Wednesday, November 9, 2011

Today, a reporter asked me about corporate espionage...

Protect Your Assets -
Q. Would you say that in addition to legitimate competitive intelligence gathering, that most major [industry deleted] manufacturers engage in industrial espionage of some kind as well? Or would this be exaggerating things?

A. If you use the term espionage broadly, I would say all. Everyone keeps an eye on the competition to some extent. Many of the tactics are legal, such as 'open source competitive intelligence'.

If you mean unethical espionage, I would say most. But, take into account that "unethical" means different things in different cultures. Eliciting information from a competitor's employee under a pretext may be viewed as unethical by some cultures, other cultures view it as a patriotic act …and, if that competitor has not taken steps to protect their valuables, then it is the competitor's business ethics which are questionable.

If you mean illegal espionage, then I would say probably most, but it is impossible to know for certain. Like all espionage, if conducted correctly, it is not found out. The cases of illegal espionage that we read about in the papers, and wind up in the courts, are the failures. They constitute the tip of the 'spyberg'.  

My feeling from being in the corporate counterespionage business for over three decades is that everyone engages in some form of espionage. And, over time, most of them have stepped into the last two categories (unethical and illegal) to some extent. These transgressions can range from occasionally accepting information without questioning how it was obtained, to the few who ruthlessly plot and snatch from the unsuspecting, like monkeys in a Buddhist temple.

Q. Is there a fine line between legitimate competitive intelligence gathering and spying - or is it very clear cut? (eg. As a journalist I have sometimes posed as someone working in industry when trying to find things out from a company switchboard in order to gain some information when they won't take calls from reporters etc.)

A. We actually call it a grey line. As I mentioned in the last question, there are varying shades of grey. In fact, you may want to interview Andrew Brown, the author of a revealing new book called, The Grey Line: Modern Corporate Espionage and Counter Intelligence. In the book he explains exactly how corporate espionage is conducted.

Q. If a major firm wants to find out what its biggest rival is up to, will it typically employ a third party specialist or attempt to gather the information in-house?  If they do seek out a specialist, are there a handful of key firms/individuals that are well-known in the trade or is it a much more fragmented industry?!

A. Business consultants and their minions (or "cutouts" as we call them) are the prime conduits of business intelligence. Most companies want 'the goods' but don't want to know how they were obtained, or get their hands and reputations dirty if the operation is exposed. That being said, it is known that some companies have dedicated in-house personnel, for better control. 

Also take into consideration that the government intelligence agencies of just about all countries (except the U.S.) actively collect and present business intelligence information to businesses in their homelands.

There are also people who occasionally pop up and try to sell information on a free-lance basis, or on-spec. My feeling is that they are looked upon with suspicion by potential buyers, as we hear about buyers alerting the victimized competitor to their offers. Makes sense. One never knows when one is being set-up.