The Privatization of Intelligence. The Subversion of a Government Monopoly

CHAPTER I

INTRODUCTION

A. BACKGROUND

Intelligence is an ambiguous term whose meaning ranges from a person’s mental ability to espionage. As applied to organized institutional activity the term is neither clear nor appreciated by most non-practitioners. In order to develop a common understanding of what “intelligence” means, we will start with a widely accepted definition of the term:

Intelligence is a simple and self-evident thing. As an activity it is the pursuit of a certain kind of knowledge; as a phenomenon it is the resultant knowledge. As applied in the context of organizational activity intelligence is a kind of knowledge upon which a successful course of action can be rested, it is also the type of organization which produces the knowledge, and finally, the activity pursued by an intelligence organization. (Kent, 1942.)

Intelligence connotes information needed or desired by the government in a pursuance of its national interest. It includes the process of obtaining, evaluating, protecting and eventually exploiting the same information. Intelligence also encompasses the defense of U.S. institutions from penetration and harm by hostile intelligence services. The term is also used to describe the mechanism or mechanisms and the bureaucracies that accomplish these activities. (Godson, 1983)

Godson’s definition provides the classic perspective that intelligence is preeminently a governmental activity; its goal is to obtain “information needed or desired by the government in a pursuance of its national interest.” [Emphasis added]

Since this study describes how the preeminence of governmental intelligence is being diluted by non-governmental intelligence activities, we will expand Godson’s definition to include efforts taken in pursuit of knowledge vital for organizational survival, whether the organization is commercial, private or even criminal.

Distinction is also made between “data” and “information.” Data are the raw, unevaluated qualitative or quantitative observations recorded, either textually or numerically which, become information only after being processed and analyzed. (McGonagle, 1996)

Information simply refers to the output -- in whatever media -- that results from the analysis and evaluation of raw data. It normally reflects the nature and scope of the data and the judgment of the analyst(s).

The term “intelligence,” as used throughout this document refers to knowledge achieved by a logical analysis and integration of available information or data on competitors or the competitive environment.

Organizational survival demands constant scanning of the environment, it also requires evaluating the activities and intentions of other entities or individuals within the shared environment. This requires compilation of factual data, accurate estimates of the strengths, weaknesses, resources of potential or actual adversaries, and their probable responses to threats and opportunities.

Intelligence is a group rather than an individual effort; consequently, intelligence operations involve a complicated division of labor. The head of the operation frequently must deal with organizational, administrative, personnel, and human resource problems. (Kent, 1949) How these problems are dealt with has a significant impact on the quality of the intelligence and the security of the enterprise.

B. Overview

As a former FBI agent and corporate executive, the author has researched intelligence activities and violent political conflict for many years. This experience provided the perspective to develop a model on the nature of power. This refers to power in a political, military, organizational and even personal sense. As such, the model provides a conceptual framework useful for analyzing intelligence, which fundamentally deals with developing, retaining and exploiting tactical or strategic advantage over adversaries and even allies.

The model posits that power (the ability to control, influence or modify outcomes involving the actions of other actors, whether organizational or individual) is fundamentally based on three inter-dependent factors:

- Position
- Information (Intelligence)
- Action (Initiative)

Position refers to an entity’s span-of-control in each environment. It is based on tangible resources, such as money, weapons, land, and/or intangible ones such as good faith, reputation, loyalty, etc. Position provides a range of legitimate action, even when the position itself or the action initiated is the subject of debate.

For example, the legitimacy of a brilliant neurosurgeon to design the engineering elements of a bridge and build the structure without professional (engineering) counsel, would be questioned as a matter of common sense and officially, by institutions controlling construction of these structures. To the degree a person or organization attempt to act outside of their position (commonly accepted historic, political or social roles which are themselves defined by previous action, knowledge and skills) the likelihood other actors within the given environment will resist increases.

From the military or legal perspective, position also refers to physical control or possession of tangible resources such as terrain, weapons, funds, information, structures, etc. Even when control of these resources is in dispute, adversaries periodically accept that those controlling resources have the right to use them. It is an adage that “possession is nine-tenths of the law.”

