13
Shadowing

Short Description

Shadowing is one of the newer analytical techniques that monitors specific competitors or markets in a high degree of detail to learn how a specific competitor might think, reason, and react. It means learning as much as possible about a competing firm's managers in order to predict what they might do. The competitive knowledge afforded by shadowing will allow a firm to make reasonably accurate inferences regarding the strategic and tactical intentions of rivals.

Background

Shadowing is the commercial application of a concept long used by opposition politicians in the British parliamentary system and throughout the Commonwealth. Opposition members of legislative assemblies or Parliaments regularly form "shadow cabinets," wherein each member of the opposition party follows and/or forecasts policy developments in each ministry or government department. For example, one opposition member of Parliament might be assigned to "shadow" the Ministry of Finance. In this position, he or she would be given responsibility to do the following:

• Monitor all changes in relevant policies such as tax, deficits, debt, and spending
• Track all changes in personnel within the Ministry of Finance, departments, and bureaucracy
• Develop proprietary policy for her/his affiliated party as an alternative to the party in power
• Offer rebuttals and critiques in response to recently developed initiatives to the party currently in power
• Forecast important issues in order to predict the government's response and to proactively develop opposition policy
• Be prepared to assume the portfolio in the event of a change in power

All of these individual shadow members working together are known as the "shadow cabinet." This strategic tactic has proved to be very effective in achieving the ultimate goals of opposition political parties. It has allowed political entrepreneurs to simultaneously counter the strategies of the incumbent government, as well as prepare for a hopeful electoral victory in the future by capturing a majority of the political "market."

Since the late 1980s, shadowing has become an increasingly popular technique within the competitive intelligence tactical toolkit. Many companies are now shadowing their competitors at a level of detail that is of an order of magnitude higher than traditional environmental scanning and even competitor profiling.

Shadow teams today provide a mechanism for accessing internal resources, scanning the competition and/or external environment, and integrating the insights to create new organizational learning. Fahey¹ asserts that shadowing is useful when one or more of the following conditions prevail within a firm:

• Managers have become complacent due to a firm's marketplace performance.
• A firm has become strongly committed to a set of assumptions underlying its historic strategy (and appears unwilling to evaluate them even in the face of significant marketplace change).
• The strategy planning process has largely degenerated into a routine (to be completed as quickly as possible and reviewed maybe once a year).
• Little effort is being expended to search for new marketplace opportunities.

However, shadowing does not need to focus on existing direct competitors. One can address secondary or non-direct competitors or, even as Fahey suggests, one can create "invented" competitors. An invented competitor is a rival that could appear in the future but does not exist today. This approach may serve to explore what strategies might be possible at some future time; anticipate potential new customer needs as well as the solutions required to satisfy them; identify possible marketplace opportunities that might otherwise be overlooked; and challenge your own firm to be more radical in thinking about its potential future strategies, both how they might be developed and executed.

Today when a cross-functional team focuses specifically on information about a major competitor or market, a shadow team has formed. The objective of shadowing is then to learn everything possible about a competitor—its people, processes, networks, and services—or a market, so that a firm can begin to think, reason, and react like the competitor.

Strategic Rationale and Implications

Shadow teams perform as a think tank, operating between working on special projects and creating a storehouse of knowledge to draw from when special needs emerge. Using analytical, team dynamic and communications techniques, shadow teams can evolve into smoothly operating entities with strong competitive and analytical skills.

They collect and organize information and become an identified knowledge base. With strong analytical skills, shadow teams can prove to be one of the greatest assets for the power brokers in a firm.

The fundamental premise underlying shadowing comes from the belief that strategy is a result of organizational structure and design. By closely monitoring the organizational structure and design of rivals, it is suggested that a firm can gain valuable insights into their strategic intentions.

In order to conduct this type of analysis, you must become intimate with every element of rival firm. Every minute detail, regardless of its apparent obscurity or immediate applicability, is taken into consideration. Often these details can be gleaned directly from your own firm's internal sources or by analyzing publicly accessible information. In addition, the actions and behaviors of rivals will often yield important information.

