When the Mr. Video conglomerate opened one of its shiny new stores around the corner from my parent’s homey video shop in the dusty South African mining town of Randfontein in the mid-’90s, I saw it as a declaration of war.
Mr. Video could afford to rent out their videos for less than we did because they could rely on a huge conglomerate safety net, international investors and marketing teams – everything a mom and pop video store simply could not have. It was never going to be a fair fight.
I decided that to beat this nasty Goliath, everything was acceptable and there would be no ethical boundaries. I would thwart their growth strategy, confound their marketing plans, chase away their customers and hound them out of town.
First, I hired my friend Woolies, an out of work BA student, put him in my car and parked him in the parking lot a few hundred meters away from Mr. Video with a pen, paper and enough pizza to last him an entire day. He was to take note of how many people walked into Mr. Video’s store: Were they coming in one by one, in families, in pairs? Were they coming out with one video, two or more?
I would ask my other friends to walk into Mr. Video and pretend to be customers, and then debrief them over more pizza. I walked in there myself and wished the manager well, all the time scanning the interior and trying to assess my mortal enemy. I collated all this information in the war room I had set up in the corner of our shop’s faulty tapes and video machines clearance area. I was Reinhard Gehlen, I was Isser Harel. This was war and I was running a network of informants and the information was streaming in nicely.
And yet in the end, my parents, who smiled and winked at my efforts but had a clearer vision of where the war was headed, sold their video store to a competing chain and moved to the coast – not because we were beaten by a large conglomerate, but because they wanted a better quality of life by the sea and there were better schools there.
That was 1997. Ten years later, this week, and the talk at the Israel Export Institute’s Competitive Intelligence conference at the Sheraton Hotel in Tel Aviv was of the need to differentiate, in the private and public realm, between those involved in business intelligence on the one hand, and industrial espionage on the other. Many of the hundred or so conference-goers, representing the sum total of competitive intelligence practitioners in Israeli industry, went to great pains to tell me that they were not spies, even though some of them started off as spies in Israel’s various security services.
What separates competitive intelligence from industrial espionage?
According to the Virginia-based Society of Competitive Intelligence Professionals, of which there is only one Israeli member, CI is acquired from open sources only, and by people who disclose all relevant information, including their identity and organization, prior to all interviews.
According to Yoram Sander of Elisra, a company that provides solutions to the defense industry, CI is measured by its ability to improve the quality of the decisions made by management and to identify opportunities and threats. The difference, it seems, is in the means, not the goals. The refrain from the professionals here is that that competitive intelligence and industrial espionage are at the opposite ends of two extremes. While CI has at its core the use of open-source methods and full disclosure, industrial espionage is more akin to the shadowy world of defense espionage: eavesdropping, spying, ‘false flags,’ deception operations and the like.
The other major theme on people’s minds at this week’s conference was the curious fact that, despite the existence of an enormous pool of Israelis trained in gathering and analyzing information on the country’s enemies, Israel has no well-formed business intelligence industry. Very few of the top companies here employ full-time competitive intelligence professionals, and this is harming our local industries and, more importantly, hampering our global competitiveness.
Countries such as France, the UK, USA, Japan and India have an advanced competitive intelligence culture; it permeates boardrooms across a wide variety of industries and associations. Israel, although it has great ‘intelligence resources,’ as one of the delegates told me, is lagging behind most of the world’s most successful economies.
With the rapid redefinition of the world’s financial and geopolitical map, Israeli businesses are increasingly coming into contact with well-oiled firms from the new centers of business dynamism in China and India.
‘We can’t leave competitive intelligence to the very few who know the language and the culture, and rely on them to do everything. We need to know what’s going on in these countries in a much more extensive way,’ says Kobi Haberman, president of Business Development and Strategic Planning at Nice Systems.
Another delegate went as far as to say that in an age where business conglomerates wield decisive power over governments, and those governments in turn set policy and act according to the business interests of their homegrown conglomerates, Israel has no time to waste in getting up to speed on competitive intelligence to effectively compete in a global marketplace where finance and politics are increasingly intertwined.
