“The genius of our product is inside this Black Box.” Innovative ideas are precious and rare. For many firms, there is just one technology or technique that forms that vital market differentiator. If this key idea escapes from the box, competitors may pounce and a market advantage may be lost.

But there’s a dilemma here. The analyst who is assessing your offering and your business will not give you any credit for magic. As an analyst, I cannot assess a Black Box. I need to be able to assess its contents. If you don’t trust the analyst to treat your secrets confidentially and with integrity, there can be no real engagement and no analyst relationship.

So how valid are companies’ concerns in this area? Are analysts a safe haven for your most valuable information? Or does briefing the analyst amount to giving your competitors a briefing?

One factor that makes it harder to decide what to reveal is the frequent lack of any legal agreement that would impose a duty of confidentiality on the analyst. In my days at Gartner, the policy was very clear. As analysts, we could sign an NDA for very specific information that was embargoed for a few hours or days, but not a blanket NDA that would last for years.

From the point of view of the analyst firms, the reason is obvious. They are paid to come up with market insights. It’s what they do. And they wouldn’t stay in business long if they spent every day and dollar in court, defending claims from firms insisting their insights came from divulging commercial secrets.

You have to draw the line

So are they leaky buckets then – not to be trusted? Not in my experience. And for good reason. The other side of the bargain is the analyst’s understanding of the realities of the situation. If analysts were a leaky bucket, they would quickly have no business. This is the age of the internet and social media, and any firm that revealed other people’s confidential information would be mercilessly exposed. Its business reputation would evaporate. Non-disclosure is not a legal matter; it’s dictated by commercial reality.

The analyst market, though, is not a homogeneous one. It’s made up of firms ranging from the one-man-band making a living from a handful of clients to the global behemoth that is Gartner.

Equally, being an analyst is not a vocation. The analyst you speak to today may well end up tomorrow at a different class of firm, or even as VP Products at your chief competitor. The analyst firm may be under an obligation to keep your secret, but what happens if the individual jumps ship?

The only practical solution to this is to make your own commercial judgment and keep certain commercial secrets away from the analyst’s gaze. If this analyst’s market opinion does not count, those secrets may amount to everything that’s in the Black Box. But your firm may need the boost of a positive assessment from the analyst, and simply showing a tightly closed Black Box will guarantee no risk is matched with no reward.

Playing too safe can be dangerous

Our advice to clients is that they should consider what level of secrets in the Black Box can be safely exposed, without giving away the keys to Fort Knox. The aim should be to enable the analyst to understand the essential mechanics – and the unique and powerful beauty of your approach – without ever knowing exactly how that piece of genius is achieved.

It’s unlikely that an explanation of the high level architecture, for example, that explains what’s going on at the structural level, will give key secrets away. Equally, sharing the essence – but not the detail – of the technological approach is unlikely to give away how to replicate your achievements.

On the other hand, explaining how the code is structured or describing the specific features of underlying components could do it. So don’t share those details.

The truth is, the analyst doesn’t need that level of detail to assess you, anyway. The analyst just needs to know that your claims of efficacy could reasonably be achieved. So if you claim you can process something ten times faster than anyone else, you’ll need to provide a reason to believe this is feasible, without necessarily explaining in detail how it is done.

Ultimately, these are senior executive decisions. Locking the Black Box is the easy option. It’s safe, conservative, and apparently risk-free. But if you take enough safe, conservative no-risk business decisions, often enough, you’ll end up with no business to risk.

If you want to grow your business via the analyst channel, you need to be ready to open the box and think carefully about what elements you really need to hold back. And remember this: as a general rule, the less you tell the analyst, the less confident they will be in you.

 Are we on target? Have you experienced issues of coverage?  Have your say, and send us any practical tips you’ve discovered that we can share with our readers.