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‘Don’t spy but beware of spies’

Basant Chaudhary
Basant Chaudhary November 28, 2023, 7:33 pm
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Business espionage is growing as competition intensifies

October 7 proved to be one of the darkest days in the 75-year-long Palestine-Israel conflict. Gaza Strip-based Hamas terrorists rained a barrage of over 5,000 rockets on Israeli territories killing over a thousand unsuspecting citizens in a single blow. The Jewish state vowed to neutralise Hamas’ political and military leadership in the Gaza Strip.

As I pen this piece, the Israeli-Hamas conflagration has escalated. Bombardment by Israel has claimed about 9,000 lives in Gaza Strip. Tragically, the toll is set to rise as both sides refuse to relent.

However, I need not dwell upon the details of the West Asian war as readers are receiving minute-to-minute information about the violent, gory and inhuman fallout through the internet. I am also not in the game of apportioning blame to the respective warring parties and their supporters. I would rather focus on the lessons which corporates and managers can draw from the ongoing war.  

The question doing the rounds in geopolitical and business circles is: how could Israel’s intelligence agency Mossad, one of the sharpest and most ruthless players in the sphere of espionage and retribution, be caught sleeping? After all, the massive attack by Hamas ultras must have been in the making for a very long time.

Delve deep into this mystery and you will find parallels in the corporate world too. Failure to monitor competition has proven to be the undoing of the mightiest business enterprises. That is why business espionage or spying has become a thriving business in its own right today. It involves unethical or illegal actions to gather confidential information about a competitor. Examples include cyber-espionage, wiretapping, bugging, hacking, or even bribing employees of the competitors for inside information. But such activities can lead to legal repercussions and damage a company’s reputation. I, therefore, suggest that managers, young and old, should desist from such acts while remaining aware that rival companies may not be equally moral and principled. We should, however, remain alert against unscrupulous designs of our competitors.  

So, what should managers do without crossing ethical and legal boundaries? Opt for competitive intelligence – aggressively. Smart companies use market research, competitive analysis, and data analytics to track their competitors. They analyse public information, such as financial reports, press releases, and social media activity, to gain insights into the strategies and performance of the competition. Readers would certainly be aware of SWOT analysis which is commonly employed to assess strengths, weaknesses, opportunities, and threats.

For example, in the tech industry, Apple closely monitors its competitors. It keeps an eye on Android phone releases and features to stay competitive. It uses public information like patents, product announcements, and market research data to adapt its strategies. One infamous case is the 2014 hack of Sony Pictures attributed to North Korea. This cyber-attack exposed sensitive information, including unreleased movies and emails, revealing confidential competitive strategies and causing significant damage to Sony. In the ever-going Pepsi-Coca-Cola business war, a Coca-Cola employee tried to sell trade secrets to PepsiCo in 2006. The Federal Bureau of Investigation uncovered the plot and the culprit was jailed. The risk of insider espionage was highlighted again in 2011 when automobile company Renault accused three of its executives of stealing and selling its electric vehicle technology to competitors. In 2010, Google alleged that it was targeted in a cyber-espionage campaign originating from China, leading to a major diplomatic incident. The goal was to access Gmail accounts of Chinese human rights activists. In 2008, Siemens and Mitsubishi were caught in a corporate espionage dispute pertaining to trade secrets of gas turbines.

Keeping in view the growth in corporate spying, companies like IBM and Microsoft have established ethical guidelines for competitive intelligence, focusing on respecting laws and maintaining ethical standards. But no one knows as to what extent these guidelines are put in practice.   

Many business schools teach competitive intelligence, emphasising ethical and legal methods for gathering information. Harvard Business School, for instance, includes courses on competitive strategy.

Though all espionage does not happen via digital means, it would be worthwhile for managers to pay adequate attention to data encryption and access control on a need-to-know basis, creation of robust and proven cyber security tools such as firewalls, intrusion detection systems, and anti-virus software. Vulnerabilities have a way of dodging our attention. Constant vigil is of the essence.

We often tend to ignore physical security in the flurry of IT and cyber precautions. This can prove costly. Secure physical premises with surveillance cameras, restricted access areas, and visitor logs. Limit the number of employees with access to sensitive physical documents. Implement regular monitoring and auditing of network traffic and access logs to detect unusual or unauthorised activities. This can help identify potential breaches early.

Ensure that suppliers and contractors follow stringent security practices. In 2013, US retail giant Target experienced a data breach through a third-party HVAC (heating, ventilation and air conditioning) contractor, highlighting the importance of a secure supply chain.

Develop a comprehensive incident response plan that outlines the steps to take in the event of a breach. Practise and update this plan regularly. Be ready with a well-defined communication plan to address customers, employees, and the public if a breach occurs. Be transparent and maintain trust. Be prepared to take legal action if necessary. Apple filed a lawsuit against a former employee who allegedly stole trade secrets and sold them to a Chinese company. Legal action can act as a deterrent.

Don’t spy. But do keep spies away.

Failure to monitor competition has proven to be the undoing of the mightiest business enterprises. That is why business espionage or spying has become a thriving business in its own right 

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JUNE 2024

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