Fuld & Company's 2013 Global Benchmarking Project Update has just been released and we invite you to download a complimentary copy.
Today’s business climate is challenging for most corporations, with consolidations and downsizing very much a part of the business landscape. It seems the one shining exception is the function of competitive intelligence where particular industries and certain regions have witnessed a surge in large competitor monitoring efforts.
The C-Suite is also paying more attention to vital intelligence than it did five years ago. These findings are based on a five-year update report benchmarking nearly 400 companies from around the globe.
“Quietly but definitively, companies around the world continue to invest heavily in uncovering one, simple fact for senior executives: What is my competition going to do next?” said Leonard Fuld, President, Fuld & Company. “Increasingly, the C-Suite is arranging for direct access to information on competitor activity in real time, rather than burying the intelligence function many layers below within the corporation.”
Among the study’s major findings are:
Super programs with multi-million dollar budgets have emerged with relatively generous budgets and lots of influence in the C-Suite.
In Asia and in Europe, companies with intelligence budgets of more than $2 million or more did not exist five years ago but today represent 2-3-percent of all intelligence budgets
In North America, programs that spend more than one-million dollars increased from approximately 5-percent of all corporate intelligence program budgets to nearly 10-percent of all budgets
Across the board, from Asia, Europe to North America, the surviving corporate intelligence programs have increased their influence and direct reporting to the C-Suite. All regions report an approximately 5-percent increase of their programs that report directly to the chief executive’s office
Professional service firms far outshine any other sector with over 28-percent of the programs surveyed reporting to the C-Suite. Consumer firms and Technology/Telecom are next with each reporting over 22-percent of their sector reporting to the CEO, CFO, or COO
We look forward to hearing your thoughts on the report. Please feel free to comment below on this blog post.
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How the biz world took a page from the CIA | Fortune
By Omar Akhtar | December 20, 2012
Companies use a variety of methods to stay one step ahead of their rivals. Competitive intelligence is one of the fastest growing ways to pull this off.
Corporate espionage may be illegal, but companies can still keep tabs on the competition. Some large corporations around the globe spend more than $2 million a year hiring outside firms or staffing internal departments to track and analyze the actions and strategies of their competitors. These companies pull this off with the help of public resources and investigative research, a practice collectively known as competitive intelligence (CI).
"Competitive intelligence is gathering information, which is analyzed to the point where you can make a decision," says Leonard Fuld, president of competitive intelligence and research firm Fuld & Company. This includes gathering information about competitor's products, pricing, business culture, and investments, as well as external factors like market conditions and government regulations.
More than anything, CI aims to eliminate surprises. "Companies seem to have been caught off guard more by new and disruptive technologies in the last five years," says Jan Herring, former director of intelligence at Motorola. "As a result, senior management has become more appreciative of gathering intelligence and we're seeing expanded areas of application."
Herring, a former CIA officer, was asked to bring his government intelligence experience to Motorola in the mid-80s. "I believed that, much like governments, multi-national companies were going to need their own intelligence departments to be able to make the right decisions," says Herring.
In many ways, competitive intelligence is as old as business itself. In the late 1800s, the Rothschild family sent its bankers to France to observe banking techniques and adopt the best strategies. However, Herring says the modern incarnation of competitive intelligence took root in the 1980s, pointing to the publication of Harvard Business School professor Michael Porter's Competitive Strategy: Techniques for Analyzing Industries and Competitors. "It was the seminal document that caused everybody to focus on intelligence gathering as a profession," says Herring.
Recession-proof business service?
While businesses have been slashing budgets in the wake of the recession, expenditure on intelligence has actually edged up. A survey of 400 global companies by Fuld & Company reports that in the last five years the number of companies that spend more than $1 million on CI has increased from 5% to 10% of all companies with CI programs.
The pharmaceutical industry accounts for 27% of companies that spend more than $2 million on competitive intelligence, far more than any other sector. "Pharmaceutical companies are probably the best at doing what we do now," says Herring. "Plus there is a lot of public information out there they can utilize." Predictably, the financial services world has seen the largest decrease in spending while technology is the fastest growing sector for CI programs in the last five years.
