I Spy Today, the basis of competitive advantage has changed. The dominant company in any industry is not necessarily the one with the greatest capital, the most efficient factories, or the best access to raw materials. Instead, winning companies are those with the richest knowledge ? knowledge about their customers, potential customers, suppliers, technologies, and competitors.
It shouldn’t come as a surprise, then, that many companies’ intellectual property is increasingly being plundered by competitors and foreign countries.
Corporate espionage costs U.S. businesses $250 billion in annual losses, according to a report in Insight on the News. The U.S. is the prime target for industrial spies because it controls 70 percent of the world’s intellectual property and spends $125 billion each year on research and development.
Consider the Grumman aircraft plant on Long Island, New York, that hosted a group of Russian scientists for a tour. The managers prohibited the scientists from taking pictures or notes. What they didn’t realize is that the Russians had fastened sticky tape to the bottoms of their shoes. As they walked through the plant, their soles collected tiny pieces of metal alloys on the floor. When the Russians analyzed the alloys, they discovered the exact components Grumman was using to build U.S. military jets.
Companies are particularly vulnerable to information theft because they are doing so little to stop it. According to a survey by the American Society for Industrial Security, or ASIS, 62 percent of the Fortune 1000 companies and many of the 300 fastest-growing firms lack procedures for reporting stolen information. Forty percent of the companies do not have a program for protecting that information in the first place. ASIS surveyed 1,300 companies and found that there were more than 1,100 incidents of economic espionage, and another 550 suspected incidents.
The primary targets of such attacks are high-tech firms, followed by companies in the manufacturing and service industries that make proprietary products and use unique processes that give them a competitive advantage. According to a report from the National Counterintelligence Center, within the past decade, companies such as IBM, Corning, Honeywell, 3M, AT&T, and General Electric have been targets of espionage.
And, of course, for every company that is aware that it has been the victim of corporate espionage, dozens more have been attacked without realizing it.
ASIS identified the countries that are most active in corporate espionage as China, Japan, France, Canada, Mexico, the United Kingdom, South Korea, Germany, Russia, and Brazil.
The techniques range from bribing insiders for information and documents, to blackmailing executives about affairs, to hidden cameras in factories and wiretaps in boardrooms. But many companies are unaware how easily their secrets can be discovered by anyone who wants them. If a company prints hundreds of copies of its annual budget, at least one of them is likely to end up in the trash, where it can be scooped up from the Dumpster by a competitor or a foreign agent. Similarly, companies often place valuable information on their intranets and in e-mails that can be intercepted by hackers. Others allow their secrets to be stolen by spies who penetrate the company dressed as photocopier repairmen or electrical inspectors.
This threat is well-known to the U.S. government. In 1998, FBI director Louis Freeh told the U.S. Congress that 23 nations were trying to steal U.S. trade secrets, and 12 countries were striving to acquire “proprietary economic information and critical technologies” about American businesses.
The economic impact is enormous. More than 6 million American jobs have been lost due to economic espionage, according to the White House Office of Science and Technology Policy.
Based on this growing threat, we offer the following forecasts:
First, the technology for eavesdropping will continue to expand. One new way for stealing corporate secrets involves reading what is on the computer screens in an office without entering the building. At Cambridge University, scientists measured minute changes in the light reflecting from office windows, and were able to reconstruct images from a PC screen in the office. Known as “optical time-domain eavesdropping,” this approach could enable spies to literally read over the CEO’s shoulder. The best prevention is to keep your office brightly lit; another is to use monitors with liquid crystal displays, which are not prone to this type of eavesdropping.
Second, more companies will wake up to this very real threat to their stability. In 2003, Samsung, which is the world’s largest chipmaker, took a small step by barring employees and visitors from bringing camera phones into its factories. This simple device can easily be used to capture secrets about a company’s production processes and new products. Broader measures will be needed, and a top executive will need to be responsible for overseeing them. For example, just as many companies have appointed Chief Knowledge Officers to amass and distribute the firm’s intellectual property, businesses may need to name a Chief Knowledge Security Officer to prevent that intellectual property from reaching the hands of competitors.
References List :1. Insight on the News, August 31, 1998, "Corporate Snoops Sharpen Skills (Industrial Espionage Conducted by Former Spies)," by Timothy M. Maier. ⓒ Copyright 1998 by News World Communications, Inc. in association with The Gale Group and LookSmart. All rights reserved.2. To access the article "Window Light Can Give Away a Computers Secrets at 50 Meters," visit the ComputerWeekly.com website at: www.computerweekly.com/Article110731.htm3. The Korea Herald, July 5, 2003, "Samsung Bans Camera Phones in Workplace." ⓒ Copyright 2003 by Herald Media, Inc. All rights reserved.
