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Just what behaviors are ethical in gathering intelligence about your company's competition? Recent revelations that the cable-TV division of media giant
Time Warner used questionable methods in Houston to gather information about a competitor show that even a big, publicly traded corporation with strong
ethics guidelines can get overzealous in its efforts to beat out rivals.
Recently, Time Warner Cable admitted that it had offered to reward its Houston employees for placing bogus orders for high-speed Internet access with a
rival, Southwestern Bell, in an effort to gain information about their service. It now concedes the practice violated its own corporation's ethical
standards. Southwestern Bell has asked for state and federal investigations of Time Warner's "anticompetitive" and "underhanded" practices.
The Society of Competitive Intelligence Professionals has a strict code of ethics. Though unwilling to take sides in a dispute without all the facts,
SCIP President Pat Bryant, a professor at the University of Missouri-Kansas City, says Time Warner could have avoided its current predicament by
adhering to the society's code. He points out that the code, among other things, expressly requires compliance with one's own company guidelines, forbids
misrepresentation, and frowns on conflicts of interest. "If you adhere to our code, you don't have to worry about embarrassing disclosures," he says. The
code was adopted to guide the society's 7,000 members around the world. (Read the complete code at www.scip.org/ci/ethics.html).
"UNDERHANDED TACTICS." In the Time Warner case, fliers offering free Internet service or a chance to win $100 were inserted in the pay envelopes of
Time Warner Cable employees in Houston, the company says. To qualify, employees had to order high-speed Internet service from Southwestern Bell, cancel the
order if it was confirmed, and report the results back to Time Warner. The cable company was apparently trying to find out where the telephone company was
able to offer service and exploit any weaknesses in its market. But the practice went beyond the price-checking many companies ask their employees to do,
Southwestern Bell said, by placing orders that are expensive to process -- as much as $370 apiece -- and by detracting from the telephone company's ability
to serve legitimate customers.
Ron McMillan, president of the Houston division of Time Warner Cable, admits that the company made a "mistake," and says the program was canceled as soon
as senior managers found out about it. But James D. Ellis, general counsel of SBC, calls it an example of Time Warner's "willingness to use underhanded
tactics to improperly enhance its position in the broadband-access market." Ellis filed formal complaints with the Federal Communications Commission and the
Texas Public Utility Commission.
While the federal Economic Espionage Act prohibits the theft of trade secrets, competitive intelligence professionals admit gray areas exist. Still, if
you follow the ethical guidelines of the professional society and use common sense, you'll stay out of trouble. Two well-known competitive-intelligence
consultants, Leonard Fuld and Kirk Tyson, independently came up with their own "Ten Commandments" to guide competitive-intelligence professionals. They
prohibit such blatant illegalities as lying, stealing, bribing, and eavesdropping with illegal devices. And while there's not a word about making a
false order for Internet service, Time Warner would have done well to heed their admonition to never embarrass your company.
Speaking of embarrassment, George Dennis, another society member, goes by what he describes as "the Mike Wallace rule." Dennis, director of competitor
intelligence for Telcordia Technologies in Piscataway, N.J., counsels his colleagues to think about how their work might be portrayed on TV: "Suppose you
and your family saw it on 60 Minutes. How would you feel? If you would feel sheepish, you shouldn't be doing it."
By
Carole Ashkinaze
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