Wednesday, 27 April 2011

Competitive Intelligence: fixing on a formula

Only two senior executives are supposed to know the recipe for Coca-Cola. The US beverage company forbids them to travel on the same plane in case the mythical formula should go down with them. Now the best kept secret in corporate history is out (or so a US radio show would have us believe). All along, the ingredients for inventor Dr Pemberton’s fizzy magic were tucked away in the pages of his local newspaper. So now we all know: just a splash of cinnamon and Neroli oil, a drop of coriander, orange and lemon, a tea-spoon of alcohol and – hey presto – the ‘real thing’.

Hogwash, says Coca Cola. It would. For more than a century, the company has kept the world guessing. Such uncertainty does wonders for marketing. Yet, in today’s competitive, dog-eat-dog world, the days of corporate confidentiality seem to be fast disappearing. Renault in France, Rio Tinto in China and Sears in the US are just some of the big names to have found themselves embroiled in recent espionage scandals.

It’s natural to want to know what your competitors are up to. Some even say it’s an ethical obligation. (Willful ignorance leads to uncompetitiveness, which leads to shortchanged shareholders, the argument runs). Yet where to draw the line? It’s not easy, admits Rajesh Chhabara in the latest issue of Ethical Corporation. Especially in an environment where ‘competitive intelligence’ companies are out hawking their investigative services.

One basic rule of thumb: if you came by the information ethically, it’s probably okay. And, in the internet age, there is a mountain of publicly-available data out there – if you’ve the time, energy and expertise to go looking for it. If your means were dubious (think: theft, spying, phone tapping, computer hacking, etcetera), then you’ve almost certainly overstepped the line. There are guidelines out there. Surveillance firms have a code of ethics courtesy of US trade group, the Strategic and Competitive Intelligence Professionals. Corporations are developing their own norms too. Training staff, developing approval processes and conducting regular cross-functional reviews are just three of the ten best practice suggestions featured in a recent report by the Institute of Business Ethics.

Chhabara weighs up other angles too. How might companies misuse information collected legitimately, for instance? Or where does collecting information on campaign groups cross the line? (Greenpeace recently sued several companies, including Dow Chemical, for espionage.)

Sophisticated software is making it easier for those with criminal intent to steal competitive information. On the other hand, it’s also enabling companies to better protect their private data. In our high-tech age, however, good old honesty still goes a long way. Like when PepsiCo was offered stolen trade secrets from a disgruntled Coca-Cola employee. It could have paid the asking price. Instead it phone the FBI. Now, in ethical terms, that’s surely the real thing.

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