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It was one sentence among hundreds in a transcription of a dull congressional hearing on the environment, a statement anyone might have missed: Bristol-Myers Squibb Co. was looking to increase its harvest of the Pacific yew, a protected tree. But Wayne Rosenkrans, the competitive intelligence officer at archrival SmithKline Beecham Corp., happened to catch it, thanks to a routine search of competitors' activities on the Web.
Rosenkrans sprang into action. He knew Bristol-Myers' researchers had been testing a substance in the tree's bark as an experimental agent against breast cancer. But why was BM suddenly seeking to cut down 200 times as many yews? Was it ready to put its planned anti-cancer drug, Taxol, into production? Back at SmithKline headquarters in Philadelphia, the news was enough to trigger serious nail-biting in the boardroom. SKB was developing its own anti-cancer drug, Hycamtin, but it wouldn't be ready for another 18 months. Would it beat Bristol-Myers' drug to market? Or would SmithKline Beecham have to speed up its production scheduleand if so, by how much?
Rosenkrans' team wasted no time. It immediately began canvassing conferences and scouring online resources for clues. It tapped into Web sources on the environment and got staffers to work the phones, gathering names of researchers working for Bristol-Myers. It even zeroed in on cities where BM had sponsored experimental trials of the substance.
Sure enough, BM had had been taking out recruitment ads in those areas' newspapers for cancer researchersa sure sign that Bristol-Myers was stepping up its hiring of oncologists specializing in breast cancer. The next clue? From data discovered on financial Web sites and in the comments of Wall Street analysts, Rosenkrans' team discovered that BM was increasing its spending on its oncology group.
That was all Rosenkrans needed to hear: Senior R&D managers were ordered to speed things up, and ended up rushing Hycamtin to market in six months instead of 18preserving SKB some $50 million in market share and millions in drug development costs. Says Rosenkrans, now global intelligence director at London-based pharma giant AstraZeneca plc: "The CIA, the National Security Agency and England's M15 used a form of CI to figure out what the Russians were doing. We can use it too."
SmithKline Beecham's tale of how competitive intelligence saved a company millions is no longer unusual. Indeed, one of corporate America's worst-kept secrets these days is that more and more companies, from Burger King to Nutrasweet to MCI, are spyingand have in-house operations to keep tabs on rivals. The number of large corporations with CI units has tripled since 1995, says the Society of Competitive Intelligence Professionals, and spending on CI is estimated to be around $12 billion annuallynearly double the amount spent just five years ago.
To be sure, data-diving isn't new. As far back as the 1970s, in a now-famous example of excess zeal, The Boeing Company discovered that a Russian delegation visiting one of its manufacturing plants was wearing crepe-soled shoes that would surreptitiously pick up metal shavings off the factory floor to determine the type of exotic metal alloys Boeing was using in its planes. And at Motorola Inc., the former chief of competitive intelligence used to work for the CIA.
But now, thanks to the Net and its ever-growing, low-cost reach and speed, nearly everybody's spying. In a May 2001 survey by marketing firm TR Cutler, Inc., 55 percent of U.S. manufacturing companies with fewer than 1,000 employees admitted to spying on competitors during the previous 12 months, using the Web and posing as potential customers to glean pricing and other competitive tidbits.