More important than the detail, however, is the holistic interpretation and analysis of the sum of the detailed information gathered from shadowing. Shadowing yields important clues as to the future plans of rival firms. Hence, the objective of shadowing is to be able to predict with reasonable accuracy the strategic intentions of competitors in order to develop proactive strategy.

To facilitate this goal, two approaches to shadowing offer two distinct but related courses of action:

1. Shadow planning—This technique involves the continuous monitoring of all of the relevant components of a rival's strategy. For example, the goal of shadow product planning is to equip the analyst with such an intimate knowledge of rival's product development plans so as to develop a reasonably accurate understanding of its competitive mindset. This will allow you to analyze contingencies in your firm's own product planning. The analytical output is a continuous stream of market intelligence necessary to strategically negotiate dynamic markets and intense competition.
2. Developing a shadow market plan—This technique differs from the previous one in that it is a one-off project with a limited timeframe for completion. Its objective is to develop an accurate proxy for the actual marketing plans of rivals. The analytical product is a document with a finite shelf life that closely resembles the formal marketing plan of a competitor.

These two approaches are not mutually exclusive, as shadow planning is used to build shadow market plans. The continuous stream of shadow planning information provides a solid intellectual foundation from which to develop actionable recommendations and launch strategy—think of the shadow market plan as the intelligence vehicle, and shadow planning as the maintenance that tunes it up regularly, making the engine run more effectively.

Not only are these two tactical manifestations of shadowing closely integrated, but should be closely integrated into the firm's broader corporate strategy. A recurring debate in the field of strategy is the question of identifying the true source of the firm's competitive advantage. Does it lie inside the firm in the form of resources, core competencies, capabilities, organizational structure and business processes, or does it lie outside the firm in the form of superior competitive position within markets, strategic groups, and industries? As with many arguments that attempt to delineate ambiguous or circular constructs to their core, the answer to these questions is not black and white but, rather, several shades of gray. In reality, the location of the firm's competitive advantage is both internal and external. It is in this gray area where shadowing, if employed correctly, can shed much light onto the challenge of crafting strategy.

In order to fully leverage the power of shadowing within a firm, it is important to bridge the link between the internal and external sources of a firm's competitive advantage. By having a number of analysts explicitly charged with learning as much as possible about rivals, the firm incorporates several legitimate sources of strategic challenge inside itself.

Shadow analysts with an accurate read on the competitive mindset of competitors, function in several ways to integrate the internal and external view of corporate strategy by

• Testing the validity of the firm's own strategies
• Identifying potential weaknesses of rivals that the firm may exploit
• Protecting against weaknesses in the firm's current and future strategies
• Predicting the contingent reaction of competitors to the firm's planned marketing strategies
• Identifying potential new competitive threats or opportunities in the broader market framework

Given that the goal of strategy is to find the best match between the firm's resources and opportunities to provide superior customer value, the knowledge that shadowing can bring to this process is extremely valuable. The competitive value of a firm's resources and the definition of superior customer value are contingent upon competitive response. Shadowing provides reasonable inferences regarding such contingent competitive response. Hence, shadowing is one of several effective methods to bridge internal and external views of strategy.

Often, the role of shadowing is seen as duplicating the market research function. Certainly there is an overlap, but shadowing is much more in-depth. A leading expert in this area, Rothberg² asserts that while traditional market research excels in securing knowledge of consumer research and the "Four Ps" of the marketing mix, it stops short of securing the breadth of knowledge required for strategic success. Shadowing supplements market research by providing insights into the entire value chain of competitors.

Shadowing is especially necessary for the heightened levels of competition that characterizes modern markets in which globalization is threatening once-secure markets. Similarly, technology is fostering market migration by unraveling traditional linkages in many value chains.

Strengths and Advantages

A valuable benefit of shadowing is the removal of blindspots that commonly develop inside of the strategic decision-making process. Without shadowing, firms often make incorrect assumptions about the future direction of rival strategies. Similarly, firms often neglect to adequately consider the contingent competitive reaction to the firm's planned strategy. Adopting the competitive mindset of rivals through shadowing allows the firm to counter these two common blindspots.

