Protecting against the CI activities of others (Part 1)

March 25, 2013

This is a subject on which Carolyn Vella and I have written[i] and spoken[ii]. In that regard is interesting to see a discussion of the interplay between secrecy and patents in recent issue of The Economist[iii].

There, an article dealing with the Economic Espionage Act of 1996, as amended, and patents pointed out that some businesses have elected not to patent critical technology to provide long-term protection. While that sounds counter-intuitive, the feeling is that patent protection is insufficient, or too limited in its duration.

Of course, taking this option this implies that the company itself be able to protect the technology or techniques not only from accidental disclosure, but also from the competitive intelligence efforts of competitors, as well as the widespread industrial hacking now underway.

You do not have to be involved in matters of the highest technology to face this decision. But keep in mind one additional twist: if you develop something, and decline to patent it, and a competitor at a later date patents it, then even though you may have “invented” the process or product, you may be out of luck.

The lesson here is that you must exercise great care in deciding what to do with patents and trade secrets – how you protect them not only from those who violate the law to acquire them, but as well from those who can use effective competitive intelligence to discern some, if not all, of your protected “secrets”.

[i] See Protecting Your Company Against Competitive Intelligence, Praeger, 1998.

[ii] The next time is a webinar on May 15, 2013 sponsored by ComplianceOnline. More details later.

[iii]“Can you keep a secret?”, The Economist, March 16, 2013.

How close do you have to get? (Part 2)

March 22, 2013

In the previous post on the subject, I pointed out the pressure to come up with numbers. The example that I used is not an isolated case, particularly when dealing with competitive intelligence. To look at from one perspective, you could take the old Microsoft commercial and tweak it to say “where you my competitors plan to go tomorrow?” To answer that you have to get close in another sense.

Your competitors are not machines, so where they can go and where they plan to go is not determined by computer program that plots out a map with surgical precision. Your competitors are run by people and people do not operate in a mechanistic manner.

This means that if you want to get close to what your competitor is planning to do, you have to get inside the heads, as it were, of the key managers and executives there. That in turn means, yes, psychology. Now to be fair, you cannot literally get inside their heads. But you can at least try to do the next best thing, that is get somewhat close.

Among the factors that you should be considering are the overall corporate culture of your competitor, the career path that key personnel at your competitor have taken, their personal experiences, such as notable successes in their corporate careers, and their education.

As for corporate culture, some companies have one and some do not. For those that have a definite corporate culture, careful study will enable you to understand everything from how people are promoted to how management, new product, and investment decisions are made, and how succession is planned and managed.

The career path that key personnel have taken can tell you about relative strengths. For example, if a vice president of product development has previously spent time finance, you can probably be fairly comfortable assuming that she is more comfortable with financial issues in product development was than her predecessor, who lacked such a background. As a matter of fact, considering the background of the person that she replaced and comparing that with hers can disclose useful insights.

The personal experiences of key decision-makers can be very critical. For example, I recall reading a number of years ago about a decision by one media executive to move to another company in a higher position. The senior executives at the new company made it very clear that the hiring was influenced in large part by his past successes. But, basic psychology will tell you that he will also have his performance impacted by the failures. Failures? Yes. Either he will (A) try to avoid putting himself in situation where he faces a similar failure again or (B) he will affirmatively seek an opportunity to take on a similar challenge to prove that the past failure was not his “fault”.

So if you want to get close to a competitor, you have to get close to the minds of its key executives and managers. Given that you will not be able to interview them, do the next best thing: read interviews they have given, track down their biographies, review their Facebook and LinkedIn pages, look for local news stories about them, in other words, get as close as you can to them, so you can get into the decision-making at your competitor.

How close do you have to get? (Part 1)

March 19, 2013


One of the things that you’re going to find as you doing your own competitive intelligence is that you sometimes cannot get a complete or perfect answer. From my point of view, that is a carryover of a quantitative state of mind. I that, I mean we are trained that numbers are important and, the more precise the numbers, the more precise our findings.

