When gumshoes go too far. The fine line between tracking and illegal spying
Boston — Gathering information on competitors in a legal, ethical way is hitting its stride as an accepted practice in corporate America - yet its darker side is a constant threat. ``Our worldwide electronic mail system is part of the fabric of our corporation and we use it for everything, including gathering competitive information,'' says a spokesman for a major computer manufacturer. ``That's not an unreasonable thing to do.''
While it is not unreasonable, the temptation for reasonableness to devolve into expediency and unethical behavior is real for anyone involved in gathering competitor information, says Robert E. Frederick, associate director of the Center for Business Ethics at Bentley College in Waltham, Mass.
``Due to the high goals people have been trying to attain, there's a lot of corner cutting going on,'' Professor Frederick says. ``I have seen this more in the past few years than I ever have before. Some of this is due to the tremendous increase in international competition and wholesale restructuring that has gone on as people gear up to compete in international markets with a smaller staff, a smaller research-and-development budget.''
Some practices, such as planting electronic bugs (listening devices), stealing documents, or bribing employees are clearly illegal. But other methods, though legal, are unethical ways of squeezing information from a source to get an edge on the competition. A few of these are:
Pumping suppliers, customers, or the competition directly for information while misrepresenting yourself as a disinterested party, such as a student doing a research paper.
Advertising for job openings, then milking potential hires for specific information on their work for competitors.
Buying a competitor's garbage, then sifting it for documents that might shed light on operations or marketing.
Hiring away people from the competition, and when you get the information you need from them, letting them go.
These practices are not common, they are known to exist. And if they are condoned, they tend to degrade into worse tactics and possibly illegal methods, competitor-intelligence professionals say.
The irony, say professionals who work full time gathering competitor information for companies, is that there is really no need to cross ethical boundaries.
``We announce who we are by name, and we give a valid explanation of what we are doing,'' says John Ballou, an official with the Society of Competitor Intelligence Professionals. ``Nearly everything you want can be obtained ethically and legally. The rule of thumb for intelligence gatherers like us is that if you are faced with doing something you would not feel comfortable discussing with anyone - your family or anybody - then you probably shouldn't do it.''
But as information gathering on the competition increases, ethical boundaries can get hazy. There are instances, for example, where an employee who quits one company legitimately uses his knowledge in a new job. The problem comes when he begins to use inside information from his old job to help in his new post.
``There are a lot of upstart companies venturing out their on their own to find a niche, and their founders have taken a trade secret along with them from a former job,'' says David Leopard, a former FBI agent, now a security expert.
Employers are very concerned. International Business Machines and General Electric - both of which have been victims of widely publicized corporate espionage cases, refused comment on any aspect of this subject.
But it isn't just huge corporations. Small companies, too, are worried their trade secrets will fall victim to the corporate intelligence-gathering efforts of others. As a result, tens of billions of dollars are spent annually to secure buildings and limit access to documents of companies. Yet, the biggest problem still isn't the vulnerability of buildings, documents, or machines, but the employees.
Take a chapter title from a book advising executives how to protect trade secrets: ``Why Employees Represent the Greatest Threat to Trade Secrets.''
Other, even more extreme attitudes are apparently not uncommon among many top executives, says Mr. Leopard. The threat exists, he says, but there has been some overreaction.
``They can secure themselves physically by limiting access to certain areas and by locking up sensitive material,'' says Saul Astor, president of Management Safeguards, a New York City security consulting firm. ``But the main problem is the people themselves, what they can remember - what is in their minds when they leave work.''
To find out what the competition is up to before it reveals it publicly, many chief executives are beginning to mobilize entire companies - sales forces, secretaries, accountants, and marketing managers - to toss information into the bin when they get something on the competition.
With this in mind, a number of companies are trying to stop the outflow of information, but meeting with limited success. Nowhere is security more intense than in the highly charged competition of the electronics industry. Here, a loose company secret can bankrupt a company.
``I actually went through culture shock going from the electronics industry to the cosmetics industry,'' says Jeffrey Whittington, security director at Mary Kay Cosmetics. ``It's a totally different concept of security. At Mary Kay everything is more low-key. At the other company you didn't take cameras, tape recorders, and we checked the briefcase at the front lobby.''
Most companies do not find it so important to get high-quality information that they are willing to risk unethical or illegal behavior, says Leila Kight, president of Washington Researchers Ltd., a competitor-information-gathering company.
Still, she says: ``It's a temptation for an employee if the boss says we need this so desperately. The bottom line is that you just don't lie about who you are,'' she says. ``If you have to lie, then you just don't get the information.''
Some businessmen don't even try to spend a lot of time getting information on the competition.
``It's better to approach things in an intelligent manner,'' says William C. Norris, founder and former chairman of Control Data Corporation. ``If you have to depend on setting your strategy through spying, you'll always be a couple of jumps behind. You're much better off to be aggressive in your research and development, and in your forward planning.''
Last of three parts.