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It's The Information, Stupid!!

As intangibles outpace tangibles as the dominant source of corporate, institutional value, a business and R&D environment reliant on ' we can invent and commercialize faster than they can steal ' as the primary strategy to offset - mitigate the impact of competitor and economic intelligence, is misguided and conveys limited understanding about this highly organized, extraordinarily sophisticated and predatorial worldwide phenomenon.

In sporting parlance, such a strategy is akin to ' the best defense is a good offense ' . In the high stakes and costly business of global R&D competition, such a strategy is ' counterintelligence in reverse ' !

An ' invent and commercialize faster than they can steal ' strategy serves as no substitute for a well designed and executed program to proactively protect and preserve the value of proprietary-competitive advantage information and intellectual property.

'Go Fast, Go Hard, Go Global'
John Hayden, Corporate Vice President of Boeing Aircraft, once testified before Congress that Boeing does not need the U.S. intelligence agencies to acquire technical or economic information because, ' we can invent faster than they can steal ' . This paper is not advocating using U.S. intelligence agencies in this manner. However, the essence of this executives remarks has become a frequent refrain of other business decision makers relative to domestic and international initiatives to, if not acquire, at least learn about, well in advance, the technology, trade secrets and otherwise, the plans, intentions and capabilities of U.S. companies.

In today's go fast, go hard, go global, nanosecond business, R&D and information technology environment, trying to stay ahead of the competition by assuming you can invent and commercialize faster than they can steal, does, to be sure, represent short term (quarterly) thinking. Insofar as whether it serves as a strategy to mitigate or offset the impact of competitor-economic intelligence and industrial-economic espionage, while perhaps understandable, from purely a business perspective, it is no substitute for a well designed, well executed and proactive program to safeguard proprietary-competitive advantage information, intellectual capital and intellectual property.

Those who tout such a strategy (presumably) believe that the information, data, or technology (plans, intentions, capabilities) that's being acquired through open source competitor-economic intelligence, will quickly become obsolete (its value greatly and quickly diminished) and, therefore, any potential for rapid commercialization by others in terms of sales and/or market share losses will be minimal. In other words, any potential value of information, data, or technology acquired either illicitly or through open sources will be mitigated (offset) because it ' s obsolescence will outpace its commercial value.

In essence then, decision-makers are hedging investments in R&D and intellectual property against time, i.e.; the ability of their corporation-institution to stay sufficiently ahead of competitors (or, other end users of economic intelligence).

Is It 'The Best Defense Is A Good Offense' Or 'Counterintelligence In Reverse? '
A consequence of a ' we can invent and commercialize faster than they can steal ' strategy a, is that's portrayed here is that proprietary-competitive advantage information and intellectual property safeguards seldom receive the attention or resources either warrants in today's high risk, go fast, go hard, go global business and R&D environment. Instead, with growing regularity, decision-makers seemingly assume that the purchase and integration of proactive information protection-value preservation measures (resources), beyond the minimum, would not be cost-effective and would yield little, if any, return on investment.

Implicit in a ' we can invent and commercialize faster than they can steal ' strategy, in lieu of a well designed and well executed proactive information protection-value preservation strategy ' is:

a. The assumption that certain (but, unknown) levels of information loss are inevitable consequences of today ' s, largely open source, nano second global information technology environment

b. The mistaken view that the imposition of procedural information safeguards will impede the generation, utility and speed which (business) information must be generated, accessed and disseminated,

c. A limited understanding about the proliferation of an ultra sophisticated, highly organized and often times predatorial corporate and state sponsored competitive and economic intelligence operations worldwide

d.  The assumption that legal counsel cease and desist letters and/or threats to litigate (prosecute) allegations of theft, misappropriation, leakage and infringement represent sufficient deterrents today to would-be wrongdoers.

There are several ironies to the ' we can invent and commercialize faster than they can steal ' strategy. One irony is that such a strategy is being espoused at a time when intangibles (information, intellectual capital, etc.) have outpaced tangibles (property, inventory, etc.) as the dominant source of value in corporations and institutions.

For example, in the information-knowledge-technology eras, which we remain in the midst, the source of value of products such as computers, cellular phones, pharmaceuticals, even some branded consumer products, has, in many instances, shifted from its physical content to its knowledge content. Corporate and institutional investment in intangibles such as R&D, brand development and human capital enhancement, is growing at a substantially faster rate than tangible investments throughout all developed countries. (Blair, Margaret M., Wallman, Steven M.H. Understanding Intangible Sources of Value. Brookings Institution. 2000)

Information, Knowledge and Intellectual Capital: It All Has Value!
The often used adage, 'talk is cheap' , is perhaps indicative of a general attitude many of us hold regarding the value of information. Americans traditionally consider information as having value only if, or when, some specific action can be taken as a result of knowing it or using it.