Shadow teams also become a firm's eyes and ears on a whole range of strategic and competitive matters. This means they are in a position to help a firm adjust to changes in its environment by attending to such matters as (to name a few):

• Facilitating new product development
• Adjusting existing products and services
• Interpreting market signals
• Investigating rumors
• Identifying new technology

A well-constructed and nurtured shadow team can become an invaluable organizational asset. First, through sharing, collaboration, and analysis, the firm's knowledge assets increase. Second, a shadow team can operate as investigators of competitive rumors and market signals, or they can serve as general think tanks, providing unfiltered analysis directly to the strategic players. As a result, shadowing allows for a firm's learning to improve, as well as enhancing its ability to respond to its competitive environment.

The key contributions and value of shadow teams are identified in Table 13.1.

Table 13.1
Characteristics and Contributions of Shadow Teams

Source: Adapted from Rothberg, H.N. (1997). "Fortifying Competitive Intelligence with Shadow Teams," Competitive Intelligence Review, 8(2), p. 4.

Weaknesses and Limitations

Critics of shadowing argue that the strategy may not necessarily always follow structure. As such, shadowing may not be able to adequately predict new strategic directions undertaken by rivals, especially when past intelligence garnered from shadowing is premised on the structure and strategic infrastructure of rivals. A new strategic direction may blindside shadow team members who are myopically assuming that rivals are operating from a base of established resources and strategy. Often, when rivals are pursuing entirely new directions, strategy will precede structure.

Like many other strategic tools, blind application of shadowing does not handle discontinuity very well.

Shadow teams may also fail due to organizational issues such as the firm's culture, politics and role of senior management. Table 13.2 below identifies the issue and reason for the failure of competitive intelligence teams within a firm.

Table 13.2
Reasons Why Shadow Teams Fail

Source: Adapted from Rothberg, H.N. (1997). "Fortifying Competitive Intelligence with Shadow Teams," Competitive Intelligence Review, 8(2), p. 10.

Shadow teams take time to develop and build rapport among themselves and senior management. They develop across circumstances and with experience. Individual members bring with them their own specific weaknesses and blindspots, which may in turn impact the team dynamics. Without management's ongoing commitment and support, the output of shadowing can be littered with biases, blindspots, team conflicts, and analytical naivety.

Process for Applying the Technique

Shadow Teams

Before the process of shadowing can commence, the establishment of a shadow team or teams that can operate outside the structural confines of a firm needs to be put into place. The specific guidelines for the effective operation of a shadow team need to be explicitly agreed to by senior management. The team needs to be able to report directly to senior management without editorial input from gatekeepers. They need to be relatively fearless.

Members of shadow teams need to be cerebral independent thinkers, self-starters, and tenacious.³ Recruiting individuals with the skills, knowledge, and guts to conduct investigations and generate reports based on real data is one of the keys to developing a high-performance team.⁴

Teams will also require the following:

• A clear, unifying purpose
• Challenging goals
• Work that is meaningful with collective products and challenging performance criteria⁵
• Ongoing training and coaching in such areas as team dynamics and analysis

Special attention must be given to three key performance issues for shadow teams, as follows:

1. Team composition
2. Team structure
3. Performance goals

Team Composition

The objective is to create a balanced group of individuals who bring a combination of skills, diversity, knowledge, networks, disposition, personality mixed with creativity, out-of-the-box thinking, and analytical ability. Rothberg suggests selection of team members could address the following criteria:

1. Intellectual capability—The ability to secure relevant information; relate and compare data from different sources; identify issues and relationships; and to be conceptual, analytical, and creative
2. Results-oriented—The ability to work toward outcomes and complete what one starts
3. Interpersonal skills—The ability to relate to the feelings and needs of others and to convey interest and respect
4. Planning and organizing—The ability to schedule time and prioritize for one's self and/or others, to handle multiple activities, and to meet deadlines
5. Team-oriented—The ability to work collaboratively within a complex organizational structure
6. Maturity—The willingness to be open and act responsibly when dealing with people and situations
7. Presence—The ability to create a positive first impression and stand out tactfully (includes verbal and nonverbal communication)

Team Structure

High performance shadow teams are small yet provide a representation of the required skills. (Note: large teams tend to take on the characteristics of a group, which may impede a cohesive approach to the issue at hand and the timely delivery of the project goals and objectives.)

