Daniel Vasella, chief executive of Novartis, understands it. Robert Crandall, former CEO of American Airlines, has applied it. Jeff Taylor, founder of Monster.com prods his marketplace with it. T. Boone Pickens, the oil and gas entrepreneur, used its very building blocks to build his empire. What they all have used is 21st century competitive intelligence techniques, each with a personal twist.

Modern-day competitive intelligence is the ability to do far more than simply collect and digest published data on the competition. It requires special insights in order to see outside your own business and stay ahead of disruptions, distortions, rumors and smokescreens. Ultimately, the market measures and rewards a CEO on performance but most of the time this translates into internal corporate measures, such as revenue growth and margins.

Yet the unspoken and often unrecognized other strength a CEO brings to a company is a drive to digest large gobs of information, assess its value and act expediently-ahead of the competition. Such a CEO will know a supplier's and even a customer's moves before the rest of the market. Sometimes this intelligence will tell the executive it's best to sit tight; other times, it screams for action before the competitive opportunity disappears. There are nearly as many ways to express the competitive intelligence competency as there are CEOs. For some, such as Vasella, it's a cultural acuity, an ability to sort out the useful and potential profitable competitive insight from many competing and distracting pieces of information. In Crandall's case, competitive knowledge is all about the numbers. Taylor likes to act quickly on the basis of instinct. While for Pickens, competitive intelligence means literally seeing your competition on the ground, watching its day-to-day movement.

Culture and Context

Vasella has a reputation as a demanding, direct CEO who overhauled the once-staid culture of Novartis's Swiss Sandoz/ Ciba-Geigy heritage. One of the keys to his success is that Vasella is constantly finding ways to look outside the company as well as seeking to bring new information into Novartis. As an example of his outward- reaching personality, Vasella recently made the decision to move Novartis's R&D headquarters from relatively quiet Basel to Cambridge, Mass., a hotbed for biotechnology research. Novartis is sinking $4 billion into this facility and betting that it will become a sponge for absorbing and instituting new ideas, which in turn will create new drugs. This Cambridge facility is in many ways a reflection of Vasella and his goals-always outward looking, always critically reviewing new information.

At one point in my conversation with him, I asked him about how successful he is in his ability to forecast five or 10 years out. He responded by talking about major overseas investment decisions, including one in China that he expects to make in the next few years, and how complex a picture he expects to confront. "What formulates my mental picture of China?" Vasella asked. "I have visited many times and have had discussions with politicians, physicians and my colleagues. My picture is composed of data and experience, failures and successes." The data he refers to comes from scientific journals and papers as well as information he may find on the Net. He almost never accepts the raw data alone before making a decision.

Vasella tends to blend any data he finds in medical journals or Internet news groups and combines them with his experiences working in laboratories and hospitals, as well as relationships he has built around the world. "Every day I read material on the Internet using key words to find a selection of articles and publications," he explained. "I then extract the essence, or the facts, from a variety of formats. Additionally, organizations generate information, such as market research data or reports on research symposia, which help to complete a certain picture. In any case, it is important to separate the facts from the interpretation as the latter varies greatly depending on the perspective."

Vasella always wants to know the source, as well as the culture, behind the information. For instance, he recalled reading an article on the Internet about the monarch butterfly and genetically modified crops, an area in which Novartis once held a stake. The article's author stated that the butterfly was dying because it was eating genetically modified crops. Vasella didn't readily buy into the conclusion. "Upon further investigation, or study of the data, you learn that this conclusion was derived from laboratory data and that the study was not conducted in nature."

Vasella understands the politics coursing through the Net. "One has to be careful when reading such €˜information,' " he said, referring to the author's assertion about the butterfly's threatened extinction. "But one always learns something from it, even if it was only the political agenda of certain activists."

Thy Rival's Metrics

Crandall, former CEO of AMR Corporation, the parent company of American Airlines, is intensely numbers-driven. Instead of colors, his painting is filled with metrics, measurements of all kinds, including utilization rate of aircraft, time on the ground, time in the air, and so on. In his own words, Crandall is a man obsessed with detail. When he became president of American in 1980, deregulation of the airline industry had just begun. Large carriers, such as American and United, were under great competitive pres-  sures from newly formed low-cost airlines.

Crandall knew that American had to understand the details of this new competitive landscape, and that meant uncovering the hidden levers of competitive advantage that lay somewhere in that painting. Labeled by one admiring MIT professor as the Patron Saint of Operations Research, Crandall constantly needed to know what drove traffic to or away from American Airlines. "We wrote software to look with great precision at precisely what food the other guy was serving, at precisely what time of day, and how that compared to our service offering on our flights ... At the same time we were able to look with great precision at the other fellow's schedule, what time he is leaving, what is his published flight time."

These numbers spoke very personally to him. They urged him forward to build the first computer reservations system, known as SABRE, which American had spent years developing. His operations research bent drove him to create the hub-and spoke system, creating efficiencies for American. Crandall pioneered the frequent-flyer loyalty program to retain the high-paying business travelers. He also knew that he could over measure if he was not careful. 

