New England Patriots Take Competitive Intelligence Too Far

Recent NFL headlines have been filled with the tactics employed by the New England Patriots. Apparently, the Patriots have been filming the opposing team’s defensive coordinator, recording their hand signals, analyzing them against actual field play to break the code and, subsequently, feeding their offense with the defense’s anticipated points of attack and weaknesses.

Some might wonder what the problem is. I have heard some say that “every team can do it,” and others have mentioned that the Patriots are certainly not the only team engaging in this activity.

And, the truth is that if the Patriots had employed a method of using binoculars, a pad of paper and a pencil to steal signals, they would not be in any trouble at all. Those methods are legal (if not ethical) in the NFL system. But, the NFL strictly prohibits the use of video capture of the opposing team’s signals.

What is the penalty for this “indiscretion?”

Head Coach, Bill Belichick was fined 10% of his salary this year ($500K), the Patriots were fined an additional $250K and the team loses a first round pick in next year’s draft. These are some of the heaviest fines handed down.

Is it possible that everyone else is engaging in this type of behavior? Football at the NFL level is hypercompetitive. While there is no evidence of anyone else doing this, there is no reason to believe that other teams haven’t engaged in this activity, assuming (just like the Patriots) that they won’t be caught or that the penalty would be outweighed by the positive benefit. In either case, the NFL has sent the message firmly that cheating will not be tolerated. I suspect that many teams had to examine their own operations this last week in light of the heavy judgment handed down to the Patriots.

For you in your company, take this lesson to heart. Know the law and stay away from the edge of the darkness. Grey areas still carry risk and the people that break or bend the laws suffer the consequences as much or more painfully than do the companies in which they are employed.

Just to jog your memory, you might consult the actual text of the Economic Espionage Act of 1996:

(a) Whoever, with intent to convert a trade secret, that is related to or included in a product that is produced for or placed in interstate or foreign commerce, to the economic benefit of anyone other than the owner thereof, and intending or knowing that the offense will, injure any owner of that trade secret, knowingly—
(1) steals, or without authorization appropriates, takes, carries away, or conceals, or by fraud, artifice, or deception obtains such information;
(2) without authorization copies, duplicates, sketches, draws, photographs, downloads, uploads, alters, destroys, photocopies, replicates, transmits, delivers, sends, mails, communicates, or conveys such information;
(3) receives, buys, or possesses such information, knowing the same to have been stolen or appropriated, obtained, or converted without authorization;
(4) attempts to commit any offense described in paragraphs (1) through (3); or
(5) conspires with one or more other persons to commit any offense described in paragraphs (1) through (3), and one or more of such persons do any act to effect the object of the conspiracy,
shall, except as provided in subsection (b), be fined under this title or imprisoned not more than 10 years, or both.
(b) Any organization that commits any offense described in subsection (a) shall be fined not more than $5,000,000.

Competitive Intelligence – Save Yourself from the Cloak and Dagger

Today, I’m going to stray from the usual Primary Intelligence Competitive Intelligence thoughts to make a point about counterintelligence. Your company has to be prepared for major and minor efforts to infiltrate your confidential and proprietary information.

I’ll start with a story and follow-up comment:

"In the spring of 2005, Guy Enright, an accountant at KPMG Financial Advisory Services Ltd. in Bermuda, got a call from a man identifying himself in a crisp British accent as Nick Hamilton. Hamilton said he needed to see Enright about matters of utmost importance.

"Over the course of two meetings, Hamilton led Enright to believe he was a British intelligence officer, according to a person familiar with the encounters. He told Enright he wanted information about a KPMG project that Hamilton said had national security implications for Britain. Soon, Enright, who was born in Britain, was depositing confidential audit documents in plastic containers at drop-off points designated by Hamilton.

"But Nick Hamilton was not an agent of Her Majesty's secret service, and the documents never found their way to the British government..." (Continue Reading the Article)

Den Taylor, Strategic Insights, added his comments to the article:

"As a strategic intelligence professional, I am often asked to provide counter-intelligence counsel to deal with similar circumstances. What is invariably found in such cases is in today's global economy, intelligence gathering by any means is a simple fact of life.

"Unfortunately, many organizations do not convey this to their employees, making them easy prey to the entreaties of individuals utilizing simple forms of pretext. Interestingly, we have found that dealing with this problem is relatively simple.

"We recommend that clients conduct periodic education programs that cover the means by which outsiders gather intelligence. Such programs are often coupled with designating a knowledgeable intelligence person who can provide advice on how best to deal with unsolicited contacts. Although taking this step does not guarantee that valuable internal intelligence is never compromised, it does make the pursuit of such information much more difficult."

As a competitive intelligence professional, have you thought about educating your company on the tactics employed by your competitors? You can start by discussion your standard techniques for data collection and branch out into other possible areas of espionage. Your company’s employees don’t have to be experts on espionage. They just have to be able to sense suspicious activity and notify the right people.

In short:

-Your company has to have a plan to combat espionage and potentially harmful intelligence efforts
-As a market, sales or competitive intelligence professional, you should have input into that plan, if you don’t manage it outright.
-A list of suspicious activities needs to be prepared and distributed
-Your employees need to know how to handle a suspicious call or activity. Do they escalate it to a manager or contact your department?
-Be ready to prosecute. Illegal activity needs to be punished. (Your legal department should get a kick out of this)

If you have ideas or questions, let’s chat. (cdalley@primary-intel.com, 801-838-9600 x5050)

This Just In: Corporate Espionage Continues to Grow

The corporate world is in a constant state of battle and each participant searches for the key bit of competitive intelligence that will give an edge. Espionage has been a constant practice in nearly every industry and there is no sign of slowing.

http://economicintelligence.blogspot.com/2007/04/corporate-spying-grows.html

The likelihood of getting caught is pretty slim. So many do it because most activities are never going to be discovered. And, some forms of espionage are so simple to execute that you almost feel compelled to try.

To stay on the side of ethical, I use a pretty simple rule: "If a person would lose their job by providing this information to me, I won't pursue it."

Just because you can think of creative ways of gathering info doesn't mean that you should execute on every one of them.

And, then, you need to decide if the information you pursue is going to provide you a benefit anyway. If the information is interesting but worthless, why would you risk your company's ethics and legal standing?

Before you chase any piece of information, try to apply the following two questions and plot the answer on the quadrant below:

1- How practical is it to procure this information?
2- What is the potential ROI?


Try to stay in the upper right-hand quadrant. Otherwise, your company is wasting time, money, and perhaps legal capital on efforts that just don't really matter.

If you have an idea about a competitive intelligence or competitive advantage project, talk to me and let's figure out where it might fit in the overall productive scheme of things.

Email or phone (801-838-9600 x5050)