Growth Companies that Place Highest Value on Competitor Information Are Most Successful
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“Growth Companies that Place Highest Value on Competitor Information Are Most Successful”
CEO’s of most of America’s fastest-growing companies view business information about major competitors as important to their profit growth. But fewer than three in four have a formal, clearly-articulated internal policy protecting against the loss of privileged information about their own business.
CEOs of most of America’s fastest growing companies view business information about major competitors as important to their profit growth. But fewer than three in four have a formal, clearly articulated internal policy protecting against the loss of privileged information about their own business. These are key findings of the most recent Coopers & Lybrand "Trendsetter Barometer" survey.
In today’s business environment, nearly half of growth company CEOs rate competitor information as a critical or very important competitive tool. In contrast, only 14 percent rate competitor information as not particularly important to their business growth.
"This 49 percent of growth companies, at which competitor information is highly valued, are clearly the most successful," notes George Auxier, national director of Entrepreneurial Advisory Services for Coopers & Lybrand L.L.P. This segment of the survey sample grew nearly 200 percent faster than their peers that rated competitor information as only somewhat important or not important to their business growth.
Companies at which competitive information is most valued also expect to grow faster and have more extensive plans for major capital expansion during the next 12 months. They also have more recent bank financing activities.
"Companies that most value competitor information share several other business concerns," continues Auxier. "They are more concerned than their counterparts about profitability and decreasing margins (67 percent more)," he notes, "and they fear that lack of capital may inhibit their growth (54 percent more). They are also more concerned (60 percent more) about their ability to manage or reorganize their own operations."
Most CEOs (60 percent) say obtaining competitor intelligence is everyone’s responsibility, while 22 percent delegate the information gathering task to a specific department, and 13 percent to a specific individual. The remaining 5 percent did not respond or use other internally based information resources.
Some growth firms (16 percent) employ one or more outside contractors or consultants to collect competitive information. Where used, growth firms say these outside services provide about 30 percent of total competitor intelligence.
PROTECTING THEIR OWN COMPANY’S BUSINESS INFORMATION
The security guidelines for privileged information are written into contracts with management in 56 percent of "Trendsetter" growth companies, or nearly four-fifths of those having a formal internal policy. Also, three-fifths (61 percent) of "Trendsetter" growth companies require noncompete agreements from key management, a practice that goes beyond internal privileged information policies.
"It is vital," notes Auxier, "that growth companies protect their key business information assets, primarily among present employees, but also from disclosure by former employees."
Few growth company CEOs (11 percent) admit to having "selectively monitored" any of their key employee communications — letters, e-mail, faxes or phone calls — when concerned about information leaks. Almost all (92 percent) of those firms that have monitored employee communications have information protection policies in place, or have noncompete agreements (88 percent), so that monitoring is an integral part of the policy or agreement.
About the Writer. One of the world’s leading professional services firms, Coopers and Lybrand L.L.P. offers its clients the expertise of more than 16,000 professionals and staff in offices located in 100 U.S. cities and, through the member firms of Coopers & Lybrand International [now PricewaterhouseCoopers], more than 70,000 people in 125 countries worldwide. To learn more, visit their Web site at http://www.pwcglobal.com/us/. This article originally appeared in the Summer 1996 issue of Entrepreneurial Edge.
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