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When you have high ethical standards, gaining competitor information and creating thorough analyses can be an increased challenge. There are several ways to approach the problem, and several clear differences between your efforts to research private and public companies. Here, we'll discuss both and provide our best advice.
Because laws and regulations demand a high degree of transparency from public companies, there is a wealth of information about them currently available to employees, shareholders, and interested third parties (including competitive intelligence researchers) who know where to look for such information. Primary source documents like annual reports and company press releases represent just the tip of the information iceberg: In recent years, the digitization of information, decreased cost of data storage, proliferation of the internet, and other factors have made available a wealth of publicly-available information on public companies. In fact, it is often the case in competitive intelligence research that researchers looking at public companies find themselves faced with too much information. With respect to public companies, main challenges involve targeted, effective searching; indexing and aggregating the information; and wading through large quantities of information to identify valid and verifiable facts responding to key research questions.
Private companies represent the great majority of businesses in the United States. Whether a company is public or private is not based on the size of the company; in fact, a surprising number of large companies are in private hands. Some examples include the Hilton hotel chain, candy maker Mars, home security firm ADT, and the Red Lobster restaurant chain.
In private company research, insights are difficult to obtain not because of an excess of data, but rather due to the lack of it. There are several reasons for the dearth of readily-available information on private companies:
Annual reports published by public companies are a great source of generally reliable information. (A public company that knowingly disseminates false information in an annual report runs considerable legal and reputational risks.) Unfortunately, since private companies are not required to issue an annual report, the type of useful and reliable information contained in them must be acquired by other means.
Researching private companies: Initial tasks
Whether a company of interest is public or private, understanding the reason for your interest in researching a particular firm is extremely important. However, that understanding is especially important when the target company is a private firm, because researching private firms is so labor-intensive.
The better a researcher understands information needs, the easier it will be for the researcher to develop clearly-articulated information requirements, information objectives (information that the researcher will attempt to acquire), and a research plan. The researcher should also document and convey to any other invested parties any caveats concerning collection techniques.
A well-crafted research plan serves as a researcher’s road map. Periodically, the researcher should consult the research plan and think, “What information do I have? What information am I missing? Where is that missing information likely to reside?”
The researcher’s first step should be ensuring the target company actually exists, and identifying by what name(s) it is known. Sometimes, private companies change names. (For example, a company initially named after its founder later changes to “& sons”.)
After confirming the company exists, and armed with the research plan, the researcher is now ready to conduct secondary research. Some information may be readily available and accessible via web searches. Other information, while accessible online, may not be identified and accessed via simply web browser searches because the sought-after information has not been indexed by search engines. It has been estimated that over 90 percent of information on the internet falls into this latter category — this is the so-called “deep web” or “dark web”.
Generally speaking, secondary research is faster and less resource-intensive than primary source research. The more useful information a researcher can acquire via secondary sources, the better. Even after the researcher begins conducting primary research, however, secondary research continues. A primary source may provide information that can be verified through secondary research, or information that takes the researcher to a new source of secondary information.
Useful sources of secondary information include the following:
One of the reasons for conducting secondary research is to identify individuals whom the researcher could contact to acquire information and insights not always obtainable through secondary research.
When planning primary research, the researcher should think beyond the target company itself. Targeted primary research across the competitive value chain is an effective way to collect profiling information on private companies. For example, the researcher should consider the target company’s vendors, partners, suppliers, distributors, direct and indirect competitors, and service providers. In addition to current and former employees of the target company, potential primary research sources include journalists, industry experts, academics, and business people.
Primary source interviews yield not only information that is unavailable in secondary sources, but also amplifying information and insight that gives the information acquired from secondary sources additional context and value. In addition to information, an interviewee can provide highly valuable commentary, context, opinions, and even leads who can also serve as additional sources of information.
Unlike online searching and document examination, interviewing is an interactive, multi-sensory experience. Well-conducted primary research interviewing is an art form. An experienced researcher knows what questions to ask, how to ask them, and in what order. The researcher should develop interview questions based on the knowledge gained doing secondary research, gather the detail necessary to validate initial findings, and uncover any gaps left to be filled in in the research plan.
Competitive intelligence is neither industrial espionage nor spying. Bound by a code of ethics, competitive intelligence practitioners conduct both secondary and primary research in a legal and professional manner. Due to the sensitive nature of the information being sought during the competitive profiling process, a client might wish to consider outsourcing private company research, especially when extensive primary research is anticipated.
Especially given the often fragmentary nature of information acquired about private firms, it is important to use multiple sources wherever possible, and seek confirmation of secondary source information by primary source interviewees.
A well-written research plan can not only serve as the outline of a final report, but also as a checklist to see which information objectives were met, and to what degree. It can also be used by the researcher to demonstrate which information objectives were, or were not, achieved.
Information obtained by the researcher will have likely come from a variety of sources, some of which the researcher may regard as more or less trustworthy or reliable than others. While this is also true when researching public companies, it is especially true when the target firm is a private company. There may be instances where the researcher may wish to provide a footnoted source description and commentary, especially if the information provided may be disputed, contentious, or previously known. Examples:
Two sorts of information gathering and reporting projects exist in competitive profiling: a one-time profile of a private company, or ongoing monitoring of a private company that is a direct competitor. While quarterly or bi-annual updates are typical, interim updates can be requested as needed. Maintaining and updating a private company profile is just as important (and perhaps even more challenging) than the initial research. Unlike public company data, which in many cases can be pulled automatically from public sources to maintain profiles, the data acquisition process for a private company can be far more manual. It's entirely feasible that you may need additional or outsourced research resources to accomplish this. But it's not impossible to accomplish, so don't be dismayed or deterred by the dreaded "private" company label.
To learn more about data research and management download our 11 Steps to Selecting the Right Competitive Intelligence Software Solution.
Following a 30-year career as an intelligence collector and information operations practitioner in the US Army and multiple civilian intelligence organizations, Fred now draws upon his broad experience in worldwide intelligence collection, information operations, corporate personnel and intellectual property protection to support both government and commercial clients.