Honey Traps!

I've been thinking about a topic for this entry. I was considering something along the lines of the uses and dangers of honey-traps in competitive intelligence and counter-intelligence. This was prompted by the story of Judith told in the Apocrypha, and featured in some of the world's greatest art work. (If you see a woman holding somebody's decapitated head then it is either Judith with the head of Holofernes, or more commonly, Salome with John the Baptist's head. Judith's story is remembered on the Jewish festival of Chanukah that ended just after Christmas, and led to a custom to eat cheese on this holiday. The key point is that Holofernes, a Greek general, was tempted by the beautiful Judith, who plied him with salty cheese, and then wine to quench his thirst. Holofernes had lost his head to Judith's beauty before he fell into a drunken stupor. He then lost his head to Judith's sword! It is essentially the old-new story of beware Greeks bearing gifts - in reverse, as instead of it being the Greeks tricking the Trojans, it was the Greeks getting tricked. For competitive intelligence professionals, it shows three things:

• How easy it is to get information or what ever is needed when tempted by an unexpected gift. Rather than ask for information and give nothing in return, try and make it a quid-pro-quo by offering a piece of harmless (but unknown to the interviewee) information. This exchange can stimulate conversation and encourage the passing of information. As an example, many years ago, I was working on a project. I promised interviewees a copy of the report I was writing in return for their co-operation. This was a sanitised version of what I was giving to my client. In fact, it was pretty much a rehash of what my interviewees had just told me, with the useful bits wanted by my client removed. I sent this to one interviewee - who promptly called me back to thank me. He had been my main source and much of the report was based on his input. He then proceeded to give me much more information than he had before - invaluable to my client.
• How an unexpected gift can encourage people to talk. The above example shows how it can be done. The danger is that people in your company may be giving away valuable information - so it is important to ensure that there is a policy on who can talk to outsiders, and what can be said.
• How women can tempt men. Yes - I know that this is politically incorrect, but it is done. I know of a CI consultancy that had a reputation for employing extremely attractive, and very bright 20-year old graduates. These girls would then call up senior executives, play naive, and get the executives to talk. They would then invite them to a lunch meeting to talk further - and the executives would melt, giving away information that they should have known not to give. Unfortunately it is a failing of some middle-aged men to give away the store when flattered by a much younger woman. This is the classic honey-trap, and although it may not be ethical, it does go on.

Think why information is available

When I teach people about competitive intelligence, I always emphasise the importance of understanding why information is available.

Competitor information becomes public for a number of reasons, but these can be summarised into three categories:

• Intentional dissemination of information about the company by the company - for example, an annual report or a press release
• Accidental dissemination of information about the company by the company - for example, a leak or rumour
• Information that comes from a third party. This itself can take a number of forms. One is like a footprint in the sand - so competitor actions can provide clues to their plans or strategies. A typical example is when a competitor signs a contract with another company. This company may mention the contract - giving out information about the competitor. A second example is where a third party has managed to collect information on a competitor from a variety of sources including interviews and non-published sources. In this case, the third party may decide to publish their information as a market research report. Sometimes the third party may include a synthesis of information that combined gives further insights.

Of course, all three are important for competitive intelligence - although perhaps the third is the most important. One of the aims of a competitor analyst is to gather intelligence from both published and non-published (but legal and ethical) sources - and synthesise these so as to give something that conveys an advantage not available to competitors.

Sometimes though, information can come too easily. Part of the skillset of a competent competitor analyst should be an ability to evaluate why information became available. Which of the above was the reason and how reliable is the information? There is a risk that the gathered intelligence is wrong, and a validity check can help assess the chances of this. (One common approach is to grade both the intelligence and source, giving a likelihood of accuracy). Whatever method is used, however, there is always the risk that sometimes things will be wrong.

A simple approach is to consider how easy the information was to obtain. This works on the assumption that competitors will try and protect information that they would prefer not to be in the public domain. So if information is easily available it has a lower value and may be more suspect than information that took a lot of thought and work to obtain.

This is illustrated by the following story - in this case there was an ulterior motive in providing information that on the surface, looked like a real money-saver. The true reason came out as an accidental disclosure following a pointed interview type question!

A man was having problems with the quality of the print from his printer so he called a local repair shop where a friendly man informed him that the printer probably needed only to be cleaned. Because the store charged $50 for such cleanings, he told him he might be better off reading the printer's manual and trying the job himself.

Pleasantly surprised by his candor, the man asked, "Does your boss know that you discourage business?

"Actually, it's my boss's idea," the employee replied sheepishly. "We usually make more money on repairs if we let people try to fix things themselves"

The question of leadership

I last wrote about leadership almost a year ago. Yesterday I heard a talk that made me think again about this topic.

Understanding leadership is a crucial competitor analysis skill. Poor leadership is a weakness which is reflected in the strategies taken by the company. And companies with poor leaders are less likely to survive when competition intensifies. The opposite is the case for good leaders.

