Fuld & Company's Competitive Intelligence Blog

 
Dear Colleagues:
 
Fuld & Company has always been about delivering the best in competitive intelligence services to its clients.  Last week’s news about our acquisition and subsequent ability to now serve you with a larger Asia/Pacific presence and 24/7 research capability is something we believe will help you, our clients, very directly.  As the press release reads:
 
“As part of the acquisition, Fuld will be joining forces with Global Business Research Support (GBRS), a provider of competitive intelligence research services for consulting firms, research agencies and companies worldwide since 2002.  From its operations center in the Philippines, dedicated GBRS knowledge teams produce strategic and competitive intelligence reports on key markets, industries and players around the world.
“The addition of Manila-based GBRS will broaden Fuld & Company’s expertise, its service capacity, as well as allow for a true round-the-clock competitive intelligence services to better serve our multinational clients around the world,” said Leonard Fuld, founder of Fuld & Company.
“Fuld & Company’s operations and management teams in Boston and London will remain in place, continuing to deliver customized research and analysis, strategic gaming, and competitive intelligence process consulting services, with additional support and global reach through GBRS. 
 
Just think of the ways we can serve you in the coming years:
-          High quality analysis on a global level
-          Multiple language capability
-          Competitive analysis that takes into account many cultural perspectives
-          24/7 access to the Asia/Pacific region
-          Conduct war games and strategy games on a global scale for our multinational clients
 
This is just the beginning of the list.  We look forward to working with you in the years ahead.  I welcome your calls and comments.
 
Leonard Fuld

Companies must have rules but why do many corporations write information collection rules that are often unrealistic and even potentially harmful to themselves.  For more details on this argument, I recommend you read my recent article, How Competitive Intelligence Rules Encourage Cheating, appearing in the online Harvard Business Review Conversations section.  Feel free to post comments on the article.  I look forward to your opinions.

Here we are in the U.S. with election day upon us. I for one am sick and tired of all the attack ads skewering one candidate or another.  These campaigns have upset me without informing me one iota.   Similar failures – all be the less deliberate – occur inside companies all the time.  Why? Because you didn’t get the message across in a way the executive wanted to read it.
A few weeks ago I spoke to a group of competitive analysts in Brazil about how culture can change the way you deliver intelligence.   To be blunt North Americans typically want intelligence served up differently than Japanese, and differently than Germans.  This is not a criticism, just an observation.  In the thousands of research assignments we have undertaken over the last 30-plus years, we have seen the pattern.  To ignore the pattern is to do all the good work only to have the client say “We don’t get it,” or worse, “Please, do not contact me again.”
Rather than deliver you my recommendations, I prefer to open the conversation by posing three different cases to you.   What you would do in each case:

• We ran a war game with an American firm which has a China subsidiary.  The American executives asked to have the game run in China regarding a new product line being launched in China.   They wanted to make sure their very successful Chinese subsidiary make no mistakes.  We had a difficult time getting everyone to agree on the game’s objectives, let alone uncover competitors’ strategic weaknesses.  By the end of the two days, we did achieve some success but I would have wanted more, more engagement, more “we are one team,” etc.  What was the problem, the challenge and what would you have recommended to the client  – if you could roll back the clock?
• A Japanese company wanted to learn from the best-of-the best in innovation from American firms. This case took place over 15 years ago, by the way.  We chose Intel at the time because in all measures it managed to grow while at the same continually innovating – shedding old products while introducing new, successful ones.   The client understood our selection but rejected our analysis.  Intel by all measures was America’s great innovator.  In the end the client asked us to research another firm, one whose innovative prowess did not match Intel’s.  What about Intel do you think the Japanese client rejected?  A hint: It had something to do with organization structure. 
• Finally, we delivered a monitoring program for a pharmaceutical firm with two internal clients who saw the world very differently.  The marketing executive was satisfied with knowing the rival’s strategic direction, while the R&D chief wanted specifics on clinical trial enrollment and other quantifiable success measures.   At the same time, we had to make this client – both clients – happy with a single and tightly bounded budget.  What would you recommend we do here? Culture was at the heart of this challenge.

It’s nearly July 4 and US companies have a lot to consider about their interdependence with China.

Recent remarks attributed to GE’s CEO, Jeffrey Immelt, had him railing against China’s policy of taking technology from the West and making it its own, and “colonizing” Western companies in the process.  Whether or not Mr. Immelt actually used those words or meant them, the facts are on the ground.  China is growing at a very rapid rate and is at the same time moving far beyond its own borders, often overtaking Western corporate stalwarts in markets they once owned.