Thus we have the phenomenon that the finding “our competitor is growing faster than we are” is often seen as having no competitive value, even when it discloses a truth not known to your company, while the statement that “the competitor’s annual growth rate is 6.125% per year” is somehow seen as having real validity.

You have to get over this. First, let’s be honest. The likelihood that you will be able to get a precise number like 6.125% is unlikely. Your competitor will be measuring its growth its own way. You measure your growth your way. The likelihood that both of you measure exactly the same type of “growth” are remote.

In addition your competitor is basing its measurement on the data that it collected while you are basing it on your efforts. Are both of you exactly as precise and thorough in your data collection, storage and manipulation practices? That is unlikely.

Thus, accept the fact that “false” precision may sometimes be lacking. What you have to do is put aside your own desire and objectively look at what you have identified. In this example, if your company did not know that your competitor was growing faster than you are, you have developed a competitively important insight. Now how much faster they are growing may or may not be of importance. It is probably of less importance than the initial finding. And, if it becomes important to determine that rate of growth, then focus on that later.

Remember most of the time competitive intelligence is a qualitative, that is, bigger or faster or smaller or weaker, evaluation of the world.

Keeping your eyes wide open (Part 3)

March 11, 2013

Continuing with the discussion of the last week, I draw your attention to live an article in the recent issue of The
Economist, “Let the Sunshine in”.
In it, The Economist reports on global efforts to disclose the links between doctors and pharmaceutical firms.

Most of the article focuses on the United States, where the Affordable Care Act has produced yet another surprise. Under its provisions, starting 2014, pharmaceutical and device firms will have to disclose payments and other “transfers of value” to physicians. They also must report research fees and doctors’ investment interests.

The article points out that this does not limit these firms’ interactions with doctors, and that certain practices, such as free drug samples, are not covered. It also points out the new law does not regulate transactions with others in the healthcare system, such as hospital administrators, pharmacists and nurses.

The piece does note, at the end, that this law “will also provide [pharmaceutical firms] with exhaustive data on how much they and their competitors spend to market drugs to that doctor.” This coupled, with data already available on each physician’s prescriptions, would presumably allow pharmaceutical firms to determine which marketing results in which prescription sales.

In addition, while the article did not mention this, it enables these same drug firms to track what their competitors are doing and determine their own competitive counter marketing strategies as well.

I don’t use this to point out that this is a particularly effective tool, particularly since it will not even be in place until 2014.

However, it does also provide an object lesson for those of us interested in Competitive Intelligence. That lesson: look closely at any legislative or regulatory initiative that uses the magic words “Sunshine”, “Transparency”, “Open Records”, and the like. With some careful study and practice, they can often be used to develop new and occasionally powerful sources of CI. Of course, as we progress on one front, we often relapse on another. In that respect, I suggest reading one of the depressing recent articles about the continued restrictions imposed by the federal government on document production under the Freedom Of Information Act. In some ways, we might well call that the freedom from information act.

But, as the aphorism goes

     “When one door closes, another opens; but we often look so long and so regretfully upon the closed door that we do not see the one which has opened for us.”  Alexander Graham Bell.

Where do I start my research? (Part 1)

March 8, 2013

 Let’s say you’ve figured out what you data you need to find. Now what?

Before you start off digging for particular piece of data, stop and think about the data as if it were a commodity or product. By that, I mean think of it is something that is created, stored, transported, modified, distributed, and secured. The goal here is to understand how the particular data you are trying to obtain goes through its life-cycle. Your goal at this stage is not to figure out where you can get it, it is to figure out where it is. From there, you can figure out whether and how you can get it.

Let me be a little more specific with an example. Let’s say you decided to figure out your competitor’s costs for producing a competitive product. And also let’s assume that the competitor owns its own plant that produces this particular product. Knowing the cost of labor that plant could help you understand the actual costs embedded in that product.

This is not to ignore the cost of the building, but that is often an easier matter to work on, so I will cover later.

Back to labor costs. If our competitor’s factory is typical, it will have relatively standard wage and salary scales that apply to the people working there. So make that data your target.

