Leading vs. Lagging Disclosure Intelligence Strategies

Competitive intelligence and business intelligence are two very broad concepts, and the world of disclosure has traditionally been separate. CI and BI can encompass everything from social media and news monitoring to in-site sleuthing.

But where does the hard evidence come from? Where do you find the facts? Raw and unadulterated, the facts are found and analyzed in financial reports.

Financial reports contain the most accurate and telling information about a company. The ability of one company to get ahead of another partially relies on their chosen method of deciphering and analyzing the information that’s available to them. This is what we call disclosure intelligence.

What makes for a leading disclosure intelligence strategy as opposed to a lagging one? Let’s explore the difference

Leaders: Pay attention to insider trades.

Laggards: Don’t.

While illegal insider trading captures the reporting world’s imagination, day-to-day, less scandalous insider trading goes unnoticed, despite its richly revealing potential. Are executives running fast? Maybe investors will be to. Who are they running to? Better make sure it’s you! Financial analysts must receive your company well too.

“Analysts make their money digesting financial data and issuing projections that amounts to the sum of this data, held together by educated guesses. An analyst with a history of being more right than wrong commands a higher salary; any analyst worth his or her salt will look for as much information as possible to lead to the best guess. This includes legal insider trading activity by a company’s officers.”[1] Laggards won’t be paying attention to the competitor next door; their minds are fixed elsewhere.

Leaders: Monitor exposure drafts, ASUs and interpretations.

Laggards: Don’t.

Accounting standards are in constant flux. When a change occurs, the leaders aren’t only monitoring the changes, but they’re one step ahead, thinking of an action plan, how their processes will be affected by the change and perhaps even providing their feedback to the standard setting body. ASUs, for example, include how the FASB has changed US GAAP, why FASB decided to change US GAAP, when the changes will be effective and the transition method. Some of these come more abruptly than others. Leaders will be creating disclosures based on existing and reliable benchmarks while laggards will only just have started digesting the impacts of the change.

Leaders: Have alerts on their competitors.

Laggards: Don’t.

Strategic and Competitive Intelligence Professionals (SCIP) study shows that companies who gather high levels of intelligence increase their business performance more than their lagging counterparts.

  • Those companies gathering a higher level of business intelligence expressed 37% higher product quality and a 68% increase in business performance.[2]
  • Those companies gathering a higher level of business intelligence expressed a 36% percent quality increase in their strategic planning and a 48% increase in business performance. [3]
  • Those companies gathering a higher level of business intelligence saw a 50% higher level of market knowledge and 36% increase in business performance.[4]

Leaders: Have real-time analytics.

Laggards: Don’t.

Predictive analytics – it’s what the leaders are after. “Because today, it’s not enough to know about existing or past data, it’s not enough for a manufacturing company to know the inventory levels of the last quarter. What they actually need to know is what it will be, or rather should be for the next quarter. […] McKinsey says, “a retailer using big data to the full has the potential to increase its operating margin by more than 60%.”[5] Laggards are looking back and asking, “What happened?” Leaders are looking forward and asking, “What’s happening?”

Don’t be a laggard – Sign up for Certent’s 30-day free trial of our disclosure research solution, DisclosureNet, to get instant access to critical disclosure intelligence.

 

SOURCES:

[1] Clark, Josh. “HowStuffWorks “Using Insider Trading for Investment Analysis”” HowStuffWorks. N.p., 2013. Web. 16 Apr. 2014.

[2] “Measuring the Benefits of Competitive Intelligence.” GCC Consulting. Global Intelligence Alliance, n.d. Web.

[3] “Measuring the Benefits of Competitive Intelligence.” GCC Consulting. Global Intelligence Alliance, n.d. Web.

[4] “Measuring the Benefits of Competitive Intelligence.” GCC Consulting. Global Intelligence Alliance, n.d. Web.

[5] “From BI to Advanced Analytics.” – Dataquest. N.p., 14 Apr. 2014. Web. 16 Apr. 2014.