Knowledge Is Power

Companies, like People, Have Herd Instincts

Human beings prefer to live in groups. For thousands of years survival of an individual depended on the ability of his or her tribe to feed itself and defend itself against rival tribes.

Groups of people have the same instincts when threatened. Witness Microsoft’s offer to Yahoo, precipitated by Google’s increased domination of the search advertising market. With jet fuel prices soaring higher than the airplanes themselves, even the larger airlines are merging or forming alliances to cut costs in an effort to survive.

The dominant firm in any industry will run afoul of anti-trust rules if it tried to merge, even in today’s more flexible stances in Washington DC. But how much effort should the dominant entity expend to monitor and anticipate mergers and alliances among smaller, possibly struggling competitors?

Not much actually. Struggling competitors who align out of weakness usually see minimal benefits from the merger. And they focus internally on combining the operations instead of maintaining their diligence on competitors.

Compaq Computer Corporation bought Digital Equipment Corporation largely to obtain its services capabilities. Subsequently, Hewlett-Packard (HP) acquired Compaq to bulk up its PC business and to add to its services operations.

What happened? HP just inked an agreement to purchase EDS to increase its ability to compete against IBM for services opportunities. IBM has been doing extremely well. While the fit between the two appears good from a business viewpoint, the cultures of the two organizations are very different and will take a great deal of careful integration to create benefits from the combination.

So you work at the dominant organization in your industry, keep monitoring your merging competitors, but basically just keep doing what you’re doing right in the first place.

Learn the Difference between Counter CI & Corporate Espionage May 21

SCIP Boston Chapter Meeting
Counter CI & Counter Corporate Espionage (CE): Know the Difference!
May 21, 2008

This presentation will review the Economic Espionage Act of 1996 comparing and contrasting espionage which is criminal with competitive intelligence which is legal. It will also review steps that you, the information professional, can take to safeguard your company against other organization’s CI or CE efforts. Are employees putting your company at risk every time they travel overseas with laptop computers? Preparing your executives for “flying the unfriendly skies,” ensuring your hotel room doesn’t become your competitor’s best source of information and other commonsense tips for today’s CI professional will be just some of the topics discussed.

Harry Markopolos, CFA, is a corporate whistleblower specialist engaged in identifying companies engaged in contract or tax fraud against the US Government under two bounty programs - the Federal False Claims Act and IRS Whistleblower Program. He specializes in safeguarding whistleblowers’ identities, preparing case evidence, fraud investigation, building damages models, and working with legal teams to file cases under seal (in secret).

Mr. Markopolos graduated with his B.A. in Business from Loyola College of Maryland, earned his M.S. in Finance from Boston College, and is a Chartered Financial Analyst. He also graduated from the Army Command & General Staff College.

Prior to starting his own company, he served as Chief Investment Officer for a $9.5 billion equity derivatives asset management firm in Boston.

Registration will be available on www.scip.org after SCIP08
For More Information, Contact:
Boston SCIP Chapter Chair Parmelee Eastman 781/416-3686, peastman@eastsightconsulting.com
SCIP Staff Contact: Dionedra Dorsey, SCIP Chapter Coordinator, ddorsey@scip.org

Beyond Outsourcing to India

“Image search firm Riya is to pull its research and engineering operations out of India to consolidate in the U.S. due to rising wages in Bangalore.” (“Rising Wages Prompt Riya to Pull Out of India,” Tash Shifrin, Computerworld, July 2, 2007)

“The company, which is behind visual shopping website Like.com and specialises in image recognition software, had maintained offices in both Bangalore and the U.S. despite the difficulties of being based in locations 12 time zones apart because low wages and a strong pool of talent in India meant the company still saw a significant return on investment.”

“But in his company blog, Riya chief executive Munjal Shah, said: "Bangalore wages have just been growing like crazy. To give you an example, there is an employee of ours who took the first five years of his career to get from 1 percent to 10 percent of his equivalent U.S. counterpart.”

"He then jumped from 10 percent to 20 percent of his U.S. counterpart in the next 1 year. During his time with us (less than two years) he jumped to 55 percent of the U.S. wage. In the next few months we would have had to move him to 75 percent just to 'keep him at market.'"

Start-up Riya is consolidating its operations in the US since it seeks very experienced staff. Some firms may switch outsourcing operations to lower-cost countries such as China, Philippines, or Vietnam despite concerns that China has not strengthened its intellectual property policies and practices sufficiently.

