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What Do You Do When Competitor Information is Private?

Fred Hoffman

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June 19, 2018

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.

Researching public companies

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

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.

What makes researching private companies so challenging?

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:

  • A private company is not traded on any stock exchange.
  • Private companies do not have to file any documents with a financial regulatory body like the U.S. Securities and Exchange Commission.
  • Private companies don’t have to disclose anything they don’t want to.
  • Some private companies can be extremely secretive.

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.

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Researching private companies: Initial tasks

Comprehend the purpose of the research

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.

Clearly articulate research requirements and objectives

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.

Use the research plan as a road map

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?”

Lay the foundation through secondary research

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.

Sources of secondary information

Useful sources of secondary information include the following:

Websites

Paid subscription databases

Social media

  • LinkedIn
  • Twitter
  • Facebook
  • Blogs (may be closed to non-members)

Government sources

  • State and Federal regulatory agencies including EPA and other filing offices
  • Local/regional chambers of commerce
  • Secretaries of state
  • Patent and trademark offices

News media

  • National and international news media
  • Local (state and regional) press/clipping services

Business and industry professional journals

  • Oil & Gas Journal (as a representative example)

Primary Research

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.

Consider outsourcing primary research

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.

Validating information

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.

Presenting the data

Research plan as checklist

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 attribution

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:

  • “Source is a railroad industry executive with over 20 years of experience in freight operations.”
  • “Source is a former company mid-level employee who was highly critical of the current management team.”
  • “Source is a journalist who specializes in writing on topics related to the supermarket industry.”

Revisiting the topic

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.

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Fred Hoffman
Fred Hoffman

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.

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