Professional surveillance

More firms using analysts to gather data on rivals

? Kurt Neubauer doesn’t wear disguises or sift through a company’s trash hunting for secret information. But he is involved in corporate espionage.

Rather than calling himself a spy, however, Neubauer’s job title is competitive intelligence analyst. Everything he does is legal and ethical, he says, and his services increasingly are sought by midsize and large firms that spend an estimated $1 billion a year for inside dope, a figure predicted to grow tenfold by 2012.

Competitive intelligence analysts like Neubauer collect inside information by simply talking to people who work for or are associated with companies that his clients want to learn more about. At the top of the list, firms want to know what products or services are in their rivals’ pipelines, so that they can plan countermoves.

Learning a few years ago that a competitor planned to launch a new line of men’s personal care products to coincide with the Super Bowl, one client locked up as much retail counter space as possible for its products to throw a curve at its rival.

Finding sources

Neubauer’s best sources are salespeople, he says, because they like to talk. One mission was to learn how many salespeople were employed by a target company, their sales strategies and how much they earned. Calling one salesman’s home number, Neubauer got the wife instead. She was unhappy with her husband’s employer, knew quite a bit about the company and was eager to talk.

“It’s not a typical source we would go after,” said Neubauer. “I stumbled upon her.”

Neubauer, who works for Proactive Worldwide, based in Rolling Meadows, Ill., said he told the disgruntled, loose-lipped wife his real name and that of his employer, saying he sought information about sales practices. He didn’t identify his client, a rival of the husband’s employer.

Neubauer used the wife’s information as a starting point for conversations with people who worked directly for the company.

“You’re more likely to get a response to ‘I hear you’ve got about 300 sales reps, is that right?’ instead of asking how many people they have,” he said.

Other than sales people, engineers also can be good sources if you can understand the terminology they use, Neubauer said. But lawyers or accountants? Forget about it.

“They’re used to protecting information,” he said. “It’s best to avoid talking to them. I won’t call them.”

Fledgling efforts

The Society of Competitive Intelligence Professionals estimates that among its 3,300 members, only a quarter work full time at CI, said John Fiegel, the group’s interim executive director.

SCIP has a code of ethics and regularly holds educational forums to help practitioners improve their techniques, Fiegel said.

“We’re looking at pulling together a body of knowledge and credentialing,” he said.

In a 2006 Web survey of 141 companies, Leonard Fuld, a Boston-based consultant specializing in CI, found that most companies’ efforts were fairly new and got minimum funding. Fuld calls such fledgling programs “stick fetchers” because while they may gather some useful information, it usually falls short of supplying important aids to strategic planning.

But Fuld predicts that CI will become more widely embraced, as essential as market research, its much larger big brother. From his survey, Fuld estimates the top 1,000 U.S. companies now spend about $1 billion a year on CI and will raise that to $10 billion over the next five years.

“When used properly, CI can help you win some more market share,” said Fuld. “It’s not about vanquishing a rival. It’s about improving performance at the margins.”

Trade shows and meetings

Among the most aggressive users of competitive intelligence are pharmaceutical firms.

Most of the competitive intelligence gathering occurs at trade shows and scientific meetings through such benign techniques as just hanging out at a rival firm’s exhibit booth, listening to conversations and jotting down useful tidbits, said Dr. Douglas Melnick, a California physician.

Craig McHenry, director of competitor insights for Wyeth, the Philadelphia-based pharmaceutical firm, said the way clinical tests are structured provides clues about how a drugmaker may position a new product.

“We look at which patients are included in a trial and which are excluded,” McHenry said. “That can suggest the indications for the product they hope to get on their label.”

Such information is used to play war games where Wyeth executives come up with plans to counter various possible market moves by rivals, he said.

“It’s like pilots using a simulator to fly over an enemy battlefield to look where the anti-aircraft guns are,” McHenry said. “Even if the guns are in different places when they do the actual flight, the simulator gives them helpful experience.”

Wyeth sometimes notices competitors watching them, he said.

“It’s almost entertaining to watch how this goes back and forth, like a chess game with defined rules,” he said. “We try to think three or four moves ahead.”