Why should CIOs help their companies suss out data on rivals?
Data is information. Under theories of an efficient market, everyone gets the same information at the same time. But in the real world, some companies are able to acquire market insights, while others don't. This information advantage may last months, weeks, hours or minutes, but it can make a lot of money for the company that has it. CIOs can help their companies exploit this intelligence gap. They can sculpt their IT systems better so that their companies can respond faster to what their rivals are doing. They can help their firms, ideally, respond in real time to the speed of information.
Isn't that a whole lot easier said than done?
Think of it this way. The CIO's job is all about information processing. If CIOs can figure a way to better find, tag, prioritize and distribute key market data to the right folks at the critical moment, it's a huge job. No question, the task of boiling down management's need for critical intelligence and then building an IT process around that need is a relatively new challenge facing CIOs. Trouble is, people get sloppy about information. For example, we recently came across a large telecom equipment manufacturer with 10,000 home pages on its intranet, several hundred of them dedicated to the competition. There was no coordination between them. This was a situation where the CIO could have taken charge and made sure the information was in one spot. How many tens of millions of dollars were thrown at that intranet and wasted annually in inefficient man-hours?
How do CIOs get started?
The CIO's first step must be to identify the key intelligence topics and figure out how to build the processes that best feed information about those topics to the right people at the right time. For example, if you want to understand a rival's strategy in the Southeast, start coding data from regional newspapers so trends and anomalies can be more readily identified. Another area where CIOs could get more active is in setting up early warning systems that can track information and spot trends. For example, in the mid-1990s, Daimler-Benz aerospace set up a system to watch for mergers involving their U.S. competitors so quick action could be taken to stem market fears and forestall stockholder complaints with appropriate public and investor relations. When the Boeing-Douglas merger took place, Daimler-Benz knew it was coming six months before the announcement.
An example of a company getting blindsided because it didn't anticipate developments elsewhere is the Federal Express concept for Zap Mail kiosks in the late 1980s. Faxes would be received and delivered within two hours. Great idea, but they didn't realize how fast the cost of fax machines would drop, quickly putting them in reach of companies and, eventually, consumers. The kiosks went out of business after FedEx spent about $1 billion to develop them.
What's the lesson here for CIOs?
Technology can't develop intelligence, but it can help CIOs to grind information down and parse it out quickly to the managers who can use it. But be warned: You can't do competitive intelligence well out of a prepackaged software solution sold in a box. CIOs must also develop systems and cultures in their shops and start thinking more broadly about customers and rivals. For example, they can build a structure that ranks information's reliability and accuracy. I sometimes look at verifications as a pointillist painting. You may not have all the dots, but you can assemble enough of the dots to pull the picture together. It requires conceptual thinking and good judgment to pull the picture together.
This article was originally published on 08-01-2001