When Perfect is not Correct

December 2, 2016

When you have finished your CI research and analysis, stop and look at the results – very skeptically.

Let’s assume you are doing a profile of a competitor, a private company, so you do not have the (un)helpful SEC filings to walk through. Despite that, you think you have produced a pretty d*mned good product, covering all the basic information on that target.

Step back. Is what you see too perfect? By that I mean, you do not see any obvious omissions, everything seems linked. That perfection may be a warning sign.

Now really think about that. How likely is it that this could really happen? Did you ever get that complete a profile before? Next consider where you got all this great data that supported your analysis. Was virtually all of it from the target, directly or indirectly, that is from its website, local news articles, press releases, industry articles, etc.? Was any of it from filings with local/state/federal government or from third parties that (supposedly) verified the facts?

  • The former can be, and often are, manipulated by the target. Think disinformation. Disinformation is “Incomplete or inaccurate information designed to mislead others about your intentions or abilities. When used in the arena of international politics, espionage or intelligence, the term also means the deliberate production and dissemination of falsehoods, fabrications, and forgeries aimed at misleading an opponent or those supporting an opponent.”[1]
  • With the latter sources, there is at least a chance that the filings were made under oath or that the verification was properly done, so maybe you have something closer to the truth. But that is not always the situation – remember (here fill a reference to in your favorite example of a business fraud).

A tip-off may be that the data you developed is largely from the targets and is too consistent, too uniform, too, well, what you expected to find. Stop and look hard for what is missing. If you were starting over, what facts about the target that you would expect to be able to develop but which are just missing? Is that “perfection” possibly a sign that you are being drawn into a picture painted by the target, while missing what it is painting over?

Be skeptical of your own results. Sometime a perfect result just means that you are seeing only what the target wants you to see, not what there is to see.

[1] McGonagle and Vella, Proactive Intelligence, p. 11.

Dilbert & Disinformation

April 30, 2014

The wonderful cartoon Dilbert recently (April 27, 2014) had a panel where the pointy headed boss tells Wally to develop a new business strategy which “with any luck” will be intercepted and sold to competitors.[1]

Wally then goes to Dilbert and asks for a “copy of our [own] business strategy”, on the basis that it will “save [him] a step”, that is actually generating a fake policy.

The lesson? Efforts to generate disinformation almost always backfire on the one seeking to do it. Whether it is “blowback”, where your own employees, who believe the disinformation are damaged, or, in the case of Dilbert’s boss, where the firm itself is going to be damaged, disinformation is not only unethical, but it is also bad business. Avoid it!



[1] Click here to see it: http://dilbert.com/strips/comic/2014-04-27/.



Between, and Behind, the Lines

August 1, 2013

When doing your own competitive intelligence, often you will read materials released by your target. They can be useful, but you have to understand how to read what is there. Let me give you a few rules on reading these kinds of documents.

First, you want to make sure that you can believe that your target is relatively truthful. If your CI target is a publicly traded company, and you are looking at materials that it has officially released, then you may have at least a degree of security that statements are accurate as presented. As we know from cases like Enron, that is still no guarantee of truthfulness. If the organization is a private company, a nonprofit, a university, etc., you do not have that help.

Second, practice reading carefully. In law school, students are taught about the “negative pregnant”: a denial that is pregnant with an admission. For example, again using the law as an example, an individual may be asked in a deposition “Were you in the [named] motel, room 26, on August 1, 2013?” If the individual wants, he or she can just answer no or repeat the question in his or her answer, “I was not in the [named] motel, in room 26, on August 1, 2013.” Technically, that is correct, even if the individual was in room 25, or room 27. So watch for the negative pregnant, and the other form, the positive statement that contains a batch of carefully chosen, specific modifiers. For examples of this, listen to virtually any political press conference or interview.

The third thing to do is to read carefully for what is not in the document. Many corporate documents are drafted by people whose job it is to make them truthful, without making them too complete. Be aware that in many cases you are up against such people. Therefore, read the documents very slowly and take in each word that is in the document. For each word in the document, there may be other words or topics that are specifically excluded from the discussion by implication. Determine what they are and if that is important to you.

Fourth, determine whether or not the document is intended to do more than communicate, specifically whether it is designed to mislead or is even disinformation. Disinformation is created specifically to mislead, in the case of CI, a competitor seeking develop CI. Disinformation is common. It is also extremely dangerous for those who use it. One danger arises from the fact that, for disinformation to work, most of the people working for the enterprise that distributed the disinformation have to actually believe it. You can well imagine what the impact on them when, at a later date, they find they have been misled.