Pharmaceutical companies (and the outside firms they hire) perform competitive intelligence in a variety of ways. CI practitioners like Fuld attend scientific conferences, often hosted by drug companies looking to generate buzz for their latest product. They keep their eyes and ears open for gossip, insider information, and questions asked by attendees that might lead to a better understanding of what's actually going on in a given industry.
"A lot of times, companies will hire us when one of their drugs is about to be approved for the market and they want to know how the competition will respond," says Fuld. Other points of interest include results from clinical trials, articles in medical journals, and "messaging," the words and rationale companies use to market a drug. Fuld will keep a close watch for news about mergers and acquisitions, government regulations, and anything else that could affect his clients' prospects.
Another strategy is to monitor online voices, especially on blogs and social media. Fuld says Twitter is a great place to glean information about customers' thoughts on a product and how the competition responds to them. "Patients will talk about their experiences, their illnesses, and their needs," says Fuld. "They'll be the ones who bring the drug to market." Companies also use social media channels to send out alerts for their activities, such as notices for participation in clinical trials.
However, the CI industry is still figuring out how to use data from social media. Michel Bernaiche, CI practitioner and interim CEO of the Society of Competitive Intelligence Practitioners, says the amount of information available on social media networks can be overwhelming and thus hard to process. "The amount of information can be cumbersome, and the data analysis is not easily repeatable," says Bernaiche. "It's going to be a huge game-changer if we can figure out how to harness it, but I think we're still a couple of years away from that."
'We're not really spies, promise!'
Both Bernaiche and Fuld assert emphatically that gathering intelligence on the competition is not spying, nor is it unethical or illegal. Fuld says he does not uncover trade secrets, gather dirt, or mislead anyone about his identity when talking to people, so any information gleaned is fair game. He says he also makes sure to avoid the kinds of conflicts of interest that could arise from working for a client's competitor.
A few years ago, corporate investigation and security firm Kroll Inc. came under fire for its work for Texas financier Allen Stanford. Stanford, best known as the mastermind of one of the largest and longest-running Ponzi schemes in U.S. history, hired Kroll to unearth embarrassing information on a senior State department official who was investigating him. Kroll obliged by reporting that the official's wife was a lesbian who had left him for another woman, information that was patently untrue.
Bernaiche admits CI can involve gathering information and doing due diligence on some executives' backgrounds, but not to uncover dirt. "We do it to find out what motivates their decision making and to possibly anticipate their actions," says Bernaiche. "We look into their college background, who they hung out with, what they studied, and their previous decisions, you can often see a pattern."
Fuld says he has received requests to dig up dirt but not in the way one would think. "I had one company who couldn't believe their competitor could be such a low-cost operator," says Fuld. "They seriously asked, 'We think that company is a money laundering front for the mafia, can you please check it out?'" Fuld says that while the mafia didn't own it, he did find out why the company was able to keep costs low.
For Bernaiche, sometimes gathering "intelligence" comes down to making good old-fashioned phone calls. "Marketing departments are great places to get information from," says Bernaiche. "And I've found that sales people love to talk, they love to correct you."
Bernaiche says he will sometimes make an intentionally false statement so that a competitor's salesperson will correct him and give out information in the process. "Sometimes they'll slip up and reveal information, but just because they give you information you're not supposed to have, doesn't mean you can't use it."
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December 3, 2012 | By Don Worthington
The number of on-site clinics nationally is expected to dramatically grow. A study by Fuld & Co., a Cambridge, Mass.-based research firm, estimated that by 2015 there could by 7,000 on-site clinics. Fuld & Co. estimates 10 percent of the U.S. population under age 65 will have its health-care needs met by employer on-site clinics by 2015.
Managing health care costs was a reason Springs Creative, Red Venture and the city of Rock Hill opted for on-site care.
