We Spy Business

• Analyst reports.

• SEC filings, including 10-Ks, 10-Qs, and pertinent 8-Ks.

• Patent (if applicable) and trademark information.

• RSS feeds for press releases, news items, and blog posts.

• Legal department biographies.

• Links to clients’ Web sites, those of competing law firms, and biographies of competing attorneys.

• Information on fees and practice groups, as well as client team rosters and biographies. Some also include wikis, or user-edited content displayed according to subject. When updated regularly, wikis are an excellent way to capture internal knowledge.

MAJOR PITFALLS

Reports and intranet pages are highly valuable and represent an excellent beginning to a competitive intelligence function. However, the information and intelligence presented through these vehicles have several major pitfalls.

First, the information becomes dated quickly. For one thing, companies can change radically in less than a quarter, and, unfortunately, quarterly earnings are not always accurate. Second, the information is static. Limited information can be displayed on an intranet page, so that historical information must be archived regularly. The information represents a snapshot, rather than a deep understanding of a client/market/industry. Third, the information cannot truly be considered intelligence unless a human has analyzed it and pulled out the salient bits. Resources would have to be realigned to provide analysis across the firm’s revenue board. Finally, the resources required to continually refresh the data are substantial and costly. The richer the information sources, the more time it takes to collect, sort, collate, and synthesize data.

A more sophisticated approach to the CI process, and one that answers these shortcomings, is to use the products of CI—the reports and information presented on the intranet page—as a process. CI is often discussed as either a product or a process, but rarely is it looked at as both simultaneously. Through the creation of a database, it can be.

EARLY WARNING SYSTEMS

Benjamin Gilad, a noted leader in the CI field, has written and spoken extensively on strategic early warning systems in his book Early Warning (2004). When used primarily as a risk-management tool, an early warning system is more applicable to products-oriented corporations than to law firms. However, a strategic early warning system would serve the CI needs of law firms very well, when customized to look at threats and opportunities.

An EWOS—that is, an early warning/opportunity system—is a database of all information gathered and products created within the CI function. The beauty of an EWOS is that, while it certainly includes information on clients, industries, and markets, it is built around business indicators. Because business indicators affect clients, industries, and markets, the EWOS is better able to provide dynamic intelligence that will show histories, highlight changes and trends, and, over time, predict them.

A robust EWOS would involve:

(2) Determining the information and intelligence necessary to answer those questions.

(3) Allocating the resources to collect, collate, and analyze that information.

(4) Employing technology to store, manipulate, mine, and report on the intelligence gathered.FORMULATING THE QUESTIONS

Profitability and competitive advantage should be defined broadly and include elements of both threats and opportunities.

As an illustration, take a look at a public company’s risk factors (in its 10-K). Each of these items represents a scenario or issue that could negatively affect their earnings. Those items, stated by key clients, industry gurus, and economic analyses of markets (including geographic markets), should be included along with indicators that will alert key CI practitioners that trends may be emerging.

For example, one issue affecting law firms today is diversity. Ten years ago, the issue was not on the radar of any law firm professional marketer, CEO, or partner, despite the fact that most Fortune 500 corporations had already had supplier diversity programs in place for many years. Still, no one thought it would affect the choice of outside counsel. However, had supplier policies been considered a business indicator and monitored accordingly, the EWOS would have highlighted the growing importance of a diverse work force. A savvy law firm would have been able to address the issue as an opportunity much earlier.

THE RIGHT INFO

There is a lot of information out there. Determining the right information and intelligence will make or break the EWOS. At a baseline, the information typically found on an intranet page should be included. Where possible, the information in each document should be broken down into data elements that can be referenced individually and cross-referenced across the EWOS. For example, a key client’s 10-K should be included as a complete document. The individual sections such as risk factors should also be itemized and included as separate items.

An EWOS database does not have to be expensive to create or administer. The technology department will certainly have opinions on the correct software and structure of the database, while departments such as marketing and finance will provide valuable insight into the contents. The more (relevant) information stored in the EWOS, the better, yet that does not have to translate into breaking the CI budget.

Once the data elements have been determined, consider off-shoring the data collection and input. Firms such as Baker & McKenzie and Deloitte & Touche have centers in the Philippines and India, respectively. Following their lead and engaging an off-shoring company that specializes in data collection can be a reasonable and cost-efficient strategy.

With the use of a little PERL programming, RSS feeds, and offshore data entry specialists, information gathering becomes a piece of cake . . . a really cheap piece of cake.