Our recent public war game, The Battle for China’s Smart Grid, confirmed the outcome that Mr. Immelt perhaps fears most. One key prediction: Western companies will need China (or a Chinese company) as a partner if they are to succeed in building out massive infrastructure projects such as the proposed smart grid in China. 

Does China have to play a bit fairer? No doubt.  It has appeared to have done some long-term corporate-relations damage with its policies despite the undeniable fact that it offers a large market opportunity for a Western firm, such as GE.  As the war game demonstrated, working with China could also help US and European companies mitigate political and financial risk abroad if let’s say a GE and a Chinese company partner in building out smart grids elsewhere in the world.  Just take a look at this clip from the war game regarding the team’s portrayal of Cisco’s China grid strategy that speaks volumes about the dynamics between Western companies and China and the choices they are about to make over the next few years.

Partnering can mean everything from a handshake and a contract to joint ownership.  What became clear in our strategy event is that joint ownership may likely be where some of these very large business opportunities are heading.  Can you imagine a portion of GE being sold to a Chinese entity?  What if a GE and ChinaCo jointly own such an entity?  These are the options that I am sure Jeffrey Immelt and his fellow energy industry CEOs have considered. 

I wish you a happy Independence Day this July 4.  Will companies be wishing each other a happy Interdepence Day in just four or five years from now?

Yes, it happened: Allscripts is going to merge with Eclipsys…and we saw it coming over one year ago. 

Last year around this time we had just completed our public war game, The Battle for Healthcare Information.  The objective was to figure out where the emerging business of electronic medical records (EMR) was heading – along with the companies driving this fast-moving market.  One of the predictions was that Allscripts-Misys, among the leading players, would have to merge with another EMR company or a larger conglomerate such as IBM in order to capitalize on the growth opportunities.  Their sales force appeared too small to truly penetrate the more than 90% of the as-of-yet untouched market potential. 

Only two months after the game ended, Allscripts already began to reach out by forming an alliance with Cardinal Healthcare for assitance in sales and distribution.  Apparently that first “dance” did not develop into a something more permanent but it clearly began a process for Allscripts that lead to its just announced merger with Eclipsys.

Let’s see where this year’s game leads….The Battle for China’s Smart Grid.  I have already posted the conclusions from the US version of the game.  I intend to post our findings from the European-run version.  The conclusions and predictions differed somewhat.  More about this next week.

Today’s Wall Street Journal article headline said it all: Foreigners Vie to Upgrade China Grid.  Written from China’s viewpoint, it sees Western firms eyeing an infrastructure gold rush.  The reality is that the state-sponsored smart grid initiative is one of the largest infrastructure projects ever conceived with China spending up to $100 billion dollars over the next 10 years.

The article also underscores the conclusions from our war game and cited one of its primary assessments: “To ease Chinese concerns,” the article states, “Western companies that want to win big jobs may have to sell a stake in themselves to a Chinese state-owned company, according to a study by Fuld & Company, a Boston-based consultancy.”

In a recent trip to China I informally polled business executives and others who work in the energy industry there about the game’s conclusions.  While I raised a few eyebrows concerning the game’s predictions, no one told me “Impossible!” or said we were way out of touch with reality.  No, in fact those I spoke with stated that the game was an important platform upon which to stress test this market.

What will happen next with the smart grid in China?  What lessons will both Chinese and Western companies learn from this great energy petri dish China has set in place? What can the West learn from this experiment on how it can grow a market in China?  More important, what can both China and Western companies take away from the experiment they can then apply to the rest of the world in the decade to come?

Stay tuned in this space for more updates as we watch the war game’s predictions unfold.

This coming month we are running a public war game on The Battle for China’s Smart Grid.  We have very quickly seen that this is more than a strategic fight of Western companies for a share of a China mega-infrastructure project.  It will likely demonstrate how Western companies can succeed in a very fluid China market – where the opportunity is great the the stakes are high.

Just this past week the New York Times (Academic Paper in China Sets Off Alarms in U.S., March 20) reported on an academic paper written by two researchers from China on the vulnerability of America’s power grid to computer attack.  This article resulted in misinterpreted accusations regarding China’s intentions to “take down” the US grid. When interviewed the researchers pointed out that this paper was theoretical and lacked the necessary depth to accomplish what their accusers claim.  Besides, they wanted to make it very clear that they used the US case because they were able find enough data in America and not enough on China’s grid to allow them to analyze their own system. 
The more substantial question is how extensively will US and European energy and technology companies invest in plant, infrastructure, and product development in China – seemingly a necessity if they are to build out China’s smart grid?  Recent concerns expressed by US firms about new PRC government policies that place heavy emphasis on only procuring products and equipment that contains “indigenous Chinese innovation” raise questions about how much of the market actually will be available to foreign companies.

