One of the biggest challenges managers face is figuring out what the competition is up to, according to Leonard Fuld, a consultant on competitive intelligence. In his new book, The Secret Language of Competitive Intelligence, Fuld explains how to analyze information about the competition to obtain insight and advantage over rivals.

Fuld contends that the information one needs to stay ahead of competitors is everywhere. Competitors reveal more information now than ever before, through online archives of their annual reports, press releases and PowerPoints detailing company strategy. But while the Web contains lots of intelligence gems, it is also a source of misinformation and confusion. The key to developing insight into one’s rivals is knowing how to use the data you find. Transforming information into intelligence is an art form, says Fuld, involving creativity, critical thinking—and prompt action once you’ve obtained a worthwhile insight.

One way to turn information into intelligence is by developing scenarios in which you imagine what your company might do in response to its rivals. Fuld provides examples of how companies can use competitive intelligence both offensively and defensively. Google, for example, needs to be prepared for how Microsoft might react to what it does, because now that Google is a public company, Microsoft and other rivals have greater access to information about its intentions.

Finally, he advises, companies need to have more than one strategy for each action they anticipate rivals will take. Using competitive intelligence effectively means more than guessing what your rivals will do; it means being prepared for what they might do.