Where are your competitors heading? Returning outsourced activities to the US suggests they include high-quality customer service and intellectual development in their strategy while switching to China or Vietnam reveals an emphasis on low costs which allows an aggressive pricing policy.

Quietly Tiptoeing in Cement Shoes

Your company should have a process for identifying, evaluating, and following emerging competitors. But what should the level of resources be for this effort since most of the emerging competitors will fade away with no damage to your market position?

Cement makers may need to increase their resources in this area to follow a quick-drying cement manufacturing operating currently in stealth mode, according to an article in the Aug 21, 2007 Wall Street Journal, “Hardened in Battle, This Company Sets Its Goals in Cement.”

“Over the past four years, a small Baltimore company lead by a 23-year Army veteran has quietly made its mark in combat zones with an unlikely weapon: fast-drying cement…But CeraTech’s repair work to date has mostly gone under the radar of industry observers—and that’s been intentional.”

CeraTech’s CEO Jon Hyman explains why, “We had issues with technology to perfect. We needed to establish intellectual property. We needed to fly under the radar and get some brand equity.”

The current dominant cement formula, called Portland cement, can take up to days to fully cure while CeraTech’s product dries in one to four hours. Like many new technologies, CeraTech’s product is more expensive and less of a track record—Portland cement has been used for at least 100 years.

CeraTech is now preparing to tackle the huge infrastructure market in the US. How much should Portland cement makers have spent on watching CeraTech and how much should they be spending now? What do you think?

Do Companies Lie?

Do people deliberately misrepresent facts about their companies to throw off competitors? Some researchers believe that mis-information is planted frequently; however, I have found that most sources will refuse to answer my questions rather than lie. Lying takes effort to create and maintain a creditable story with all the pieces hanging together.

However, recently I researched a private company that is deliberately mis-representing its revenue figures. During the late 1990’s, the management confirmed in articles in the local newspaper that revenue was around $125 million and spoke about advertising campaigns that ranged up to $20 million. But the most recent revenue figure that I could find in 2007 was $50 million. Certain information is public such as leasing new space with the help of local incentives and building permits to alter the space. So I also knew that this company had increased its manufacturing capacity by 50% two years ago by acquiring an empty plant with the help of state job creation incentives. What gives?

Turns out that an employee with an Arabic-sounding name in a key position at the firm had been arrested for terrorism by the FBI shortly after 9/11. The founder and CEO of the firm were very active in Jewish philanthropy at the time and this private firm decreased its already low profile to practically nothing after that incident.

Once I understood the firm’s situation, I threw away the $50 million figure and estimated that the real revenue for this organization to be $250 million. It’s a sad commentary on the state of the world that this firm apparently felt the need to pull the curtain on itself. However, even this organization was not able to completely cover up its activities and outsiders revealed key information about the new plant.

This example shows the difficulty of making deliberate mis-information creditable. Can it be done? Sure, it’s just difficult.

Meeting Oct 9 on Technical CI

Boston Chapter Meeting
Competitive Technical Intelligence and its Internal Clients: Opportunity for Impact
Tuesday, October 9, 2007 – 6:00 PM – 9:00 PM
Novartis, Cambridge, MA
Description
What is Competitive Technical Intelligence (CTI)? Think of it as "CI, especially where technology is a factor." In technology-based industries, such as pharmaceuticals, chemicals, energy, electronics, etc., the ability to address unmet customer need often depends upon the development of new technology or the re-purposing of existing technology. In such industries, assumptions about the technology pipeline often underlie major business decisions. In the past, marketing, market research and other professionals all "did a little" to evaluate emerging product-related technology and competition. These days, many companies employ CTI professionals for such analyses. A good CTI analyst provides technology-related information/intelligence in the appropriate business context, to support good decisions. CTI professionals do not replace the experts in technical and allied fields but, rather, complement them. They should help to shape the discussion for better transparency across the product and function concerns. Come hear and participate in this discussion of technical CI’s unique issues.

About the Speakers
Martha Matteo, Ph.D. is currently serving as President, 2007 Board of Directors of SCIP. She recently retired from Boehringer Ingelheim Pharmaceuticals, Inc., where she was Director of Knowledge Management (KM) and R&D Planning. Dr. Matteo will moderate this panel of speakers:

Carolyn J. Foster, Ph.D. is Senior Associate Director, Technology Assessment at Boehringer Ingelheim Pharmaceuticals, Inc. Dr. Foster will present the scope, client base and services of CTI.

