As the pressures of a recession (now affecting most of the world) increase, so does theft. We have read innumerable articles about inventory “shrinkage” in retail establishments — and other property crimes — but what about the other 80% of the balance sheet? The other 80%? Yes. That’s the average business value represented by Intellectual Property and Critical Information (IPCI). Approximately 80% of the value in companies listed on the Fortune 500 or the S&P 500 are Intangible Assets – aka, knowledgeware. While there are many signals indicating that the theft of IPCI is at an all time high, corporate America is still woefully ignorant of how aggressive the shadow market for IPCI has become. Forget the Hollywood images of IPCI ninjas from Japan, Russian mobsters in late night encounters, the French femme fatale in the secretarial pool, or a Chinese grad student looking for summer work. Instead, imagine companies on these lists who employ independent agents (“Wild Geese”) to find out what the competition is doing, and how they are doing it. The polite term for this activity is “completive intelligence” — a less polite term is “espionage”. Whatever you choose to call it, corporate America is loosing it IPCI faster than any time in our history.
At a recent meeting with a “500” company I got to see firsthand what their Competitive Intelligence team had uncovered with the help of outside agents. Quite frankly, it was stunning. The target was a small competing firm. They had uncovered 1.) the target’s margins, 2.) the target’s cash reserves, and 3.) the target’s marketing plans for the next two quarters. The “500” company initiated a pricing strategy – including severe cuts on all competing products – designed to squeeze their competitors resources, and chances of survival, in the coming year.
It was interesting to follow how the Intelligence teams acquired information. In most cases they simply contacted the target corporation, spoke with key employees, and simply asked questions.
As margins shrink and competition increases, the need for competitive intelligence intensifies. Large and well-established enterprises usually understand this dynamic better than the smaller players. Knowledge is power — and can be used to put your competitors out of business.