Competitive Intelligence: When the Search for Information Takes a Walk on the Dark Side

In the world of twenty-first-century marketing, competitive intelligence (CI) serves as a tool for helping organizations predict future trends by making educated projections for opportunity and risk in the marketplace and analyzing competitor data and consumer trends. Although the notion had been circulating for several decades among executive forums, Michael Porter's 1980 book Competitive Advantage set a standard for defining how a firm can maintain its lead over time within a given industry. However, careful analysis must be devoted to considering what legal and ethical limits corporations can stretch in order to gain an advantage over their competitors. Will executives really follow a "smell test" beyond the scope of what is required by the law when millions of dollars are at stake? While competitive intelligence leads to a clearer strategy for advancing company profitability, the proliferation of subversive methodology requires a straightforward consideration of the methodologies involved.

When conflicts of interest emerge over a limited resource such as clientele base, the boundaries of corporate intelligence (CI) and corporate espionage (CE) must be clearly defined and maintained for a more just society. Professional organizations propose varying definitions of CI. In the realization of broad values, the Society of Competitive Intelligence Professionals (SCIP) proposes guidelines that exhort members to maintain the highest degree of professionalism and to avoid unethical practices; to comply with all applicable laws; to adhere to their own companies' practices, objectives, and guidelines; to identify themselves and their organization prior to interviews; and to respect requests for confidentiality (Trevino & Weaver, 1997, p. 3).

In spite of these clear directives, much space remains for reinterpretation; what exactly is "unethical"? The distinguishing characteristics between "ethical" and its antonym continue to plague multiple definitions of this term, as further highlighted by Rouach and Santi (2001):

[CI] is an art of collecting, processing and storing information to be made available to people at all levels of the firm to help shape its future and protect it against current competitive threat: it should be legal and respect codes of ethics: it involves a transfer of knowledge from the environment to the organisation [sic] within established rules (p. 553).

Ambiguity notwithstanding, CI rests firmly within the boundaries of legal and socially responsible ethics as opposed to (CE), which may resort to "spying, stealing, or bugging" in order to gain valued information (p. 553). When common law merges with the specific directives mentioned above, immediately understood by corporate executives and others in positions of power, the diverging points begin to form between CI and CE.

Ultimately, in a society inundated by the competitive effects of globalization, people will continue to do whatever it takes in order to gain an edge over their opponents. Indeed, the correspondences between the two concepts share a number of common points that merit recognition. At their core, CI and CE both endeavor to gain a position of superiority over peers through the gathering of pertinent market data, customer information, and technological tactics (p. 553). Both will, at times, take an aggressive stance in their efforts to get ahead.

In the world of consumer products, this desire to get sometimes leads to embarrassing exposures of illicit activity. In the case of Proctor and Gamble (P&G) in 2001, Chairman John Pepper discovered that his company had been spying on international conglomerate and competitor Unilever. Reports suggested that spies had engaged in "rubbish archaeology," where employees rummage through dumpster bins in order to access un-shredded files that may be pieced together to gain an inside track on competitor plans (Jordan & Finkelstein, 2001, p. 1). In addition, P&G associates were accused of posing as market analysts and research students in an effort to obtain interviews with Unilever management (p. 1). In the effort to gather this information, P&G crossed no legal boundaries (although they did cross SCIP boundaries) yet managed to gain a great deal of valuable information. Such data included detailed accounts of Unilever's goals in the shampoo industry of the US market over the span of 2001-2004 along with plans for launching, price settings, and profit margins (p. 1). When brought into the public eye, such altercations often provide cause for lawsuits (p. 5). These tactics clearly reveal the dark side of competitive intelligence directives gone wrong.

It is important to understand that no major corporation wants to get mired in this issue. In fact, P&G publicly displays its corporate code of ethics as a clear guideline for proper business function: "We collect competitive information through proper public or other lawful channels but do not use information that was obtained illegally or improperly by others, including through misrepresentation, invasion of property of privacy, or coercion" (p. 4). If no legal lines were technically crossed and P&G found internal violations of their own principles, company policy suggests that this margin data and business plan subversively acquired from Unilever must have been destroyed. The true result, barring further research, remains in question.

