Masterclass: Competitive-intelligence blueprint

An effective competitive-intelligence process will comprise a perfect mix of people, services and organization, to make a firm’s attorneys more competitive. Getting it right for your firm will mean understanding the competitive-intelligence framework and each phase of the process.

One of the most valuable things your firm can do is analyze the business issues and competitive landscape surrounding your key accounts. This analysis equips and encourages attorneys to have insightful conversations with clients and prospects about their business opportunities and evolving legal needs. When done well, the attorneys love it and a new problem is born.

The better your support teams become at delivering crisp competitive intelligence and market analysis, the more of it you will be asked to deliver. Every request-for-proposal (RFP) will require an assessment of long-term opportunity and competition. Every client team will want an up-to-date cross-selling analysis. Before every client meeting, attorneys will become accustomed to pulling up their competitive-intelligence (CI) packet; not to mention the partner meetings, industry and practice-group strategic plans, recruiting projects, public-relations opportunities, merger scenarios etc.

This is a good problem to have. It means your firm’s leaders are planning with solid market information and your attorneys are actively preparing to meet business-development opportunities with facts in hand. It means you are solidifying existing client relationships and strategically prioritizing new client pursuits. But simply collecting company information from annual reports, Hoovers or D&B is not going to cut it. You need a succinct analysis of the legal activity of companies, industries, geographic markets, attorneys and other firms. You need to be able to map evolving opportunities in high-value legal work to your firm’s ability to meet those needs. You need a Competitive Intelligence Unit.

Firms that have not formalized their CI process are scrambling to do so. At the July 2006 meeting of the American Association of Law Librarians, there was only one session dedicated to CI. The 270-seat session was packed and members of the panel launched an online community designed to help librarians get a better handle on CI. At the January 2007 Marketing Partners Forum, a half-day workshop is planned around how to organize CI operations. And earlier this year, Ark Group held a masterclass roundtable on CI, attended by both librarians and marketers. The questions addressed at all these events are no longer why we need CI or what resources to include in our portfolio – the fundamental question is how to optimally organize the CI process in our firm.

Is competitive intelligence a research role that resides in the library or an analysis role owned by marketing? What information do you need from finance to complete your analysis and what is IT’s role? The obvious answer is that the CI process must be fulfilled by a cross-functional team. But the way this cross-functional unit is organized depends on a variety of firm-specific factors including the desired outcomes for attorneys, practice-group managers and business-development professionals, along with the skill-sets, workload and priorities of existing staff. Before you outline the organizational options in your firm, it is helpful to break down the CI process into component parts and assess your needs and current capabilities.

BI, MI, CI… It's all about competitive advantage

Differing definitions of CI and the related disciplines of business intelligence (BI) and market intelligence (MI) can interfere with a firm’s ability to move forward on organizing a helpful process for attorneys. For the sake of this article, let’s put the terms on the table and recognize basic differences:

BI is the analysis of internal data, most commonly from financial systems, to provide insight into the most profitable types of firm business;
MI is an understanding of the needs and activities of organizations within the broader context of that organization’s industry, geographic markets, customer base, labor pool, finance sources etc.;
CI is the process of compiling, analyzing and sharing external data, most commonly about your ability to meet market needs compared to that of your competitors.

These definitions can be debated, but everybody agrees on one point: firms that effectively institutionalize these activities are equipped with an updated fact base that supports sound decision making and creates sustainable competitive advantage. Call it what you will, this is about organizing support units in your firm to work together in a way that enhances your competitive position. We call it competitive intelligence.

Foundations of effective CI

There are dozens of models for mapping traditional CI processes, mostly involving close-loop cycles. After talking with hundreds of firms about their CI practices, we have adapted these models to the unique needs of law firms. The traditional roles of data collection, analysis/communication are, not surprisingly, aligned with library and marketing. And the recipients of this analysis are clearly the practice-group heads, attorneys and business-development teams. In most firms, however, the critical feedback from attorneys (part of data collection) is not regularly practiced as part of the process. And finance is often out of the loop altogether.

