In competitive markets, not knowing what your industry competitors are doing or planning to do, or finding out too late, puts you at a major disadvantage.
Every day, they’re making decisions that could directly affect your revenue and market position. Their activity could include changes to their product roadmaps, marketing, pricing, sales strategy, recruitment and more.
It’s no wonder then that 90% of Fortune 500 companies are gathering competitive intelligence.
Every day, there’s a wealth of information being published online about or by your competitors along with evidence of how successful their activities are. Those able to gather, analyse and use it in their decision-making process can gain the competitive advantage they need to survive or thrive in the market.
But how ethical is competitive intelligence? Are some processes or types of competitive intelligence more or less ethical than others? In this article, we’ll take a closer look at what is meant by ‘ethical competitive intelligence’, the line organisations shouldn’t cross and the process of getting it right.
What Is Competitive Intelligence?
Competitive intelligence refers to insights about your competitors and the competitive landscape in which you operate. The insights are produced by tracking, gathering and analysing data.
In most cases, the term refers to data collected via online sources using competitive intelligence software. But, as we’ll explore in this article, it has been used to refer to intelligence gathered through other means, which is often where questions of ethics and legality are brought into question.
While most organisations gather some form of competitive data, only 12% of it is analysed. Competitive intelligence refers specifically to the analysed data. Competitive intelligence is used by organisations to make smarter strategic decisions in order to protect and grow their revenue.
The Essence Of Ethical Competitive Intelligence
Based on the definition above, competitive intelligence can be considered both ethical and legal. The competitor and market tracking process used to gather intelligence involves taking data that already exists in the public domain.
The ethical aspect comes into play when we consider the means of obtaining this intelligence. It becomes more complicated, for example, when organisations invest in private investigators or consultants to unearth information that is harder to source.
While this is still legal, the Strategic Consortium of Intelligence Professionals (SCIP) indicates that the activity should “follow your firm’s corporate code of conduct, the SCIP Code, and all applicable local laws.”
Even if this activity crosses an ethical line, it may still be legal. Illegal competitive intelligence tends to refer activities, such as industrial espionage. In the next section, we’ll outline the difference between unethical and illegal activity.
Unethical Competitive Intelligence
Unethical competitive intelligence refers to the practices of gathering information about competitors that go beyond the boundaries of what is legally and morally acceptable. It involves methods that disrespect privacy, infringe upon copyrights, and violate intellectual property rights. Unethical competitive intelligence can take various forms:
Industrial espionage or corporate espionage is different from the solely unethical examples given above. It is regarded as “the illegal and unethical theft of business trade secrets for use by a competitor to achieve a competitive advantage.” It may involve spying on individuals, offering bribes, cyber attacks or hiring competitor employees to share confidential information.
The damage associated with industrial espionage is considerable: it’s estimated to cost the US economy up to 3% of annual GDP and over $500bn, not to mention millions of jobs. That’s because it weakens entire sectors of the economy, as opposed to just one company. This type of behaviour is both illegal and unethical and can carry major penalties for those involved if caught.
This can include pretending to be a client, jobseeker or trusted party to obtain inside information for commercial gain. Or companies posting job adverts for roles they have no intention of filling to prise information from applicants about their current employer.
While not illegal in most parts of the world, the deceitful nature of the activity points to a lack of ethics and fairness. There is no legal precedent for not doing it. It is purely down to the moral compass and code of conduct of the company.
Offering money or other incentives to someone within a competing organisation or a state institution to gain confidential information is a form of corruption and is highly unethical.
The Importance Of Ethical Competitive Intelligence
Engaging in unethical competitive intelligence practices can lead to serious consequences, including legal penalties and even business failure.
It’s important to conduct competitive intelligence that’s ethical and compliant with national laws. This includes sourcing information only from publicly available resources and conducting business in a transparent manner.
Ethical competitive intelligence ensures credibility, trust among stakeholders, maintains a company’s reputation while still providing valuable insights.
Companies can get away with unethical practices, though not illegal activities, for commercial gains. However, this may have other consequences and organisations need to take into consideration the negative implications:
1. Undermining company’s internal culture
61% of employees cite trust in and with senior management as important to their satisfaction, while 88% believe a strong company culture is key to business success. More than ever before, employees value the importance of ethical business practices. The Ethics.org report on ethics and compliance in 2020 found around 8 in 10 employees worldwide now report misconduct when they encounter it in a business environment.
From damaging employee happiness and productivity to driving good people out of the business, unethical behaviour is no longer tolerated. By contrast, companies with a highly engaged workforce have a 21% higher profitability.
2. Weaken company’s brand reputation
Morals and values aren’t just important to employees: 56 percent of US consumers would stop buying from companies they believe are unethical. Furthermore, as little as four negative online articles about a company could equate to up to 70% of business being lost. Participating in unethical behvaiour might yield short-term commercial gains, but might actually result in more serious deep-seated problems for an organisation long-term, if they’re caught.
Developing an Ethical Competitive Intelligence Framework
To ensure your competitive intelligence activities are ethical, it’s beneficial to develop a comprehensive framework.
This framework should be clearly communicated and understood by all employees within the organisation. Here are the key steps involved in building an ethical competitive intelligence framework:
Policy formation: Formulate clear policies on ethical competitive intelligence and define what’s permissible and not.
Training: Conduct regular training sessions to ensure employees understand the ethical guidelines.
Oversight: Establish a monitoring system to ensure adherence to the guidelines.