Shadow teams are composed of the best and brightest in a firm and are made up of volunteers who decide to take on this work in addition to their usual work responsibilities. A facilitator needs to be identified to serve as an administrative and communication hub for team members and as a liaison point between management and the team.

Performance Goals

Without focused, measurable goals and a belief that the goal is worthwhile, teams never achieve high performance.⁶ Without clearly defined goals, members can become unfocused, politicized, lose their urgency, or become irrelevant.

In essence, when establishing a shadow team, the following guidelines should be observed. The teams operate within a learning climate. They have the opportunity to learn from each other. They also have some latitude for analysis to miss the mark as long as it is based on unfiltered information and demonstrates analytical thinking:

• Teams are comprised of diverse and cross-functional people who reflect the texture of the company.
• There are clear, meaningful, and measurable goals.
• There is management support.
• There is exposure to senior executives and executive strategic decision makers.
• Appropriate tools and training are available.

Shadowing

Once teams are in place, the process of shadowing and developing a shadow market plan can be commenced; however, the process cannot be described adequately by a formal sequential or step-by-step procedure. In general, the process is characterized by collection, analysis, and dissemination of strategic recommendations. However, these general stages are usually performed simultaneously and often become intertwined through a complex web of formal and informal iteration.

The first step is for the shadow team to learn as much as possible about every aspect of the rival firms. The goal of this knowledge will be to enable the shadow team to think like the competition. In order to achieve this, several methods are offered by two experts in the field of shadowing:⁷

• Personnel hiring—An examination of the personnel changes in the executive suite, as well as the functional areas in the firm, will often yield valuable insights on the strategic focus of rivals. For example, hiring marketing staff may indicate an expansion of marketing effort. Likewise, hiring research scientists may indicate that a rival is beefing up its innovation and internal product development capacity.
• Personnel departures—Monitoring the firings and resignations of key personnel can often shed insight into which functional areas are receiving the most attention at rival firms. For example, the resignation of an operations manager and senior R&D personnel may indicate that other areas of the firm are being pursued more aggressively. One may surmise that technical innovation may be taking a back seat at this particular rival; possibly, the real decision-making power may now rest in the finance function with a strategic focus on cost cutting.
• Full text of news releases and speeches—The full text of relevant sources will often provide hints of strategic intent by allowing you to place the document in a fuller context and to search for meaning by "reading between the lines."
• Hometown media—Often minute but nonetheless significant, details are included in press coverage of the newspaper or local business magazine published in the rival's hometown. Local press digs deeper and provides more detail due to the importance of the company to the local economy. Other, more distant, press sources may leave out this detail due to detachment.
• Trade shows—Participants at trade shows involve members of the competitor's entire value chain (that is, suppliers, customers, and distributors). Additionally, trade shows offer the chance to meet members of rival firms. Face-to-face contact may offer you the best opportunity to evaluate the human resource capability of rivals. Conversations with them may also yield clues as to their resources, industry outlook, priorities, or even veiled references to their current or planned strategies.
• Corporate literature—This includes company newsletters, technical brochures, and product support material.
• Online databases—The Internet provides a cost-effective source of information in the form of general press coverage, hometown press coverage, and online databases. Additionally, the perceptions of the shadow team can be tested, and if needed objectified, by reading material written by a wide variety of sources from official security firm analysts to the meandering "off the cuff" unguarded comments in chat rooms and forums.
• Technological tracking—This is done through professional society papers, industry trade association articles, and articles written by technical personnel of rivals.
• Background checks—This is done by assessing the totality of executive backgrounds including education, previous positions, career track, past successes and failures, and hiring tendencies.
• Management personality profiling—This provides an understanding of how decision makers at rival firms are psychologically hardwired (what makes them "tick").
• Debriefing—Talking to employees who have previously worked with rivals either directly through an employment contract or indirectly through industry associations. Additionally, other valuable sources of information include members of a rival's value chain, including salespeople, distributors, customers, suppliers, and advertising agencies.
• Regulatory tracking—This involves monitoring regulatory procedures with which competitors are involved, such as patents pending, licensing, consumer, or environmental regulation.
• Financial statement analysis—Learning of the financial strength of rivals, as well as any financial constraints facing rivals (for example, debt capacity, cash flow, and liquidity) may yield insights into the success of their past strategies, as well as their propensity to intensify or change strategies.
  Financial statement analysis is intentionally placed at the bottom of the list because the whole point of shadowing is to determine the future strategic plans of rivals before they materialize into financial results. This placement underscores the ultimate goal of shadowing to function as a leading rather than lagging indicator. Nonetheless, a solid understanding of a rival's financial situation provides a necessary foundation for shadowing.