The law firm CI cycle operates in two different ways. The first is the systematic processing of competitive intelligence. This involves the aggregation of masses of secondary data sources – such as court records, SEC filings, patent filings, news stories and basic company information. As daunting as it may sound, collecting ‘masses’ of this information is really not that hard. The difficult (and more valuable) part of the process is in the systematic analysis of the data. The second layer of the cycle incorporates the human processing of intelligence. This involves primary data sources and everything that can not be covered systematically – client interviews, custom market research, attorney input and feedback, client and competitor website analysis. For this process, the collection of the data is difficult and the analysis can at times be self-evident.

The foundations of your CI process will be based on these human and systematic resources. These are investments in talent and services. To maximize the return on these investments you need to clearly identify your specific needs and measure your current capability to meet those needs.

Capabilities checklist

The ‘CI capabilities checklist’ digs deeper into the law-firm cycle and helps further clarify the requirements of your CI process. This checklist is helpful in evaluating both systematic capability and the human resources you will assign to manage the process.

I Compiling information

Research librarians have an established expertise in finding, compiling and categorizing masses of secondary sources so that information can be quickly delivered to those who need it. Experienced librarians are broadly familiar with all the resources available to inform their clients’ questions and are intimately familiar with the sources used most often. Marketers are experienced in the creation and compilation of many of the primary sources required for the CI process.

To meet the needs of the CI process, information professionals and marketers need to evaluate their resources on three dimensions:

Information source: Where is this information coming from and what is the degree of authority? Is it based on objective fact or individual impressions? For example, when collecting case or docket information surrounding a specific client or industry, the nature-of-suit (NOS) codes provide limited definition of matter types and the codes are not uniformly applied by docket clerks in all jurisdictions. The matter type of decided cases, however, can be identified with great accuracy using established taxonomies.
Information depth: How much detail is available from this information? Do the source documents contain the individual data elements we want to collect for further analysis? For example, when analyzing patent filings, do the source documents always include the name of the attorney AND the firm representing the applicant?
Information breadth: How thoroughly do these sources cover the waterfront of our particular business? For example, when collecting information about the litigation activity of a client, can you have visibility of the jurisdictions in which that company is active?

Collection of the right types of information is the pre-requisite to the CI process. Certain types of data – such as basic company information and news – have become so commoditized that they do not equip your firm to have any competitive advantage. That does not mean you can do without it. But this is simply table stakes to most firms. Advantage comes with a sophisticated analysis and understanding of the legal needs of a company and the industry in which that company operates.

II Analytic ability

The analysis phase is typically where the library hands off to the marketing department and a new set of capabilities are required. These can be broken down into four areas and should be evaluated in terms of the time it takes your people or systems to conduct the analysis:

Filter – how many controls do you have to refine the precise sorts of information you want to analyze? It is different from ‘search’ options, as filtering is the analytic ability to move in and out of the depths of information that have been collected. For example, when assessing M&A activities, can you focus on deals over a certain dollar value, in specific industries and in different parts of the country? Then reframe the question to identify the law firms or attorneys associated to those deals? When analyzing data like this, each answer revealed can often generate
a new question;
Combine– how to combine data to create custom analysis groups. For example, when conducting industry assessments, can you group companies from different industries such as ‘agriculture/energy’ that meaningfully map new realities of a dynamic marketplace? Can your systems hypothetically ‘merge’ two or more firms together to create a view of the combined firms’ market penetration by practice group, industry, geography etc.?
Compare – how easily can you compare data across any dimension? For example, this might be year-over-year analysis to plot trends affecting a company, or side-by-side market analysis to compare office-expansion options. Your CI process needs the agility to compare industry-to-industry, company-to-company, firm-to-firm and attorney-to-attorney;
Interpret – how adept is your team at interpreting analysis into key findings? While some systematic services produce analysis that needs no further interpretation, the human factor plays heavily into this capability. While your attorneys are the ultimate authority on interpreting findings into action on any legal matter, members of your CI Unit must be empowered to pose conclusions based on their analysis of market-related facts. Finding the right people to do this is the trick.

