Business Spies Flourish, Allegedly With Ethics : Espionage: Nowadays they’re ‘competitor intelligence professionals,’ and they claim to work above board. Many have graduate degrees.
Corporate spies these days say they’ve come a long way from Mata Hari and midnight break-ins to swipe a competitor’s secrets. Now it helps to have an advanced degree and the know-how to sniff out information with a computer.
Jan P. Herring, a CIA analyst for 20 years until 1983, is part of the new breed of corporate spies who have banded together to form the Society of Competitor Intelligence Professionals.
“It’s clearly a profession whose time has come,” Herring said Thursday at the 4-year-old, 1,400-member society’s annual meeting. “What has caused it to happen is competition, particularly among American companies that for the first time are experiencing both international and corporate competition.”
As recently as a few years ago, most American corporations were satisfied to concentrate on researching their own markets and customers. But many are now finding that knowing the competition thoroughly can help a company capitalize on its own strengths, shore up weaknesses, exploit opportunities and counter threats.
In Japan, corporate spying is an old custom.
“The Japanese are the professionals,” Herring said. “They’re the ones who started it. They do it almost as second nature. It’s just part of their companies.”
Bob Margulies, competitive assessment manager for McDonnell Douglas Corp. in Long Beach and new president of the society, said the Japanese “have honed their techniques for gathering and analyzing information to the point where they play it like an instrument, like a professional musician.”
Margulies insisted that corporate spying, unlike industrial espionage, is an honorable trade with a written code of ethics.
Corporate spies don’t try to ferret out confidential information or bug meetings in their rivals’ offices. Rather, they rely on public information and interviews with experts.
“It is not glamorous work,” said Margulies. “It is pure, unadulterated research: collecting data, interpreting that data and communicating to your management or customer.”
The information explosion of the past decade, fueled by more powerful computers and a proliferation of data banks and specialized publications, helps corporate spies find out almost anything they want about competitors.
“You’d be very foolish to accept inside, confidential information,” Margulies said. “It’s unethical, and it’s illegal to use that information to gain competitive advantage. It not only puts you in jeopardy, it puts your company in jeopardy and puts your profession in jeopardy.
“Ninety-five percent of what you need is readily accessible. That additional 5% that you can’t get legally is not going to help you that much. So why throw your career down the drain?”
Competitor-intelligence professionals need the skills of detectives, reporters and writers. They travel, if necessary, to competitors’ product introductions and hobnob with analysts and clients.
“A good intelligence analyst . . . pulls together the pieces of the puzzle,” said Herring. “You’ll never get all the pieces. You may sometimes get 70%.”
Herring is vice president of Futures Group in Glastonbury, Conn., a consulting company that helps corporations develop and operate their own intelligence organizations.
“Many companies have started these things and they’ve died because they haven’t done it well or to the extent that it was able to make a difference,” he said.
Only a handful of universities, including Michigan State, Pittsburgh, Boston, Stanford and Harvard, offer courses in competitor intelligence, and none in the United States offers a degree in the field.
Yet it is a burgeoning profession with opportunities for young people.
Margulies estimated that more than 10,000 people work in competitor intelligence for hundreds of companies, many of them in marketing or financial departments. Starting salaries for those with degrees and a few years of business experience are at least $30,000, he said, with the opportunity of making much more as they rise in the corporation.
A study by John E. Prescott and Craig Fleisher of the University of Pittsburgh shows that 59% of the Society of Competitor Intelligence Professionals members have master’s degrees, 29% have bachelor’s degrees and 6% have doctorates.
Fifty-six percent of them earn more than $50,000 a year, and most work for companies with more than $1 billion in annual sales.
Michael Porter, an industry expert at Harvard, has said that managers should spend a tour of duty in competitor intelligence in order to better understand the competition and how to find out about it.
Margulies said his own work helped McDonnell Douglas avoid a very expensive mistake early in the 1980s when the airplane industry was worried about skyrocketing jet fuel prices in the years ahead.
Rival Boeing Co. in Seattle had launched an extensive effort within the airline industry to see if there was a market for a fuel-efficient plane combining the advantages of propellers and jet engines, Margulies said.
Margulies said Boeing found the industry unwilling to commit to ordering the expensive planes, and that his reading of this finding led McDonnell Douglas to halt its own similar project.
“In our business, when you launch a new design, they’re so expensive that you’re really betting the farm,” he said. “So if you make a mistake, you don’t have a second chance.”