Springs Creative looked at what was affecting its medical expenses and insurance claims, Guilliams said. Care for diabetes, hypertension and other chronic diseases has driven up health care costs dramatically. Companies have found that the sooner a chronic disease is diagnosed, the greater the likelihood that long-term disease management costs can be reduced.
Effective on-site healthcare can reduce employers healthcare costs by 10 to 30 percent, according to Fuld & Co. On-site care can also improve worker productivity. Several studies suggest that companies lose as much as 15 percent of productivity daily because of ill employees seeking health care.
The program can also result in employee savings. Services at the city of Rock Hill’s clinic will be offered at no cost to employees and their spouses and children who are covered by the city’s health plan.
“It was a conscious decision for it to be free. We want to encourage employees to go there,” said Gerry Shapiro, an assistant city manager.
How effective on-site clinics are, in part, rests with a company’s culture, said Betsy Hayden, director of Corporate Health & Wellness for Carolinas HealthCare Systems. “You want your health care provider imbedded into your business culture,” she said.
A war game is a business simulation that helps a company to understand the present and future behaviors of its competitors. This event demonstrates how powerful this strategic tool is for enhancing management decision making.
April 20, 2012 -- Fuld & Company's 8th annual war game, "The Battle for Wireless Health," stress tested the wireless health strategies of Bosch Healthcare, GE Healthcare, Independa and Medtronic in a market that currently wastes up to $2.5 trillion each year. Business school students from Dartmouth, MIT, Northwestern, and Yale formed teams to role play executives from each rival company.
Fuld & Company has been helping companies compete in the global marketplace for over 30 years. Its approach to war gaming is highly effective and designed to meet the unique needs of each client. Contact us if you are interested in learning how a war game can engage your executive team and inform their decisions. Please visit www.fuld.com or contacts us at email@example.com
.View more videos from The Battle for Wireless Health
CAMBRIDGE, Mass., Sept. 5, 2012 /PRNewswire/ -- Fuld & Company today announced the acquisition of Outward Insights, a competitive intelligence firm that specializes in intelligence process and strategic gaming consulting.
"Outward Insights broadens our capabilities to our clients by bringing scenario planning, war gaming and intelligence process design capabilities," said Leonard Fuld, Fuld president. "Additionally, it is led by Ken Sawka who is uniquely suited for our culture as prior to his leading his firm he managed our intelligence process and consulting practice."
"Melding our capabilities with Fuld's deep research and analysis strengths, and global reach, will enhance and accelerate our ability to provide our clients with an understanding of their external threats, business opportunities and strategies so they can achieve a leadership position in their markets," said Ken Sawka.
Outward Insights is a team of intelligence and strategy professionals from leading organizations in the corporate, consulting, and government communities.
Fuld & Company (www.fuld.com) is a Cambridge, Massachusetts-headquartered pioneering firm in the field of competitive intelligence, providing research and analysis and strategy gaming for over 33 years with offices in London and Manila.
The Nutraceuticals industry has finally emerged - and threatens to destabilize both the traditional packaged food and consumer healthcare industries. We have witnessed enormous pressures in both industries – for example, by private label brands and eroding margins. Fuld’s research shows how two industries combining under pressure is opening a door for nutraceuticals:
Fuld & Company has delivered research for consumer healthcare and consumer packaged goods companies for over 30 years, yet we rarely see a relatively new category develop. As pharma’s core business is threatened by generics and increasing competition, can consumer healthcare opportunities, such as nutraceuticals, help reignite growth? Will consumer packaged goods companies better understand this market opportunity and assume first-mover advantage?
We encourage your feedback and to join the conversation below.
Leonard M. Fuld
‘DESIGNER FOODS’ TO GROW THROUGH MERGERS AND ALLIANCES BETWEEN GIANT CONSUMER COMPANIES AND THEIR PHARMACEUTICAL COUNTERPARTS
Scientific rigour and demand for personalised foods will drive these partnerships
A business war game contest on Monday 30th April between Oxford University’s Saïd and Cambridge’s Judge Business Schools, run by Fuld & Company predicted the outcome of the so-called ‘Battle for Designer Foods’ (nutraceuticals).