Once all of this information has been collected, analyzed, and internalized, the shadow team should be ready to assume the role of strategic challenger. By functioning as a proxy for the competitor, shadow teams should be able to objectively filter any assumptions about rival firms that other decision makers in the firm may harbor. Similarly, shadow teams will be well placed within the firm to infer the future strategic decisions and directions that rival firms may pursue.

In order to maintain the integrity of this strategic capacity, this process should be continuous, or at least updated regularly. Nothing stands still, and new forces may change the dynamics of the marketplace very quickly.

Equally important, when conducting shadowing, you must be able to consciously divorce yourself from the firm's own decision-making processes, frameworks, and biases/blindspots; that is, in order to be an effective and legitimate strategic challenger, you must act as the rival firm in order to challenge the thinking within the firm. In the event that individuals with these capabilities cannot be found within the firm, external analysts may be considered. Table 13.3 outlines the various pros and cons of outsourcing the shadowing analysis to external experts. In general, the pros of developing shadowing capabilities in-house overpower arguments for outsourcing. Individual firm circumstances may, however, refute this generalization.

Table 13.3
Issues Around Outsourcing Shadowing Capability

Source: Adapted from Vella, C.M., and J.J. McGonagle, Jr. (1988). Improved Business Planning Using Competitive Intelligence. Westport, CT: Quorum Books.

Developing a Shadow Market Plan

Intermittently, throughout the shadowing process, a shadow market plan is drawn up from the analysis. A shadow market plan is essentially a document that captures all of the knowledge obtained to date, which has been analyzed to derive some insight. Its purpose is to provide a proxy of the official marketing or business plans of rivals. Competitive analysis is essential in estimating the capability of rivals, and specific analytical tools appropriate to the team's objectives are used at this time as a foundation for strategic decisions yet to be made. This analysis may be the first level of iteration of the shadow plan, with ongoing analysis occurring as further information is collected.

A shadow market plan views the resources, competencies, capabilities, processes, strategies, strengths, weaknesses, opportunities, and threats from the perspective of rivals. As such, it attempts to view all of the parameters of strategic decision making made by the rival. This detached perspective allows the firm to establish with reasonable accuracy the current marketing and business strategy of rivals. It will also enhance the firm's ability to project the future strategic direction of rivals or their likely reaction to strategic initiatives of the firm conducting the shadowing. An informal and qualitative sensitivity analysis is then conducted to predict different outcomes to various competitive scenarios.

A useful supplement to the shadow analysis plan is to conduct a reverse shadow market plan. Vella and McGonagle⁸ suggest that firms may find it helpful to develop an analysis of how the rival actually views your firm. Often the results can be quite disconcerting.

The final step in the shadowing analysis process is to continuously monitor rivals and revise and adjust the shadow plans as required. If substantial enough, these revisions and adjustments will then influence subsequent strategic decisions. In this respect, labeling this step as the final one is a misnomer, as the shadowing process is more circular than linear in design and function.

Case Study: Illuminating Strategy by Shadowing

A hypothetical example is outlined next, which shows how the process of shadowing could improve strategic decision making at a large insurance firm. Suppose that the objective of the shadow team was to develop a shadow market plan for a large competing insurer, Mega Insurance. Summarized here is an itemization of what each stage in the proposed shadowing process may look like:

Specified objective—Delineate the analysis into the potential expansion of commercial lines by Mega Insurance in the Mid-Atlantic market.

