Tracing the origins of competitive intelligence throughout

history
Tracing the origins of competitive intelligence throughout
history

Authors:

Ariff Syah Juhari

PhD Candidate
Department of Information Science
Loughborough University
Loughborough
Leicestershire LE11 3TU
United Kingdom
e-mail: a.s.juhari@lboro.ac.uk

Dr. Derek Stephens

Senior Lecturer
Department of Information Science
Loughborough University
Leicestershire LE11 3TU
United Kingdom
e-mail: d.p.stephens@lboro.ac.uk

2
 Tracing the origins of competitive intelligence throughout
history

Ariff S. Juhari

Dr. Derek Stephens

Department of Information Science,

Loughborough University,

Loughborough,

Leicestershire LE11 3TU.

United Kingdom

Abstract:
As it is for many schools of thought, the foundation or basis for most disciplines is
usually found in its history, its origins. As Competitive Intelligence (CI) is already
becoming a separate discipline, it is important for CI scholars and thinkers to look
back to historical incidences, as there may have been many partly ancient
processes that have inspired the notion of the need for the intelligence process to
be applied within the realms of commerce, and within these records may be the
answers to today’s challenges in CI. This paper presents an overview of
incidences in history about the practices of intelligence and its beginnings in its
employment in business and the economy, guided by a timeline of global
incidences from circa 1000 B.C. to the 2000s.

Keywords:
Competition, competitive intelligence, information process, intelligence.

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Introduction

Competitive Intelligence (CI) is often viewed or regarded as a

relatively new discipline. Fuld and several other American authors have

been popularly attributed or credited as the ‘founders’ and ‘advocators’ of

CI. However, CI is not a recent phenomenon in either business practice or

scholarship (Fleisher and Bensoussan, 2002, p. 9).

The employment of competitive intelligence as a concept can be

correlated and derived from a seemingly inexhaustive list of sources,

hence, its employment may be traced to a long and winding history.

Techniques that have been used by intelligence agents in the past and

ancient military strategists in serving past governments and economies,

ancient kingdoms and empires, are valuable references in providing a

more retrospective overview of CI as a discipline. As it is for many schools

of thought, the foundation or basis for most disciplines is usually found in

its history, its origins. Therefore, it is important for CI scholars and thinkers

to look back to historical incidences, as there may have been many

ancient processes that have inspired the notion of the need for the

intelligence process to be applied within the realms of commerce, and

within these records may be some of the answers to today’s challenges in

CI. Although some literature have mentions of the origins of competitive

intelligence being placed way back in history, from the years of

government intelligence activities to the inspirations from the military

doctrines of Sun Tzu, there have not been any extensive studies on the

historical origins of competitive intelligence. Hence, this paper presents an

overview of incidences in history from all over the world about the

practices of intelligence and its beginnings in its employment in business

4
and the economy. The authors present a timeline of global incidences

from circa 1000 B.C. to the 2000s. This acts as the beginning of a study to

trace the origins and evolution of CI with a purpose to expand CI as a

discipline, just as other disciplines have justified their existence from the

greater past.

Competitive Intelligence: Revolution or Evolution?

John Prescott (1995), former president of the Society of Competitive

Intelligence Professionals (SCIP), wrote one of the first modern insights

into the evolution of CI. He identified three stages of CI development and

contended that stage one occurred during the 1960’s and 1970s. He

defined CI activities at this time as being mostly associated with data

gathering, and that they were informal and tactical. He explained that CI

was poorly linked to decision-making and involved little analysis (Prescott

and Gibbons, 1995). Prescott’s second stage of CI Development was

defined as CI activities in the 1980s when competitor and industry analysis

became popular. According to him, competitive intelligence personnel

switched from library functions to marketing and planning functions. He

explained that competitive intelligence activities remained tactically

oriented whereby the spy image began to evolve, and there was very little

by way of quantitative data analysis (Prescott and Gibbons, 1995). The

third stage of Prescott’s CI Development that began in the 1990s, showed

CI contributing to strategic decision-making that was built into dedicated

formal units, either on their own or within their marketing or planning.

Since then, competitive intelligence activities have been oriented to both

tactical and strategic decision-making and include qualitative and

5
quantitative analysis. Competitive intelligence receives moderate

attention from top management and is often a valuable contributor to

strategic decision-making (Prescott and Gibbons, 1995). However, an

overview of historical incidences later in the article should prove

otherwise.

CI as it is known today is actually an amalgam of disciplines.

Historical records reveal the important role that intelligence has played in

the history of countries (Underwood, 2002, p. 14). Accordingly, CI evolved

from developments in economics, marketing, military theory, information

science, and strategic management (Helms, Etkins, and Morris, 2000;

Prescott and Miller, 2001, p. xi; West, 2001, p. 4; Fuld, 1985, p. 10; Kelley,

1968, p. 1). The interrelation and cross dependency of those

developments have shaped the way CI has been adapted and customised.