In the political sense, again we see where position defines range of action. For example, an agency responsible for education would lack legitimacy to conduct disarmament negotiations with a foreign nation or engage in an activity beyond its scope, legal charter or organizational mission. Granted the concept of position is a slippery one, but it is generally defined by the context in which it takes place.

Information (intelligence) simply refers to the knowledge, understanding or awareness used to accomplish a desired objective. Success is a matter of luck (a fool may win a lottery and become a millionaire), but it is generally a matter of knowing what to do, when to do it, where, how and why. Actions undertaken without at least basic information usually fail. Consequently, the greater the breadth and depth of the information used to initiate a course of action, the higher the probability of success.

The third element, Action simply refers to the initiation of a process, a move forward to affect change in the environment.

In the proposed model, all three elements should coexist simultaneously. Knowledge and position may represent potential power, but in the absence of action, the power triad is incomplete. Position and action without knowledge will ultimately fail. Knowledge and action without position will generally meet with resistance or lack of support.

Applying the model to an insurgent/terrorist organization, it could be established that a group has the knowledge, the desire and means for action. It also has the position, at least a minimal degree of legitimacy for the action undertaken, such as support from a small constituency. However, because larger segments of society do not perceive the group’s actions as legitimate, their efforts will be ignored, rejected or resisted by force if necessary.

In this instance the use of violence by the group is aimed at influencing public opinion by demonstrating the adversary’s weakness. If the challenges to the status quo are successful, operational knowledge increases with each ensuing victory. If victories are sustained, public perception of their importance and legitimacy grows, increased political support leads to an expanded range of action. If progress continues, it creates an ongoing cycle where success begets support that in turn increases the likelihood of ultimate victory. Eventually, a government or political party weakened by protracted conflict and eroding public support may seek solution to the conflict. The resolution will require negotiation, which to a large extent is nothing more than acknowledging a degree of legitimacy to the adversary.

Established governments and their institutions endure to the extent that the three elements of the power triad remain in balance. The Position and Action/Initiative elements are taken for granted. The triad’s most tenuous component is the information/intelligence/knowledge dimension, consequently governments place a tremendous importance on the collection, control, analysis, and application of information and knowledge, without them, their activities are doomed to fail.

At the nation-state level, intelligence (which in its simplest form is designed to develop knowledge regarding the resources, intentions, and activities of real or potential adversaries) is critical function. If handled improperly or incompetently it may doom the state’s survival.

Analyzing the U.S. Intelligence Community (hereinafter referred to as IC)¹ based on the proposed model, several weaknesses are discerned. Whether we agree that the much touted “Information Age” has arrived or not, the private sector’s ability to create, accumulate, exchange and utilize knowledge and information has probably exceeded the capacity of the government to control it.

There was a time when the Department of Defense and IC’s research and development contracts drove American technology. Currently commercial and educational organizations outspend and outshine the government in almost every way, especially in information technology. Just 15 years ago the Pentagon purchased 60 percent of the information products developed in the U.S. Today it purchases less than 2 percent. Consequently, the military and IC’s influence on the activities of the information technology sectors has greatly diminished. (Arkin, 1999) Whatever the future of telecommunications technology, it is redefining how we communicate, work, invest, consume, and how we live our lives. The pervasiveness of this process has serious national security implications and will likely reshape the U.S. intelligence community.

Because of the current military and technological supremacy of the U.S., these changes will ripple throughout the world. The IC is still a significant element of the government’s power base, but it along with the relative economic dominance the U.S. could fade in the future. When this takes place, intelligence operations in multinational companies will pick-up the slack.

Government’s waning power according to Kenichi Ohmae’s is evidenced by developments in what he calls the four “I’s”; identified as Investment, Industry, Information, and Individual consumers. All of which are supranational in nature, in that they occur at a plane above a nation’s ability to control.