The world of food is about to change, and the companies represented by the MBA students in the war game (Abbot Nutrition, Danone, GlaxoSmithKline and Nestlé) are amongst those that will be part of the revolution. It is uncertain whether consumer packaged goods or pharmaceuticals will take control of this new space. Can the food companies complete against the pharmaceutical companies, some of which are moving back into the PPTC market, including the nutraceuticals business? Pharma companies, looking for growth opportunities as drug patents expire may be better-equipped to endure the costly and time-consuming clinical trials for products. So which industry – food or pharma – and which companies, were best-positioned to win “The Battle for Designer Foods”?
A strategy game, or ‘War Game’, is an enlightening and engaging analytical exercise that can lead to truly creative strategies. Briefly, two sets of MBA student teams represented the companies mentioned. Working in breakout rooms they created a picture of the company and developed strategic options it expects to pursue. The teams reassembled and presented their company’s marketing strategy. Teams, judges and observers had an opportunity to analyse and critique each others’ strategies. Based on what they learned they retreated to their breakout rooms to refine their strategies then returned for a further critiquing session.
The facilitators then offered a fictional but plausible surprise event for the teams to consider. At that stage, they could talk to each other if they wished, and negotiate deals.
One of the war game’s predictions include the fact that giant consumer packaged goods companies are likely to join forces with their pharmaceutical counterparts to catapult the nutraceuticals (Designer Foods) business in Europe and in the U.S. into a major market, projected to be worth $250 billion in just a few years. With the European Food Safety Agency beginning to regulate designer foods, the war game arguments made it clear that this category will be subject to increased regulatory scrutiny on both sides of the Atlantic, requiring some of the clinical trial expertise and capabilities pharmaceutical companies bring to the market with consumer companies adding their knowledge of customer segmentation and mass market resources.
“We are confident about this prediction, as past competitions have accurately forecasted events and competitive activities in a number of industries,” commented Leonard Fuld, Fuld & Company president. “This is the ninth such event run in as many years and the first between these universities with a centuries’ old rivalry. “
In addition to the above general prediction, other key insights emerged, including:
- Tailored foods will be coming to a grocer near you: A ‘One size fits all’ model will be supplanted in the future nutraceuticals market. Consumers present many nutritional challenges and will require companies producing variety in their nutraceutical portfolio to fulfill the need for each consumer segment.
- Regulators will impose stricter requirements, forcing producers to demonstrate either a product’s efficacy or health claims: At the moment, the designer foods industry offer products that do not require them to put their products through advanced, scientific testing to prove more than the basic health claims. As the interest of companies in designer food products increase, companies will migrate to issuing products that may contain compounds offering specific medicinal value – for example, treating diabetes or cardiovascular disease. While the games’ judges cited the difficulty in adding drug compounds to foods because of dosing and other issues, companies that do seek to differentiate with drug-like treatments to achieve higher value and possibly higher prices for products in this category will find regulators likely to require firms to conduct rigorous and far more expensive clinical trials, which is not the case at the moment – particularly for designer foods sold by consumer package goods companies.
- The greatest advances in designer foods will come from firms with highly focused objectives and highly focused portfolios: The game exposed the fact that the large multinational players are likely to be at a disadvantage by having to manage too wide a portfolio of products, not allowing them to focus on the designer foods segment. Smaller – perhaps start-up companies – will be the ones to discover breakthroughs in this industry sector.
In the Designer Foods War Game Fuld conducted in the United States in 2011 on the same topic risk, or fear of risk, was a central theme but this was less of a discussion point among the Oxford-Cambridge participants. In the Oxford-Cambridge game, teams demonstrated some concern about the risk of investing in functional foods but chose instead to form alliances and propose acquisitions.
Full Article Here: http://issuu.com/via-media/docs/pharma_ja_12_digital?mode=window&backgroundColor=#222222
By Leonard Fuld | August 1, 2012
I can't stand it when someone writes "obviously" in at the beginning of a sentence, any sentence. Nothing is obvious to everyone, especially when it comes to appreciating the impact a person's culture has on interpreting — or preventing the acceptance of — information.