In addition, some argue that CI had its genesis in religious texts (Walle,

2001, p. 10). Some say that it was derived from warfare (West, 2001, p.

10). As such, CI has been and can be approached from many angles; an

information theory angle; a military analogy viewpoint, an experimental

approach; as a problem in organizational theory and decision-making; or

from a down-to-earth procedural point of view (Kelley, 1968, p. ix).

In tracing the origins of CI, it is now obvious that the concept of CI

did not suddenly come into being as an effective modern tool in

strategizing the modus operandi of organizations. The very idea of CI and

its terminology, as incidences in history throughout the world will prove,

has been around far longer than when the term was first considered a

must-do practise by American organizations wishing to succeed in their

chosen commercial arena, or in their inter- and intra-government

relations.

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 Primarily, the technology explosion of the 1990s probably

stimulated the notion of CI being something entirely new or even

revolutionary. The emergence of the Internet and online databases offered

an almost inexhaustible supply of information. The technology explosion

was credited to mechanisms in the U.S. that catalyzed the new economy

of information and intelligence. Naturally, the genesis of this sudden

accessibility to and availability of a lot of information then required special

methods for filtering, organizing and analyzing. Systems and software for

managing information had to be conceptualized and developed.

Eventually, for more efficient management of information storage as well

as retrieval and analysis, information was customized to fit the

requirements of a profile. In some cases the profile monitored sets of

information that would ensure some sort of competitive sustainability.

According to Kathryn Harrigan, Professor of Business Leadership at

Columbia University, “Information and communication technology,

globalization, and rising worldwide consumerism have unleashed a variety

of dissimilar competitors that bring their own diverse rules to competition

and upset the game’s profitability. Familiarity with the art of the moving

target – outmanoeuvring via a sequence of temporary advantages – is

required knowledge in the new game that many firms are now forced to

play.” (Krippendorff, cover, 2003)

This brought about the American ‘birth’ or rebirth of the term

“Competitive Intelligence” and its corresponding techniques, processes

and importance to the continued general well-being or expansion of an

organization. By this time, both the conceptual nature and practice of CI

techniques were mostly inspired by methods practiced in military

intelligence and espionage, (Kelley, 1968, p. 1) which, were adapted into a

7
more commercial environment. Additionally, not only did competitive

intelligence practitioners have had to develop a system to act as an

information moderator, they were also responsible for protecting said

information. This created both offensive and defensive aspects of the field,

further linking it to the military metaphor (Walle, 2001, p. 14). CI then

became a term that encapsulated all activities, which involved monitoring

and acting upon information in order to achieve competitive sustainability.

However, while CI has been made a popular necessity by the influx of its

advocators and its rising importance and impact on success, the concept

of ‘modern’ CI as ‘birthed’ or ‘rebirthed’ in the 1990’s is misleading,

because it is not a new idea put into successful practice.

Military Analogies

As mentioned earlier, CI has borrowed and adapted many of its

techniques from many other sources. In fact, corporate intelligence-

gathering has its roots in a number of different, yet complementary

disciplines (Fuld, 1985, p. 10). The six steps of CI (Bouthillier and Shearer,

2003, p. 43): Identification of needs; Acquisition; Organizing; Storage and

retrieval; Analysis; Development of reports; and Dissemination are also

sub elements practiced by and for military intelligence.

The military has long recognized the great importance of

intelligence (Kelley, 1968, p. 1) and has thus achieved an advanced stage

of expertise therein. According to William T. Kelley (1968) in his book

Marketing Intelligence, military intelligence is a rich source of proven

principles from which the science of business administration can profitably

borrow. The snapshots of Country and History-specific case studies will try

8
to show how military techniques have been adapted to the commercial

landscape.

Business Adaptation

While intelligence and competition have had a long association with

successful campaigns, it is not recently as commonly believed that this

relationship is replicated into a more profitable correlation in business. The

application of intelligence to marketplace competition has existed

commercially since the first salesperson got wind of a competitor’s price

reduction and decided to communicate this intelligence to his/her superior

(Fleisher, 2001). Historical records indicate that the Byzantine emperor

Justinian I (483 – 565) in the 6th century deployed monks to steal silk

worms from the Chinese in an attempt to understand how to make silk

(Fraumann, 1997, p. 303). While no formal system was established, CI was

practiced but the recognition of the need for arranging for systematic (and

legal) marketing intelligence came slowly in business (Kelley, 1968, p. 2).

As such, CI has been ‘parked’ under the various aegis of marketing,

business strategy, advertising, market monitoring and the like until it has

been formalised and evolved into either a unit or department within an

organisation or a pervasive modus operandi throughout an organization.

