Yet, mid-sized firms are beginning to discover its value. Of the ten Hispanic-owned companies contacted by Hispanic Business, some said they did not use it, and others decline to talk about it. It is likely, according to one source, that it is being used to such advantage that the companies want to remain mum about it.
It is also likely that these high-powered investigations will ultimately become standard fare throughout the world's economic centers. It just makes good business sense to use it, says Carlos Orta, president and CEO of the Washington D.C.- based Hispanic Association on Corporate Responsibility (HACR). Organizations like HACR can use competitive intelligence to monitor whether or not corporate or public board members are complying with the law and whether they are doing their jobs properly. Mr. Orta also recognizes that it is also a powerful tool for companies battling in the marketplace. "It's competition," he says. "Anyone who gets the better product cheaper and faster is going to win."
In an age where the old cliché of "time is money" has more accurately morphed into "information is money," the information these companies can mine is a lucrative analytical tool.
"We recognize the unknowns for the client," says Arik Johnson, founder and CEO of AuroraWDC, a competitive intelligence firm based in Chippewa Falls, Wisconsin. "We not only gather the data, we help them make predictions they can base future strategies around."
One of those frequent unknowns: the competition's cost of production to determine how deep their discounts can go. Mr. Johnson's team can "reverse-engineer" a product through its supply chain to find out the comfort zone of a company's profit margin.
Competitive intelligence consultants stress that when ferreting out information about rivals, they don't employ nefarious means -- such as the Hewlett Packard case in which executives posed as reporters. Instead, they might use a simulation strategy that's growing in popularity: a "war game," also known as a "scenario analysis."
Fuld & Company, located in Cambridge, Massachusetts and London, takes a group of executives, divides them into a home team and three competitors, and gives them an assignment -- for example, a pharmaceutical company that is launching a new drug whose advent competitors have been aware of for some time.
"What's the best way to roll it out given that the rivals know all about it?" asks Leonard Fuld, president of Fuld & Company and author of The Secret Language of Competitive Intelligence. "We run a war game for them. We stress-test strategies, poke holes in strategies. If it's well run, we can anticipate the market one to two years in advance. Th is whole concept of a war game is taking companies by storm."
Attorney Castro says his firm always recommends that clients do their homework about the other party, whether it's a venture capitalist about to invest in a firm, a company wanting to buy another, or a company about to go public.
"Ten years ago it was unusual to do this, but now it's really very common," he says. The industry saw a huge boost in 2002, when Congress adopted the Sarbanes-Oxley Act after the Enron scandal and other corporate malfeasance surfaced. The law created new accountability standards for U.S. public company boards, management, and public accounting firms.
The use of competitive intelligence by potential investors and by those who seek to oversee public boards to ensure not only compliance with the law, but overall efficiency, has skyrocketed since the act was passed.
In recent years, the use of competitive intelligence has spread beyond the United States. The Society of Competitive Intelligence Professionals, which has 3,100 members, has chapters worldwide. Latin American companies, much like Japanese firms, have yet to embrace the industry primarily because their cultures prefer the old-fashioned way of doing business -- with people they know or family, and they may not feel the need for competitive intelligence, according to John Price, managing director of Miami-based Kroll InfoAmericas. "Business there is based on your word and your reputation," Mr. Castro adds. "That's all you have." But, that may well change in the future as the global markets continue to expand and the need for this deep intelligence-gathering grows with it.
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