A pepperoni company was in a financial fix: A rival was selling
sausages so cheap that it was taking a big bite out of profits.
How to sniff out the problem? The company hired Fuld & Co. of
Cambridge, Mass., a consulting firm specializing in competitive
intelligence (CI), to find out why the other firm could keep prices
Firms like Fuld are part of a fast-growing CI industry, which
does its sleuthing using everything from computer searches of news
reports to hobnobbing at trade shows, plus lots of analysis.
"We don't live in the age of information. We now live in the age
of intelligence," says CI expert Larry Kahaner.
So how did the pepperoni problem get sliced?
"This was one of our favorite cases," says Michael Sandman,
senior vice president of Fuld. He toured the plant of his client -
call it Company A - "and the powerful, pleasant smell will never
leave my brain," he says.
After meats and spices are mixed and stuffed to make pepperoni,
the links must hang for 30 days to cure. "It is not cooked. It
cures in the way yogurt ferments by a bacterium," Mr. Sandman
explains. This plant produces 10 million pounds of the stuff a
year, so a space the size of an airplane hanger was needed to cure
Sticking it to the competition
Sandman and another analyst then visited the town hall in the
home town of the target company, the other pepperoni firm. They got
the building inspector to show them the building plans of the
structure used by Company B and found it was much smaller than
Company A's, though Company B also produced about 60 million pounds
of pepperoni a year. They found from the building plans that a
certain company, located half way across the United States,
supplied unknown equipment for one corner of the plant. A
researcher in Fuld's office later found the equipment to be
Further investigation - a lot of it - turned up a little-known
trick (but not a trade secret): Warm the product to a certain
temperature early on and you can jump-start the curing process and
save two weeks in production time.
That step saved lots of storage space for Company B, accounting
for "almost all of the cost difference," Sandman says. Company A
changed its curing methods and stayed in business.
"Everything we did here was legal and ethical," Sandman claims.
Fuld is in fact known in the CI world to be a highly ethical as
well as effective firm. Its code of ethics is included in a new
book by Mr. Kahaner being published this month "Competitive
Intelligence" (Simon & Schuster). The guidelines all begin with
"Thou shalt not ..." and include no lying, bribing, planting
eavesdropping devices, or stealing trade secrets or employees. …