Historical Incidences of CI

While CI has been touted as an American-born concept and

practice, incidences in history and in other countries prove otherwise. CI

as an intelligence activity, especially derived from either military,

9
economic, commercial and or political intelligence influences, has existed

for over 5,000 years of China’s history (Tao and Prescott, 2000). In

‘Competitive Intelligence’ by Jim Underwood, the author undertook to

illustrate a representation of the diversity of intelligence and its uses as it

has been recorded over the last 3000 years. His timeline suggests that the

use of intelligence has been in practice as far back as c. 1000 B.C. as

evidenced by some early written records. He continues with the use of

intelligence and spies for military purposes from c. 1000 A.D. His findings

reveal that in the 1960’s research and business-related intelligence came

into use. The 1980’s saw the introduction of formal business intelligence-

gathering functions. The 1990’s saw the introduction of technology, more

specifically the Internet, as a means to increase the depth and breadth of

Competitive Intelligence. It is the current decade in which CI has become

the dynamic and complex entity that it is today (Underwood, 2002, p. 14).

Inspired by Jim Underwood’s (2002) brief timeline, a more detailed and

comprehensive pictorial depiction of CI incidences around the world and

the subsequent CI evolution was developed by the authors and is

portrayed below (Figure 1).

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Figure 1: Timeline of Historical Incidences related to Competitive Intelligence

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Incidences of CI: A Snapshot of Country and History specific case

studies

CHINA: incidences from 500 B.C to the 20th century

According to Chin (1997, p. iv), throughout China’s ancient history

of more than 2,500 years, there are records of perceptions and

observations of the factors regulating certain aspects of sustainability.

Circa 500 B.C, a famous military strategist General Sun Tzu, emphasized

the importance of intelligence, as well as broader environmental

information. He is quoted to have said, “If we understand and know our

enemy and also ourselves, we shall never be put in a risky position even if

we fight 100 times” (Nakagawa, 1993). Sun-Tzu stated the case for

intelligence by writing a lengthy treatise on the value of military

intelligence. General Sun Tzu’s military treatise ‘Art of War’ is oft cited and

adapted for commercial practises. A popular quotation by Sun-Tzu often

cited in CI literature stating the case for intelligence was: “Now the reason

the enlightened prince and the wise general conquer the enemy whenever

they move, and their achievements surpass those of ordinary men, is

foreknowledge,”(Musashi and Harris, 1974) where ‘foreknowledge’ may

well be a purpose of the CI concept. Another popular quote is “One who

knows the enemy and knows himself will not be in danger in a hundred

battles” (O’Leary, 2004, p. 39)

Additionally, circa 220 A.D, Master Strategist Kong Ming or Zhuge

Liang (alias the “Reposing Dragon”) of China’s Three Kingdoms Era, was

reputed to have handed down his strategies “Warcraft Strategies of Kong

Ming” in two parts, viz, 46 Articles on the Qualities of a General and 16

Strategies of War (Chin, 1997, p.iv), which were a strategy management

12
guide applicable to both the military and administration. One of the many

connections to CI is: “If he can assume [1] full control of his army and [2]

always move one step ahead of his enemies, then he can command his

army to face any kind of situation, just like giving a fierce tiger wings”

(Chin, 1997, p.iv). Kong Ming later retired and made his fortune in

business, practising the strategies he had penned for military use (Chin,

1997, p. iv)

Gavin Menzies (2002, p. 21) wrote in his book ‘1421: The Year China

Discovered the World’, that Eunuchs served as ‘palace menials, harem

watch dogs and spies for rulers throughout the ancient world in Rome,

Greece, North Africa and much of Asia.’ The intelligence system of the

Chinese, in which eunuchs were critical players, played a significant role in

their liberation from the Mongols. Menzies’ historical findings about a

Chinese eunuch, Admiral Zhu Di, attest to the ‘intelligence’ role they

played. In 1382, Zhu Di joined the Chinese campaign against the Mongol

forces that were occupying the mountainous south-western province of

Yunan. Zhu Di later became a famous naval officer who sent out hundreds

of Chinese ships to explore the world and bring them under the dominion

of the Chinese Empire (Menzies, 2002, p. 20).

As China progressed, a look at the definition and implication of qing

bao contained a double meaning; both ‘information’ and ‘intelligence’

(Kahaner, 1996, p. 198). The Chinese equivalent of the term “intelligence”

was their adaptation of the 1860’s Japanese “Joho”, and it first appeared in

a 1915 edition of a Chinese dictionary, Ci Yuan (Source of Words) (Miao,

1993). This happened decades prior to its English equivalent.

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 In 1956 China established a Scientific and Technical Information-

Intelligence System (STIS) to provide information/intelligence support for

scientific and technological research, engineering projects, and long-term

planning for application in government and state-owned enterprises’

decision-making processes. The first and central element of this national

system was the founding of the Institute of Science and Technical

Information of China (ISTIC). The secondary elements of eighteen

provinces and municipalities, nine state ministries, as well as national

agricultural science and medical academies, were operational within four

years (Kahaner, 1996, p. 98).