III Communication and workflow integration

Unless you are providing a due-diligence report for a corporate acquisition, delivering a five-inch thick binder is actually counter-productive. Calculate the time and resources that went into that binder that few people will read. Communicating actionable CI to busy attorneys is the art of integrating the analyzed information into the everyday workflows of the firm.

Packaging: How do you define the standard formats of regularly produced reports so that attorneys can quickly process the findings? There will be different formats required for different parts of the workflow: RFP and opportunity assessment; client-team and practice-group meetings; client meetings etc. A succinct statement of the interpreted analysis should always lead the executive summary page of every report. This is a human part of the process and it requires tight writing skills. The supporting data that follows should be highlighted or graphically depicted to underscore your interpretation. Because each package should be developed so that it can be printed and distributed electronically, additional formatting skills are required by your service providers and internal team.
Technical: How easily can CI about specific clients, industries and competition be integrated into your firm’s client-portal pages, CRM or other firm-wide systems? More than simply technical packaging, integration requires the combination of external CI and MI with internal BI. For example, can the analysis that defines your most profitable clients be easily combined with an assessment of competitive threats that put that account at risk? Of course, this assumes that your attorneys use the firm-wide systems. It is a chicken/egg scenario – over time, your attorneys are more likely to use the systems that provide quick access to valuable client analysis, succinctly summarized, with direct links to supporting detail.
Cultural: What are the best ways to introduce the CI team and process to all attorneys in the firm? An attorney that receives concise CI analysis along with the basic company information prior to a client meeting will rightfully come to expect this internal service in the future. Some
will expect a lot more. It is critical to manage these expectations. For the firm-wide process to pay broad dividends, attorneys must be formally introduced to the CI Unit and process. The goals of this internal roll-out are to learn how to request information and analysis, become familiar with internally generated reports, understand the types of follow-up analysis the firm is able to quickly provide and understand that there are limits to the amount of light that can be shed on certain issues.

Getting ahead of the curve

Firms that have fully organized their CI process and effectively integrated CI into attorney workflows are rare – it requires investments in people, services and organization. But those firms that have built out their CI capabilities are way ahead of the curve in terms of providing a competitive advantage for their attorneys. Their key client teams are better equipped to grow revenue, their business-development teams can better address new opportunities and the firm leadership teams can make strategic decisions with a solid fact base.

Once equipped, the incorporation of CI analysis becomes an everyday activity in large firms. And that is the very good problem to have.

Building a CI Unit at your firm

There is no one right way to build a CI Unit, but there are plenty of wrong ways to do it. To figure out the right approach in your firm, you need to answer these questions:

Do you serve CI needs with existing staff?
Should this process be owned by the library or marketing?
Have we evaluated individual talents and workload of existing staff?
How much of existing staff time is dedicated to the function?
Do we create a dedicated CI position?
To whom does this position report?
Does this person become ‘liaison’ between existing departments and teams?
What are the skill-sets to look for in this person?
Do you create a cross-functional ‘CI Unit’?
Who is on the CI team: marketing, library, finance, IT?
Will the team leader be an attorney?
What is the priority of CI work for team members?
How are individual CI responsibilities divided among team members?
How do you roll-out the CI process to the firm?
What are the standard CI deliverables available to attorneys?
How do attorneys initiate CI requests?
How do we prioritize and support extraordinary requests?
How do we best integrate CI into existing firm infrastructure?

Doug Hoover is director of strategic marketing for the Business of Law segment at Thomson West. He advises large law firms on the implementation of market/competitive-intelligence systems and on the practical application of CI in everyday firm operations. He can be reached at doug.hoover@thomson.com.