If one just reads the ongoing press about Google’s exit and arguments with the Chinese government, then it is clear that concerns about the PRC business environment are growing.    At the same time, with far less noise other companies, such as Applied Materials, a prominent Silicon Valley technology firm is moving some of its technology R&D over to Xian, China (Austin-American Statesman, March 22, 2010). What exactly is the center of gravity regarding foreign business thinking about China?
Finally in response to US trade pressure on China, the China’s commerce minister, Chen Deming, warned against the U.S. beginning a trade war with China (Washington Post, March 22).  
So, as you can see the Battle for China’s Smart Grid is far more than just about the technology itself. It is about nations trying to gain competitive advantage.  It’s about where the R&D will be taking place. It’s about trust and about how to establish a growing business in a new market with lots of promise.

 We just released a white paper on The Art of Anticipating Disruptions (click through to the white paper section of our website).  What is remarkable is how such a wide variety of headline-catching companies have managed to learn about and successfully plan for these disruptions. 
 We based this white paper on an examination of over 100 companies. Sixteen companies made the “cut.”  That is, 16 companies seemed to have built an intelligence mechanism that allowed them to see just far enough around their strategic corner.   Among the leaders cited in the paper are Wyeth (Pfizer), Intel, Cisco, Shell and Corning.
From those interviews, we identified five key success indicators that describe how the best-in-class companies anticipate disruptions. They are:
• Credibility – Intelligence activities have the explicit support of senior management.
• Investment – Most intelligence programs have full-time staffs and dedicated budgets.
• Communication – Early warnings are effectively communicated to key stakeholders.
• Training – Business managers can factor early warnings into their strategic planning.
• Action – Senior executives are prepared to respond to disruptive events.

I invite you download “The Art of Anticipating Disruptions” white paper; then I would ask each and every one of you to let me know if you feel your company or another not mentioned in the white paper are models we should also consider – and why!

Enjoy the read!

Whew! This year is about to end and what a relief for many of us. Busy, hectic, fractured are just some of the adjectives I will consider when looking back over my shoulder at 2009.  Next year promises to evoke a different set of adjectives, such as confounded and ill-prepared. I say this because we are about to complete a number of surveys that indicate 2010 will bring with it a number of specific short-term and long-term competitive warning flags:

Warning flag #1 – China continues to confound Western companies:  We just completed a survey on competitive challenges Western companies encounter when working in China. We conducted this survey in conjunction Dr. Denis Simon, Professor of International Affairs at Penn State University and the China Institute. Fifty-four companies participated, many with over 16 years of experience in the China market.  Among their competitive concerns are:
- The business environment remains uneven and extremely vexing
- Our chief competition in China today may be other multi-nationals but tomorrow are likely to be domestic Chinese companies about which we know terribly little
- Government policy so dominates competitive conditions, we feel we just do not have a handle on which way the “wind is going to blow” with respect to new regulations or changing competitive rulings
- There is a lack of informational transparency with much market data either not available or at times not accurate
Warning flag #2 – We are inadequately prepared for the next healthcare marketplace: Under the guidance of Wayne Rosenkrans, Fuld Vice President and Chairman of the Personalized Medicine Coalition in Washington as well as a Fellow at MIT’s Center for Biomedical Innovation, we are polling senior healthcare executives in the United States about their preparedness for the 2015 healthcare market.  From their responses to date, they appear to say that their organizations have not prepared for the futures that await them.   

For the moment all attention in the United States is focused on the White House’s healthcare initiative and pending legislation. That is today but what about the market only five years away?  It is unclear whether or not large drug companies have planned that far ahead. What we see are lots of Big Pharma mergers mostly to rebuild or shore up the pipeline. This controls for short-term stock market reaction and may shield these firms in the long-term.  If preparation is the key, I am not sure that mergers alone will future proof your competitive portfolio. Take the survey and see how your peers view these futures.
Warning flag #3 – Too many companies are riding on guidelines that offer only legal lip service.  For the last two years we have been running a new survey on corporate ethical-legal guidelines for information gathering. We are about to close this survey. What I have seen until this point is that most large companies issue legal and ethical policy statements for competitive information collection. That is fine but not adequate. Many respondents who work for these companies also declare that they have not seen or know in any depth policy details or how to apply their information-gathering guidelines. Company management always has lots to do; these types of legal policies seem to fall to the bottom of the pile once issued – that is until someone steps over the ethical/legal line and calls negative attention to the corporation.  Stay tuned for a summary of this survey and implications it teaches us all.  If you are interested in trying out this anonymous survey for yourself, just click here.  You will have automatic report card sent you upon completion.