So where is Israel going to find CI practitioners? As it happens, like so many other things, the answer lies just under our noses. There are thousands of Israelis trained in gathering and analyzing intelligence for the security services.
With such a well-formed Defense intelligence infrastructure, why is there no comparable business intelligence infrastructure? Why aren’t CEOs who are looking for competitive advantage hiring former Mossad operatives? Why are customer service firms not aggressively scouting recently-retired Shin Bet (Israel Security Agency) field agents and interrogators? Why aren’t logistics firms falling all over former Military Intelligence officers?
Michael Belkine, general manager of Splendour Ltd., a business intelligence company in Tel Aviv, should know – he spent many years in the security services and has seen many excellent spies fail in the boardrooms.
According to Belkine, who is the only Israeli member of the Society of Competitive Intelligence Professionals, 20 percent of the practitioners in Israel’s fledgling CI industry come from the security services. He laments that Israel has an enormous ‘intelligence capacity’ that is not being tapped.
‘Israel has very few natural resources. What we do have is this intelligence capacity that we can tap into and create a business intelligence culture, like in France and Sweden. Government, business and social advocacy associations there all contribute to this culture. Our national welfare and economy vis-a-vis the rest of the world depends on this,’ Belkine says.
There was an initial boost of hirings at the end of the Cold War, when several intelligence professionals retired from active service and were looking for work. Since then, the number has tapered off dramatically, and now most Israeli competitive intelligence practitioners – and there are not that many – come from the business and academic world.
And this is not because they’re not trying anymore. The new generation of retired spies are just not able to make the transition from defense to commerce. ‘Many have tried and failed, because the culture in our boardrooms hasn’t ripened to absorb them yet,’ he tells me.
The main problem, according to Belkine and others at the conference, is the Israeli ego, the ‘I know everything syndrome,’ as another delegate from the Israel Aerospace Industries says. According to this delegate, who has worked in competitive intelligence at IAI for several years, many of Israel’s spies and intelligence analysts come out of a culture of ‘knowledge is personal power,’ and will use what they know to advance themselves.
Apparently sharing good information with others in your security organization can lose you the credit for that information, and someone else could get promoted ahead of you. That kind of culture is detrimental to business, several delegates told me.
Some CEOs also want to keep their business intelligence manager, if they have one, close to their chests, for greater control and prestige. Some overconfident CEOs just think they know it all, and that they don’t need CI people. They don’t want to be told they could be wrong.
Belkine says he once spoke with a CEO who told him that since he had commanded a tank division in the IDF, he knew all about intelligence. And one top executive in one of Israel’s largest communications companies told me this week that his firm has decided not to centralize competitive intelligence because there were already people doing CI in almost all of the company’s departments, especially sales and marketing. Furthermore, the executive, who heads a strategy and planning department, says many top execs were burned in the 2005 Trojan Horse spy program scandal and are being much more careful about the way the obtain market intelligence.
Another obstacle to the transition is that in the security services, spies, especially at the field level, are given ‘blank checks’ – both financially and ethically – to get the data they need. It is only at the higher administrative levels that there has to be an accounting.
In the business world, every shekel has to be justified and accounted for. Many former spies find it hard to adjust to that, Belkine says.
Furthermore, the lines of what is allowed and not allowed in the ‘great game’ of espionage are much more blurred than in the business world. There are legal and ethical restraints to what CI professionals can do in the private sector. Many former agents find that hard to swallow.
The conference, according to the Israel Export Institute, is part of a new push to create awareness of the field. There are currently only a handful of courses teaching CI in Israel, and they are wrapped within larger business and management courses. There is very little academic research in this field here, too.
The move from the security services to the business world entails a change of culture, argues Prof. Jonathan Calof, regarded worldwide as a competitive intelligence guru. ‘In the defense establishment, the costs of failure are enormous. There is a culture there of ‘failure is catastrophe.’ In the entrepreneurial world, it is common knowledge that you are going to fail a few times before you get it right,’ Calof, an active member of the Ottawa Jewish community, tells me.