In 1985, the Chinese scientific and technical information-intelligence

system was celebrating its thirtieth anniversary, by which time it had 33

state ministerial and 35 provincial/municipal Qing Bao institutes as well as

thousands of basic cells, information stations in grassroots units and an

estimated 60,000 full-time workers (Kahaner, 1996, p. 51). China’s

Economic Information System (EIS) was established in 1986 to provide

macroeconomic analysis and forecast support for government planning

agencies. The rapidly increasing demand for CI has reoriented EIS and

STIS into a more market focused entity. EIS now estimates their number of

CI practitioners at 10,000 people, while STIS estimates their number of

practitioners at 80,000 people (Tao and Prescott, 2000). According to

Qiahao Ming of ISTIC, new intelligence services and awareness of them

have resulted in [1] Foreign companies in China bringing their own

intelligence systems and ideas into the country, [2] Growth of

consultancies that specialise in competitive intelligence, and [3] Private

information brokers in industrial areas (Kahaner, 1996, p. 198) But,

Prescott argues that the production and distribution of goods were

14
extensively planned and firmly controlled by government agencies, and

thus the creation of STIS did not fulfil the ‘market’ concept of CI (Tao and

Prescott, 2000). A look at Japan will address Prescott’s issue of the

‘market’ being central to CI.

ROME: an incident in 204 B.C

According to O’Leary, in 204 B.C Scipio, a Roman general, landed in

Africa with thirty thousand troops facing a Carthaginian army and its allies

of thirty five thousand infantry troops and ten thousand cavalry. Under the

guise of diplomacy, Scipio sent out ambassadors to gather intelligence.

The information allowed Scipio to strategise and confuse the enemy such

that overnight, the Carthaginian army lost forty thousand soldiers while

five thousand soldiers were captured. His modus operandi was “Study

your enemy until you are absolutely certain of his habits. In his habits you

will find his weakness” (O’Leary, 2004, pg. 37) With that credo, Scipio

managed to devise the means to defeat the feared Hannibal. His success,

a decisive Romo Victor was such a triumph that Scipio became the first

Roman General to receive the name of the land he had conquered: Scipio

“Africanus”.

MIDDLE EAST incidences from 1100

According to Carole Hillenbrand’s (1999) ‘The Crusades’, the Muslim

military manuals devote considerable space to the strategy of war, where

importance is placed in conserving manpower and deploying stratagems

to avoid military engagement where possible. For example, Al-Ansari’s

notable military manual written circa 1100’s, devoted a large portion of his

writing to spies, couriers and information. Al-Ansari wrote “Victories which

15
have occurred through excellence of stratagem and grace of ingenuity,

with the self safe and the armies preserved and with no expenditure of

effort, are the best”. Additionally, Al-Ansari wrote that:

The General of the army must be perfect of intelligence, . .

.perceptive about the rules of war . . . aware of stratagems . . .

informed about the management of armies and the organisation of

troops . . . (Hillenbrand, 1999, p. 515)

To relate to the incidence of CI, Hillenbrand wrote that Nizam al-

Mulk mentions the necessity for spies in his book Book of Government

which sets out a guide that spies must be in disguise and bring back

reports. He wrote that ‘spies must constantly go out to the limits of the

kingdom in the guise of merchants, travellers, Sufis, peddlers and

mendicants, and bring back reports of everything they hear, so that no

matters of any kind remain concealed’ (al-Mulk, 1960). In accordance to

that principle, Yusuf Khass Hajib in his ‘Mirror for Princes’, points out the

importance of using guile and cunning with which ‘you make the enemy’s

face yellow’.

Beyond the obvious benefits of employing stratagems,

communication was also an important factor in gathering and

disseminating intelligence. Historically, prior to the telegraph a range of

simple ways to transmit messages and intelligence included sending

messengers on fast horses or camels, using codified flares to

communicate news from one high place to another over considerable

distances, employing swimmers (as in the situation Saladin faced in Acre

c. 1190-1) and deploying pigeons (by order of al Malik al-‘Adil Nur al-Din in

c. 1171-2 at the siege of Alexandria in 1174-5). Al-Ansari was quoted as

saying in his military manual that ‘It is obvious that pigeons are among the

16
fastest means of communication because the pigeon covers the distance

of 20 day’s walking in less than a day’ (Hillenbrand, 1999, p. 515).

In acknowledging the importance of timely and safe delivery of

communication, the Egyptian postal service had its intelligence arm using

mules and swift camels. As communication and the reliance on

intelligence became more important, the postal service was subsequently

extended and embellished with staging posts, hostels and signal towers.

Our current reliance on email, telephone and fax is but the natural

selection of the most effective means of communication available at the

time.

