800-CEO-READ Excerpts

“No” was the answer to his question. Dell’s need to eliminate the “no” is what drives him to close the intelligence gap between his suppliers and his customers.

Sam Walton would have been proud.

POLITICAL AWARENESS: SCANNING

INTELLIGENCE FROM MANY DIMENSIONS

The flight was about to take off. I shimmied my American frame into the European-cut economy seats on the Virgin Atlantic flight and off I went to London. The flight was packed and I was barely able to move my arms (I felt more like RoboCop than some suave international traveler). At the same time, I very much enjoyed my nearly seven-hour trip,much more so than the British Airways experience I had some months before.

It was not the seat. Seating in the economy section was pretty much the same in every airline: tight.

Nor was it necessarily the service, although I do recall the Virgin staff being friendlier and more attentive than those from British Airways. (Unfortunately, I did not have a masseuse offer to work me over as Virgin’s first-class passengers get to experience.)

It was something else. It was the video screens planted in the

Imagine that: video for the price of an economy trip. Today we can all smile. Video screens are fairly common on all but the short-haul airplanes. Back then, though, they were not. This was an innovation, a Richard Branson special. To my knowledge, the only carrier at the time that used video was Singapore Airlines. In western Europe and in North America this was a first.

This story is evidence of the drive and the far-sightedness that Branson has exhibited throughout his stormy, tumultuous career. My experience also demonstrates the very broad view Branson brings to assessing any industry. It’s an outsider’s view.

He is an outsider and appears to like the role. In general, he prefers to enter industries where customers have very few choices. He enters as the upstart and often changes the rules by which others play (very similar to Rothschild,Walton, and Dell).

He has a long string of both business successes and failures.Virgin Records upended the recording business. He then moved into air travel, where he was successful in gaining market share against entrenched and seen-as-stuffy British Airways. His Virgin Cola never quite succeeded at winning share from the giants Pepsi and Coke. Other businesses include cell phones,Virgin-branded music and movie stores, and even a British-based rail line,Virgin Rail.

Branson also likes flying balloons in an attempt to break various world records.Whether or not he succeeds in his flights, balloon flying is perhaps a metaphor for how he views market entry into a new business. He first looks out from on high, surveys the 

Francis Aguilar, a retired Harvard Business School professor and father of the concept known as environmental scanning, would describe how Branson perceives the market as exactly that—scanning. Professor Aguilar, a quiet man, dressed in a cardigan sweater when I met him many years ago in his office, believes in the need for gathering information from a wide range of sources, including government and regulatory groups, competitors, suppliers, and academia. Aguilar sees intelligence in many dimensions. So does Branson. As Branson perceives it, both threat and opportunities can emerge from out of a dark, unexpected corner. You need to watch the ever-changing landscape in order to be ready for it. Both Aguilar and Branson agree on this intelligence philosophy.

The difference is that one teaches the idea and the other lives it. Francis Aguilar impressed me as an introspective, thoughtful individual, with a Mr. Rogers–like quiet but perceptive personality. Richard Branson, on the other hand, has been described as a showman, a P. T. Barnum, who attempts to fly hot-air balloons around the world.

His showmanship allows him to both establish a presence in a market as well as open information conduits that might be closed to others. Branson invites controversy, even revels in it.While the mayhem over one outrageous act or statement ensues, he is always watching and listening. He is scanning.

A good example of this played itself out in the early 1990s. Branson had already run Virgin Atlantic Airlines for approximately a half-dozen years when he wanted to move out of Gatwick (London’s secondary and less-trafficked airport) and win gate slots at Heathrow. He also wanted to expand into Tokyo. He knew that British Airways would try to resist any expansion attempts by this relatively new, upstart airline with only four Boeing 747s to its name.

While he clearly saw his nemesis as British Airways, Branson realized that his competitive position could improve or languish if he ignored intelligence from a number of other arenas—all surrounding his expansion strategy.

According to Branson’s own account, Lord King, the then chairman of British Airways, met a representative from the Rothschilds’ bank (yes, from that same family who brought you the winning bet at Waterloo) for lunch in early 1991 and was reportedly “badmouthing Virgin” to the Rothschild bank. Branson was immediately concerned that news of Virgin’s supposed financial troubles could cascade down to a number of influential groups, any one of whom could begin to sink Branson’s airline.

Branson was watching.

His own words described the environment he must scan: “An accusation of financial weakness coming from highly placed Lord King can rapidly become a self-fulfilling prophecy, particularly when it comes from such a lofty and authoritative source as Lord King . . . Lord King’s accusation of Virgin Atlantic’s financial weakness had a number of key audiences.”

Branson constantly watched the press. He wanted Virgin’s story—not British Airways’s—to reach the press first. Next, he knew he must keep his feelers out with London’s bankers and financiers. Virgin had indeed run into cash problems in recent months. Branson very much needed additional financing. He also monitored the airplane manufacturers and leasing companies who might fail to extend credit to a financially distressed airline. Finally, he would have to take the pulse of the Civil Aviation Authority (CAA), the government body that would permit or refuse Virgin the additional gates it would need for the expansion.

Virgin placed key people in negotiating positions with the CAA. He also used the press to his competitive advantage. The battle between British Airways and Virgin entered the public arena at the end of January 1991. Virgin was painted as the underdog being assaulted by the far larger rival, British Airways.

Branson won this particular battle, in what was (and is) a long, protracted war. By the end of January, the CAA granted Virgin access to Heathrow and ordered British Airways to turn over four landing slots to Virgin at Tokyo’s Narita Airport.

This was a multidimensional battle, requiring Branson to look at a threat from a number of angles.

I have seen too many businesspeople discuss the subject of intelligence and interpret it as just “competitor intelligence,” that is, intelligence only about and from your rivals. Wrong, wrong, wrong. Intelligence, when it provides true competitive advantage, emanates from many sources, from many perspectives.

If there is any history lesson here from Rothschild, Buffett, Walton, Dell, and Branson, it is this: It does not matter whether you use carrier pigeons or airplanes, or you walk on the ground and look around. Competitive threats and opportunities are always present and may reveal themselves through the many actors in your business drama. Competitors, suppliers, new entrants, and government regulators are all participants in your marketplace.

The past masters of competitive intelligence would offer you four pieces of advice:

Act on critical intelligence with speed.
—Nathan Rothschild

You will need less information if you build on past experience. —Warren Buffett

See your competitors through the eyes of your customers— probably the clearest view of all.
—Sam Walton and Michael Dell

Scan the market from all dimensions, including the political one.
—Richard Branson

Wonderful advice if you’re a business genius, some of you might say. What about the rest of us, though, the mere mortals in the business realm? There are very few Bransons or Buffetts among us. How do we adopt global lessons from these sometimes swashbuckling mega entrepreneurs to our own lives? How do product managers, small business owners, marketing managers, company scientists, purchasing managers, and everyone else find ways to live a life of competitive clarity? By working the essentials of competitive intelligence into your everyday life—the subject of the next chapter.

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