scale, helped us to:

Increase our sales to become market leaders.
Overcome competition.
Find new suppliers.

This article summarized my experiences during this period.

The information brokerage scene in Israel

We primarily competed with two local companies. The first, Company A, was the leading information broker in Israel. We discovered that it was planning to leave that line of business and was already dropping market reports from its product line. The company intended to concentrate its efforts on the on-line market. Eventually, it turned to us with a request that we purchase market reports for one of its client's’ market reports.

The second competitor, Company B, had an even smaller operation than we did. But it was selling. with some success, products from our own suppliers—even though these suppliers had an exclusive agreement with us. They turned out to be our primary competitors.

Several other competitors included the suppliers of the information themselves. Some of them were companies that supplied us as well. The world economic downturn of the early 1990s encouraged many of these firms to increase their direct involvement in foreign markets, thereby competing with their local representatives. It took us quite a while to fully comprehend the actual significance of this competition.

Last but by no means least, we were competing with individuals employed by potential clients, or consultants hired by the companies in another capacity, who chose to buy market reports from information suppliers outside the country, without using our services.

Assessing the market

I joined the company just as it was putting its business plan together for 1994/1995. As a first assignment, I was asked to prepare a review of my target market. Specifically this review would identify existing and potential clients, and analyze the research field in which they would be interested.

Before setting out, I spoke with several veteran employees, two of who had been directly involved in selling market reports. The information they provided led me to believe that research into the communications sector was selling well, sales of military- and defense-related topics was on the decline, and research about consumer products was the sales leader.

But the picture I received after checking the actual sales data was somewhat different. The communications sector was more than decent; it was booming, accounting for about half of total sales. In second place was the defense sector, followed by pharmaceuticals and biotechnology. To my surprise the consumer products sector was actually in decline.

Developing sales strategy

Based on the information that I gathered—which, I should stress, comprised of not much verifiable data and little “hard” intelligence—we developed a plan that focused on finding new suppliers of information. The plan placed a strong emphasis on niche sectors mainly in communications and IT, such as voice recognition, optical networking, Internet (still in its infancy at the time) and video on demand.

We were assisted in formulating our strategy by several public sources, such as Findex, and news publications, including those that cater to a professional audience. We reviewed on-line information, and, most important, we gently “squeezed” out the names and addresses of market research companies from those of our clients who were using independent sources.

In this respect client visits proved not only to be an excellent marketing aid, but also a tool for CI-oriented activity that could be used whenever possible. Client visits not only were helpful for developing sales strategy, but they also provided us a wealth of information about the activities and suppliers of our competitors, particularly those of Company B.

It was during a visit to a client that we learned the identity of the firm that was most probably Company B’s most important supplier. The supplier in question dealt mainly in the preparation of “tailored” reports for niche markets. We also learned that the client was unhappy in its relationship with Company B. In fact, the client urged us to reach an agreement with the supplier. I actually investigated the possibility, but was not successful because Company B’s contract with the supplier appeared watertight.

Nonetheless, what we learned from the client enabled us to offer alternatives, and this we did with varying degrees of success. Incidentally, a visit to our company by a journalist preparing an article on Israel’s high-tech sector revealed that Company B’s sources were “meager” compared to ours, except for what it received from the same, above-mentioned supplier.

Company visits proved particularly helpful in uncovering information about the competition we faced from overseas suppliers selling reports directly to the Israeli market.

Using CI to block competitors

As good sources of information, clients sometimes even undermined their own interests by helping us to block our competition in the local market.

A case in point involved Company B, which had taken advantage of the strong internal competition between different branches of one of our main suppliers to obtain a report from a branch that was not supposed to be distributing information to the Israeli market. The firm that Company B was supplying in Israel was also a client of ours, and it informed us about what had transpired. Since we had an exclusive agreement with the supplier, we passed the relevant information to the branch that we were working with, and demanded its intervention to stop the supply of reports to Company B. We later learned that the supplier did sever Company B’s contacts with its various branches.

Collecting information on the competition in Israel

The above incident served to drive home the point that we were lacking information about the activities of our competitors in Israel. After considering the problem, I came up with a solution that was believed by some in our company to be unconventional, as it was overly simple and straightforward. It basically involved us asking our suppliers directly about their activities in Israel.

