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These articles by Melinda Sherwood were published in U.S. 1 Newspaper on May 19, 1999.
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Mining the Information Lode
United States companies are much better at producing
competitive intelligence than protecting it, says John E. Prescott,
professor of business administration at the Katz Graduate School of
Business at the University of Pittsburgh. "You can reveal a company’s
trade secrets through simple analysis," he says, "and as long
as you obtained the information through ethical means, the fact that
you ascertained trade secrets does not make it illegal."
Prescott will be one of the guest speakers at the Fourth Annual Competitive
Intelligence Education Day on Wednesday, June 2, at 8:15 a.m. at the
Hyatt. The keynote speaker will be John Fialka, a reporter with
the Wall Street Journal and author of "War By Other Means,"
a look at economic espionage in the U.S.
Other leading professionals will discuss best practices in competitive
intelligence (CI), analyzing patents and their link to scientific
research, and targeted business. "Breaking Down Barriers to Implementing
CI in Your Organizations," will be the focus of a panel discussion.
Panelists include Steve Adolt
director of strategic business analysis, Merck; and Diane M. Russo
market analysis director at Lucent Technologies. Cost: $175. Call
703-739-0696 or visit http://www.scip.org.
Prescott has a BA in psychology at Indiana University of Pennsylvania,
Class of 1976, an MS in industrial psychology from Stevens Institute
of Technology, and a PhD in business administration from Penn State.
He has been a professor at the University of Pittsburgh since 1984,
when he developed the first MBA-level course in competitive intelligence
at the university. Two years later, he helped found the Society of
Competitive Intelligence Professionals, which sets the industry standards
for ethical practices in competitive intelligence. He is also the
executive editor of the Competitive Intelligence Review, a quarterly
published by John Wiley in New York.
"If a company is doing poorly," says Prescott, "it’s often
the result of two things: they are either poor implementors, or they
don’t have good information about what they’re supposed to do."
Competitive intelligence, he says, gives companies the kind of information
they need to do to retain a sizable portion of the market.
The basic tools of competitive intelligence include the following:
its design is a popular tactic in the automobile industry," Prescott
and databases that are all open sources. Still, Prescott says, electronic
data is not nearly as useful as the information that can be obtained
from talking to people.
collection network, so that people in the sales field, or in any other
department, are constantly talking to customers and suppliers and
getting that back to competitive intelligence professionals,"
Prescott says. This, he adds, is one of the most difficult competitive
analytical expertise must always be applied. And, he adds, "a
good analyst should have a human intelligence network in development,
and many of them don’t."
With competition fiercer and bloodier than ever, competitive
intelligence professionals rely on a vast wealth of open source information
to get the scoop on competitors. Contrary to what you may think, the
most valuable information is not electronic; it’s in people’s minds,
says Mitchell Audritsh, manager of market intelligence at Lucent
Technologies. "One of the folklores within the competitive intelligence
profession is that most of the information that a company needs can
be found outside the corporate walls." In fact, he says, most
of it is inside the company. "The trick is to the harness that
information, so at one level everyone in the company is a contributor.
How that is organized is really a matter of taste," he says.
Audritsh is the leader of the New Jersey chapter of the Society of
Competitive Intelligence Professionals (SCIP), which sets the standards
for ethical practice within the field of competitive intelligence.
The organization is hosting its annual Competitive Intelligence Education
Day on Wednesday, June 2, at the Hyatt (see story above).
At Lucent Technologies, Audritsh is one in a network of roughly 100
competitive intelligence professionals. His job is to spark a dialogue
with authorities among the company’s 140,000 employees worldwide.
"Information is not power," he says. "The mutual sharing
of information is the real power. If I can show how the information
I can get from you can powerfully help you do your job than that’s
a lever to generate that information flow." Spoken like a former
Audritsh holds a BA in political science from Kent State University,
Class of 1981, and a graduate degree in political science from the
Maxwell School at Syracuse University. Near the end of the graduate
program, Audritsh applied to the Central Intelligence Agency, where
he spent three years working as an intelligence analyst during the
high-water mark of the Cold War.
Competitive intelligence, Audritsh says, is not just about collecting
and analyzing information; it’s about a well-organized defense as
First, he says, know what signals you’re sending out. "Merely
by existing," he says "you’re sending valuable information
to someone who may be listening." For example, he says competitors
can extract valuable information simply by counting the number of
cars in the parking lot. "Be aware of what you’re communicating;
you’re always communicating something." In short, know thyself!