July 9, 2013

The recent weeks are filled with discussions of whether or not residents of the United States, or for that matter of any Western country, have any privacy left. The answer is yes, but not as much as we did.

The underlying issue is whether and to what degree we’ve surrendered our privacy voluntarily or involuntarily. Involuntary loss of privacy is a political issue of major consequence. The voluntary surrendering of privacy is not.

Think about this in the context of competitive intelligence. Much of what you can learn through competitive intelligence is because we do not live in a closed society. In a free society, people communicate, they make public statements, they post on the Internet, they advertise, they meet, they speak freely, etc.

In that context competitive intelligence, which to remind anyone who is reading this for the first time, is perfectly legal and ethical, can be conducted and can be very useful. From an economic point of view, the more information one has about the marketplace and on competitors, the more perfect, from an economic sense, competition can be. So competitive intelligence, in a free society, contributes to, rather than impedes competition.

In a society where there are significant involuntary losses of privacy, competitive intelligence cannot function. That is because people and institutions there closely guard information, or affirmatively distort information (disinformation), or just withhold information from others. Without free access to public information, competitive intelligence cannot function.

The best estimates are that from 80 to 90% of all the information that a business needs to know about its competition can be collected through legal and ethical means, that is, by competitive intelligence. The last 10 to 20% requires unethical, or even illegal means. But that is another story.

One might even say that the inability to practice competitive intelligence effectively is one measure of the degree to which any losses of privacy are involuntary rather than voluntary.

There is no denying that we’ve suffered involuntary losses of our privacy. Actually some may argue that we have had no such involuntary losses, because our freely elected representatives have voted for and supervise those “invasions of privacy”. But the existence of and current practice of CI may tell us how much.


February 5, 2013

 In the most recent issue of Bloomberg Businessweek, an article on honesty in the workplace[1] states

“Apple has been reported to spread false rumors to throw off the press and has fired employees for leaking even most quotidian of news items.”


Well this short quote, assuming it is correct, actually involves at least two separate concepts for those of us with an interest in competitive intelligence. The first is disinformation, and the second is the impact of a founder or other powerful personality on the direction of an organization.

With respect to disinformation, again if the article is correct, the spreading of these “false rumors” is a form of disinformation. In the case of a public company, disinformation is not the same as the release of non-public information. Why? Because it is not really information. How or even whether the US Securities and Exchange Commission would go after such activity is not clear. If intended to disrupt competitors, it is hard to say that it is principally aimed at manipulating stock prices.

But in any case, as I have explained, disinformation is an exceedingly corrosive activity.

The second concept is the impact that one person can make a large, even gigantic, organization. The stories about Apple founder Steve Jobs and his impact on the culture at Apple are numerous, and I suspect in some cases are even accurate. Among them are stories about his personal domination of the organization, as well as his intensely negative attitude towards competitors. Again, this short quote reflects that.

Certainly it is true that Jobs is no longer at Apple, but the people that he trained, hired, and his allegedly handpicked successor are still there. They would not be expected to stray far from his philosophy, at least not in the short period of time that has passed since his death.

This is not to say that the passing of a strong personality or founder does not eventually lead to changes in the organization. One only has to look at the case of Walmart, which under Sam Walton was proudly declaring that all of its products work made in the USA. Now, Walmart is reportedly the largest single importer of products from China.

So what does this mean? It means that, when you were doing your own CI, you have to understand your target, and its people, and you can’t accept everything out there as the absolute truth.

[1]Christopher Bonanos, “The Lies We Tell at Work”, Bloomberg Busienssweek, Feb. 4-10, 2013.

Disinformation (Part 3)

December 18, 2012

I have talked so far about not using disinformation and how to deal with it.  I suppose I should spend a little bit more time on what it is.

The best way to spot disinformation is to understand how it can be created.  There are two ways: disinformation created affirmatively when your target is intentionally misleading people with erroneous or exaggerated information, and passive, where relevant information is concealed.  In either case, the disinformation is aimed at establishing false value judgments, creating erroneous impressions, diverting attention from defects or problems, or just hiding the facts.  So let’s look at the way this comes into the marketplace – intentionally or accidentally.