Despite the misgivings, I prepared a formal questionnaire and faxed it to all of our suppliers. Politely, they were asked to provide us information regarding the number of reports that they had sold in Israel through us and independent of us, and they were requested to provide the names and addresses of their other clients in the country.

With one exception, the suppliers were all remarkably cooperative. They revealed that we were their primary conduit for reports to the Israeli market, although several suppliers were selling independently and legitimately, since in those cases we were not their exclusive agents. Interestingly, they were prepared to supply us with the names of the companies they had sold to independently, and all of those firms were immediately approached by our sales agents. A fair number of them were to turn into regular clients of ours.

The readiness of our suppliers to provide us with the names of companies to whom they had sold independently most probably resulted from a perception on their part that, given the limited size of the Israeli market, it would be in their interests that we handle all of their local business.

We also learned that we had grossly overestimated the market share of Company B. To our great surprise, the original report that had instigated our study was the only one sold by Company B from one of our suppliers.
The survey suggested to us that the market in Israel for the specific products we were selling was probably larger than we originally thought, and in the field that we specialized we were the leading suppliers of information in the country. Our real competitors were the suppliers themselves. They were being approached by representatives of local companies who were not aware of our existence or did not want to make purchase through us.

Our better appreciation of our status in the Israeli market, as well as our newly enhanced ability to improve that position, provided us with some leverage in changing, to our advantage, the contracts we had with our suppliers.

The reluctant but wily supplier

As mentioned, there was one supplier who declined to cooperate with our survey. Several weeks later I approached a sales representative at the company. He was polite, but he would not disclose any of the information we were seeking.

We soon discovered that the supplier’s reluctance to give us information was not simply a result of business secrecy. Several weeks later, we received notification that our agent’s agreement with it had been terminated. Its decision to cut us loose had little to do with our performance as agents on its behalf.

This specific supplier had a standard policy regarding its foreign agents. Unbeknown to the agent, it would give the agent a standard five-year run in any market and during that time it collected CI, using the services of the unwitting agent. By the time the supplier terminated its relationship with the foreign agent (us), it had amassed a database of 100 existing and potential clients in the Israeli market, all of whom it planned to deal with independently.

Reporters and consultants

Another very useful tool for collecting information were journalists and consultants. However these sources had to be treated very carefully, because information was supplied on a “give and take” basis. Just as they are supplying you with information, they are prepared—if they are getting something in return—to provide information about you to your competitors.

Summary and conclusions

Smaller companies should make a CI effort, even if only on a small scale. There should be both awareness and encouragement for such activities from management. Before my arrival, CI was not systematically sought after, but this was largely a case of lack of understanding and appreciation of its actual worth. This general attitude has changed in Israel over the past several years.

From my experience with my company, I would recommend the following:

Share information at all levels. People who leave the company should be “debriefed” before their departure.
Budget time for a weekly staff meeting, with CI high on its agenda. By not doing this on a regular basis, we missed opportunities that we could have taken advantage of -- the information was available in the company.
Build a database containing information about competitors for the use of your employees. By concentrating on the data, employees will find it easier to stay up to date
Be aware that suppliers are primary targets for the collection of CI.
Client visits are the most desirable means of collecting CI, in addition to its many other benefits.
Verify any of your assumptions regarding the competition. You may well be surprised.
Use the information you collect. This is an obvious fact, which sometimes is forgotten.
Cultivate an external network of secondary sources, such as consultants and journalists.
Collect CI systematically, and with a clear statement of goals. I do not underestimate the value of sheer luck—it often seemed to be our most valuable ally—but it should not become your primary means of gathering information.
Collecting CI requires creativity and innovation. As I discovered in the case of my survey, a method, which initially appears doomed to failure, may just be the one that will deliver the goods.

Background:

Danny Shirtz is currently working as a project manager at Ness Technologies in Israel. He holds a masters degree in Middle Eastern studies from Tel-Aviv University, and developed expertise in selling, marketing, and information technology/knowledge management. Danny served at the IDF in military intelligence where he sharpened several aspects of his CI knowledge. He also was a senior assistant to the Ministry of Defense, Export Body executive where he collected, analyzed and distributed CI information. Danny is married and he and his wife are expecting their first child shortly.

Copyright 2002 Society of Competitive Intelligence Professionals

SCIP.online, volume 1 number 15, September 3, 2002.
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