Once competitive intelligence professionals have a grasp on what messages
they are sending, the company is in a position to stage offensive
counter-intelligence. "If you know what your signals are, you
can give off a choreographed set of signals to mislead your competition,"
he says. Misinformation requires a lot of mundane planning, he adds,
and cooperation from individuals at every level. "In an ideal
world everyone is a CI contributor," he says.
Regardless of whether a company is taking an offensive or defensive
stance, CI professionals should make every effort to build a seamless
relationship with the strategists in the company. "A lot of our
burden is to be proactive and make connections with the key-decision
makers in the company," he says. "We lose business when we
don’t pay attention to what’s going on outside our own company."
Even after the Taiwanese-born scientist Wen Ho Lee was
caught leaking classified information to China, Americans continue
to think economic espionage is stuff of spy novels, says John Fialka,
a reporter for the Wall Street Journal. "Americans think we’re
at peace," he says. "There’s a sense of insularity over here."
In fact, says Fialka, the U.S. loses billions of dollars every year
to foreign competitive intelligence.
In "War By Other Means" (W.W. Norton and Co., 1997), Fialka
contends that the U.S. is engaged in an economic war against China,
Japan, France and Canada — and is losing sorely. His book is loaded
with wonderful facts. For example, between 1985 and 1989, Japan’s
aggressive efforts cost $105 billion in lost U.S. sales. "I tried
in my book to keep all anonymous sources out of it," he says.
"It should scare the hell out of executives."
Fialka will be the keynote speaker at the Society for Competitive
Intelligence Professionals education day Wednesday, June 2, at the
Hyatt (see story above).
A member of the Wall Street Journal’s Washington bureau, Fialka has
reported on issues of military, diplomatic and national security matters
for nearly two decades. Although he holds a law degree from Georgetown
University, he chose not to practice law..
In 1992 he wrote "Hotel Warriors," a first-hand account of
the relationship between the press and the military during the Gulf
War. A Woodrow Wilson Fellowship enabled Fialka to spend two years
collecting information for his second book.
In "War By Other Means," Fialka traces accounts of economic
espionage back to the 18th century, when an American opportunist by
the name of Francis Cabot Lowell stole the intellectual property necessary
to bring the industrial revolution to America. In the past several
decades, however, U.S. intelligence has fallen far behind other countries,
in part because of the proliferation of information in America, and
a cultural attitude towards openness. "We’re the most open society
in the world, and an inviting target to everybody," he says. "China,
Russia and Japan have had a field day at our universities, where things
are not classified until there is a weapons application."
Freedom of information is just one of the country’s weaknesses. Historically
skeptical of foreign competitors, many U.S. business have lost a portion
of the market when they least expected it. He offers as an example
how American steelworkers scoffed at warnings about Japan’s growing
steel industry, and then later saw their companies annihilated by
If American companies have been foolhardy in their assessment of foreign
companies, it derives in part, says Fialka, from a cultural tendency
towards rugged independence. Fialka writes:
"In the arena of competition, most American companies are John
Wayne against the Indians. They act individually. The opposition sometimes
acts and thinks by drawing on the resources of a nation. American
companies don’t go sniveling to government agencies for advice. It
is an image that readily blends into the American dream — the
Frontiersman, the Lone Ranger — except that it is an image of
the past. Lately, the `Indians’ have been winning. There are a few
intelligent cowboys out there, like Motorola and Amgen, that have
set up their own internal intelligence operations. The rest are like
the United States before Pearl Harbor: there are plenty of clues about
the competition around, but no one has the time or responsibility
to collect and analyze them."
While Fialka doesn’t believe that America should become some kind
of fortress, he maintains that the best defense is a good offense.
"If you want to compete with them, you better learn how they operate
on their terms," he says. "We need to send more U.S. researchers
abroad and equip them with both the right language and cultural skills."
Fialka also urges more aggressive prosecution of espionage cases.
"Until 1996, when they passed the Economic Espionage Act, you
had to find a guy with a sign that says `I am Chinese’ running out
of a company with a box labeled `secret’ in order to prosecute."
Today, he says, the law has gotten better, but it’s still murky. "Only
one percent of economic espionage cases are criminal," he says.
"There’s a lot of art involved."
Ultimately, Fialka says, the U.S. needs to think about long-term strategy
— to make competitive intelligence a national priority that involves
businesses, government and its citizens. After all, it is something
that affects everyone, he says. "As taxpayers, we have spent an
amazing amount of money to develop technologies, and when people take
that overseas and develop products overseas that out-compete ours,
I feel I’ve lost something."
— Melinda Sherwood
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