Sifting through garbage: Intelligence or spying?

Carolyn Koo and David Howard Sinkman

NEW YORK: Trying to stay a step ahead of the competition, companies are

increasingly toeing a fine line between market intelligence and corporate

espionage.

Witness the revelation last week that Procter & Gamble Co. used covert

means to gather intelligence about the hair care products of its main consumer

products rival Unilever NV.

This isn't the first recent case of corporate snooping by top tier American

companies either. Oracle Corp. last year disclosed its detectives paid janitors

to sift through Microsoft Corp.'s garbage in hopes of finding dirt to use

against the software giant in court.

But looking for information goes beyond picking through garbage. Sometimes it

can cross legal and ethical lines.

Alden Taylor, head of corporate intelligence at investigation firm Kroll

Inc., tells of a student who continuously clicked his pen while touring an

unnamed European company.

Executives thought the student was just hyperactive, but his pen was actually

a sophisticated camera. Three years later, the company the student worked for

released a product based on information from the photos he took.

Fuzzy ethics



Still, knowing what the competition is up to is a vital part of doing business.

"A firm would be stupid if they didn't try to know as much as they could

about the products and activities of their competitors. As long as it is sort of

public information, as long as it is out there for all to see," said

Michael Hoffman, a philosophy professor and executive director of the Center for

Business Ethics at Boston's Bentley College.

Some 60 per cent of companies have an organized system for collecting

information on rivals, according to researchers at The Futures Group. Sniffing

for information can be big business as a result. The market for business

intelligence is worth about $2 billion a year worldwide, including services

ranging from detective work to clipping news articles, Kroll's Taylor estimates.

But the ethics of corporate intelligence can be fuzzy. "If you're

selling Toyotas, I think it's appropriate to go buy a Honda and take it to your

factory and find out if they're doing something better than you're doing,"

Professor Hoffman said.

"But to go rifle around in Honda's garbage can, or to put surveillance

equipment illegally in their offices, or to sit up in a building across from

their factory with high-powered binoculars and spy on them, if not illegal that

is certainly ethically questionable."

Not a nice thing



Stephen Miller, a spokesman for The Society of Competitive Intelligence
Professionals, puts it another way. "Competitive intelligence is the legal

and ethical collection and analysis of information about the competitive

environment," said Miller. "Corporate espionage implies the theft of

trade secrets, which is both illegal and unethical."

Companies may shoot themselves in the foot if they engage in practices that

are publicly revealed to be illegal or unethical. That alone can be the biggest

incentive for companies to play by the rules.

"Most companies act in a way that is not offensive because they do not

want to be associated with activities that consumers find offensive," said

Peggy Daley, vice president for corporate investigative firm Pinkerton,

America's oldest private investigation company.

Companies that participate in corporate investigation have another take on

the matter altogether. "In most cases if the trash is out, it's fair game,

as long as there is no law," said Richard McCormick, head of Pinkerton's

business risk division.

"Shame on the person who allows himself to get chatted up on an airplane

after too many drinks."

(C) Reuters Limited 2001.