Environmental Scanning in Action in US Corporations

AT&T

AT&T's environmental scanning function is divided into three services: an electronic directory of experts; an intelligence database; and a competitive analysis group (Sutton 1988, 1989; Teitelbaum 1992). The online experts directory, known as AAA (Access to AT&T Analysts), is used to connect together technical experts, intelligence analysts, and users seeking information. Staff are invited to fill out questionnaires detailing their areas of expertise. Users enter keywords describing a topic of interest and get a list of company experts including their job titles, electronic mail addresses, and telephone numbers. By spreading the net as widely as possible, the best information can sometimes be found in unexpected places. Stark recalls how two maintenance workers who had signed up for the AAA program proved to be the best sources when a team designing a home-alarm feature needed information on fire codes. The network also serves as a broadcast medium for disseminating significant news by electronic mail. Thus, someone who has just picked up information on a topic (such as a competitor) can use the network to send a message to everyone who has previously expressed interest in that competitor.

In 1993, the AAA network was still operative, with several hundred subscribers (Gilad 1994). The intelligence database has three components: a market database, a financial database, and a competitive digest. In the online market database, users can find information on 1,400 products, 580 companies, 180 industries, and 65 geographic areas, as well as five-year product market forecasts prepared by the business units themselves. Data are gathered and input by employees in the various business units. Updated news from the database may be routed to users based on keywords they have given in their profiles.

According to Blaine Davis, corporate vice president, strategic and marketing planning,

The members of the network chose to collect this information and to make it available. ... The network includes both hourly employees and executive level employees at 110 company locations worldwide. Their functional titles range all the way from strategic planning to product and market management, competitive analysis, engineering, administration, manufacturing, service, development, market research, library services, and training. We average about 110 to 120 log-ins per month, from 50 to 60 users. Those log-ins produce roughly 500 queries. (Davis, quoted in Sutton 1988, p.22.)

Although the network is centrally administered by the corporate planning department, each business unit collects its own data, and the 800 users are encouraged to exchange information with each other. In effect, the network is being used to share and synergize the competitive analysis work that is going on in parallel among the various business units. Martin Stark, competitive information and analysis manager, illustrates:

For example, one of our competitors is Northern Telecom, and several of our units keep track of that company. The switching group looks at Northern Telecom, and so does the PBX group. We try to get those groups working together, sharing information. We also try to find out what kinds of studies they're doing so that when we have a question we're in a position to respond without doing extra work. That's what we mean by "distributed" information. (Stark, quoted in Sutton 1988, p.23.)

The financial database reconciles standards and conventions used across the globe, cleaning up and consolidating the data so that users may retrieve meaningful financial data according to accounts, companies, ratios or years. Finally, the competitive digest is based on published news from all over the world. A unit translates these clippings into daily reports which include strategic impact statements prepared by internal experts on the news items. The digest and impact statements are sent to senior managers, and are then systematically archived to facilitate future access and retrieval. The third set of services is provided by the central competitive analysis group. The group coordinates the scanning that is done by the various business units, initiates the distribution of intelligence reports from the business units, and responds to information requests.

From our sketch of the scanning and intelligence function in AT&T, we can discern some of the features that we derived in our discussion of the human visual-perception system:

Motorola

Motorola's strategic intelligence system was initiated by its chairman and chief executive officer, Bob Galvin, who had become convinced of the need for such a program after serving on the US President's Foreign Intelligence Advisory Board during the 1970s. To develop the system, he hired Jan Herring, a professional intelligence officer who had worked 20 years with the Central Intelligence Agency. Herring explains the final design for the system thus:

The design is best described as an intelligence community, where there is a clear division of responsibility between the corporate intelligence office and the operational divisions Ñ each organization contributing its part to make up the whole system. Only the intelligence database would be centralized. But because Motorola has a superb worldwide communications network, with some 5,000 electronic mail terminals, all intelligence collectors and users would be able to access the database. ... One of the major objectives in any intelligence system is to create a sharing culture in the company. Being able to come online and read information that others have put in is an incentive to contribute. Then it becomes a self-sustaining database. (Herring, quoted in Sutton 1988, p.10, 28.)