Of course, governments can control the flow and scope of investments by taxation, tariffs and import restrictions among others. However, over-regulating or cutting-off foreign investment would damage the government itself. Transnational flow of funds, place governments in a situation where they, at best, have marginal control over money crossing their borders. A flow driven solely by quality, opportunity and expected return on investment.

Industry likewise is going global on an unprecedented scale. It is difficult to think of a major corporation that does not either obtain raw materials, manufactures goods, or sells its products exclusively within its country’s borders.

Information is also transnational resulting in a condition where commercial, technical, strategic and personal data flows with relative freedom without respect to geographical or political borders.

Consumption by individuals also takes place on a supranational level. Demand for price, variety, quality and availability is not satisfied solely by domestically produced goods. In any given day we consume fruits grown in Latin America, wear garments assembled in Asia, drive vehicles manufactured in Europe, Asia or Canada. Consumers’ main goal is to get the best quality at the least cost, without regard to where they were produced. It is well known that even products advertised as “made in America” contain components manufactured or assembled abroad. Most consumers’ loyalty goes first to their pocketbook and second to their country. (Ohmae, 1995)

As a significant player in the world’s technological and economic arena the U.S. influence extends well beyond its borders. The evidence, based on Ohmae’s four “I” model, is there. The U.S.’ is appealing to investors worldwide because of its political stability, economic growth and generally unregulated investment climate, and benefits from cross-border investments. The U.S. is also the single most prolific producer of information and technical knowledge in the world and efforts to restrict data/information flow would harm the nation’s economy. The U.S.’ industrial capacity and efficiency have significant impact on the world’s economy and its citizens’ appetite for foreign goods is acknowledged worldwide.

The economic, cultural and military influence of the U.S. confers on its governmental institutions a significant power in the world’s stage. Consequently, the military and intelligence agencies which are used to project power externally, directly or indirectly influence the behavior of other nations and are de facto powerful not because of their intrinsic skill and efficiency, but because they are components of a powerful entity.

Notwithstanding U.S. economic and technological dominance, its position and influence in world events are increasingly tenuous. Rod Paschall’s research on warfare’s future highlighted that power sharing in the early 21st Century will markedly contrast the geopolitical arrangements of the late 20th Century. Rather than a world dominated by two superpowers, five evenly matched centers of economic and political power are likely to emerge: North America, Asia, Latin America, China, and a confederation of Western European states. (Paschall, 1990)

Other regions such as the Balkans, Africa, the Middle East and some of the states comprising the former Soviet Union and Eastern Europe are likely to undergo a lengthy period of political, economic and social readjustment marked by violent ethnic, cultural, and geographic conflict. Facing these threats will dilute U.S. influence by requiring it to form transitory alliances with other power centers whose strategic goals are not necessarily compatible with its own. These temporal alliances will be necessary to deal with regional conflicts that will threaten U.S. national security, geopolitical influence or access to raw materials. These developments will require the U.S. intelligence community to develop new strategies and great flexibility to deal with unanticipated changes.

After World War II, governmental intelligence was shaped not only by the ideological struggle between communism and capitalism, but also by the threat of nuclear war. The Soviet Union’s military power and its efforts to acquire tangible technological, military, and scientific assets provided additional impetus to develop a massive intelligence apparatus. During the Cold War, intelligence laced with military muscle, was indeed the only line of defense.

The collapse of the Soviet Union left the U.S. intelligence community unprepared for the challenges it now faces, therefore it continues to be secretive, divorced from society, emphasizing clandestine and technical collection, and comfortable with linear predictive reasoning. (Rathmell, 1998)

The growth of information creation and transfer within the private sector and the IC’s outdated mindset is radically altering the balance of power between both. The former is diligently attempting to redefine its mission and identify suitable institutional goals. In terms of the previously noted power triad model, by expanding their mission to include other threats to national security, the IC is attempting to redefine its position in order to expand their scope of legitimate action. However, the secrecy with which the IC has cloaked itself, hinders political support for these efforts.