A case in point: I facilitated an important global marketing meeting in Beijing not long ago with a U.S.-based multi-national food company, which had just purchased a specialty food product line from one of its rivals. The newly-adopted subsidiary had recently become a market leader under its old ownership, based mostly on very good market research that was informed and driven by a deep cultural understanding of the habits and behavioral preferences of the average urban Chinese.
The new owners sent their US team to participate in a strategy session, a discussion of where this Chinese subsidiary believes its market is heading and how it must respond to new and mounting competitive threats. The U.S. team set about asking questions as they would do in any meeting in the U.S. They tried to be sensitive to their hosts and believed they were treading lightly. To their surprise, the Chinese nationals reacted defensively to even the smallest and seemingly most innocent questions. "Who were these 'outsiders' telling us about our market?" In essence, perhaps without recognizing it, the Americans slighted them without even knowing how or why.
It turned out that their Chinese hosts relied on close customer proximity in developing the company's packaging and marketing practices. So when the Americans suggested that perhaps their new Chinese colleagues may have overlooked new competitive threats from other multinationals as well as from home-grown rivals, the local executives viewed it as a challenge to their research, and felt insulted. Interestingly, also attending were a handful of Hong Kong Chinese who were not at all upset by the Americans' questions. It turned out that many of them were educated abroad, including in the United States, and appreciated the purpose and directness of the questions posed by the US execs. No harm, no foul, they felt.
At the end of the first day of meetings, the overall group accomplished little. The room felt like a boxing arena with each contingent remaining its own corner. The Americans remained concerned over ominous signs that the company's Chinese market was about to change. Looming new government regulations would likely curb nutritional claims and impose stricter enforcement on violators. New rivals were poised to enter the market. Nevertheless, the local PRC nationals (not the Hong Kong group) remained stalwart, unconvinced that they might have to alter their existing plans. There were data to validate the Americans' concerns. Unfortunately, their very presence interfered with discussion of the issues.
On the second day, the meeting's facilitators deliberately blended the groups, and a thaw occurred in the room. The Hong Kong participants assumed the role of cultural translators and explained to their colleagues from the US as well as the China mainlanders that each had a legitimate perspective, grounded in different methods of validation. The Chinese preferred to test their view deductively. By starting with an understanding of the cultural habits and behaviors of their customers, the Chinese team believed they could explain past, present and future outcomes. The Westerners preferred to validate their view inductively, discovering the facts and then developing an explanatory storyline.
While the various groups still reserved their right to disagree, the session ended with something of a consensus. The local Chinese group remained determined to focus on its rigorous marketing plans, still largely driven by a series of cultural insights they had identified. At the same time, the group did concede that perhaps it needed to examine the new competition more closely and more directly. It also acknowledged a need to monitor rumors of government regulatory changes in its market.
There is nothing new about the tensions and difficulties that emerge from an intermingling of cross-cultural, cross functional groups. While the business world is certainly far more inter-connected today than it was when I started working, it nonetheless remains fraught with many land mines. Companies that do far more than trade with overseas partners are confronted with such talent challenges on a regular basis. Often, players from across the globe have become participants in the same enterprise, shuffled together like a deck of playing cards. But unlike perfectly uniform playing cards, people can't be so easily blended with each other.
The very richness that global yet diversified talent brings to a company can also impede its progress all because of cultural misperceptions or unintended affronts. An Emily Post or Miss Mannerscannot teach you why one group accepts certain types of facts and data as their primary decision criteria while another may appreciate taking a different tack because they peer at the world through a different cultural and experiential lens. Absorbing the strategic insights and the intelligence that drive any business decision or strategy requires awareness and the need for discussions prior to a formal meeting; the use of intermediaries such as cultural interpreters may prove useful if only to bring to the surface deeply held beliefs and assumptions.
