Ethics – Stephen Shu, PhD

January 14, 2010

Musings On Conducting Competitive Intelligence Ethically

Competitive intelligence (CI) is an activity done by a wide range of professionals ranging from marketers to product managers to consultants to strategic planners. Now I’ve held back for many years on posting on the subject of conducting CI ethically. I tend to be more on the conservative side, and by posting my thoughts on this subject publicly, I’ve had concerns that some clients and future employers would see me as too soft on the issue. Would a client shy away from hiring me because I was unwilling to go the “distance” to get a job done?

In spite of my concerns, I’ve decided to address the issue here. In my experience with the business world, I’ve seen the topic of ethics (in the context of CI) discussed much less frequently than I would have expected, and that should change. Here I’ll provide some examples of bread and butter methods and more infrequently used methods for conducting CI. People should feel free to comment on other methods they have used. I’ll also provide some examples of activities that I either think are questionable or outright unethical.

Here are some examples of ethical, secondary research methods for performing CI:

Pulling annual reports and shareholder presentations on competitors from the web
Analyzing securities and exchange commission (SEC) filings and financial statements
Gathering marketing collateral information from trade show booths of competitors
Obtaining industry reports from investment banks and/or financial institutions
Reverse engineering the positioning focus of competitors from marketing collateral
Searching through LinkedIn to analyze salesforce profiles and reverse engineer likely go-to-market methods
Analyzing resumes of employees of competitor
Using Google satellite to analyze geographic profile and size of competitor facilities
Using Crunchbase or Techcrunch to analyze private companies
Using Compete, Alexa, and other web services to analyze web traffic
Analyzing advertising copy and positioning
Purchasing third-party reports (e.g., Gartner, Forrester, Parks Associates) to round out research
Looking through job postings by the company on the web

Here are some examples of ethical, primary research methods for performing CI:

Interviewing a distributor that has experience with competitors and asking questions whether client’s proposed offer would be competitive
Asking distributor to describe any non-confidential information that they would be comfortable sharing about either the competitor or distributor’s relationship with competitor
Visiting retail outlets of competitor to infer go-to-market methods, assess general profile of locations, etc.
Directly purchasing a competitor’s service or product
Surveying salespeople within client organization to get their feedback on what they’ve run into with respect to selling against the competition
Conducting focus groups with general customers to get their feedback on competitor’s products versus the client’s prospective offerings
Obtaining general information by calling into a competitor’s call center

Finally, here are some examples of questionable or unethical methods of performing CI (and these topics come up somewhat frequently in my experience):

Misrepresenting oneself as a potential customer of competitor in order to get pricing information not made generally public
Asking a current distributor or employee of competitor to share proprietary information about competitors and violate non-disclosure agreements
Interviewing a competitor’s employees for the sole purpose of gathering competitive information as opposed to intending to consider such people for direct hire

One problem that I see organizations run into is that they can get focused on one single issue. For example, they may say “I must know exactly how competitor XYZ is pricing”. This type of logic can be dangerous because it tends to lead to one solution. It may also tempt one to try to take unethical shortcuts. If the problem statement is reframed around “getting a better picture of whether my client’s market offer is competitive”, then this can lead to more flexible and varieties of solutions. Tools like conducting customer focus groups, surveying salespeople, etc. then become possibilities for solving the real problem at hand.

As a closing note, in a framework I alluded to in a prior post, one way to think about activities are to classify them in two dimensions: (ethical – unethical) & (legal-illegal). The other framework that I use for weighing ethical issues is to determine how I would feel if my activities were plastered all over major press outlets. Would I be embarrassed by my team’s or my personal activities? Posing that type of question is often a nice litmus test for good behavior.

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August 5, 2009

Interview On The Ethics Of Consulting

I was recently asked to do an interview at the consultant website, "Think Like A Consultant" on ethics & consulting. The full interview is posted here.

One question particularly of note was "What are the best ways to handle a client who appears to have unethical practices?" For that question, I responded as follows:

Fortunately, I have not been posed with many situations that are obviously troublesome. One area that comes to mind, however, is when a client asks a consultant to perform competitive intelligence, especially when soliciting for primary market information. Let’s say that a client has asked you to masquerade as customer and try to obtain information on a competitor (e.g., on pricing). Some company codes of ethics would strictly disallow this, as would many people’s personal ethical value system.

