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.