MONGOLIA: institutionalised incidences in 1234

Communication has always been a key dimension of CI. Morgan

(2001) in The Mongols wrote about the Mongol’s system for

communicating military and trade intelligence. He observed that the

administration of an empire the size of the Mongols’ required an effective

communication system and that the Mongols termed theirs ‘Yam’ in which

organisation and efficiency were among the features of their Government.

He explained that the purpose of the Yam network was varied. It was

designed to facilitate the travels of envoys going to and from the Mongol

government; it was used (especially on the route between North China and

Mongolia) in the transportation of goods; it ensured the speedy

transmission of royal orders from one part of the empire to another; and it

provided a framework whereby the Mongols could receive intelligence as

quickly as possible (Morgan, 2001, p. 103). According to al-Din Tabib’s The

Successes of Genghis Kan, the Yam system, was further institutionalised

17
by Chingiz’s successor, The Great Khan Ogendi in 1234 (Hillenbrand, 1999,

p. 549).

JAPAN incidences from the 16th century

Authors Nozumu Ikeya and Katsumi Ishikawa (2001) contend that

the desire to gather, analyze, report, and share information have been the

driving forces of Japan’s economic success over the last 50 years (Ikeya

and Ishikawa, 2001). However, research shows that the propensity for

intelligence gathering activities goes far back.

In the 16th century, Hideyoshi, who is often referred to as the

Napoleon of Japan, was the first person accredited to have utilized the

science of war by successfully incorporating the strategic theories of Sun

Tzu (Nakagawa, 1993). In the 1860’s, so is this in the right place…) the

creation of the Japanese word “Joho” acted as a translation of the German

military term “nanchrit” which was exclusively used for “intelligence”. The

term was later adapted by the Chinese (Miao, 1993). Throughout the

1860’s, both the Tokugawa Government and its predecessor, the Meiji

Government sent missions to Europe and to North America. In the mid

19th century, Emperor Meiji appreciated the importance of information for

Japan and instructed his people to acquire information from all over the

world to solidify the foundation of a modern Japan. One of the sayings

popular at the time was “Wakon Yosai” – “Japanese Spirit and Western

knowledge” and that one of the tenets of the Meiji Charter Oath of 1868

was that “Knowledge shall be sought all over the world, and the

foundations of imperial rule will be strengthened” (Kahaner, 1996, p. 163).

The policy is attributed to having had an impact on the success of wars

with China in 1894 and with Russia in 1904. The information Colonels,

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Akashi and Fukushima are recognized as having been central figures in

the intelligence work (Kahaner, 1996, p. 163).

If Prescott’s issue of ‘market’ is central to CI, then the Japan

External Trade Organization (JETRO) can be considered as a working

example of CI in practice. In addition to business enterprises, business

circles, business associations, METI and JETRO have contributed to Japan’s

economic success (Nakagawa, 1993). JETRO was founded in 1958 with the

support of the Ministry of Economy, Trade and Culture (METI). It was

established mainly to focus on gathering information related to import and

export and provide an early warning of opportunities and threats, as well

as competitor monitoring and assessment in international trade. JETRO

provided consulting and training services as a CI agency for the support of

strategic planning and decision-making. Their comprehensive operations

and strong social connections with large general trading companies

(shipping, financing, insurance, marketing, warehousing, development,

etc) enabled them to effectively gather information through their far-

reaching global networks and sophisticated support system

(www.jetro.go.jp, 2002). Deacon, author of Japanese Secret Service,

attributed Japan’s success in the wars with China and Russia during the

Meiji restoration and the success of Japanese Industry in the post war

period to Japanese inquisitiveness and eagerness for information, which he

sees as a very natural aspect of the Japanese people. It is their means of

coping with “advanced” countries (Deacon, 1982, p. 48).

Post World War II, in the 1960s and 1970’s, the major governmental

organisations in Japan played a critical role in supporting the nation’s CI

activities in business and in the industrial/technology arena. The Japanese

Government, especially through the METI, directed business to facilitate

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the country’s economic recovery. The government not only coordinated

complex issues among companies, but also provided CI support through

METI, JETRO, and its embassies (Ikeya and Ishikawa, 2001). At this time,

most Japanese manufacturers tried to copy Western countries’ products,

so much so that Toyota’s famous Kanban (just-in-time) system was

derived from their benchmarking of an American supermarket (Ikeya and

Ishikawa, 2001). According to authors Hannon and Sano, the Japanese

semiconductor industry competitors such as Mitsubishi, Mitsui, and

Sumitomo have intelligence departments that purportedly rival the U.S.

Central Intelligence Agency in ability and validity. Performing CI is seen

not only as a natural extension of doing business, but also as a part of

their information and intelligence hungry cultures (Hannon and Sano,

1995).