What I would try to do in these circumstances is to rework the problem statement and methods with the client. For example, perhaps the problem statement may be more about getting higher confidence in prospective pricing levels that the client is looking to put in the market as opposed to getting the exact pricing levels from the competitor. With the problem statement refined, you may find opportunities to solve the client’s problem in a more palatable way, such as through running focus groups with customers or industry distributors, conducting benchmarking studies, and other approaches.

Articulating and rearticulating problem statements are something fundamental to consulting and something which I've addressed before. For example, see here.

In any case, I'd be interested in feedback on the interview from folks. It is my third or fourth serious post in the blogpshere related to ethics, and I don't expect it to be my last.

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June 26, 2009

My Experience With Teaching Ethics Session As Part Of Core Marketing Course

This past week I had a chance to teach an ethics session as part of a larger, core marketing course that I am teaching at Irvine University. I write this post to share my experiences on what worked and what didn't.

Now as context, about four years ago in 2005 I wrote a post on covering ethics as part of business school curricula, and to make a long story short, back then I didn't have a very comfortable opinion on how effective that type of training would be and whether students would want to pay for such training. I have since that timeframe (and based on comments from folks) augmented my opinion a little bit in that while I feel that ethics is something that should not be exclusive to business schools, it is something that leaders need to work with, and as such, is a fundamental topic for business schools to address.

That said, I am not quite comfortable with how I addressed ethics in this past week's session. Setting my effectiveness and student perceptions aside for the moment, here's the basic path that I took:

Though I'm no business historian, I characterized the history of the revitalization of ethics in the business schools as falling into two mini-eras in recent history– One of these mini-eras started on the order of five to ten years ago and was driven by a lot of the corporate scandals, executive fiascoes (e.g., Enron), and need for better financial reporting (e.g., Sarbanes-Oxley). In this first mini-era, business schools introduced ethics into their curricula with some of them incorporating ethics into leadership courses with others taking ethics and spreading a little bit of those ideas into all courses. Waving my hands a lot, I cited Michael Lewis' piece, "The End" (Of Wall Street), the role of credit default swaps, and failure of ethics (among other things) being at the heart of the cause of the economic downturn. So I concluded that business schools can still do more. Mini-era two is taking place with MBA graduates taking part in the student-led MBA Oath, which has been going viral.
I indicated that leaders need to be concerned with ethics – basically what I said above in that it is not the sole responsibility of business school students, but that we can further the practice of ethics.
I promoted two key frameworks for analyzing ethical concerns– Both of these frameworks are from Chapter 4 of the McGraw-Hill Irwin textbook, "Marketing", 9th Edition, by Kerin et. al. One framework was the standard, 2×2 consulting-like matrix that broke ideas into 4 quadrants with (Ethical-Not Ethical on one axis and Legal-Not Legal on the other). We spent time discussing certain scenarios and whether they fell into one quadrant or the other. I argued that the legal axis was, in principle, more straightforward than the ethics axis, where the degree of overlap and misfit between individual, company, general business, and international ethical principles are more fuzzy and can require reconciliation whether by management, ethics officer or other. I cited Transparency International as a data point and source for international practices and norms for ethical conduct. The second ethical framework that we covered conceptually balanced profit maximization and shareholder value against items like environmental, societal, and other factors. Here I feel that the best management practices for balancing things are not so well-developed, but I struggle a bit with how this area should be advanced.
I talked about ethical codes of conducts (as documents that need to be affirmed by employees in many companies) and associated online training programs – although I did not have example references or documents to point to off-the-cuff.

With respect to the big picture, I was able to cite a number of cases where companies (e.g., Body Shop, POM, BP) have made ethical and social concerns an essential part of their business and/or marketing strategy, but I think my ability to cite, crisp quantitative information could have been better. What are the costs of being ethical? What are the costs of not being ethical? Where does being ethical add to the bottom-line in terms of revenues, sales commissions, shareholder value, reduced churn, etc.? The answers I provided to these questions were either a bit long-winded or not available at the tip of my tongue.

In any case, if folks have thoughts on ethics, teaching ethics, receiving ethics training, etc., please feel free to share your stories. I am interested in what works and doesn't work for folks.

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