Sources of Information

Insurance industry publications include the following:

• Mega filings with the Securities Commission
• Trade publications of industries to which Mega sells commercial insurance
• Commonly reported Mega press releases
• Full texts of Mega press releases
• Regional business publications
• Newspapers covering the city in which Mega headquarters is located
• Internet marketing and financial reports of Mega by securities analysts
• Coverage of Mega's new facilities in computer industry trade publications
• Interviews of Mega executives in local business publications
• Evidence of zoning application or permissions for new Mega facilities at relevant municipalities
• Evidence of expansion from industrial development authorities regarding public financing
• Mega's own Web site
• Other Internet sources

Inferences

• Mega is planning to initiate a new commercial line starting in Ohio.
• Mega has engaged a contractor to build a new office in New Jersey.
• Mega has recently recruited an executive from a rival firm to manage the NJ office.
• Marketing materials distributed by Mega to target customers, agents, and brokers reveal current distribution, target market, and sales of new commercial lines.
• Shadowing also uncovers the planned grand opening of the NJ office to coincide with the market launch.
• Management profiling reveals background, experience, and past successes and failures of the new NJ office executive.

Confirmation

These sources and inferences are then confirmed and cross-referenced with existing information of Mega's strategy, past affiliations, and actions in the Mid-Atlantic market area. Next, these tentative conclusions are meshed with an environmental analysis of the market conditions in the relevant areas.

Tentative Conclusions

A shadow market plan is built consisting of several prominent strategies, including the following:

• Mega is planning a major expansion of its commercial lines.
• A regional marketing approach will initiate the product launch under the auspices of the new executive in the NJ office.
• The pioneering product will be the new commercial line.

Monitoring

The same sources discussed previously are used to monitor the progress of Mega's shadow market plan. In addition, several additional sources are added, such as:

• Monitoring new policies and rates of the new commercial line via records at state insurance offices in Mid-Atlantic states
• Determining the target market from advertisements placed in regional business publications⁹

Mini Case Studies

Case 1—Deregulating Utility

A shadow team at a large utility company in the midst of deregulation warned senior management about activities indicating a key competitor's acquisition intentions that would result in shrinking the utility's current market and tilting market power in the competitor's direction.

Result

Senior management responded quickly by pre-empting the competitor's offer with one of their own. The threat of a loss in market share was thwarted and actual market power increased.

Case 2—Packaged-Food Multinational

A new product development group in a multinational packaged food corporation was planning to develop a challenger to a rival product category leader. The competitor shadow team was brought into the process to "war game" the potential rivalry with the group's new product offering. The shadow team knew the rival's operations down to product P&L, had profiles on senior management (one who had his corporate roots in the product category), and possessed a clear understanding of their marketing mentality.

Result

The two-day simulation revealed that the rival could and would retaliate against all market moves and had a cost structure enabling it to win any ensuing price war. At the game's conclusion, the decision was made to abandon the product line before investing further in its development.

Case 3—Ready-to-Eat Foods

A leader in "ready-to-eat" foods was gearing up to produce a new product for test marketing. While visiting a remote out-of-state facility, a manufacturing employee noticed an unusual structure in a nearby town owned by a rival. An internal search by the shadow team identified a recently hired employee who had worked for the rival and was familiar with the facility. Apparently, the rival employed the site as a testing ground for the manufacture of new products that the market had not yet proven worthy of full-scale operations. The shadow team's comparative financial analysis of the firm's new product manufacturing process versus a flexible testing facility demonstrated that the rival was saving millions of dollars. The shadow team was also familiar with the rival's equipment engineers and suppliers.

Result

Information leveraged from these network contacts increased the shadow team's contribution by recommending a rudimentary test facility design of their own.

Case 4—Pharmaceutical Firm

A medium-sized American pharmaceutical firm structured shadow teams around ailment classifications. During scanning activities, a shadow member heard a rumor from a Federal Drug Administration (FDA) contact, which was corroborated by a field salesperson, that a new drug positioned to rival the firm's market leader was close to receiving approval. An upcoming conference gave the shadow team the opportunity to gather intelligence and validate—or refute—the rumor. Network connections identified the academic institution conducting the competitor product trials. During an evening cocktail party, shadow team members independently engaged scientists in discussion about chemistry and related topics. In time, they learned about the trials (although the product or sponsor was never noted by name), confirmed the FDA rumor, and, importantly, identified the new procedures employed in clinical testing.

Result 1

The firm leveraged this information and launched a campaign to bolster its product's market share. During this time, the shadow team was charged with finding out why competitors were constantly beating the firm to market with new categorical drugs. The team's experience with competitor scientists at the conference influenced their decision to launch a counter-intelligence investigation of their own firm. They learned that their own scientists, both in-house and those contracted to run clinical trials, behaved similarly.

