Ethical collection of competitive intelligence

Ethics is one of the most popular topics in competitive intelligence. Since CI is the collection of information on the activities of people at firms who would prefer we remain ignorant and act stupidly, there is an automatically adversarial bent. Many executives feel sneaky even broaching the subject.

We say dive right in.

Gettin’ busted – the illegal collection of competitive intelligence

First, let’s get a topic out of the way that makes your general counsel jittery: flat out illegal activities. Every country’s laws are different. Competitive Futures is based in the United States, so these comments will be based on the American legal system. There are two ways that you can break the law by collecting intelligence. The first is criminal, a crime against the state, and the second is tortuous, breaking a law that harms an individual and exposes you, the collector, to liability in a civil litigation.

It is very hard to break criminal statutes around competitive intelligence in the United States, particularly the Economic Espionage Act of 1995. You have to really, really try to get busted for a violation of the EEA, and if you do, you are hilariously over the line of any behavior that might be called “ethical.” To violate the EEA, the following conditions have to be true:

  • There is competitively sensitive material about a company
  • The company has taken active measures to protect it
  • You intentionally breach those measures using deception
  • You smuggle the information out of the company
  • The information is employed at a competitor’s firm
  • The information causes the violated company to be harmed financially
  • You can connect the breach competitively sensitive information to the harm
  • And you can prove it in court

Basically, you’d have to identify Colonel Sanders’ unique blend of thirteen herbs and spices. KFC would have to be actively securing that data. (Let’s assume that it’s only on one copy of paper in a single safe in Kentucky, for example.) You go to get yourself hired as a janitor while in the secret employ of the notorious Vermont Fried Chicken. You rifle through the executives’ desks until you get the code for the safe. You spirit out the list, give it to the scurrilous executives in Montpelier. They launch a competing product, stealing 14% of market share from KFC. The breach is discovered. And KFC can prove it in court.

Yeah, you gotta really make an effort. That’s by design. The act was designed primarily enacted to give a legal weapon against foreign entities that might attempt to steal American corporate intellectual property.

There are other versions of illegal acts that are tied to other criminal statutes: breaking and entering, theft, and trespassing are all illegal anyway, so it doesn’t matter that you were also trying to get some new product marketing plans off the competition. You’re just in trouble.

In the last thirty years of competitive intelligence, there are relatively few cases of straight up criminal espionage that get prosecuted. When they do, the entire competitive intelligence community is instantly gossiping, eyes are rolled, and we declare the malefactors a bunch of crooks. Anyone who even comes near to the criminal line is pretty much black balled instantly.

Because folks, subtlety is the name of the game and criminality is just so…boorish.

Ethical lines that are blurry? This is much more interesting territory and more important as a focus.

Unethical collection of competitive intelligence

It is much more important to concentrate on ethical collection of intelligence than the out-and-out criminal. As shocking as it might seem, the following activities are not illegal so long as you cannot tie them directly to an economic loss at a competitor:

  • Lying in general
  • Pretending to be a customer looking to purchase something
  • Posing as a job seeker at informational interviews
  • Claiming to be from a company other than the one you work at
  • Wandering into an office asking to use the bathroom and then reading a bunch of documents lying around

All of those activities are considered by the competitive intelligence community to be absolutely legal, but definitely unethical. Can you? Sure, you can. Should you? Nope. Here are a few reasons:

  • Even if the risk of arrest or civil litigation is low, the risk of embarrassment to the company (or client) is high.
  • You look like a dirtbag.
  • The information probably isn’t that good.

Very few competitive intelligence professionals focus on that last part. They remain, like many of their clients, beset with greed and lust over every last lascivious private detail about The Other Guys. We’re less interested. In our experience, some of the lesser known reasons for engaging in above-board intelligence collection are:

  • Liability and criminal charge risk: zero
  • Ethically-collected information may be slightly older than the brand new spreadsheet pilfered from an executive’s desk, but it is probably verifiable from multiple sources.
  • Your success is likely focused on how well you analyze a competitive dynamic, not getting every last detail about a competitor.

Also, if a major competitor is doing something interesting, chances are it leaves all manner of traces in sources from public databases for finance, real estate, and intellectual property (to name but a few), leaks to journalists, SlideShare decks from executives that didn’t get properly vetted, and more.

Ways to stay on the ethical side of the line in competitive intelligence

So you’re launching a new competitive intelligence initiative and you want to avoid jail or court but still stay on top of the competition. Here are some handy questions you can ask yourself to tell if you’re on the right side of the line.

  • If you were exposed using a certain practice on the front page of the Wall Street Journal, would you look like an aggressive-yet-savvy player, or a scumbag?
  • Have you paid someone to pose as a waiter on the CEO’s yacht?
  • Did any of your collection involve pasting on a fake mustache?
  • Did you pretend to be CFO of the target company so that someone in the office could “just fetch you that hard drive you accidentally left on your desk?”
  • Did you pay any contractors with a bag of non-sequential, unmarked hundred dollar bills? And were those contractors Russian?
  • Did you friend some executive surreptitiously on Facebook to obtain their kids’ birthdays and pets’ names so you could correctly guess the password to their company’s intranet?

There are plenty of ways to learn about your competitors that don’t involve being creepy or ending up in court. You can even still have fun.