ETHICS

How Not to Learn About a Rival Company

A CEO allegedly poses as an SVP at his biggest competitor and winds up in a lawsuit.
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Leaders forced to reckon with much larger competition do themselves a great disservice by not gauging rival companies and their larger market. They do themselves a greater disservice, though, when they don't observe the boundaries of that research.

Take, for example, the story of Modell's Sporting Goods CEO Mitchell Modell. Modell, whose company operates 150 retail stores across 11 states, allegedly walked into a New Jersey location of Dick's Sporting Goods last month and told the store's manager that he was a senior vice president at Dick's, there for a scheduled meeting with the much larger chain's CEO.

A lawsuit filed by Dick's and originally reported in the New Jersey newspaper The Record alleges that Modell convinced that manager to show him confidential company records. Now, he finds himself facing a civil suit from Dick's. Meanwhile, the story is going viral as one of a CEO who has his share of tenacity and even creativity, but might be a little short on honor.

A Better Way

Modell's example clearly isn't one to follow. But conducting competitor research is your prerogative. Retailers and restaurateurs, especially, will commonly visit rivals to get a sense for how they do business. "I’ve been on tens of thousands of store visits by CEOs," Howard Davidowitz, chairman of retail consulting firm Davidowitz & Associates, told The Record, before adding of Modell's alleged antics: "This I’ve never seen."

For a more above-board approach to doing so, check out this handy tipsheet from IncAmong the suggestions:

Talk to your suppliers: Depending on how similar your operations are to your competitors, you might share suppliers--or your supplier might at least have some previous contact with the other companies. Though your suppliers probably won't give you any direct answers about one of their customers, you might be able to get a sense for how things are going if you ask vague questions.

Talk to your customers: "Whenever you win a new customer, find out who they used before, and why they switched to you (i.e. The reason they were dissatisfied with their previous supplier)," says Arthur Weiss, managing director of UK-based competitor intelligence company Aware. "Do the same when you lose a customer--identify what they preferred about your competitor."

Mind their personnel: Don't just look at who your competitors are hiring, but keep up on their job listings as well. Doing so will give you a sense for where their holes might be and what they're looking to do next.

Just ask them: Modell might have avoided a lot of embarrassment if he chose not to adopt a new personality and had simply gone into the store and asked questions about Dick's. He wouldn't necessarily have needed to identify himself, but then, it might not have even hurt if he did. After all, who doesn't like to talk a little bit of shop?

The tipsheet includes several other strategies for keeping track of your competition, and none involve going undercover.

IMAGE: Complot/Shutterstock
Last updated: Mar 4, 2014




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