Susan L. Levinson, PhD’s President of The Strategic Choice LLC, with a long prior history as a successful marketing executive at Novartis. She will represent the concerns of CTI clients relative to marketing.

Jason Tong, PhD, is a Distinguished Member of Technical Staff at Alcatel-Lucent where he has 22 years experience in the telecom business, including manufacturing R&D, supply chain management, product development, Standards definition, technology transfer, intellectual property management, licensing and competitive intelligence.

Location
Novartis , 220 Massachusetts Avenue, Cambridge, MA

Directions
Public Transportation
Take the Red Line to the Central Square, walk north along Mass Ave toward MIT (away from Harvard Square) about five minutes until you reach 220 Mass Ave.

Driving Directions:
From the west, take the Mass Turnpike to exit 18, Alston/Brighton/Cambridge. Once past the toll, bear right onto Storrow Drive and follow Cambridge-Somerville signs onto River St. Take the bridge over the Charles River and continue straight for about one mile to Central Square. Take a right onto Mass Ave and watch for 250 Mass Ave and 220 Mass Ave.

From the North, take Rt 93 to Storrow Drive and take the Harvard Bridge across the Charles River to Mass Ave. Go past MIT towards Central Square, but before Central Square, look for 220 Mass Ave on the left.

From Boston, take the Harvard Bridge across the Charles River to Mass Ave. Go past MIT towards Central Square, but before Central Square, look for 220 Mass Ave on the left.

Parking is available at meters on the street and is free after 6 PM. The closest garage is the University/Star Market Garage on Green St. Turn onto Sidney St, which is west of 220 Mass Ave, and then take the next left onto Green St, which is one-way. Turn right into the garage just past the Hotel@MIT.

*Please Note* For security purposes, attendees must register by close of business Friday October 5, 2007.

Agenda
Registration & Networking 6:00 PM
Food & Beverage 6:00 PM
Presentation 6:30 PM – 8:00 PM
Q & A 8:00 PM – 9:00 PM

Registration Fees
SCIP Member - $35.00
Non Member- $45.00
Student - $20.00 (Please contact Dionedra Dorsey for registration details)

*Note* Please register by 5pm October 5th. Registration via the web will be closed by 5pm October 5th!!

To register, please click the link below:
http://members.scip.org/scriptcontent/BeWeb/events/eventdetail.cfm?&PRODUCT_MAJOR=BOSCHP1007

Contact Information
Parmelee Eastman, Boston Chapter Chair, (781) 416-3686, email, peastman@eastsightconsulting.com

Dionedra Dorsey, SCIP Chapter Relations Coordinator, (703) 739-0696 x111, email, ddorsey@scip.org

Cancellation Policy
Cancellations not received in writing by Friday, October 5th will not be refunded. No sh ows will be billed.

Boston SCIP Chapter Meeting: Current & Creative Collection Techniques for Intelligence Professionals

Monday, September 17, 2007 – 6:00pm – 9:00 pm
Vinny T’s Boston Restaurant, Lexington, MA

The value of public source or secondary research is often underestimated. There is a whole world of unique information available in the public domain – much of which can be pieced together to tell a very important story – just waiting to be collected and analyzed by the brightest and most creative intelligence professionals among us. Furthermore, there is a wide variety of research tools and techniques that can be used among these special sources and some of the more traditional ones to develop valuable insights regarding our respective marketplaces and protect us from information overload at the same time.

It is extremely challenging for research professionals to remain current regarding these publicly available intelligence sources and their applications, as well as the ever-changing capabilities of commercial online services and web search engines. This presentation will help bring the audience up-to-date regarding the sources and tools that are presently available and how they can be applied to produce current, relevant and actionable intelligence findings.

About the Speakers
Toni Wilson is founding partner of MarketSmart Research Services. Prior to establishing the company in 2000, she was an intelligence practitioner at LexisNexis, a leading information services company, for 15 years, and is an expert in identifying, comparing and accessing publicly available information and intelligence sources and tools. In addition to being a long-time SCIP member and active volunteer leader, Toni is also a member of the American Marketing Association and Association of Independent Information Professionals (AIIP).