Intentional disinformation almost always originates from the business itself.  In one case we dealt with, a business arranged for one of its officers get an interview in a local newspaper to improve that firm’s image in the community.  During the interview, the reporter’s expected questions about the firm, its plans, and its future were all answered, in some cases with great care, by the officer.  The reporter left with his notes, perhaps recording a portion of the interview, handouts, and of course impressions.  When the article was finally written, all of these went into the final product.  There’s where the disinformation occurred. In writing the article, the conclusions drawn by the reporter were not precisely correct.  In fact, the person giving the interview worked quite hard to have the reporter draw certain conclusions without ever stating these as facts. This enabled the reporter, not the officer, to produce the disinformation – unknowingly.

At this point, the article became an input to the trade publications, to investment analysts, and to others following the firm or the industry in general.  In turn these sources may generate a second level of disinformation.

Accidental disinformation can also happen, but is significantly less common.  Let me give you an example. At one point in the past, due to a rise in bank mergers, many small regional banks in the US reviewed their long-range plans to see whether they should seek to be acquired, prepare to oppose such an acquisition, or make a defensive acquisition on their own.  As a part of such review, they often hired outside consultants to advise them on their options.

One case, a bank holding company retained such a firm.  The bank did not intend to publicize this fact.  The firm was actually hired to provide general advice; it was not a step towards acquisition or towards a sale.  However, the firm that the bank hired did not “get the word,” about avoiding publicity – just the opposite. The consulting firm issued a press release about its retention, publicizing the hiring to get future business.  The press release was duly picked up by the business media, but some who saw the resulting article came to the erroneous conclusion that the bank was seeking to be acquired.  Why? They concluded that the bank released this information, particularly in publications serving areas that none of the bank’s own subsidiaries served.  The result was the bank was quickly misidentified as a potential acquisition target.  As a result of this undesired attention, the bank actually had to take steps to protect itself against a possible takeover while deciding whether she even actively seek such a takeover.

This will be the last blog until new year.  Have a Merry Christmas and a Happy New Year.

Disinformation (Part 2)

December 14, 2012

Disinformation is something that looks like information but is not.  For CI purposes, disinformation is incomplete or inaccurate information designed to mislead others about your target’s intentions or abilities.

Disinformation is not the same as puffing, which is an advertising “overstatement” falling short of fraud. In business, disinformation is created intentionally, aiming at misleading competitors and others with erroneous or exaggerated information. It can also be generated simply by concealing relevant information[1]. In either case, the disinformation is aimed at establishing false value judgments, creating erroneous impressions, diverting attention from defects or problems, or hiding facts.

Trying to decide whether a competitor is using it is important:

  • If you don’t consider whether a key piece of data represents disinformation, and, in fact, it does, this failure can be destructive. Moreover, you may not recognize its destructive effect until it is too late to counteract it.
  • If you look for the disinformation, you may not spot it. In that case, your CI analysis could be affected in a direction and to a degree you cannot predict.
  • You may find what you think is disinformation, when it is not really there. That means you simply become more suspicious about the credibility you assign to what is really accurate data and more reluctant to rely on it without further confirmation. Not much of a cost.
  • You may be correct in spotting disinformation. In that case, handling it properly allows you to avoid its damaging effects on your CI analysis.

If you have identified data that appears to be disinformation, handle it as follows:

  1. Is the reason for your concern the source of the data or the nature of the data itself? If your concern is due to a questionable data source, you should look for other sources to verify the data. If your reason arises out of concern in the nature of the data itself, you should seek confirmation or contradiction from all sources, including the original source.
  2. If you are not sure whether the data is disinformation, try to estimate the likelihood of its accuracy and then explicitly assign a probability of accuracy to it. This may allow you to use the data, even while there is a question about its validity.
  3. Analyze why the potential disinformation was created, or allowed to continue. If you cannot see a reason why the source would have created it or permitted it to exist, it may not be disinformation. On the other hand, if you can determine why it may have been created or allowed to continue, you may not only have identified it as disinformation, but you may now understand what the source was trying to accomplish.
  4. If there remains any question about critical, non-confirmable data, treat it as disinformation.

However, don’t overreact. Be sensitive to the distinction between burnishing a corporate image and disinformation. Remember, the success of a disinformation initiative requires that you, the target, be willing to be deceived.

[1] It can happen by accident, but that is very rare.