Dyson has discovered a spy for its German rival Bosch working in its high-security inventing department in Malmesbury.
One of the basic principles of business strategy is that competitive advantage comes from differentating yourself from competitors. This comes from either improving processes or improving products – cost leadership or product/service differentiation.
Competitive Advantage cannot come from a follower-strategy. It comes from proving to customers that you are different and offer something that competitors don’t have.
Copying competitors does not do this – it shows a lack of ideas and a lack of creative, innovative strategy. For a company like Bosch, known for engineering excellence, resorting to corporate espionage – and being suspected of wanting to use another ocmpany’s ideas says that Bosch is in deep trouble.
There is a big difference between competitive intelligence and corporate espionage. Competiive Intelligence aims to understand everything about the competitive environment – and why customers choose one company in preference to another. It can also try and understand what a competitor aims to do next – so that clear lines can be drawn between companies. Espionage does something different. It says “we want to do the same as you and want to know your secrets”. That’s a straegy failure – and wrong!
See on www.telegraph.co.uk
Part of the task of a Competitive Intelligence consultancy is to show companies that competitive intelligence is a necessary business skill – and that it is legitimate and ethical to outsource competitor research to external consultants whatever can’t be handled in-house. (Reasons for outsourcing include lack of time, lack of skills and experience and the need for an objective view – which can’t be obtained by doing research in-house). In fact AWARE views training in competitive & marketing intelligence as a key element of its business mission, so as to raise CI/MI skills.
There are many ethical competitive intelligence consultants apart from us – in the USA there is Market Analytics, Fuld and Aurorawdc to name three. In Australia – the Mindshifts Group, led by CI industry leader Babette Bensoussan is important. Within Europe there are similar consultancies. We link to a number of top CI consultancies on our alliances web pages.
Unfortunately there are also several companies that fall short ethically and even legally. I recently came across one – with a great domain name, but that’s as far as it goes. This “business intelligence” company (which I won’t name for now, for legal reasons), openly states that they engage in industrial espionage.
Secondary research – their “light touch” is legitimate if it doesn’t employ hacking or password cracking. However their in-depth research placing moles into the target company is highly unethical and probably illegal (depending on the information supplied, and any non-disclosure agreements signed by the agent and their “employer”).
Such behaviour brings all competitive intelligence under suspicion – which is part of the rationale behind this post: to expose such shenanigans.
Fortunately this “business intelligence service” doesn’t come cheap and only very few (probably desperate) companies will avail themselves of such services. In fact the company actually implies this by saying on their web-site:
“We hope that you never need our services, but if you do, then you can be assurred of an excellent service.“
Their charges range from £10,000 for the “light touch” research to £150,000 for their in-depth research (including “employee placement and surveillance“). Even this is not their top price. When looking at individuals, pricing ranges from £25,000 for “light touch” research verifying personal details, employment, connected people, etc. to £200,000 for fully in-depth analysis (lifetime checks, asset checks, lifestyle, etc.). Some assignments are charged at fees of up to £25,000 per day (although most are claimed to be a fraction of this).
To put things into context, we have never charged anything like £10,000 for pure desk research and from conversations with other consultants, they haven’t either.
They claim that their “researchers” come from military, police and government service backgrounds – but they don’t mention any business or marketing background. They seem to be ignoring, or perhaps do not even know the risks involved in industrial espionage and based on what they offer, I’d question whether they’d see the value in standard strategic analysis as a means for understanding competitors. (The US Economic Espionage Act, 1996 is just one risk. Even when companies don’t go to law, there can be serious financial ramifications for espionage).
Instead of looking at public non-confidential intelligence that, when aggregated, can create a detailed picture of all aspects of a company they seem to prefer subterfuge. Such approaches may say what a company is currently planning but it won’t help in understanding what the company is thinking or likely to do in the future
Interestingly this company is not as immune to standard CI investigation as they probably think. Standard secondary research suggests that they use a Plymouth, UK, based front company for finding work placements for their agents, and that their minimalist web-site has at least one hidden / secret directory – which can be found by searching for a robots.txt file.
I read this news item from ABC news ‘James Bond’ Tactics Help Companies Spy on Each Other” and had only one thought: that guy is totally unethical and wrong.
