Competitive Intelligence

In the news recently, there was an incident in which an airline used private investigators to get confidential flight information on a rival airline. The private investigators accomplished their objective by

A) Breaking into their website and
B) Going through the garbage of the rival’s senior executives

Is this an example of Competitive Intelligence?
No, the incident described is a case of industrial espionage. Hacking into a company’s website and taking documents from someone’s garbage is certainly not CI, and goes against the spirit and practice of the profession.
What could have be done to protect the company’s confidential information?
At the risk of sounding like I am blaming the victim, I say that every company is responsible for protecting and disposing of confidential information. In the Internet environment, maintaining a robust firewall is the responsibility of the IT department and each company must ensure that sufficient funds are provided to help the IT department to hire the right people and technology to do its job properly.
As for the disposal of documents containing confidential information, a company has to set the guidelines and provide and funds and technology to ensure that nothing is lost. There are contractors who provide document disposal services, but I am of the opinion that it is much safer if a company handles the job internally. This means purchasing shredders that reduce documents into confetti, not strips.
Why buy shredders that turn documents into confetti and not just strips of paper? Technology is the answer. There are professionals who, with the aid of specialized software, can scan strips of shredded documents and reconstruct important documents, thus revealing the plans of their competitors. Therefore, it is imperative that the proper equipment is purchased.
The disposal of confidential documents is not an issue that can be allowed to be sidetracked by budgetary concerns.
Finally, if an executive does bring confidential material to his/her place of residence, then standards should be set about their proper disposal.
Such documents must not be thrown out with regular garbage.
Either they should be burned or returned to the office to be properly destroyed.      

In the June 19, 2006 edition of the Korea Times, an article written by Cho Jin-seo indicates that more than half of that country’s top 20 high-tech firms have suffered leaks of industrial know-how over the past three years.

These are companies who made that highest investment in R & D and are now seeing the results of their sacrifice turned into profits and market gains by their competitors.

The extent of technology theft is now growing ever quicker.

A significant amount of this apparent knowledge theft is believed to take place when employees change companies. In the past, South Korea (like Japan and other Asian countries) offered their employees lifetime jobs and thus garnered their loyalty. South Korean workers no longer see their current employers as providing lifetime jobs. Thus, there is no loyalty. In fact, two-thirds of suspected technology thefts involve former employees.

One can imagine what the situation is in North America, where for decades workers have been used to working for a number of different companies.

In South Korea, the major high tech companies have increasingly responded to technology theft with legal action.

Possible Solution

As CI Manager, it is incumbent upon you not only to implement CI programs to analyze the competitive landscape but also to minimize (if not prevent) the leakage of key knowledge to your competitors.

These are some suggested measures:

1. Investigate Suspected Cases of Technology Leaks
   Are the products offered by your competitors truly identical to your products? Or are they cheap or substandard imitations? Do they do the same things as your products or are your competitors making exaggerated claims?Investigate your competitors thoroughly to ensure that there is indeed evidence of theft. If the competitors are making exaggerated claims about their products, then you can provide your sales and marketing people with ways on how to refute the competitors claims.

2. Look Into Whereabouts of Former Employees
   If there is enough evidence to indicate the possibility of technology theft, investigate where former employees are working now. It is possible that their former colleagues in your company may know where they are currently employed.If there is strong evidence or suspicion that a former employee is responsible for technology theft, then the company should seek legal counsel for further action.

3. Prevention is the Best Medicine
   All employees working in sensitive areas of the company should be made to sign letters of confidentiality binding them to promises to not pass on technology secrets to competitors. There is something about signing a document that has a lasting effect on a person.

Where should a CI group be located within an organization?

It all depends on the size of the company. In a large company, a CI group should exist within every strategic business unit (SBU). Keep in mind that the main goal of a CI group is to gather information from internal and external sources, and produce an executive summary to decision makers on the near- and long-term developments within their particular industry. (This would include possible marketing moves by competitors, the development of new products, impact from legislation, new hiring by competitors, technologies from unrelated industries that could make significant advances to your particular industry.) The CI group should have more knowledge about the company’s industry than any other employee or department. Accordingly, the CI group should reside wherever key decision-makers exist within a company, whether it be the CEO or the manager of a business unit.

From what I have heard about CI, it is mostly to get pricing information or getting an estimate on the sales force of specific competitors by eliciting information from sources. What other techniques are used by CI?