Could we have headed off the initial locking of horns between the Americans and the mainland Chinese? Perhaps, though we were not given any warning of the prevailing temperament of both sides. More to the point, even in a world of globalization there remains an ever-present need for executives to anticipate and appreciate this frequently hidden culture factor and early on to place it on both the written and unwritten agenda of every similar meeting in the days ahead. If not, decision-makers may overlook basic data — and miss major strategic opportunities.
Original Article Here: http://blogs.hbr.org/cs/2012/08/cross_cultural_communication_takes_more.html
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Competitive intelligence (CI) is good for business, plain and simple.
Competition is a fact of life in the business world. As such, the practice of competitive intelligence has become a commonly accepted and essential part of running a successful company. No one in business questions the need to monitor the moves and strategies of rivals, to takes steps to anticipate and mitigate market threats, and to identify and seize opportunities that may come from this activity. It is only when abuses occur--Hewlett-Packard’s alleged illicit spying on its board, McLaren’s alleged theft of Ferrari’s race car technical secrets, P&G’s dumpster diving for Unilever’’s secrets--that the words “intelligence,” “spying,” “privacy,” and “secrets” become jumbled indiscriminately.
Competitive intelligence is not about spying. Spying is spying and implies something deceptive, perhaps even something illegal (See our CNBC interview on the Patriots spy scandal). Competitive intelligence is about the legal, ethical pursuit of information and the analysis of that information in order to better understand today’s competitors or tomorrow’s business disruptions.
Misconception 1: Distrust your employees first. Yes, companies leak information all the time, most of it through the very act of doing business. Paranoia is not the answer to learning about a rival. Our cardinal intelligence rule, “Wherever money is exchanged, so is information,” tells you that every time a business transaction takes place—whether leasing new office space, purchasing equipment, or bringing in temporary workers-- intelligence of interest to competitors is invariably created. That’s just how business works. Sure, you can have a malicious employee – or a board member – but more likely the company serves this information to the market on a regular basis anyway.
Misconception 2: Everyone needs a “deep throat.” Maybe it’s a legacy of the Watergate scandal, but many executives believe the only way you can know about a rival’s strategy is by having a “deep throat” informing on that company. In reality, companies through their own business dealings give away enough hints for the astute observer to piece together the puzzle. Our analysts do not seek out some astounding “secret,” They seek many fragments of information, which they can filter and string together to gain a reasonable view of a company, or rational scenarios about pending competitive threats.
Misconception 3: Dumpster dive first, think second. Competitive intelligence is a thinking person’s job. When you go after something in a rival’s trash you’ll likely find just that – trash. Sure, people sometimes toss vital information in the garbage, but most of the time they don’t. Attending a trade show or a conference, listening to speeches and conversations, as well as the banter between customer and supplier is more revealing and more accessible than rummaging through trash cans – even if the trash is technically in the public domain.
Misconception 4: Intelligence at arm’s length is good for business. One of HP’s apparent failings was farming out the leak-search project through various subcontractors. The board chair may have been more than three layers removed from the person collecting the information. The decision maker should be in direct contact with the analyst/information collector. In HP’s case, the board chair appeared to convey a request that was filtered through many levels. Somewhere along the line, the Chair’s intentions and objectives may have been misunderstood or perverted, the goal or objective lost along the way. The main message that appears to have gotten through is that the ends justify the means. In business, arms-length intelligence requests not only run the risk of jumbling of the original message, but also of activities going awry.
Misconception 5: Cowboys, cowboys everywhere!Managers today are encouraged to be entrepreneurial, action oriented. In this environment, you need to establish limits for those collecting information for your company—not squelch talents and initiative, but train and educate. Make sure your employees and others working for your firm know the limits. This is critical. Multinational companies employ staff from all around the world, likely with different views of what it takes to stay competitive – including how aggressively to gather competitive information. You need to instill a common sense of ethical information-gathering values across your corporation. DO NOT assume that because everyone collects his or her paycheck from the same corporation that they intuitively know the ethical and legal limits. You need to have guidelines. Fuld & Company’s Competitive Intelligence Ethics Guide is one example of such guidelines.
Read more about ethics and competitive intelligence: