Competitive intelligence’s legal and ethical challenges
Everyone wants that competitive advantage. But intelligence collection and analysis require awareness of information that may live in a gray zone—not entirely in the public domain but not exactly a corporate secret either. Gathering competitive intelligence requires great care to understand what information may be legally collected and how to collect it ethically.
Legal considerations of competitive intelligence
The legal aspects governing competitive intelligence are established, and you should know them. Even unintentional violations can cause significant corporate and/or personal fallout. So, learn and follow your company’s requirements regarding laws that affect competitive intelligence gathering for all countries where you do business.
For example, in the U.S., key relevant federal statutes include the Uniform Trade Secrets Act (UTSA) and the Economic Espionage Act of 1996 (EEA). Both address theft or misappropriation of trade secrets, and violations carry high penalties.
There are other U.S. statutes to consider, too.
For example, antitrust regulations are an issue if two competing entities discuss market division and/or pricing; and fraud, which generally refers to misrepresenting yourself or your purpose to gain information.
Countries outside of U.S. have their own—often more restrictive—legal statutes governing these and other factors.
In practice, you may encounter situations in which interpreting statutes like these is open to ambiguity. Along with strictly following your company’s requirements, when in doubt, leave it out. It’s always better to take the high road. And, though it should go without saying, local statutes addressing inappropriate activities, such as breaking and entering, trespassing and theft, also apply to competitive intelligence gathering.
Engaging third-party competitive intelligence vendors on your behalf can carry benefits—from freeing your team’s resources for more strategic work to obtaining candid, sponsor-blind information you can’t get directly. Remember, though: Your vendor must follow the same laws as your company. If it’s proven that you pushed a vendor to violate the law, your company remains responsible. Conversely, engaging a vendor who exhibits questionable conduct can hurt your company’s reputation.
It’s important to vet the longevity and history of a competitive intelligence vendor to ensure they can be trusted to follow your company’s requirements and adhere to high ethical standards themselves. As a start, screen for cease-and-desist orders or other related legal conflicts in their operating history.
Ethical considerations of competitive intelligence
Next, consider what you should—or shouldn’t do (even if it’s legal). This is where business ethics come in. It’s easy to bump into the gray zone when you want to understand the competitive landscape and its players beyond publicly available information. This is when you must decide what’s acceptable in pursuit of these insights.
Brand protection is a key reason that companies establish corporate ethics. You are, of course, responsible for adhering to your company’s ethical guidelines to protect the brand. Likewise, the discipline of competitive intelligence has its ethical guidelines established by the organization of Strategic and Competitive Intelligence Professionals (SCIP) to protect the competitive intelligence brand. Hint: Follow both your corporate ethics and competitive intelligence-specific ethics. The credibility of the guidance you provide to your leadership depends on it.
Even within these guidelines, navigating ethics takes care—especially when collecting competitor information that, while you don’t believe it to be a corporate secret, isn’t shared openly. Pricing, salesforce compensation, development and marketing timelines, bundling strategies and so on may not be corporate secrets. But each is more protected than other information that’s available in public documents.
For example, a B2B contract may not be a corporate secret, but the issuer may not want it shared with competitors. You may want access to the competitive pricing strategy in it, but competitive intelligence ethics dictate that you don’t misrepresent yourself or your purpose when seeking it. And, specific to pricing, if your company is in a dominant position, asking vendors for pricing information and acting on it may be viewed as anti-competitive.
Additionally, as with the legal aspects of competitive intelligence, it’s important to consider ethics from the perspective of the culture in any country where you will collect competitive intelligence. Some countries set a higher ethical bar in collecting competitive intelligence than others, requiring additional care—and potentially different methods, such as face-to-face interviews vs. phone-based ones—in your inquiries. This must be factored into your timelines and expectations.
Collecting competitive intelligence legally and ethically
Here, we draw on more than 50 years of combined experience as competitive intelligence practitioners and providers to recommend practical considerations regarding the ethics of competitive intelligence. As with any recommendations, they should be filtered through your own company’s requirements.
- Collect secondary competitive intelligence. Getting competitive intelligence from publicly available sources, the public domain or open source is the simplest competitive intelligence work and carries little to no risk of competitive intelligence ethics violations. Then again, everyone else can access this information, too.
- Ask internal sources within your company. Sales staff, support employees and field workers often have insight on your competitors since they interact with clients who may have experience with other vendors/suppliers.
- Cultivate an external source network. Develop relationships with others in your industry who have access to information on your competitors. To maintain the relationship, you’ll need to have information to provide as well, while adhering to all legal and ethical guidelines.
- Attend trade shows and other events. These are rich environments for collecting information on competitors since they’re often where new product iterations are unveiled and key announcements are made. It’s OK to approach booth representatives to ask about their products, what’s in the pipeline and what the latest announcements mean for business. It’s not OK to pretend to be someone else, like a customer, when you do it.
- Communicate directly with competitors. In other words, go right to the source and ask. This is the most reliable and fastest way to collect intelligence. You might not get it, but, hey, it’s worth asking. Again, just take care not to misrepresent yourself.