GREAT BRITAIN: incidences from the 1500’s

In the 1500’s most Europeans like the Dutch, the Portuguese, the

Spaniards and the British were looking for avenues to ‘discover’ new

worlds. While religion did play a role in encouraging travel outside of Great

Britain, the country was also generally expanding its political powers and

economic strength by way of discovering and setting up new colonies

abroad. English colonies at one time included over 30 countries, many of

which now are members of the British Commonwealth which today still

seek trade and economic benefits by mutual association

According to Thomas Breed (1999) tea became an attractive

enough commodity to draw the English around the world to buy it from

China, and attractive enough to motivate them to attempt to grow it

themselves in their various colonies, as an alternative to having to buy it.

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In Britain’s case, tea caused a massive trade imbalance, in which British

exports to China equaled only one tenth of the cost of tea imported

(Schirokauer, p. 389). Wickham wrote about tea in 1615, in a letter from

Japan (Britannica, p. 738). Wickham was sent to China in order to gather

intelligence that would make Great Britain more economically and

militarily competitive. He relayed the importance of tea in its potential to

enrich British coffers and subsequently tried to replicate both the

Chinese’s tea cultivation and export. Wickham infiltrated the Chinese

production of tea by ‘going native’ for ten years. In the mid to late 17th

century, Wickham and the British East India Company (then the John

Company) attempted to bring tea plants back several times but failed due

to the tea and the plants’ inability to survive the long and dangerous

voyage (Breed, 1999). Wickham’s ensuing invention of a box or chest with

mirror slits to bring the tea back was successful. The British then centered

their tea production in India. By the 1880s, Indian tea had supplanted

Chinese tea in the British market (Ottuv, p. 852). Soon afterwards, Indian

tea was the most popular tea everywhere, except in Arabia, which

continued purchasing Chinese tea (Toussaint, p. 598). The British success

depended on the more efficient usage of fertilizers and labor (Schirokauer,

p. 457). The application of competitive intelligence technique to benefit

the nation and improve economic prospects had justified a long term

approach.

Another British example of entrepreneurial success is that of

Rothschild. According to Fuld (2002), approximately in the late 1700’s,

Rothschild employed a critical intelligence matrix developed between him

and his brothers that managed to not only help the British government

defeat Napoleon but to also make a fortune for both his family and the

21
British Empire. The astute use of intelligence helped him achieve his many

successes: he saved the London stock exchange from collapse and he

befuddled his financial rivals, building the world’s most far reaching

banking concern (Fuld, 2002).

NORTH AMERICA: incidences from the 1800’s – 1990’s

Marketing Research has been credited as having had some of its

elements borrowed to form other elements of CI. As such, in the U.S., CI’s

evolution as derived from competitive objectives, elements and practices

of marketing research, may be traced to the first manifestation of

marketing research activities in 1879. However, its more formal and

extensive exercise as an organized function dates from the mid 1920’s,

when Parlin was generally recognized as the first man to hold the title of

Director of Marketing Research as appointed by the Curtis Publishing

Company in 1926 (Kelley, 1968, p. 2).

During World War I, manned balloons were used as stationary

observation posts from which soldiers would attempt to look behind

enemy lines to gather critical information about troop movements and

deployments (Underwood, 2002, p. 12). Aircraft were used for more than

just transport and fighting. Aerial observation was intelligence used as a

bird’s eye view for a battle plan. Additionally, according to Ladislas Farago

in his War of Wits, in the words of General Ridgeway: ‘Adequate

intelligence constitutes the fundamental basis for the calculation of risks,

the formulation of plans, the development of material, the allocation of

resources, and the conduct of operations’ (Farago, 1954, p. 8). By the

1990’s intelligence-gathering tools and methods had grown apace with the

employment of technology surpassing in importance the now peripheral

22
intelligence data of past efforts. The Gulf War illustrated the sophistication

of technology complimenting and enhancing a new genre in the

intelligence industry. The allied powers had the ability to gain information

via satellite on every troop deployment throughout Kuwait and Iraq

(Hallion, 1997, p. 44). The information allowed the allied forces to identify

and target every key tactical unit that posed a threat. In turn, better-

informed decisions could be conveyed and deployed appropriately.

The recent events in international terrorism and subsequent military

actions have brought ‘intelligence’ to centre stage. The March 25, 2002

online edition of Time magazine looked at how, post-9/11, executives are

demanding better information not only about security risks, but about

threats to their competitive edge as well (SCIP.org, 2002). The resulting

surge of research into competitive intelligence processes, technologies

and software further illustrates the importance and possible impact that

having the right information at the right time (in order to develop the best

possible response strategy) is having on competing businesses and other

organizations. A concern that has had its place throughout global history

In the 1960’s, literature on intelligence activities in business was

sparse, but Kelley (1968), author of the breakthrough work in Marketing

Intelligence: ‘The Management of Marketing Information’, felt that covert

business intelligence was far more prevalent than previously/commonly

thought (Kelley, 1968, p. 70). In 1954 Ladislas Farago published his ‘War

of Wits’ that espouses the importance and uses of intelligence as a tool for

businesses. In 1956, Fortune printed an article by R. A. Smith entitled

‘Business Espionage’. An excerpt of the article read that ‘Battalions of

more seasoned operators are regularly at work stealing business secrets

undetected by management. In scale, their operations range from spying

23
out a competitor’s multi-million dollar bid on a government contract to

paying a Safeway mimeograph man $5.00 a week for an advanced copy of

the Thursday specials’ (Smith, 1956). In 1967, Sir Richard Powell of the UK

Institute of Directors said: “We deplore anything of an unethical nature,

but I am afraid (industrial espionage) is on the increase” (Lambert, 1967).