The division of labor worked out as follows. The corporate intelligence office maintained the central database; coordinated collection and served as the clearing house for strategic intelligence reporting; lead the corporate-wide analysis projects; and supported the operational divisions' intelligence activities.

The operating divisions, on the other hand, ran their own operational or tactical intelligence collection; performed division-level analysis; and supported corporate collection and analysis efforts.

From the start, the corporate office was dedicated to serving the information needs of top management only, both the corporate and the operational. A high-level policy committee, comprising all group vice presidents and chiefs of headquarters functions, assigns intelligence priorities to the unit. The staff of the corporate office are highly trained, some with both intelligence and business experience, and they analyze the information collected to arrive at and recommend alternative courses of action.

Strong emphasis is placed on foreign intelligence. Motorola is one of the few US companies that systematically monitors technology developments in Japan, making large investments in obtaining technical literature, learning the language, and developing long-term relationships with Japanese researchers and organizations. The payoff? Here's an account put together by Gilad from open sources:

During a meeting in 1985 between Motorola's top management and its European managers, top executives queried the European people about the Japanese in Europe. The Motorola-Europe guys were not impressed. They reported that the Japanese were not really that aggressive in Europe. That did not fit with the character of Motorola's Japanese rivals. Motorola then sent a Japanese-speaking intelligence analyst to Japan to dig out information on the Japanese competitors'capital budgets. After researching for a while, the manager turned out the numbers. They showed that the Japanese planned to double their total capital investment in 1987, but in not in their TV and VCR factories, as everyone expected. Instead, they were going after the semiconductor market in Europe. Based on that information, Motorola changed its strategy: it aligned several European partners and worked closely with customers. Despite the Japanese attack, Motorola either retained or increased its market share. (Gilad 1994, p.126)

The common element of the environmental scanning systems in AT&T and Motorola is a distributed network of specialists who are called upon to participate in information scanning and analysis. Several teams or subunits monitor different issues in parallel. A central office integrates the processed intelligence and undertakes strategic, corporate-level analysis. The network of experts need not require computer-based communications. For example, Kraft Inc identifies a network of competitively knowledgeable employees throughout the firm, each with a specialty, by asking department and division heads for nominations. They are 30 or 40 people, generally middle managers, from all functional areas, including manufacturing, operations, R&D, and marketing. They scan selected journals, newspapers and magazines; send clippings for the research analysts; and create a browse list of articles for mangers that include two-sentence summaries and estimated reading times.

Or consider General Mills. According to Smith and Prescott (1987), General Mills trained all members of the organization to recognize and collect information of potential competitive interest. The analysis of the collected information was highly distributed Ñ internal focus groups were formed periodically to discuss issues such as the changing industry climate, and competitors'strategies and success factors. Participants in the focus groups were drawn from various functional areas to ensure a diversity of background and specialization.

General Motors, Eastman Kodak, and other Fortune 500 Companies

By comparing the competitor analysis systems of General Motors, Eastman Kodak, and British Petroleum, Ghoshal and Westney (1991) found that all three corporations adopt a dispersed and interconnected system rather than a single analysis unit. Each firm had formal, multi-member analysis units at the corporate level, and additional units or specialized individual analysts at the group and business unit levels. Analysis was also linked to specific functional areas, so that, for example, the R&D organization had its own formal analysis unit monitoring technology and product development. In order to integrate the activities of such a dispersed system, the three firms use a mix of coordination mechanisms, including special project teams, ongoing competitor assessment teams, joint theme-related presentations, and support groups.

All three companies formed project teams comprising people from all over the corporation who had particular expertise to focus on a particular issue or competitor. Ongoing competitor assessment teams also drew members from all over the corporation, but they were given the task of tracking a single issue or competitor continuously over time. From time to time, joint presentations were organized around a specified theme or competitor. Analysts from various parts of the organization presented their own views of the issue, with little or no prior coordination, thus stimulating debate and discussion. Finally, the support groups did not do any analysis, but brought together specialists from all over the company to exchange information, share expertise, and jointly deal with problems such as competing definitions.