Calof, who was invited by the Israel Export Institute – ‘the first time I have been invited here to talk about CI’ – says he is surprised by the relative lack of a well- formed CI culture here.
Calof, who says he has never worked in defense intelligence, travels the world and teaches corporations the methods of business intelligence, so he should know where it is developed and where it is not. Canada has it, as do several European and Arab nations, he says, adding that the fact that this was his first invitation suggests to him that Israelis think they don’t need expertise in this area and don’t feel they need to learn from others.
‘People outside of Israel always say, ‘Boy, Israel must be really good at business intelligence because it has all these people trained in intelligence.’ We as a people, both Jewish and Israeli, we love to know, we love it. We go up to people and say, ‘So, tell me what you know, what’s going on?’ We do that so naturally. We shmooze, you know. People worldwide think most Israelis have some intelligence training, well that’s the rumor anyway,’ Calof says.
While most IDF generals would not dare embark on military operations without proper intelligence briefings, or so it would seem, many CEOs don’t take business intelligence seriously, Calof says, and it’s odd because many of these same CEOs were at some stage active in the military.
‘What I see in Israel is that far fewer companies have formalized intelligence units reporting directly to the top executives. In other words, that same general who, when in the military, would never make a decision without the intelligence person at his side, goes to industry and doesn’t have that same infrastructure,’ Calof says. Relative to a country where ‘many have been trained in intelligence,’ Israel, he says, has a grossly underdeveloped CI infrastructure. He doesn’t have hard numbers on how many top Israeli firms have CI units, but says it should be a lot higher than it is. Belkine, of Splendour, concurs.
What about the difference between CI and industrial espionage? Calof, whose area of expertise is trade show intelligence, makes it clear that his profession is not spying. ‘What most companies here fail to realize is that almost everything you need to know is already within your organization. The rest is training your organization to look at open sources, listen to the right people, like customers and suppliers. They know what your competitors are doing and what they’re planning,’ he says.
According to Calof, there is no need for cloak and dagger. ‘Most people want to talk. Interviewing is the best way to get information,’ he says, adding that if you happen to overhear an important conversation, join in and direct the flow of the conversation to what is important to you. That’s not unethical.’
Calof says he hears the same complaints, and sees many of the same obstacles, in both the defense establishment and the corporate world. No matter where they work, he says, there are three common refrains from intelligence people. ‘They complain of political agendas, a lack of analysis and access to decision-makers.
‘What we’ve learned from government intelligence people is that over 90% of what they do comes from open- source avenues. What’s important is to make good use of the collective knowledge of your organization,’ he says.
People involved in industrial espionage, he notes, are easier to fool than those working on competitive intelligence. ‘If you want to get someone to believe you, you just have to speak into the microphone [that someone has secretly planted in your office]. That points to the importance of counterintelligence. If I know that you’re using industrial espionage and not using open sources, what I’ll do is drop information in the areas that I think you’re looking at, and that way fool you,’ he says.
How do you know if someone is spying on you? I ask Calof. ‘You just assume they are and move on from there,’ he says.
The methods of CI, says Calof, are more reliable than spying and are less risky for a company’s image, let alone its legal situation. He advises companies to use psychological profiling for better interviewing, develop analytical methodologies and a culture of information management, and share the information with everyone in their organization.
On an upbeat note, Calof believes that once Israeli companies adopt a good CI culture, they, and the economy in general, will benefit from the large number of potential CI practitioners available.
‘Former spies and analysts make great CI people if they can make the transition. It’s not all about collection, it’s more about analysis. Its easier to take someone who was in the Mossad and teach them to speak business than it is to take someone from the business world and teach them to gather and analyze intelligence. In almost every country I go, to you see the government intelligence people making a better transition into business because they understand the importance of open- source methods and how to interview, observe and analyze,’ he says.
Some of these potential CI people, Calof intimates, could use their knowledge of Arab countries, and their contacts there, to develop business ties, and perhaps in that way bring some good to the world.