The implementation of CI can take many different forms and strategies. Rouach and Santi highlight five fundamental strategies for effective CI work: the warrior, the assault, the active, the reactive, and the sleeper methods (p. 556-557). Fleisher (2003) provides a detailed outline where CI is divided between personal intelligence (PI) and technical intelligence (TI) (p. 187). Metayer (2013) describes fifty different analysis techniques that companies use in the effort to create a competitive advantage such as the SWOT analysis and the Innovation Ambition Matrix. Clearly, option abound. Although the SCIP code of ethics has already been described on page one, there are some legal frameworks for the effective imposition of these rules. Bosca (2013) mentions the Economic Espionage Act, set in place to enforce the attainment of the aforementioned principles. Such a broad mandate, ideally, should serve to divert renegade behavior among companies.

Nevertheless, the time has come to face the facts: corporate espionage is exciting. Frankly, this is the kind of content movies come from—people who are willing to engage in acts of phone tapping, dumpster diving, false interviews, and even mystery shopping have a certain vigilante ambiance to them that quickly captures the public imagination. Hence, we find the cause for the great blurring of CE and CI: "since the 1980s, newspapers and magazines appear to be more interested in espionage and breaches in ethics than in the methodology for doing CI" (Bosca). Not only are detailed analyses of CI techniques almost always avoided, but they are also intimidating to understand for the average layman. When these ethical tactics are compared to more ambiguous strategies that could compare with a spy series, the public remembers the illicit. For the private companies involved in such competitive industries, however, this daring public image of CI has negative implications that, if caught or even suspected, can tangibly reduce the value of stocks, irate shareholders, and downgrade credit ratings (Jordan & Finkelstein, p. 4). In a world where image so often matters more than truth, companies must work with all due diligence to avoid even the semblance of CE (Bosca). Not doing so is rarely worth the risk of discovery.

Often, consultants distinguish ethical issues in CI in terms of consensus ideals as compared to open-ended issues. Trevino and Weaver clearly highlight the opportunity for gray areas by juxtaposing misrepresentation of identity against misrepresentation of intent and a sin of commission against a sin of omission (p. 13). If a spy simply chooses not to reveal their identity and an unsuspecting competitor divulges sensitive information, is that the spy's fault? Such questions strike at the heart of the elusive gray areas between CI and CE.

The correspondences between military intelligence and CI provide an opportunity for high-level workers in the private sector to implement strategies from the battlefield. In a warrior or assault setting, strategists take pro-active stances bent on managing the CI process and finding new opportunities for growth; especially in the assault scenario, consultants are actually ex-military intelligence specialists (Rouach & Santi, 556). These kinds of analysts take on an aggressive state of mind with an "us v. them" strategy, a campaign against forms of disinformation, a vigorous system for processing data, and an ongoing search for strategic information" (p. 556-557). As superficial maxims such as "all is fair in love and war" resonate with so many members of society, it is no wonder that some CI tactics inevitably cross ethical boundaries. Perhaps, such realities speak more directly to the state of our values in Western society and our acceptance of situations where gross atrocities occur, condemned from the lecterns of public rhetoric yet implicitly accepted through a lack of retributive action.

One clear example of this CI assault mentality came through tactics implemented by Nutrasweet and Nestlé. In 1982, as the Nutrasweet patent on the artificial sweetener aspartame was set to expire, marketers were at a loss to find solutions that would maintain market share. To solve this problem, Chairman Robert Flynn directed an investigation of competing company prices, customer service tactics, market plans, and advertising campaigns (p. 557). Flynn estimated the value of this tactic at the sum of $50 million; the result allowed Nutrasweet to protect eighty percent of its market share (p. 557). In the case of Nestlé, they have grown from a two-product company into an international food enterprise through the directed implementation of intercommunication strategies between "food science, processing, nutrition, and bioscience" (p. 557). Successful implementation of new services comes as a direct benefit of parallel organizations like Nestec with a whole host of external investigators focused on importing new ideas and analysis outside the core strengths of Nestlé (fine chemicals, pharmaceuticals, aircraft industry) (p. 557). These strategies show two examples of proactive mentalities that demonstrate ethical applications of CI.

Although there is invariably a clear assessment of strengths and weaknesses in military intelligence work, there exists also an unequivocal demand for tangible results. When that element transfers into the corporate world, it can create the gray areas that give CI its unwanted reputation. In the examination of certain unnamed organization's ethical cultures, Trevino and Weaver interviewed a series of managers. Sometimes their results were disappointing:

I would be lying if I said that people don't want you to be a little underhanded, because they do. They want the information. They don't care how you get it. . . . One of the dilemmas I constantly get is when somebody comes and asks for information about a company or a market or whatever. They want perfect information. They want to know it all (p. 16).

Is a company really willing to let the end result justify the means? Only a company completely devoid of acceptable business practice acumen would claim to be ignorant of SCIP regulations. Each knows the rules, but they also get the opportunity to interpret them in their own way.