A few years ago, an Israeli colleague commented to me that in his experience, most of the ex-secret service operatives who try and enter the commercial world of CI fail. The reason he said is that they don’t know the boundaries of what is legitimate competitive intelligence collection and what is corporate espionage, and illegitimate. He also said that in many cases, they also have no real idea of budgets and what is valuable to a company strategically versus the cost of obtaining it. Most never had a budgetary role when working for the various national security services and so could not do a cost-benefit analysis effectively.
This story shows both examples. Purchasing the garbage from an organisation is not only unethical but strikes me as wasteful. Garbage is thrown away for a reason – it’s not wanted and valueless. The majority of companies today have shredders and routinely shred anything that would be seen as highly sensitive. True, the mid-level material may be chucked, but not the high-level stuff. (And those that don’t shred deserve what they get – I’d be surprised that any Fortune 500 companies don’t have shredding contracts!)
As for the other shenanigans implied – any company that employed a consultant to use such techniques deserves to get sued and end up paying more than they gained. The trouble is some do – and the list of companies that learned the hard-way that espionage doesn’t pay is still growing.
So let me make it clear: espionage is wrong, while CI is a legitimate practice that uses only ethical means to collect intelligence.
This involves declaring your identity and NOT collecting information that would be classed as secret or confidential. As Issur Harel the Israeli spy-chief responsible for capturing the Nazi war murderer, Eichmann, is reported to have said:
We do not deal with certainties. The world of intelligence is the world of probabilities. Getting the information is not usually the most difficult task. What is difficult is putting upon it the right interpretation. Analysis is everything. James Bond is not the real world.
An article in the New Zealand Herald – Cloak & Dagger Tactics Hit the Office gives an interesting perspective on how dirty tricks, espionage and other unethical practices can hurt companies. Unfortunately there is nothing new in the idea that competitors and others can deliberately aim to hurt rival organizations using unethical and illegal approaches.
Competitive intelligence (CI) is primarily about finding information on your competitive environment – competitors, customers, suppliers as well as general business trends that could impact you. (AWARE‘s brief guide to competitive intelligence tells you more about this).
One common technique is to identify the key intelligence topics (KITs) that you need to focus on to give you that competitive edge. These KITs will are aimed at helping you understand competitor strategies and the reasons competitors are doing what they are doing – as one example.
One topic that all organizations should look at is what others are saying about you.
- What do your customers think about your products and services?
- What do suppliers think about your negotiating skills – are you a push-over?
- How do competitors view your position in the marketplace – and what do they see as your vulnerabilities?
You need to do this globally. Don’t just focus on your key local competitors, but consider those from further afield. New threats could be coming from anywhere: Brazil, India, China…. In fact, CI is a truly global discipline, and it is essential to know thy competitors – wherever they are located.
Sometimes what you’ll discover may be uncomfortable. In 1993, Virgin Atlantic discovered that BA had gained access to confidential files and was using these to poach customers from the airline. This led to a protracted court case – BA lost.
More recently, the Canadian insurer, Fairfax, was the target of a campaign of malicious disinformation from a group of Wall Street Hedge Fund managers. The company is now suing them for $6 billion – claiming that their aim was to manipulate the market by creating uncertainty about the company and its future. These include a variety of dirty tricks – false emails and letters, espionage attempts and more.
The lesson from these two cases (and there are many more) is that it is important to watch out for what others are doing to you. Don’t assume that your competitors always play fair – some don’t.
You need to keep a look out for unethical practices:
- the phone call from the “student” asking for help with a school project;
- the visit from an “industry analyst” claiming to be writing a stock report
and so on.
Always check that they are who they say they are before confiding anything. If suspicious refuse to give any information away.
Even more important, beware of scams that may try and lull you into a false sense of security: the “official” who claims to be a government tax inspector, who then gives a phone number that you can use to check him up. Except that the people answering the phone are in on the scam! (For any official organizations it should be easy to verify that the phone number is real).
Or the organization using a fake, but official sounding name (e.g. in the UK, many companies are conned into paying more than needed by companies calling themselves things like “Data Protection Office Ltd” which sounds sufficiently similar to the real Data Protection Registrar.)
The old adage Buyer Beware (Caveat Emptor) holds. A key intelligence topic that all companies should include in their armory is the one that focuses on what competitors are doing aimed directly at you – what they are saying, what they thinking, and what they are doing, especially if they have a propensity to play dirty!