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SPI versus spy.


ITEM: In MAY 1988 RESEARCHERS FROM THE NATIONAL Institute of Justice and the University of Illinois in Chicago concluded that the "theft of trade secrets is quite prevalent in diverse types of large American high-technology companies."(1)

ITEM: A report released in September 1988 by the Conference Board, a business research firm, indicated intelligence activities of corporations are on the rise.(2)

ITEM: Monitoring the Competition: Find Out What's Really Going On Over There, published in 1988, is essentially a handbook for legally and ethically gathering business intelligence from the competition. Marketing and strategic planning experts in large US corporations destine the book to be a best-seller.

ITEM: The Society of Competitor Intelligence Professionals has grown in its two-year existence to between 500 and 600 members representing between 300 and 350 corporations.(3)

ITEM: A marketing vice president of a major engineering firm was quoted in The New York Times as saying, "Next to knowing what customers want, the most important thing is to know what competitors are doing."(4) IN THIS INCREASINGLY COMPETITIVE BUSINESS CLIMATE, YOUR COMPANY IS more likely to become the target of an aggressive intelligence-collection campaign--sponsored not by some foreign intelligence service but by your competitors. Such an intelligence-gathering operation by your competition could be conducted using either legal and ethical methods or covert methods characteristic of industrial espionage.(5) In either case, your company's proprietary information--and its competitive edge--may be at risk.

Surprisingly, high-technology companies are not the only firms in danger of becoming the targets of intelligence-gathering efforts. According to a report in The Philadelphia Inquirer, a temporary-hire firm alleged a competitor sent one of its vice presidents as an espionage agent to pose as an applicant for an executive position in the target firm.(6) The agent's task, according to the lawsuit filed by the temp firm, was to gather billing information, training manuals, client lists, and phone numbers and addresses of temporary workers. The object was to destroy the competition and eliminate the target company as a competitor. The lawsuit contended that thousands of dollars in lost business, personnel, salaries, and other expenses resulted from the alleged operation.

While you may think your competition would never stoop to illegal and unethical methods associated with industrial espionage, many perfectly legal and ethical means of gathering information about your firm are available.(7) How can you as a security manager effectively combat efforts by aggressive competitors to collect your company's proprietary information--its trade secrets--by legal and illegal means?

A comprehensive SPI (safeguarding proprietary information) program may be the answer to this dilemma. This type of program has been recognized as an essential and effective weapon in the battle to protect a company's most sensitive business data and information. The accompanying chart provides a seven-point approach that will assist you in developing an effective SPI program.

As a security manager, you must be aware of three fundamental activities to safeguard your company's proprietary information. You must understand how competitors gather intelligence, how to stop or at least slow these actions, and finally how to prevent these actions from taking place again.

To combat the data leakage threat, you must know the intelligence-gathering techniques used by competitors. Leonard M. Fuld, president of Information Data Search, Inc., of Cambridge, MA, noted in his address to participants at the 34th Annual ASIS Seminar and Exhibits in Boston, MA, that corporate information is released daily during normal business transactions. Competitor-intelligence collectors simply find out where the release points are and capture the escaping information--legally and ethically. Fuld posited two rules on competitor intelligence gathering.

* Wherever money is exchanged, so is information.

* Published information does not necessarily mean public information.

Fuld also noted that companies may not be able to stop all leaks of corporate information, but they may be able to slow them down. Some ways you can slow down corporate data leaks, according to Fuld, include

* reviewing public relations documents or any public documents your firm releases,

* eliminating noncompliance information from filings,

* starting employee awareness programs, and

* briefing employees before trade shows.

Finally, competitor-intelligence gathering is a two-way street. You should prevent your staff from employing illegal and unethical methods of intelligence gathering just as should your competitor. Your senior management's guidance and support in adhering to the proper methods of competitor-information gathering is essential.

Fuld's company and the members of the Society of Competitor Intelligence Professionals disavow the use of illegal and unethical means of intelligence collection. Practitioners of legal and ethical competitor-intelligence gathering claim the job of collecting data about competitors is so easy that no one need resort to illegal and unethical means. Nevertheless, the temptation to participate on the dark side of competitor-intelligence gathering--industrial espionage--could become overpowering.

The fact that some marketing researchers and strategic planners yield to temptation is not surprising considering most operate with little or no guidance from their senior executives as to the proper methods of collecting information about the competition. Gary Edwards, executive director of the Ethics Resource Center in Washington, DC, believes competitor-intelligence gathering has become extremely important to most US businesses, yet very few corporations have gone on record to deny they break the law when gathering intelligence about the competition. Of the more than 700 corporations on file with the Ethics Resource Center, according to Edwards, only three have expressly addressed the ethical responsibilities of their marketing personnel when collecting competitor intelligence.

Even when a corporation publishes a written policy on the subject or includes references to competitor-intelligence collection within corporate ethics policies, some marketing people, according to Edwards, refuse to believe their company's policy is to be taken seriously. Therefore, when competitive pressures rise, the temptation to collect competitor intelligence illegally may become irresistible. Marketing people may rationalize their illegal conduct by claiming they do it for the company or that senior executives, despite their published ethics policy, are sending a clear signal to do whatever it takes to get the information.

Safeguarding your company's proprietary information is more important now than ever before because the risk of losing such information through both legal and illegal competitor-intelligence gathering is increasing demonstrably. Your SPI program should be a corporate program--fully supported by your company's senior executives and tailored to your company's specific needs. A fully supported and well thought-out SPI program will go far toward securing your company's most precious trade secrets and retaining its competitive edge. (1)Lois Felson Mock and Dennis Rosenbaum, "A Study of Trade Secrets Theft in High-Technology Industries," ASIS Foundation Grant, May 1988, p. 6. (2)Elizabeth M. Fowler, "Career: Intelligence Experts for Corporations," The New York Times, September 27, 1988, p. D23. (3)Fowler. (4)Fowler. (5)Norman R. Bottom, Jr., and Robert R. Gallati, Industrial Espionage: Intelligence Techniques and Countermeasures (Stoneham, MA: Butterworths, 1984). (6)Richard Burke, "Temporary-Help Service Accuses Rival of Trying to Steal Its Secrets," The Philadelphia Inquirer, August 25, 1988. (7)See Leonard M. Fuld's books on competitor intelligence: Competitor Intelligence: How to Get It, How to Use It (New York: John Wiley & Sons, 1985) and Monitoring the Competition: Find Out What's Really Going On Over There (New York: John Wiley & Sons, 1988).

Thomas C. Rauter, CPP, PhD, is a lieutenant colonel in the US Army, director of Army Officer Education, and professor of Military Science at the University of Pennsylvania in Philadelphia, PA.
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Title Annotation:safeguarding proprietary information
Author:Rauter, Thomas C.
Publication:Security Management
Date:Feb 1, 1989
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