Competitive Intelligence

Tactical, Operational & Strategic Analysis of Markets, Competitors & Industries

n the AVC blog there's an interesting discussion in the comments of this post about the merits of open information sharing versus the competitive advantages of secrecy. To put this in context the author of the AVC blog runs a venture capital firm that's portfolio is concentrated on what most would call "Web 2.0" companies, so a lot of the businesses he invests in thrive on the open flow of information. That said, the comments contain a nice discussion of the various considerations of the balance between open information sharing and secrecy.

My favorite comment pointed to a case about Lego asking for suggestions from their user community, a Lego fan blog putting out that call, fan's submitting suggestions via comment on the blog and then Lego asking them to use a form on their site to submit suggestions so that competitors couldn't steal the ideas. Lego's stance is understandable, but an interesting follow up question is this: Let's say that Lego's fans preferred, strongly, to post suggestions to their favorite fan blog so that they could have discussions with other fans and maybe even collaborate on and improve their ideas. Is it more beneficial for Lego to risk competitors seeing the ideas in return for getting more and potentially better suggestions via fan collaboration, or is it preferable for fans/customers to submit ideas in isolation even if it means fewer, potentially weaker suggestions?

This was cross-posted at the site.

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This is a really cool polemic. I've been wrestling internally with the ramifications of secrecy/openness for sometime, and this Lego is a good case study. Perhaps social media can outflank slow, hierarchical structures for intelligence gathering, software projects, design, and some types of journalism. Surely, though, there's a place for cleverness and the element of surprise. You want to be open, but not too open.

I predict that companies will never want to be completely open with their decision making processes, no matter how much Webs 2, 3, 4, and 5.0 take hold. In a turbulent market, sometimes only one company will be left standing. Let's say you have four companies in a space, all of them losing money. The last company in the market will profit, but not until all other competitors have left. So who moves first? Keeping that kind of information secret ("We're closing 150 stores next month!") is surely going to have its uses. Gandhi said that secrecy was the enemy of freedom, but it's still bidness.

That said, the legendary American football coach Vince Lombardi said of his Green Bay Packers, "We only have four plays. I can tell you what they are in advance. You still can't stop us." In a world of total information openness, this may be the attitude to take.

Now, it's time for me to play with my Indiana Jones Legos!


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