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Competitive Intelligence, Corporate Security and the War on Terrorism

Counterterrorism measures also play a role in intellectual property theft and other security steps taken by corporate America.

By John J. McGonagle and Carolyn M. Vella, The Helicon Group

October 30, 2007 — CIO — Competitive intelligence teaches you to see things as they are. So what role does competitive intelligence have in the fight on terrorism? What is happening to competitive intelligence due to the response of corporate security staff to the war on terrorism? Let's list the major ways that is occurring and then develop each of them in turn:

• Those involved with competitive intelligence may have additional missions.
• Businesses are changing and will continue to change the way they deal with outsiders.
• Numerous changes have resulted for so-called open records or Freedom of Information Act statutes and regulations, both at the federal and state levels.
• The war on terrorism has placed increased responsibility on, and an increase in funding at the disposal of, corporate security units.
• Many, although certainly not all, citizens are more sensitive to what other people are doing and are on the lookout for anything "strange."
• There will be unintended, perhaps even unpredictable, consequences for competitive intelligence professionals.

Currently, in the corporate world, the burden of responding to the war on terrorism has fallen most heavily on corporate security personnel. As those involved with security are finding, since the war on terrorism has so many facets, it is useful to reach out to other corporate functions for assistance.

For example, in some firms, it has increased the awareness of the impact of counterfeiting, which is sometimes linked to terror groups. That in turn sometimes brings the legal team into the mix, drawing on the expertise there to help deal with counterfeiting and its associated activities, such as trademark violations, patent infringements and the like. Internal staff involved with competitive intelligence may also have a similar supplemental role.

A competitive intelligence team should be reviewing what your firm has already released to the public to avoid wasting time and money protecting such material. For example, in one assignment, our firm was able to develop complete floor plans, equipment inventories and even machinery locations for several Midwestern food plants. The principal source of the data was a tax office that was being filed to allow regular updating of assessments.

If this were your firm, instead of focusing on keeping this data from being disclosed through other channels, which it is too late to do, a better use of resources would be to protect the facilities and also work with the tax office to make sure that future filings would not be accessible to third parties or contain sensitive facility information. To provide for the second step, you will probably have to work with the agency and provide the data separately, marked as "trade secret—not for release" or the equivalent. Also, the competitive intelligence team can help your security team determine whether the "leak" is the result of economic espionage, an accident or just effective competitive intelligence efforts directed at your firm.

Seek out the competitive intelligence team's expertise and ask it to help educate your entire staff on how to defend against the intelligence-gathering efforts of your competitors. While that is beyond the scope of this piece, an effective defensive competitive intelligence program can supplement legal and security programs by minimizing the accidental loss of competitively sensitive data, thus reducing the burden on these functions. But just how can it supplement those programs?

To understand where and how competitive intelligence professionals can assist both your security program and a legal program, it may help to align these programs. One school of thought puts the relative availability and benefit of so-called "open-source information," which is data available to everyone, primarily but not exclusively secondary data, as follows:

• Open-source information: 80 percent of what is needed to make decisions.
• Open proprietary: legally obtained through concentrated efforts, 10 percent more of what is needed.
• Closed propriety: information obtained through so-called gray activities, which are legal but of dubious ethical stature, as well as some that are clearly black, such as industrial espionage, 5 percent more of what is needed.
• Classified: closely held, extremely valuable information, such as trade secrets, virtually all black operations, 5 percent more of what is needed.

As the following chart shows, one way of looking at the relative missions of corporate security, intellectual property protection programs and defensive competitive intelligence is to line them up against the elements of the data pyramid showing these ratios.

If a competitive intelligence unit cannot or does not undertake these missions, there is no reason why appropriately trained security personnel cannot assume these related responsibilities.

To competitive intelligence practitioners, business changes driven largely by security efforts have already made it more difficult to collect primary information on many targets. No longer are full company directories commercially available or a regular feature on the Internet. No longer are tables of organization and plant diagrams to be found on a homepage or on the walls in public reception areas in businesses.

Industrial security teams are not doing these things to foil intelligence gathering, but to protect against potential terrorist activities. But protecting against terrorists in many cases also means, almost by accident, protecting against competitive intelligence professionals working for your competitors.

As the war on terrorism drags on, we can expect that companies will increasingly protect their employees and the information that their employees possess. If and when U.S. businesses begin to be damaged by terrorists, we can expect to see such protective and defensive activity escalate to levels that today would be almost unimaginable. If such escalation occurs, it will not put competitive intelligence out of business, but it will make the collection of primary intelligence—information from people, or information from observations—even more difficult than it is today. That in turn means that those developing competitive intelligence will further rely on secondary or document-based data for intelligence purposes.

There are many fundamental flaws with such a research strategy—among them that what has not yet happened, but is being planned, is likely to be in the possession of people, while documentary evidence is available in only the most general terms.

If competitive intelligence should trend toward library- or now Internet-based research, we can expect an increase in the use of disinformation, which practitioners find most distasteful. Besides its obvious ethical problems, which are significant, disinformation has the effect of destroying trust in those involved in spreading it. In the business world, for disinformation to work, it must mislead competitors. And those people spreading it, or least most of them, must actually believe in it as well. When it becomes obvious later on that the information is incorrect, these people will, consciously or subconsciously, be less willing to do the future bidding of those who created the disinformation.

It is only the presence of the relatively new Securities and Exchange Commission (SEC) rules on public disclosure that have kept many publicly traded businesses from utilizing disinformation. For non-publicly traded businesses, however, disinformation still remains an option. As businesses realize that they are more secure from competitive intelligence penetration aimed at primary intelligence data, we can expect a rapid rise in the use of disinformation released through the print media. Some of the disinformation, of course, will be accidental. A reporter who misquotes an executive, a typo in a magazine chart, or an overly enthusiastic or pessimistic headline all can contribute to disinformation, or even can create it.

To be sure, disinformation, if taken too far, can be fraud. But there is a great gray, and frankly distasteful, area between strict honesty and fraud. As competitive intelligence is pushed back from access to people and must rely more on secondary sources, targets of legitimate competitive intelligence activities may well be tempted to tweak what the competition hears by adjusting what they say or do not say.

Research has shown that starting on this slippery slope from the clear bright light area of legal and ethical behavior into the increasingly gray zone of unethical behavior leads all too often to the black area of fraud and violation of criminal laws.

 

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