Additionally, the competitive intelligence boom of the 1980s was

also driven by the increasingly widespread recognition that good

information has a direct impact on the most crucial aspects of business.

The demise of the Cold War could be seen as the springboard for

politicians to focus on the economies of their countries. Political leaders

have had to listen more to their bankers and finance ministers than to

their generals and admirals, as they realize that the hopes of their

countrymen – and voters – lie more in economic growth than in protecting

themselves against military dangers. The captains of industries and

services will be making the key decisions that will affect the futures of

their fellow citizens in the products and jobs they offer (Colby, 1993).

CI also evolved and branched out as part of the larger movement

toward strategic management of organizations. Sammon, Kurland, and

Spitalnic (1984), authors of Business Competitor Intelligence, stated that

“…by the 1980s, many business managers were wondering why it

(strategy) worked so poorly. Part of the answer may be that strategy

without intelligence had become a contradiction in terms” (Sammon,

Kurland, and Spitalnic, 1984, p. 11).

Although firms by this time had recognized the importance of

competitive analysis, many were disenchanted by their apparent inability

to generate user-driven competitive intelligence that could impact on

strategic decisions (Wang, 2001). Wang further points out that the

24
analysis was not effectively integrated into the decision-making process

and that they were not able to generate critical strategic insights that

would enable decision makers to respond to business threats. The

evolution of CI required that beyond marketing strategies and sales

tactics, intelligence should also yield a rival firm’s strategic orientation and

intent. Thus, the strategic thrust of rival firms can be evaluated before

they become painfully apparent in the market.

The advent and prolific use of computers boosted the technology

and analytical capabilities of CI. On the subject of developing competitive

advantage, Roy Vagelos, CEO of Merck, said, “when you have knowledge

no one else has access to – that’s dynamite” (Prescott and Gibbons, 1993).

Since more data may be housed and generated, CI as a more reliable and

cost efficient centre became more acceptable to upper management.

While other countries and businesses were either establishing their own CI

centric agencies or outsourcing their CI requirements, a group of

professionals understood the current limitations and issues of the CI field.

As a result, in 1986, The Society of Competitive Intelligence Professionals

(SCIP) was established. Beyond overcoming the then perceived limitations

of CI, the society also addressed the wider implications and issues of CI.

SCIP is a global nonprofit membership organization for everyone involved

in creating and managing business knowledge. SCIP provides education

and networking opportunities for business professionals working in

competitive intelligence. As mentioned earlier, in 1989, SCIP membership

numbered 600 members and by 1999, it had increased tenfold to 6,500

members. By February 2002, an average of 9,626 users a week was being

recorded on the SCIP website (SCIP.org, 2002).

25
 According to Leonard Fuld, author and Managing Director of

pioneering CI consulting firm Fuld & Company, in 1993, business

intelligence history was made when at the UNIDO headquarters in Vienna,

Austria a group of 14 individuals from around the globe, including

intelligence experts, government representatives and industry

spokespersons, met to explore how industries in developing countries

could benefit from the intelligence process. Attendees and sponsors

wanted to investigate the possibility of exporting the intelligence process

to their regions as they had realized that developing countries needed to

learn to assess their competition and their markets in a more accurate and

timely manner (Fuld, 1993).

Implications for the Management of CI in Organizations

It is not uncommon anymore for CI to be included as an official

designation in the management and/or even the upper management

division in an organization. This is because there is now the realization for

CI to be an indispensable part in its the strategic decision-making aspect

of the company. As history have shown, intelligence engagements have

always been the forefront of military processes, where country leaders and

high ranking government officials use intelligence to make crucial

decisions for political sovereignty, protection of countries and their people,

for creating and maintaining strategic alliances and for predicting the

future of their countries. It is apparent that the objectives for intelligence

use to govern a nation are parallel to managing a business, where

competitive intelligence has a significant role in business survival, in

26
maintaining relationships with other businesses, counterintelligence, and

short-term and long-term aims and objectives.

In addition, history is often used as a reference in any field. CI

managers can look back into the chronicles of military, business and

economic intelligence to find situations similar to today’s events, whether

it was written over 2000 years ago, or they are calamities or successes,

they are there to be used as lessons learned to be replicated, modified, to

be avoided all together and to be researched for further advancements to

strengthen current process. In other words, it can be used as a guide for

efficiency and to move forward.