Taking action was key. His investment in the SABRE system was just one example of this decisiveness. SABRE cost countless millions and took years to refine. Yet it was an investment that positioned American Airlines as industry leader for years to come. "About half of the job of management is trying to figure out where the company is going to be five to 10 years down the road, and the second half is execution."

Intelligence, according to Crandall, must be applied quickly and without hesitation. "The most successful companies," he concludes, "are those whose CEOs make reasonably accurate forecasts more of the time than do their competitors."  

Act Early 

To Taylor, founder and former chief monster (as he liked to be called) of Monster.com, arguably the world's largest Internet career and job matching service (with over 15 million visits a month and over 8 million registered members), life is about in-your-face marketing, ranging from the oversized, very uncorporate, cartoonlike monsterlogo to the ads that flout the old-fashioned world of traditional newspaper help-wanteds.

Taylor's seemingly unbridled enthusiasm for nearly everything translates into an individual with high energy, willing to take on the world. Taylor typically attacks the world around him with his big, toothy smile. If he doesn't have the information on his competition, if his painting lacks details, well, he will go out himself to find those details.

Newspapers are Monster's direct competition for job ad placement. No problem. If Taylor wants to learn about how his competition's management is going to battle Monster, he wants to hear their plans directly. Taylor has regularly entered the competition's lion's den and spoken at newspaper conferences. He's there to both look for competitive opportunities and to garner publisher intentions. Taylor wants to know where newspapers want to take their classified advertising strategy and how that strategy may have an impact on Monster.

Taylor has learned many lessons from his slower newspaper rivals, including the need for in-your-face speed. He learned early on to go after employees (the sell side), not just employer ads (buy side). For example, when Coca-Cola announced it would lay off 2,000 employees a few years ago, Taylor immediately dispatched his Monster blimp to fly over Coke's headquarters in Atlanta. He was intent on reminding all buyers and sellers that Monster.com was the place to go, no matter on which side of the table you sat. He left the Atlanta newspapers in the dust.

Gut instinct and fast action drive him in the same way that numbers shape Crandall's thinking. Taylor seems to assemble odd bits and pieces of information, then quickly and intuitively builds a better whole. Monster itself was born from just such a confluence of insights.

Early in 1994, Taylor, out of college and running his own ad agency, was told by one of his clients, "I don't want any more big ideas. I want a monster idea." That was ingredient No. 1. At the same time, he had been tooling around the nascent World Wide Web, trolling through bulletin board systems, noting how people often posted jobs on these primitive sites. That was ingredient No. 2. That's all he needed.

In the middle of the night, some days after this client's remark, Taylor woke up at 4:30 a.m. with the concept of the first Monster board rattling around in his head. Not wanting to wait until the morning, he got dressed and sat in a coffee shop, where he sketched out the interface that represents the Monster board today. As evidence of his finely tuned instinct combined with speed, his Monster.com site was only the 454th dot-com on the Web. Many other career-hunting sites followed, but Monster, with over tens of thousands of prospective job seekers, remains the Web brand to beat.

The perspective on his painting changes too fast. Taylor thinks in hypermoving Internet years. In Taylor speak, he is intently telling you never to relax, never stop absorbing ideas that may in some way, small or large, affect your success. "Once you see the signals of change on the horizon," he warns, "it's too late."

Out On the Street

Like Vasella wandering through the labs, Pickens, a trained engineer, probably realizes more than anyone else the need to escape your desk if you truly want to see what the competition is up to. Any business Pickens has ever run demanded he pay attention to what was going on in the ground itself. Whether he was operating an oil drilling business, buying and selling water rights (among his more recent ventures), owning a quail farm or operating natural gas fueling stations, he always paid attention to the ground around him.

Recalling his early days in the oil and gas business, he describes how he learned about a rival's drilling activity long before everyone else in the market. "We would have someone who would watch [the rival's] drilling floor from a half mile away with field glasses," recalls Pickens. "Our competitor didn't like it, but there wasn't anything they could do about it. Our spotters would watch the joints and drill pipe. They would count them; each [drill] joint was 30 feet long. By adding up all the joints, you would be able to tally the depth of the well."

Pickens understood that the deeper the well, the more costly it is to bring the oil or the gas to the surface. It was a simple equation but one that provided him with competitive advantage. For Pickens, seeing your competitive landscape in perspective meant watching and observing activity at the ground level. Leave the confines of your office and go outside where the market takes shape.

Few savvy chief executives talk openly about collecting and applying competitive intelligence in today's ultracompetitive day and age. Nevertheless, they know it and use it. Undoubtedly, investment analysts will continue to measure a CEO's performance against P/E ratios and various other returns on investment. his is as it should be, at least in part. But at the same time, a stockholder needs to appreciate the daily tactical and long-term threats and opportunities that face corporate management. A company's most senior exec should not exclusively look inward, examining only where to cut costs or improve the bottom line. For while you are looking at your spreadsheet, someone else is trying to upend it.