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Howard's End: Competitive Intelligence

The recent grounding on safety issues of 10 Ansett Australia Boeing 767's, owned by Air NZ, could likely have been avoided if Ansett had perhaps spent around $50,000 in the past year. John Howard writes.

What do companies like Kellogg’s, IBM, Du Pont, Shell Oil, Johnson & Johnson, 3M and PricewaterhouseCoopers have in common?

They all use risk managers to watch for danger signals and new opportunities that appear on the radar screen.

It's known as competitive intelligence and the most sought after of these corporate snoops are older experienced journalists with research and analytical skills who enjoy the labourious task of sifting through a sometimes huge mountain of published information and asking the right questions on behalf of their corporate bosses.

But this is more than just a news clipping service. This is intelligence gathering, analysis and report writing, which is becoming more and more vital to the success or failure of anyone doing business in the global economy. It's not seen as spying because most of the information gathered is already in the public arena.

It all came about because the dangers surrounding company mergers, acquisitions, and take-overs along with nervous and volatile markets who react to even a small snippet of adverse company information, means a wrong or uninformed company decision can cost shareholders dearly or even threaten the very existence of a company.

As they say - "knowledge is power but ignorance punishes."

For example, imagine how different things might have been now if Air NZ, when purchasing Ansett Australia last year, knew that Ansett's former owners had allegedly missed two earlier Boeing directives to check for structural defects in the Boeing 767's - one issued three years ago, the other issued in March last year before the Air NZ buyout.

Do you think that knowledge might have made a difference to Air NZ and the depth of the hole in which it now finds itself? Or to the price it paid for Ansett Australia?

Clearly, information like this would have been vital competitive intelligence for Air NZ to have had in its possession.

Imagine further, if Air NZ knew at the time of purchase that the Australian Civil Aviation Safety Authority (CASA) had failed to properly oversee maintenance directives to Ansett and had missed those directives.

Would that have made a difference to the substance of the buyout deal?

That is the purpose of competitive intelligence risk managers in a global trading environment - to find and report and, in Air NZ's case in buying an overseas company, it seems a small price to pay.

Chief Executive of Air NZ and Ansett Australia, Gary Toomey, says they raised many of the maintenance checking issues with CASA back in December and it also says it will do what is required to retain its air operators certificate. It has also been accused of understaffing and although it plans to recruit another 200 or 300 engineers they seem more to cope with a growing fleet rather than any concession that Ansett was understaffed.

Australian Prime Minister, John Howard, in now answering criticism of CASA says, " They're Ansett is the primary responsibility of Ansett to make sure that its planes are safe, and no amount of comment about what CASA should have done or shouldn't have done can alter the fact that Ansett were given notifications to do things. They failed to do so."

But a report by CASA's audit branch found it no longer properly monitored airline safety compliance, saying records were not kept properly, key documents were missing and checklists provided to staff were little more than headings.

CASA chief, Mick Toller, and Transport Minister John Anderson, have discredited the report and Mr Howard said the report contained personal views of one individual.

The (CASA) board met and considered this report and rejected it," Mr Howard said.

But that doesn't sound reasonable behaviour for a Government organisation with the responsibility for airline (and public) safety.

In the U.S., small and large companies spend anywhere between $20,000 and $15 million a year on formal competitive intelligence programs with nearly all Fortune 500 companies having some form of unit.

Sometimes, it's as simple as checking on the opinion of a competitor to a market which might seem expensive or unprofitable and if it is to them, then cornering that market yourself.

Gathering intelligence about what a Government is up to is also important.

In one well-known case the Nutrasweet marketing department proposed an expensive advertising blitz to preserve market share when they heard that the Food & Drug Administration was about to approve a rival sweetener from Johnson & Johnson.

But the company's competitive intelligence people discovered that the approval was not about to be granted in the immediate future. That simple piece of intelligence is believed to have saved Nutrasweet almost $100 million in unnecessary advertising costs.

Although a much smaller country, there are journalists operating as competitive intelligence people in New Zealand.

Clearly, the problem in which Air NZ now finds itself is still volatile, but it also seems it may not have been entirely unforeseeable. A long and costly court case looks inevitable - a competitive intelligence risk manager would have been perhaps far cheaper in the long run.

© Scoop Media

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