A tackle box of sleuthing tricks for companies out to catch rivals

Corporations fishing for information on rival companies are using an assortment of nets, lures, and hooks to haul in information that lends a competitive edge. Bank One, of Dayton, Ohio, has taken to collecting direct-mail ads that were sent to the bank's employees. This has given it information on competitors' markets, pricing, and products.

Xerox has its engineers take apart every nut and bolt of a competitor's product to find out how much it cost to design and build each piece, and discover the production cost of the total machine.

The Chicago Tribune asks each of its sales research staff to ``shadow'' a competitor. Each researcher is assigned to a specific area such as advertising rates, marketing, or sales. When anyone, through his reading or interviews, catches wind of a rival's advertising rate or other changes, the information is passed immediately to managers.

These instances and techniques are related in a not-yet-published book, ``Monitoring the Competition: Find out what's really going on over there'' (John Wiley & Sons, New York), by Leonard Fuld, president of Information Data Search, a Cambridge, Mass., company.

Mr. Fuld and a growing number of other professionals gathering intelligence on competitors are writing books, holding seminars, and getting paid by companies to dig up information about rivals' operations. ``Information of this kind has sort of created its own market,'' says Fuld. ``We helped create our own industry.''

But competition has been the essential catalyst. As competition has intensified, the demand to get better information has spurred the growth of consulting companies and innovative research techniques on competitor intelligence.

``As certain industries have shrunk, everyone is fighting harder for their piece of the pie,'' says Leila Kight, president of Washington Researchers Ltd., a competitor-information consulting firm. ``In the high growth sectors, if you don't know what the competition is doing you could get left behind in the smoke.''

Basic competitor information that goes well beyond what is included in a rival's annual report can be found in investment manuals and services, industry directories, financial periodicals, management biographies, computer data bases, state corporate filings, federal government documents, and filings with the Securities and Exchange Commission.

And while SEC filings apply only to public companies, researching state filings makes it possible to tap into information about millions of privately held companies and partnerships.

Financial and other details can be gained from bankruptcy filings obtained from federal bankruptcy court. Environmental protection filings with the state and federal environmental agencies as well as filings with the Occupational Safety and Health Administration can reveal inside details of products, plant operations, and processes.

Getting such information from federal agencies occasionally requires a petition citing the Freedom of Information Act. The FOIA was intended to enable the common man to get information from government. But it has become a tool of corporate intelligence gatherers. One spokesman for the Environmental Protection Agency said nearly a third of the FOIA requests the agency gets are from business. Ms. Kight says she thinks it is likely that 75 to 90 percent of all FOIA requests are from companies trying to get competitor information.

But the bottom line for a corporate intelligence gatherer, says Fuld, is that he must pay special attention to a few basic areas. In his 1985 book, ``Competitor Intelligence: How to Get It - How to Use It,'' he details the following techniques, which are similar to recommendations of other researchers:

Computer data bases, for example, which number in the thousands, can be a good place to start. Broad data bases such as Dialog, Newsnet, and Nexis can help pick up tidbits on the competition. Scavenging trade publications like newsletters and magazines is helpful, because these contain announcements of personnel shifts, help-wanted ads, calendars of events, trade show information in advance of the show, new-product announcements, surveys.

Newspaper clippings can provide tidbits of valuable information on a rival company. A clipping service can be a useful resource.

By reading between the lines, help-wanted ads can be analyzed. Some ads indicate plans to expand, others hint at types of new technologies that are being developed. Ads for personnel can also sometimes reveal details about a corporation's internal organization that are hard to discover otherwise.

Already published market research studies are occasionally helpful, as are Wall Street research reports issued by the major brokerage firms. Attending trade shows and snatching up all the free literature you can carry for later analysis is a good idea. Fuld recommends taking lots of pictures, particularly of the various displays. As discussed earlier, public filings with federal and state agencies can be useful.

Tracking competitor advertising may reveal the company's marketing strategy. Tearsheets of Yellow Pages and newspaper, magazine, and trade show advertising can begin to reveal a pattern of emphasis.

No information source can substitute for a real, live human being. Personal interviews and contacts usually lead to discovering more timely information than all the others combined. Names of experts can be culled from newspaper clippings, magazine articles, trade publications, university course catalogs, and trade show literature; and professional conferences also provide a wealth of expert sources.

Beyond the basic sources, imagination must be used to capture elusive competitor information. Visual sightings are one such method, in which the number and size of trucks entering and leaving a plant can help determine the volume of business.

In the oil industry, Fuld says, competitors have been known to stand outside the fence surrounding an oil well. With binoculars, it is possible to count the number of sections of pipe being sent down the drill hole. That information tells how deep the well is, and therefore, roughly what it will cost to produce oil there.

But the key to gathering and using competitor information most efficiently is taking advantage of what a company already knows about the competition.

``The ultimate paradox is that companies already have an incredible amount of data on their competitors,'' says Liam Fahey, a Boston University professor who researches competitive intelligence gathering. ``But it's not coordinated, orchestrated, integrated, synthesized, and used in any kind of reasonable manner.''

Second of three parts. Next: Corporate security and the ethics of snooping.