That data is probably created by and stored at the human resources office at the factory and also at the human resources office at headquarters. The information is distributed to management at both locations. In addition, the employees know their particular wage or salary and probably have a pretty good idea of what relative scale applying to their job and their possible next position is. In addition, if the plant is unionized, the local will have full information on the wages.

So now we’ve identified the following as potential sources of this data: human resource offices, and the people that work there, as well as the people formerly worked there, plus current and former employees, and union representatives.

But it does not stop there. Depending on local labor conditions and agreements, the plant may post jobs with specifics on the wage or salary ranges in local newspapers, with local job centers, or state job training programs. In addition, if the plant is using state or local funds for job training, the contract may provide that the training covers the creation of jobs with certain minimum wage requirements. Each of these give you an insight into the issue of labor costs.

So locating this data is a matter first of determining its path and then only then determining where you have the best chance of getting some or even part of this data to accomplish your task. Only then should you begin to attack the problem of getting the data – now that you know where is likely to be.

Keeping your eyes wide open (Part 2)

In my last post, I noted the importance of looking at new developments from a different perspective.

Let me give you another example. I have said, more than once, that for you to be effective in CI you have to open up your perspectives, and that reading something different is one way to do that. If you do not read mysteries, read one; if you do not read science fiction, read some.

Science fiction? Yes, some sci-fi, particularly classic sci-fi contains insights that we are just catching up with. Such as?

Start with Tom Swift, the early 20th century science wiz kid. His author conceived of many extensions of existing science we are just now exploring. Such as? Well, the series included “Tom Swift and his Electric Rifle” (1911), where Tom whipped up the ancestor of today’s Taser. Taser, as in an acronym for “Thomas A. Swift’s Electric Rifle”. (“A” was added by the creators of the Taser).

What else? How about Isaac Asimov, a very prolific late 20th century author? For his “Foundation” series of novels, Asimov created “psycho-history”, a scientific principle that allows researchers to predict, with a high degree of accuracy, the behavior of billions of people. How? According to a letter I once received from him, he simply decided that it should exist!

And, maybe it does now. Today, we see at least two lines of serious scientific inquiry following Asimov’s (fictional) long and winding road:

The Economist, reporting from the AAAS meeting, notes that there are several scientists working to manage vast data sets to develop patterns of – ready – predictability of human behavior. They include using mobile phone records to predict a person’s location at any time of the day, to predict the paths that global epidemics will follow, and the creation of a “general model of society”.

Consider also the development of a system to predict historical cycles, Cliodynamics, by Professor Peter Turchin. This subject, which I discussed in November, raise fascinating questions about political and economic movements. And Professor Turchin tips his hat to Asimov too.

So, what does that mean to CI? It means looking in almost any new director should be able to open a new, useful intellectual window.

 BTW, ever wonder about the name of the Sony robot, ASIMO, an acronym for Advanced Steps in Innovative Mobility? Isaac Asimov also wrote a series of great books about robots and their ethical issues. At least one source believes (as do I) that the name is also a nod to Asimov.

Keeping your eyes wide open (Part 1)

March 1, 2013

A colleague of mine, Mercyhurst Professor Kristan J. Wheaton, just posted a very provocative blog. In it he took a look at crowdfunding and then contemplated its application in all types of intelligence.

Intelligence? Yes, intelligence.

His point was that crowdfunding is important not only as a source of revenues for would-be entrepreneurs, or for the development of new products and processes, as well as the launch of movies etc. It is also a rather convenient place that we should watch for emerging competitors and other competitive threats.

One of his observations is as follows:

“Savvy intelligence professionals in the business world should be watching these sites for potential competitors that might emerge from successfully funded projects.  Likewise, given the underfunded nature of most start-ups, it makes equally good sense to see successful crowdfunded projects as a no-cost extension of your own R & D programs – buying out small companies with proven products may well be less expensive than developing them in-house. “

In other words, here is another way we can watch out for our current and potential competitors. Had you thought about this is an application of crowdfunding? I had not, but I have now.

For you, the greater lesson learned should be that any time you see a new development or site that could be of value to your business, also look at it from the point of view of using it to provide valuable CI on your competitors.