Know Your Enemy The smartest companies don't let the competition take them by surprise. Here's how to make sure you're always three steps ahead.
By Brian Caulfield

(Business 2.0) – To figure out your company's edge in the marketplace, you have to know who you're battling. Some companies resort to spying and dumpster diving, but there are less distasteful--and more legal--ways to learn your rivals' movements and plans. To Melanie Wing, first vice president for marketing strategy at Bank One Card Services, it all comes down to "taking information from the public domain, adding it to what you know about your company and your industry, and looking for patterns." Here's a guide to gathering intelligence on competitors and preventing them from getting information you want to keep secret. -- BRIAN CAULFIELD

MONEY How healthy are your rivals?

The Basics

Obviously, you want to get a peek at your competitors' books. If they're public companies, no problem: Just check out the quarterly and annual reports filed with the Securities and Exchange Commission at The filings will give you a rough idea of what they're paying to produce their goods, what kind of administrative overhead they're running, and whether they're involved in any lawsuits. If your targets are private, however, they don't file this information. The next best thing is to check their credit with Dun & Bradstreet, which will sell you detailed reports for $122 each. And be sure to check out Uniform Commercial Code reports; banks file them with the state whenever companies take out loans. A bonus: UCC files often contain juicy details on what the loans are for.

Getting Creative

Conferences and professional courses led by rival executives are great places to gather information. George Dennis, former competitive intelligence chief at telecom-software vendor Telcordia, says his firm hit the jackpot when one of its accountants attended a professional course taught by a competitor's CFO. The CFO used his company as the case for the class, revealing all kinds of tantalizing private financial information. Listening in on competitors' presentations to analysts at investment conferences and on conference calls is another good way to get financial dirt.

PEOPLE Personnel shifts can clue you in to your competitors' plans.

The Basics

Keep tabs on rivals' leadership via corporate websites, press releases, trade publications, and annual reports and proxies. The payoff can be huge: When consultant Fred Wergeles noticed in an SEC filing that an executive from one of his client's competitors had been named to another rival's board, he had reason to think a partnership was in the offing and helped his client prepare.

Getting Creative

Use your foes' job postings to figure out who they're hiring next; make sure to take note of the kinds of technical skills they're looking for. And, if you're in tech, brainpower is your industry's raw material. Check out your rivals' parking lots: Are they empty or full?

STRATEGY What's their next move?

The Basics

Again, check the SEC reports. They can tell you where your competitors are putting their money--sales? marketing? R&D?--allowing you to respond accordingly. Dale Fehringer, former market intelligence vice president at Visa International, says the credit card company has used this kind of information to pump up its ad spending in response to rivals' promotional blitzes.

Getting Creative

Marketers and engineers can't wait to brag about what's coming down the pike at their companies; catch up with them at trade shows. Do a patent search to get a glimpse of what your rivals have in the pipeline. Watch regulatory proceedings. When drugmaker Bristol-Myers Squibb told Congress it needed to increase its harvest of environmentally sensitive yew trees, says Wayne Rosenkrans, a former intelligence executive at SmithKline Beecham, he knew there was a good chance that BMS would soon seek Food and Drug Administration approval for a drug using yew bark.


Obviously, you can't keep your competitors from getting their hands on your public filings. But you can do something about inadvertent leaks of proprietary information. There are two ways leaks can occur: through your people and through your publications--marketing materials, product documentation, and websites. Here's a guide to keeping your company's secrets secret.


More often than not, leaks aren't the work of malicious employees intent on hurting your business. Learn to avoid the accidental revelations.

Compartmentalize Information

Not everyone in your company needs to know everything about your business. For example, Apple Computer--famous for its mastery of secrecy--assigns each department a different code name for the same product, which makes it easier for corporate security to trace any leaks and more difficult for the rank and file inside the company to piece together the larger picture.

Lock Down Vendors

You'd never reveal how many widgets you sell, but it doesn't take a genius to figure it out by talking to the company that sells you cardboard widget boxes. Steven Bauer, an intellectual property attorney with Proskauer Rose in Boston, advises clients to have their vendors sign agreements not to disclose anything about their business with you--including the fact that you're a customer.

Guard the Exits

You can't delete the memories of departing employees, so do the next best thing: Make them promise to keep your secrets. Ask them to sign a memo that clearly outlines the kind of information your company considers confidential, such as customer lists, proprietary technology, or the results of expensive research and development efforts. Make sure the memo asks them to pledge not to reveal any of it.


Any rival can easily access your public website and printed materials. Don't let them say more about your company than you want the competition to know.

Screen Your Job Postings

Don't be too specific when you're writing help-wanted ads. Watch out for listings that reveal proprietary information, like what kind of supply-chain software you're using, what sorts of new drugs your researchers are cooking up, and what kind of workers you'll need at that new factory.

Make Sure Your Website Doesn't Give You Away

Don't let information meant for your vendors or employees leak onto your public site. Everything from detailed organization charts to factory layouts to financial spreadsheets have found their way onto the Web. Consultant George Dennis recommends a quick wild-card search for spreadsheets and word files by punching ".xls" or ".doc" into your site's search field. "You may be surprised by what falls out," he says.

For Everything You Patent That Works, Patent Five Things That Don't

It's tough to control what overseas companies will do with your intellectual property, so Dennis suggests having a little fun. Worst case, your Chinese competitor's engineers will have a few chuckles when looking at your design for a stainless-steel tortilla chip. Best case, they'll decimate their R&D budget trying to figure out how to copy that perpetual-motion machine.