It is only in the past twenty years that we have come to realize that information has taken on a new character, that is, it has passed from being (merely) an instrument through which we acquire and manage other assets, to being a primary asset itself. It's important then, to recognize the emergence of information as a commodity which calls out for protection and definition of ownership rights. (Branscomb, Anne Wells. Who Owns Information? From Privacy to Public Access. Basic Books, 1994).

Today's companies increasingly find themselves producing an entirely different type of product: knowledge. Knowledge has become the primary economic muscle of the information era. Today, nearly all of the world's most innovative, successful and wealthy companies are those that wield knowledge effectively.

This ability to use knowledge effectively applies not only to high tech R&D environments, but, also to more traditional companies. Wal-mart, for example, may be a retailing chain, but it uses the collective brainpower of its people to gain advantage over competitors. In fact, 90 percent of Wal-Mart's $200 billion market capitalization (8/99) is not attributable to book value rather to its intellectual capital, or more specifically, the market's valuation of Wal-Mart's ability to use its intellectual capital assets to generate profits. (Gross, Clifford M., Reischl, Uwe, Abercrombie, Paul. The Idea Factory. Battelle Press. 2000. Columbus )

Michael Dertouzos offers another view about information value. Because its believed, he says, that most information can be easily replicated or replaced, it (presumably) has little, if any, value. Since most information is passive and exists in abundance, Dertouzos says , little value is attached to all but a very few, such as to its owner or originator (or, in the context of this paper to economic competitors). (Dertouzos, Michael. What Will Be, How the New World of Information Will Change Our Lives. Harper Edge. 1997)

The perspectives expressed by Dertouzos often evolve as an organizations ' rationale for applying only the most cursory (minimum) measures to protect and preserve the value of information (intangibles).

Still, another perspective readily found in both public and private sectors ' , it's assumed there is a connection (correlation) in how certain information is classified and its value, i.e.; top secret, secret, company confidential, proprietary, sensitive, etc. Presumably, the higher its classification the greater its value.

Understanding What Others Want and Covet: Competitor & Economic Intelligence
A second irony to the 'we can invent and commercialize faster than they can steal' strategy is that it is being touted at a time when corporate and state sponsored economic intelligence and economic espionage are on the rise (the latter being linked to supporting terrorist or highly nationalistic organizations).

The National Counterintelligence Center's, 2002 Annual Report to Congress on Foreign Economic Collection and Industrial Espionage states that 'the U.S. continues to be threatened by the theft of proprietary economic information and critical technologies. The risks to sensitive business information and advanced technologies have dramatically increased in the post-Cold War era as foreign governments - both former adversaries and allies - have shifted their espionage resources away from military and political targets to commerce. The information they seek is not simply technological data but also financial and commercial information that will give their countries a competitive edge in the global economy. The increasing value of trade secrets in the global and domestic marketplaces and the corresponding spread of technology with dual applications have contributed to a significant increase in both incentives and opportunities for economic espionage. But, contrary to private industry's belief, the leading-edge technologies are not the only technologies being targeted.'

Ultimately, to better understand the role of (information) value, especially for Dertouzos ' idea of ' customized information ' as would typically be associated with R&D projects, it's important to become familiar with the current status of the worldwide competitor and economic intelligence phenomena. By recognizing who, what and why others , worldwide, are interested in accessing particular types of information and technology, and how the gleaned economic intelligence can be used to achieve an economic-competitive advantages, one may be less likely to summarily dismiss the value of information.

Computer Security & Information Security: They're Not The Same Thing
A third irony implicit in the ' we can invent and commercialize faster than they can steal ' evolves around confusion about the operational distinctions between information security and computer/IT security.

Conceptually, computer security is often considered the dominant domain, especially when considered in light of the significant amount of resources organizations dedicate to protecting their systems from spamming, denial of service attacks and hacking and installing anti-virus software, fire walls, etc.. Some computer/IT advocates would have us believe that all valuable information evolves from and is stored in computers and computing systems. Therefore, the logic continues, as a company's computers and computing systems are secured, so is the company's proprietary-competitive advantage information, intellectual capital and intellectual property.

But, the question, is the system secure?, carries much less meaning today. The more meaningful question is; is the proprietary-competitive advantage information and intellectual property protected against events and acts known to be harmful, i.e.; open source competitive and economic intelligence, industrial/economic espionage? An often overlooked aspect is the fact that proprietary-competitive advantage information and valuable intellectual capital exist in many formats, other than electronic bits and bytes .

In order for the 'we can invent and commercialize faster that they can steal' strategy to be consistently effective, decision-makers, presumably, must be able to estimate-measure, with some degree of precision each of the following:

  1. the time (close proximity) when an information loss actually occurred, and
  2. the time period (days, weeks, months) when the recipient (or, ultimate end user) of the acquired information (plans, intentions, capabilities) could conceivably apply it commercially to undermine or deprive its owner of economic benefits.

The difference between 1 and 2 reflect the loser's 'head start' , or how far they are ahead of their competition.