Christine Wunderlin is co-managing partner of MarketSmart Research Services. Previously, Christine was employed as a business applications consultant at LexisNexis, where she advised business leaders seeking to better understand their business rivals, vendors, competitive and market forces. Christine also conducted training sessions with practitioners regarding the functionalities and nuances of secondary research techniques. Prior to working for LexisNexis, Christine was employed at Lands' End Inc. where she designed and implemented the CI function. Christine is a long-time SCIP member and prolific volunteer leader.

During the past several years, Toni and Christine have shared their knowledge of current and creative public source collection techniques with numerous SCIP audiences, including attendees of SCIP’s 2006 and 2007 annual conferences, as well as with members of the Special Libraries Association (SLA) and Legal Marketing Association.

MarketSmart Research Services delivers high quality marketplace research and training services to its clients, focusing on the intelligence collection needs of corporations and small businesses.

To sign up, visit www.scip.org and click on Training & Events, then Calendar and scroll down to Sept 17.

I look forward to seeing you there!

Do Not Copy that Article!

The Software & Information Industry Association's Corporate Content Anti-Piracy Program, initiated last October, has nailed its first violator, according to an August 17, 2007 article by Grant Gross from IDG News Service “Copyright Violations Cost Big Bucks.”

“Analyst firm Knowledge Networks Inc. has agreed to pay US$300,000 to settle a complaint that it distributed news articles to its employees without permission of the copyright owners, a trade group announced Thursday.”

“Knowledge Networks' marketing group had been distributing press packets to some employees on a regular basis, the SIIA said. Those packets contained articles under copyright and owned by SIIA members such as the Associated Press, United Press International and publishing company Reed Elsevier, the trade group said.”

Check your agreements with your content providers to determine if your organization can copy material, and if so, under what conditions. Also, speak with a lawyer to ascertain if you summarize or otherwise use information contained in copyrighted articles, you will not be violating copyright laws. If your organization does want to distribute copyrighted material, build the payments into your budgets. The competitive advantage of keeping employees up to date is worth the fees.

The SIIA did not reveal who turned in knowledge Networks, but did reward that person with a $6,000 payment so an employee could easily have been the source. Do not be next!

The Optimist Sees Opportunity in Every Danger

"The optimist sees opportunity in every danger; the pessimist sees danger in every opportunity." -- Winston Churchill

Competitive intelligence professionals appear to be programmed to see the dangers, but in fact they can spot the opportunities among the dangers.

If a competitor is launching a new product or service, does that mean that the company will neglect its existing products/services? Will the company spread itself too thin? You do have to analyze how the new product will affect your products and customers, but there may be opportunity among the competitor’s existing customers to convert them to your offering.

Is your competitor heavily defending a leading position in a large market? The firm could be ignoring new entrants which could be acquired by your organization. Or it could be clinging to technology which has become outdated. Ruling the pay phone business (to update the buggy whip analogy) is not very profitable when people switch to cell phones in droves.

Watching for emerging competitors can highlight new markets. There is a first-to-market advantage, but in reality, companies that can recognize opportunities quickly and learn from the leader can often dominate with a superior product. A former employer, Digital Equipment Corporation, was actually second- or third-to-market with some of the products for which it was famous. When it was small and nimble, it spotted trends and rushed good products out into the market. Unfortunately, it lost this skill as it grew large and unwieldy.

So think like Winston Churchill and find money making opportunities for your organization in addition to warning co-workers of the dangers.

Guess the Dates!

Guess the dates of these quotes about Level 3 Communications

"We expect a tremendous increase in wavelength sales this year and it's enabled by DWDM,"

“…with a stock price that has almost doubled over the past year and bond prices that have risen
about 20%.”

Right! The first quote came from 2001* and the second from 2006**.

The rest of the articles do not sound alike since Level 3 almost went bankrupt in the meantime and is still saddled with massive debt. But beware of statements taken out of context and be aware of the bias of the time. While some journalists and industry observers were skeptical of the boom projections, many were not. Level 3 is no longer seen as a serious competitor to deep pocket telecom firms, but as a potential acquisition candidate for firms like Google or Qwest. Competitors and markets all change and the context and date must be evaluated for all bits of information. Also weed out old information that could just be confusing.

*”Carriers, vendors stretch their fiber capacity, and revenue projections, with DWDM technology,” April 2, 2001, Broadband Week, David Iler

**”Level 3 Regains Luster Amid Web-Video Boom,” Dec 21, 2006, The Wall Street Journal, Li Yuan and Gregory Zuckerman