The Winners
Interview with Mr. James B Haybyrne
on Competitive Intelligence
CNBC: Winning the war against the competition in times of battle, you have to have an edge in intelligence. Jim, how do you get this intelligence advantage, clearly an important edge in business?
Haybyrne: “Well, knowledge is power in business, and in life. Thus the ability to acquire intelligence about what’s happening in the world around you and how you position your company to respond to those changes is essential for a competitive advantage. There is an old story I tell about Wellington and his battle against Napoleon. Wellington was out numbered by Napoleon in 10 to 1, and Napoleon had the best generals, the most resources and clearly was in a dominant position. But what Wellington had and what was his secret weapon was competitive intelligence about Napoleon’s forces. He had individuals audaciously ride through the camps of Napoleon finding out what was going on and reporting back. By using that intelligence, Wellington was able to gain a competitive advantage and ultimately defeat Napoleon on the battlefield. And that intelligence is what corporations need today in order to beat their competition.
CNBC: Are you suggesting that Microsoft’s people wander through IBM’s factories?
Haybyrne: That’s not necessary nor legal. Most of the intelligence that you need to gain a competitive lead are available through public sources. It is the most effective way of finding out what a competitor is doing. Most actions in business: your competitor’s product characteristics, pricing policies, target customers and so forth are information available to you. It’s a matter of having a systematic way of acquiring that intelligence and then providing the information back to your own people so that they can respond accordingly.
CNBC: Are there a few basic sources that you will recommend people to use?
Haybyrne: Well, the basic source of intelligence is in understanding customer needs. One has to look beyond your competitor into changes in the demographics and the preferences of your customers. When you begin tracking that, you can then predict and anticipate where a competitor is going to move against you in terms of fulfilling those needs.
CNBC: When we use the word intelligence images of James Bond or spy satellites come to mind. There is a thin line between legally gathering intelligence and illegally gathering it; illegal, in terms of your own country’s laws. How do you recognise this line?
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Haybyrne: When you are developing intelligence for a business, no one is ever suggesting that you have to do things that are illegal. In fact, the profession has a strict code of ethics. Certainly, having access to proprietary material or using illegal entry into someone’s premises, are not within the scope of the ethics of conducting business. And, in fact, I would submit that they are not necessary. Most of the success in acquiring intelligence from competitors has been done in the public domain. Let me cite you a few examples. The VCR which was discovered in the United States by Ampex in the 1950’s, was then commercialised by JVC, simply by acquiring through public domain, the technology information on the VCR. Sharp, another Japanese company, today is pioneering the area of flat screen technology. They bought that technology from Westinghouse Corp. who in the 1970’s decided that there was no future for flat screen technology. So one doesn’t have to wind up on the wrong legal side to gain knowledge. If you keep your attention to what’s going on, you can gain a tremendous amount of information that is legally available.
CNBC: What should Ampex and Westinghouse have done to protect themselves?
Haybyrne: Well, what they should have done to protect themselves is to see where the changes were happening in the marketplace. In fact, a market for flat screen technology was developing over the years. Recently Sharp announced new advances in that technology and it’s becoming commercially available right now. What Westinghouse failed to see was the changes in the use of the technology. So it wasn’t a matter of them protecting the information. If they kept it themselves, they still wouldn’t have done anything with it because they didn’t appreciate what could happen in the marketplace if the technology was exploited.
CNBC: Are there organisations out there that can gather this intelligence for a company?
Haybyrne: Companies themselves can start up their own intelligence operations simply by acquiring on-line information through a company such as Lexis/ Nexis, a data-source company. By understanding the questions that you want answered, they can sort through a number of different sources in order to provide strategic intelligence to you.
CNBC: Is there a way for a company to avoid this material getting into the public domain?
Haybyrne: One technique that’s used is what’s called segmentation of technology. In other words, you don’t let one person know all of the aspects of a particular technology. And there are a number of other techniques: for example, keeping your information close to your strategic group. But that’s for another time!
CNBC: All right. Jim, thanks very much.
Haybyrne: Thanks very much, Bill.