But what makes a good or bad leader. Is it just an ability to come up with winning strategies, or is there more to it.

I've written before about how the Bible can teach us lessons that are applicable for today's business. The biblical story of Korach - told in the book of Numbers is one story that illustrates the issues of leadership. Korach was a cousin of Moses, the Israelite leader. According to Jewish legends, he was fabulously wealthy, and he was also sufficiently charismatic to attract several followers. He approached Moses and asked why he was being passed over - questioning the right of Moses and his brother Aaron to be top dogs. God was not amused, and eventually Korach and his followers were destoyed.

But was it so wrong to aspire to leadership. What was so special about Moses and Aaron that made God accept their leadership style and not that of Korach. Afterall, Korach had proved that he could be successful - his wealth and followers showed this.

The answer lies in how you lead. There are two sorts of leader. The first, leads for reasons of ego. They want to lead. They want to be the boss. Essentially, their ambition is to make things better for themselves, and if those beneath them benefit, then all the better. They thrive on the feeling of power and control that leadership can convey. This type of leader can be viewed as a taker. They take what is given from their followers and those underneath them. If they are good at strategy, then all benefit - although they will often benefit more. If they fail, however, then through not cultivating successors and partners, they are likely to drag all down with them.

The second sort of leader is the opposite of the first, in that rather than choosing to lead, leadership is thrust upon them. They may be the boss, but their ambition is not to benefit themselves but to make things better for those who entrusted them with the leader role. They are givers and will encourage others to follow them, through taking up leadership roles and sharing power. As a result, such leaders are more likely to leave a long-lasting legacy, and will also be better suited to withstand problems. They can call on others for help - and as their motivation is altruistic, they are more likely to receive help.

So how do you spot givers and takers in companies. The first thing to do is look at the company culture. Is it collaborative or mercenary? Do the leaders lead by example, or do they just expect to be obeyed? Do they consult with others and take account of the needs and interests of all the organisation or just a select few who they see as their near-equals?

People like to knock Microsoft, and Bill Gates. Gates is a ruthlessly successful businessman. It is not for nothing that there used to be a Googlebomb that claimed that Microsoft was more evil than the devil. Afterall, Windows and Office are the dominant computer operating systems and software (although not 100% - this is being written on an Apple iBook using Firefox - if you are not using either, consider switching for a better computing experience!). But let's look at Gates himself, over the last few years. He stepped back from being the Microsoft CEO, and now has virtually stepped out of the picture. The world's richest man stated that his aim is to use his wealth to benefit others - via his charitable foundation. This is not the profile of a taker but of a giver. Is this why Microsoft is so successful - it listened to its staff, its customers, its suppliers and the inner voice that says make the world a better place.

Or what about Google. Their company motto may be a trite Don't be evil but this at least recognises that corporates can be evil - Enron and Worldcom were just the tip of the iceberg. OK - so Google's practices in China are suspect. And the way they don't filter out pornographic sites is defintely wrong. However I personally think that both these examples are reflections of how difficult it is to resolve mutually incompatible conflicts of interest. How do you supply search listings when a government gives you a choice of censorship or nothing. Refusal to comply, and so getting blocked totally, doesn't help the population of China. And machines don't find it easy to tell good from bad - Google set rules on what could be found and how, and although these could be altered for exceptions, it sets precedents that could destroy the very accuracy people want. Essentially, Google's leadership style is that of a giver - but giving is never easy. It is taking that is easy as you then consider what is best for a small elite and don't have to balance multiple conflicts of interest.

Both these examples link to computers and the Internet. But givers don't just come from these areas. Ben & Jerry's ice-cream company is another example - that as part of its corporate objectives supports small-scale family owned farms that would otherwise have gone under - squeezed out by their larger competitors. Ben & Jerry's new owners - Unilever also take corporate social responsibility seriously. And if you look at how Unilever is managed, you will see a truely diverse company with many races and creeds at senior positions. Or take the Indian ICICI bank. India is seen as a patriarchal society by many. Yet ICICI has more women at senior / board positions than many US corporations. It is also India's fastest growing private bank - success and the giving mentality seem to go together.

There are many more examples. Just recently Warren Buffett, the chairman of Berkshire Hatherway, announced that he plans to leave 85% of his fortune to the Bill & Melinda Gates foundation - which made charitable payments in 2005 alone, of more than twice that donated by UNESCO. The name Buffet won't even become incorporated in the charity's name.

So, when you look at the leaders of your competitors (and your own companies) think about whether they are givers or takers. If they are givers and your company is a taker than be worried, as long-term it seems that being a giver is a more reliable indicator of success.

(With thanks for the idea of givers and takers to Rabbi Mendel Lew and his sermon given following the annual reading in synagogue of the story of Korach).