Lastly, on a rather different tangent, there exist the philosophical

element of CI’s origins and history, which can be used as tools to inspire

the profession, as other professions have used their chronicled past within

their field. As CI’s upper management are generally considered veterans

in their field, they should often be or are looked upon as reference for

practitioners. Knowing a field’s history can add philosophical depth in

creating an aspect of the foundations of a discipline, which CI is growing to

be, if it isn't already. The appreciation for the philosophical aspects of CI

can benefit managers to consider different beginnings and evolutions of CI

in different parts of the world as well as adding cultural perspectives, such

as being aware of different ethical boundaries, to support international CI.

Implications for Further Research

As can be gathered from the previous paragraph, one of the main

objectives of this paper is to advocate a more philosophical view in the

field of CI. Apart from several mentions of where CI might have originated

27
in literature, there has never been a comprehensive research initiative or

publication on the greater history of CI. Still however, it should be said that

this article does not put everything in perspective in terms of CI's origins;

instead, it proposes a subtopic for research within the CI discipline.

Further research in CI’s history and origins can take many forms

depending on the research objectives. For example, a research project can

be focused on a particular event, era or geographic region and gather

information for evidence to support a hypothesis. Figure 2 below gives

examples of the different perspectives, however not limited to these, to

take for further research.

Historical Eras
in Commerce
Geographic
Region Culture

Origins of Technological
Objective Competitive Advancements
Intelligence

Timeline Discipline
Historical Eras
in Military

Figure 2

Conclusion

As in many fields of scholarship, history connects the field of CI to

philosophical views and methodologies found documented by early war

and economics scholars, from which CI is already thought to have

originated. History has also shown that the evolution of CI borrowed

elements and processes from the Military, Government Administration,

Business Administration, Marketing, Economics, and to some extent

28
intelligence-driven cultures. These elements and the dynamic synergy of

‘modern’ CI have been practiced successfully and integrated as automated

norms in other parts of the world before the advent of its so-called more

refined concept and development in the U.S. While some may argue that

the American CI is adapted for today’s ‘modern’ business applications, it

nevertheless had its genesis centuries before. Prior to Prescott’s

placement of the 1990’s as being the refined ‘modern CI’, elements of the

intelligence cycle for business applications had already been in practice as

formal processes in China, Japan, France, Great Britain and other parts of

the world.

Chin (1997, p. iv) reported that China had records of observations

and stratagems for ensuring its sustainability as far back as 2,500 years

ago, circa 500 B.C. The practice of employing Eunuchs as envoys, business

advisors and spies to further the ‘leadership’ of Imperial China in a number

of industries was one example of this. By 204 B.C, Rome was known as the

greatest organized military force in the world as well as the centre of

culture and commerce. At one point in history, they had conquered most

of the then known world and as such thrived on trade and its related

competition for world goods. Incidences of CI, albeit of a more military

nature, resulted from the Holy Crusades for the Middle East where spies,

competitive stratagems and the technology to further the intelligence

communication channel played an important role in successful campaigns.

In 1234, the Mongols had institutionalised their Yam system that served to

provide competitive intelligence to their whole government and business

administration. In Japan, one of the tenets of the Meiji Charter oath of

1868 was that “Knowledge shall be sought all over the world, and the

foundations of imperial rule will be strengthened” (Kahaner, 1996, p. 163).

29
The breadth of its successes were later to be adapted all over the world

during the colonial era as practiced by the English, the Dutch, the

Portuguese, the Spaniards and the French.

Today, CI is receiving even more attention from top management

than before (Teo, 2000). Circumstances have coupled with the internal

development of the field to give competitive intelligence prestige and

clout in today’s corporate world (Walle, 2001, p. 15). Traditional measures

and estimates cannot capture external factors that influence corporate

performance (Marceau and Sawka, 2001). The need for actionable

business intelligence has arisen. As national concerns change into

concerns about their competitive economic performance in the world, the

CI profession will become an essential element of private industry, helping

its leaders make informed judgements about their company’s strategic

direction and tactical moves on the world market (Colby, 1993).

As the needs for and extent of CI is explored, more and more issues

arise of recognising the sources, the tools, the generated information and

intelligence, and its integration into the decision-making process of its

users. The successes and unique contributions of competitive intelligence

have resulted in the field being recognized as a separate and distinct

discipline. Today, the profession has its own literature, an array of

consulting firms providing a range of services, and a strong professional

association, the Society of Competitive Intelligence Professionals. Along

with the growth of CI publications and training courses, it has been

observed that a growing number of universities and academic institutes

that have incorporated CI into their taught programs, as well as

conducting research in various aspects of the field. All in all, with history

30
on its side, there is optimism that CI will continue to evolve into a complex

and dynamic function within organizations.

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