Review and Update: Regularly review and update the policy to reflect changes in laws, regulations, and business environment.
Building An Effective Ethical Competitive Intelligence Strategy
If you’re not building and utilising an ethical competitive intelligence strategy, it may be time for a new approach.
Here are 4 important considerations to getting it right:
1) What’s your organisation’s objectives?
Depending on the size of your organisation, your goals might be focused on a specific challenge (e.g. winning the talent market, closing the gap on the market leader, becoming the authority on a particular industry topic or regulatory change, etc.).
Or much broader, such as building a clearer picture of the competitive landscape as a whole and making stronger decisions across sales, marketing, product development and more. Being clear on what you want to achieve from your competitive intelligence is vital for guiding your entire approach and ensuring it delivers ROI.
2) What will you track?
Ethical competitive intelligence is about gathering data that already exists in the public domain. That offers a world of possibilities, so use your goals to shape the parameters of your strategy.
That could be specific metrics you need to track, such as which competitors are doing best on social media or offer the most competitive pricing. Or it could gather specific details on things like competitor product developments, website changes or marketing campaigns.
Next, identify the competitors and sources you intend to track. Depending on your metrics, you may want to monitor your competitors’ websites, blogs and social platforms alongside independent industry sources like newspapers, event organisers and regulatory bodies.
3) What resources will you need?
If setting up and running an ethical competitive intelligence programme seems like a daunting task, you’re in luck. The process has been streamlined thanks to sophisticated, often AI-powered, competitive intelligence software tools.
Some tools will provide dedicated market analysts to manage the set-up process, taking most, if not all, of the process off your plate. Most will then automate the tracking process and offer comprehensive market coverage. As well as saving your team time in manually monitoring what’s happening, they ensure all relevant news or competitive activity is being captured. I.e. Nothing important is missed.
What you’re left with at this stage is raw, but comprehensive data. This is again where the role of a market analyst is valuable. They cut through the noise to populate your dashboard with the most relevant and useful competitive intelligence. They’ll extrapolate the collated data to turn it into something just as valuable as intelligence that’s sourced through unethical or illegal means.
In short, you get powerful, ethical competitive intelligence ready to share with the right stakeholders across your organisation with minimal effort or resources besides the price of the software. The insights are focused on your goals, helping your organisation make better strategic decisions.
4) How will you use your ethical competitive intelligence?
Before your organisation can use its intelligence, you need to be able to share it efficiently and effectively. Having everyone access the dashboard is often impractical and offers little control to those managing the account.
Thankfully, the best competitive intelligence tools do the hard work for you. They offer effortless integration with the communication and data visualisation tools you already use as an organisation. The familiarity of those tools will make it easier for people to consume and use the insights they receive.
You can also turn your insights into one-off or periodic reports and presentations to share your competitive intelligence with other people in the organisation, including the board of directors.
But to get the most value from your competitive intelligence investment, you may need to seek feedback from department leaders on how they’ve used the data to make informed, strategic decisions. This will not only hold people to account but should highlight the impact the intelligence has had on results.
Given there is a wealth of publicly available information available for you to gather and analyse ethically, there is no need to conduct unethical practices. Even the perceived benefit that unethical activity would produce more in-depth intelligence are countered when you have an epxerienced market analyst sifting through the data to surface insights tailored to your specific goals.
As we highlighted in the opening section, competitive intelligence tools are now commonplace in most large organsiations and many smaller ones too. It is considered an ethical practice and therefore offers zero damage to your culture or brand. Combining the right software, analysts and internal processes will enable you to extract the most value from data that already exists and continues to grow.
FAQs About Ethical Competitive Intelligence
1. What is competitive intelligence?
Competitive intelligence is the process of gathering and analyzing data about your competitors to improve your own business strategies. It helps to identify market trends, assess competitors’ strengths and weaknesses, and make informed business decisions.
2. What makes competitive intelligence ethical?
Ethical competitive intelligence involves gathering data through legal and acceptable means. This includes using publicly available resources and respecting privacy, copyrights, and intellectual property rights. It strictly discourages practices like corporate espionage, deception, hacking, or any other form of unauthorised data access.
3. Why is ethical competitive intelligence important?
Ethical competitive intelligence is crucial because it safeguards a company against legal repercussions, preserves its reputation, builds trust with stakeholders, and promotes a culture of integrity. Unethical practices not only harm a company’s reputation but can also lead to significant penalties and litigation.
4. How can businesses ensure they are practicing ethical competitive intelligence?
Businesses can establish a clear policy regarding ethical competitive intelligence, provide regular training to employees, and set up oversight mechanisms to monitor compliance. Additionally, they should regularly review and update their policies to keep pace with changes in laws, regulations, and the business environment.
5. What are some ethical methods of gathering competitive intelligence?
Ethical methods of gathering competitive intelligence include reviewing publicly available sources like websites and financial reports, attending trade shows and conferences, social listening, networking within the industry, and analysing patents.
6. What are the consequences of unethical competitive intelligence?
Unethical competitive intelligence can lead to legal penalties, damage to the company’s reputation, loss of customer trust, and potential business failure. It also fosters a negative business culture that can impact employee morale and retention.
7. Is there a professional standard for ethical competitive intelligence?
Yes, the Strategic Consortium of Intelligence Professionals (SCIP) association has established a code of ethics for professionals in the field, which outlines principles for conducting competitive intelligence ethically and responsibly.