China, healthcare, and ethics, are all competitive issues that will remain with us for a very long time.  During the quiet weeks ahead, think about how your competitive landscape is changing and the challenges that you and your company will face in 2010 and beyond.

I wish you a quiet next couple of weeks and a successful year ahead.

Last month I intentionally made over 200 people squirm in their seats.   They were participants at a pharmaceutical conference for competitive intelligence professionals.  Rather than just speak for the keynote address, I challenged my audience with a series of information-gathering situations and asked them if they thought the behavior in each case was “normal,” “aggressive,” “unethical,” or “illegal.”  At my firm, we use such cases to align the information-gathering compliance guidelines for many of our clients.  This Scruples-type game approach is a wonderful way to bullet-proof compliance guidelines.  How do you think the audience reacted?

Case A: Interviewing
A manager asks you to interview a number of experts (who recently have worked for or indirectly with a rival) to gather enough details for you to identify a specific  molecular structure for a product  that has recently entered clinical development?

Case B: The Restaurant
You are traveling for work and you go to a restaurant in your temporary host city.In the restaurant, you see two competitors from two different pharmaceutical firms having lunch together.
Your table is within earshot of theirs, and you overhear that they are in negotiations for a new partnership on a new drug.

Case C: The Doctor-Employee
You have a new employee on your team, a doctor who recently left full-time private practice to work at your company, but still sees patients one day a week at a local clinic. 
Your competitor is enrolling patients in a Phase III cardiology drug trial, and will give the entire clinical trial protocol and endpoints to any physician who enrolls eligible patients.  Your new employee enrolls some of his patients and gains access to this clinical trial information.
Case A was relatively simple for most in the audience.  Nearly everyone felt this was a normal situation and something their companies do to remain competitive. Some in the audience did suggest that all this is conditional on how you identify yourself, as well as number of other possible factors. But overall, most felt comfortable with this general description.

Case B was somewhat of a surprise for me – as well as for some audience members. Quite a number of people around the room felt extremely uncomfortable and even went as far as to say they would walk out of the restaurant.  Even after I fine-tuned the hypothetical to say you did not plan to go to restaurant hoping to overhear such conversations (which many companies do not object to) and that this was a total coincidence, still a number of people blanched.   They were not necessarily wrong in my view for taking this highly conservative stand. Perhaps their company was recently slapped with a law suite related to information theft or corporate council warned all who were about to go to the trade show or scientific conference to be extra careful. 

What did I think? I believe you can eat in any restaurant you choose. If someone is talking loudly enough for others to overhear their conversation–be it on an airplane, on the street while talking on a mobile phone, or in a hotel corridor–it is their security breach and responsibility, not yours. 

Case C, the doctor-employee case, presented more substantive challenges for this group. Many stated the doctor may have breeched confidentiality agreements, as well as misrepresented himself. 

Are there variations on each case? Certainly, and each one will likely demand a slightly different approach.  Because each situation is different, this method of stress testing through hypothetical examples works so well—you can consider ‘what-ifs’ or real ethical challenges that your sales people and other market-facing employees must confront every day.  Then, you can continually refine your information guidelines accordingly.

Final note: In our currently running ethics survey (which I recommend you take. Just click here), we have already discovered a disturbing finding for the healthcare industry in particular.  While a larger percentage of respondents from the healthcare industry acknowledge that their company has specific ethical and legal competitive intelligence guidelines (73% v. 65% for other industries overall), only 45% of healthcare respondents stated that someone has reviewed these guidelines (compared to 61% for all other industries).

The implication: Many companies have such guidelines but neglect to truly teach the meaning and implications of right and wrong information-gathering behavior.  As my exercise above demonstrated, since some organizations have different tolerance levels for certain behaviors than others, it is impossible to predict how employee A or employee B will react to a given circumstance.  One of these two employees might do the right thing (even if it is aggressive yet reasonable behavior) while the other steps over the legal limit.  Thus, a clearly articulated (and enforced) set of guidelines will ensure consistent behavior that meets a common standard of ethical conduct for your company and your industry.

If I and my audience learned anything at that keynote presentation, it was to test and educate. Test your guidelines against realistic information-gathering encounters. Educate your employees to know right from the not-so-right.