Result 2

A program was created to generate awareness for protecting intellectual property and competitive information throughout the organization. The shadow team drove home the importance of not only learning, but also of guarding knowledge.¹⁰

FAROUT Summary

Figure 13.1 Shadowing FAROUT summary

Future orientation—Medium to high. One of the primary purposes of this model is to forecast with reasonable accuracy the future strategic plans and contingent reactions of rival firms.

Accuracy—Medium. To the extent that strategy follows structure, this tool is reasonably accurate. To the extent that strategy precedes structure, accuracy is compromised. Additionally, qualitative inference is fraught with potential inaccuracies.

Resource efficiency—Low to medium. Shadowing requires a dedicated team of internal analysts conducting analysis on a daily or weekly basis. Outsourcing introduces painful and often costly tradeoffs.

Objectivity—Medium. The idea that analysts can fully and objectively adopt the competitive mindset of rivals may be questionable in principle. Bias can be introduced by the analyst's internal affiliation and exposure to the firm's strategic decision-making processes and blindspots.

Usefulness—High. Having an in-house team of strategic challengers is very useful in rooting out blindspots. The usefulness of this strategic challenge is enhanced by the fact that the analytical ammunition of this model is externally sourced and cross-referenced.

Timeliness—Medium to high. A shadow market plan can be drafted fairly quickly.

Related Tools and Techniques

• Blindspot analysis
• Competitor profiling
• Functional capability and resource analysis
• Growth vector analysis
• Management personality and profiling
• Scenario analysis
• Strategic group analysis
• SWOT analysis
• Value chain analysis

References

Fahey, L. (2002). "Invented competitors: a new competitor analysis methodology," Strategy & Leadership, 30(6), pp. 5–12.

Fleisher, C.S., and D.L. Blenkhorn (2003). Controversies in Competitive Intelligence: The Enduring Issues. Westport, CT: Praeger Publishers.

Gilad, B. (1994). Business Blindspots. Chicago, IL: Probus Publishing Company.

Gilad, B. (2003). Early Warning: Using Competitive Intelligence to Anticipate Market Shifts, Control Risk and Create Powerful Strategies, AMACOM.

Katzenbach, J.R., and D.K. Smith (1993). The Wisdom of Teams. New York, NY: HarperCollins Publishers, Inc.

McGonagle, J.J. Jr., and C.M. Vella (1996). A New Archetype for Competitive Intelligence. Westport, CT: Quorum Books.

McGonagle, J.J. Jr., and C.M. Vella (1999). The Internet Age of Competitive Intelligence. Westport, CT: Quorum Books.

Rothberg, H.N. (1997). "Fortifying competitive intelligence with shadow teams," Competitive Intelligence Review, 8(2), pp. 3–11.

Rothberg, H.N. (1999). "Fortifying strategic decisions with shadow teams: A glance at product development," Competitive Intelligence Magazine, April/June, 2(2), pp. 9–11.

Rothberg, H.N., and G.S. Erickson (2005). From Knowledge to Intelligence: Creating Competitive Advantage in the Next Economy. Elsevier, Inc.

Vella, C.M., and McGonagle, J.J. Jr. (1987). "Shadowing markets: A new competitive intelligence technique," Planning Review, September/October, 15(5), pp. 36–38.

Vella, C.M., and McGonagle, J.J. Jr. (1988). Improved Business Planning Using Competitive Intelligence. Westport, CT: Quorum Books.

Young, G. (2004). "Using shadowing to build creativity and continuity," KM Review, July/August, 7(3), pp. 20–23.

Endnotes

¹ Fahey, 2002.

² Rothberg, 1999.

³ Larson and LaFasto, 1989.

⁴ Rothberg, 1997.

⁵ Katzenbach and Smith, 1993.

⁶ Rothberg, 1997.

⁷ Vella and McGonagle, 1988.

⁸ Vella and McGonagle, 1988.

⁹ Adapted from Vella, C.M., and J.J. McGonagle, Jr. (1988).

¹⁰ Rothberg, H.N. (1999).