The findings of Trevino and Weaver, however, were not completely espionage-related. The authors describe the "game metaphor," where everyone works towards reputable goals, implements positive customer service, and, hopefully, attains a degree of success (p. 14). When such rules come into play, people can act with a high degree of civilized behavior as highlighted in the following anecdotes:

If a disgruntled employee goes to a competitor and says, "Gee, you know I have this, this, and this," most American companies will just go, "Nope, we don't want any part of you." And a lot of times within the industry, they'll call you up and say, "Hey, just to let you know, Joe Blow contacted us" . . . . I've heard of someone stealing a lab notebook and mailing it to another company and the other company just puts it in an envelope and returns it (p. 15).

What conclusions can be drawn in interpreting the results of Trevino and Weaver? It appears that, just as in war, some organizations operate within the rules of convention and others do not, instead choosing to focus on the bottom line (territory, assets, market share). Whether barbaric or mannerly, history will judge the means used to obtain the final result. It would be interesting to find some original research examining the ethical tendencies of civilizations and business organizations based on the stakes involved. The results could be revealing.

In the public sector, competitive intelligence still plays a role in organizations with similar potential repercussions. In the case of charitable organizations, donations play a pivotal role in providing for daily operational costs. In an Internet age where fewer and fewer people respond to simple solicitations via postal mail, competition becomes fierce to obtain necessary funds to grow and thrive. CI comes in the form of who can elicit the largest monetary gifts with the most elaborate dinner party or produce the most touching advertisement spurring the spontaneous donation. CE within charitable organizations may take on roles where groups covertly align with powerful lobbyists to obtain a monopoly on a particular service.

In fact, in the case of lobbying, opportunities abound for CE. Lobbyists may inadvertently switch the meeting place with a core sponsor without explicitly advising other involved parties. Those missing the meeting may miss a beat in keeping updated with political developments. Lobbyists certainly understand the political process of deals and negotiations. It stands to reason that they may work to manipulate the system to their advantage, ultimately to the detriment of others. In the world of tourism, visitors to a country create opportunities for significant revenue; therein lies a case for further CI. Take, for example, the ABC islands of the Caribbean: Aruba, Bonaire, and Curacao. Nestled together just north of the Venezuelan coast, these islands have similar experiences to offer for the vacationing traveler. The discretionary traveler will make their decision through a variety of marketing and service comparisons. The clever ministry of culture will do everything in their power to entice travelers ahead of their competitors. Finally, the twenty-first-century implementation of robots, hacking, and metadata analysis provides substantial opportunities for CE; it is hard to imagine situations where such scenarios would come under socially acceptable business practices. While the role of government spying through organizations like the National Security Agency has been thoroughly documented thanks to efforts of whistle-blowers like Edward Snowden, the implications of such new spying techniques remain to be determined in the corporate world.

The differences between CI and CE do not so much concern the use of data as they do the means by which data is obtained. Even in the twenty-first century, the corporate world seems to operate under an environment where ethical activities may not necessarily equate to corporate success. Due to the nature of human interaction, determining what specific techniques contribute to espionage and intelligence will continue to elude simple definition. Ultimately, such matters must rest with individual policymakers: each worker is the leader of their own ethical pursuits.

References

Bosca, C. O. (2013, July 3). The Origins and the Evolution of Competitive Intelligence. Hipótesis Contextos de Inteligencia Competitiva. Retrieved February 17, 2014, from http://revistahipotesis.com/2013/07/03/the-origins-and-the-evolution-of-competitive-intelligence/

Fleisher, C. S. (2003). Controversies in competitive intelligence the enduring issues. Westport, Conn.: Praeger.

Jordan, J., & Finkelstein, S. (2005, January 1). The ethics of competitive intelligence. Tuck school of business at Dartmouth. Retrieved January 17, 2014, from http://mba.tuck.dartmouth.edu/pdf/2005-1-0095.pdf

Metayer, E. (2013, October 7). 50 Competitive Intelligence analysis techniques. Competia. Retrieved February 17, 2014, from http://competia.com/50-competitive-intelligence-analysis-techniques

Rouach, D., & Santi, P. (2001). Competitive Intelligence Adds Value: Five Intelligence Attitudes. European Management Journal, 19(5), 552-559.

Trevino, L. K., & Weaver, G. R. (1997). Ethical issues in competitive intelligence practice: Consensus, conflicts, and challenges. Competitive Intelligence Review, 8(1), 1-23.