Big companies have it easy when it comes to gathering and utilizing competitive intelligence. They have a defined brand and a fairly clear picture of market penetration, differentiators, and existing products and services.
Start-ups, especially high-tech ones, typically don’t have the same luxury. But competitive intelligence – data gleaned from mostly public sources and analyzed for patterns, trends, and positioning – is important for investors and shareholders, customers, and employees (from business development to product to customer service). It tells investors why you might succeed in this particular market or in creating a new one – and who could come nipping at your heels. It can also help you outflank savvy competitors and acquire more market share. Failing to utilize it can be highly detrimental for budding businesses. So where do the underdogs begin?
Start by creating a competitive intel repository and committing to its maintenance. This can be embedded in a company’s culture during its infancy (though it’s never too late if a business is already well underway). It can be as simple as a shared file on Google Docs or Sharepoint, or a company-developed wiki. House all your information there as a living document, and over time, trends and patterns will become apparent. To make this data useful, designate someone at the company to take control of competitive intelligence. If you make competitive intelligence everyone’s responsibility, it will be forgotten. Wise companies appoint a centralized curator of competitive intel, who updates the repository and keeps everyone else informed.
Start-ups must also know what to put on their competitive intelligence radars. Here’s how to size up the competition:
Be skeptical of company websites. It’s a common mistake to look at a competitor’s website, see the same buzzwords, and assume the business is already doing what you’re working toward. But understand that a competitor’s site may not reflect what they actually do, what they intend to do, or what they’re capable of doing. Take the information with a grain of salt and dig deeper.
Identify investors and boards. Board members typically align with the VCs that funded the company (though not always), and prominent investors often have reputations that precede them – some only do angel investing, some prefer early to mid-stage companies, and others only hitch their wagons to a late-stage star. Their profiles may be a reliable indicator of where a company is in its cycle – and how seriously you should take them. It also helps to see if a company has disclosed how much funding it raised.
Know who their employees are. Sources like LinkedIn make it easy to understand the composition of a rival. The number of employees can imply the likelihood of profitability, indicate cash utilization, or give a sense of allocated capital. You can see ages, experience levels, educational backgrounds, and so on. The ratio of current to former employees is also telling – evidence of high turnover may reveal something about a company’s management style or stability.
Note the geography. Identify where clusters of employees are located. Does the company have a 15-person workforce in as many locations? That could signify a virtual setup or a lack of maturity. Do you see a company’s sales and customer service folks in the Midwest, while its engineers are clustered in Silicon Valley? Do they have a team overseas, say, in India? These data points can help you assess competitors’ maturity, speed, agility, and burn.
Use social media. You may get a fingertip sense of market penetration by checking out an opponent’s social media channels. Learn how they’re positioning themselves on Twitter and if they’re blogging on LinkedIn. A large follower base shows people are taking notice of them – but even a small number of followers can be revealing once you dig into the composition. Are influential journalists and bloggers part of their following?
Don’t forget traditional media. If a start-up makes the news, it’s doing something intriguing. Stories may give a sense of a company’s strength – if a new product has a lot of buzz, if it has the ability to rapidly transform itself in response to market feedback. Listening to the spokesperson gives you insight into how they’re positioning. What are the talking points they use? What seems to be the primary focus?
Study the leadership team. Where did those leaders go to school? Where else have they worked? Does the CEO have experience starting companies? Have multiple team members worked together before? Most start-ups fail, but if a team has experience working together and creating a product, that maturity can take it further.
Start-ups can – and should – mine competitive intelligence to refine their understanding of the market and customers, consider new product directions, and outmaneuver potential rivals.