This creates a conundrum, on one side the growth and importance of private sector intelligence is acknowledged by the IC, on the other hand, senior intelligence officials have well-founded concerns that non-governmental intelligence activities will be difficult to control.

While the IC wrestles with this issue, commercial entities are developing a robust and efficient information collection and analysis capability (commonly referred to as open source intelligence). As OSS, Inc.² president Robert Steele noted in a 1994 conversation with the author, this commercial capability is often superior to classified capabilities, and sometimes the only capability available for specific targets or topics.

These developments erode governments’ preeminent control over the collection, analysis and dissemination of geographic, political, social, military and economic data. These changes are creating internal friction within the IC. Current intelligence officers in contact with the author voice frustration at the pace of change and often criticize the process. Others vote with their feet, leave government service to join innovative and profitable commercial enterprises in their field of expertise.

Externally, the public largely ignorant of the task, mission and structure of the intelligence community provides only marginal support. In 1995 the annual budget for the intelligence community exceeded 30 billion dollars.³ Yet, to date, the return on this investment of public funds is at best vague, at worse, simply not there. We only to briefly recall recent intelligence failures characterized as such based on our government’s inability to prepare contingency plans to deal with them. They are: India’s emergence as a nuclear power, the war in the Balkans, the emergence of a transnational Russian Mafia, and the unresolved conflicts in North Korea, Iraq, and last, but not least allegations that Chinese espionage has compromised the nation’s most advanced nuclear weapons research.

In the absence of major threats to the country’s national security, fiscal considerations and concerns over efficiency will likely encourage increased collaboration between the IC and with the private sector.

The trend is already evident, in December 1994, President Clinton asked Vice President Gore to conduct a review of agencies to identify opportunities for additional savings, program terminations, and privatization of selected functions.

The document issued by Gore’s committee, Common Sense Government, identified the following Intelligence Community activities as possible targets in the report’s Appendix C: New Recommendations:

- Consolidate Imagery Intelligence
- Integrate Military and Intelligence Satellite Acquisition
- Reform Human Resource Management
- Consolidate Intelligence Collection Activities
- Consolidate Office Space
- Consolidate Warehousing
- Privatize Supply and Equipment Acquisition
- Franchise Microelectronics Production
- Reinvent Travel
- Reinvent Community Courier Service
- Reinvent Training and Education
- Reinvent Excess Equipment Utilization
- Reinvent Security
- Reinvent Foreign Language Training

Even as the scope of commercial intelligence activities expands, issues of accountability and control that dogged governmental intelligence remain relevant and have increased in importance.

Presently, governmental intelligence activities are circumscribed by law and presidential orders and monitored by several legislative and executive branch entities. They are also controlled by a few statutes, judicial review proceedings, and internal regulations.⁴

This is not the case in the private sector, where formal, informal and quasi-legal intelligence operations function with virtually no constraints, other than those imposed by law, an individual or organizational sense of morality and the fear of legal action.

This study is designed to provide factual data useful to current and future public policy analysts as the basis for additional research in this field. A related aim is to analyze the implications of private sector intelligence activities and to reduce the topic’s complexity. These activities are identified, documented and clarified. By structuring, organizing and clarifying current activities and future trends, this study widens the scope of public discussion on this important topic.

B. STATEMENT AND SIGNIFICANCE OF THE PROBLEM

The emergence and rapid growth of non-governmental intelligence operations is evident. Since the late 1970s commercial enterprises offering services closely related to traditional governmental intelligence have expanded exponentially. One measure is based on the membership of the Society of Competitive Intelligence Professionals that grew from a few dozen people in 1986, too more than 6,000 in 1998. (Green, 1998) There are other indirect measures that are detailed in the body of this study.

The evolution of intelligence as a commercial service provided by firms, subcontractors and consultants, is paralleled by its increased importance in organizational settings. Several multinational corporations, non-governmental organizations (NGOs) and even transnational criminal enterprises provide significant impetus for privatization. Because these entities cannot reliably depend on governmental support for defensive risk-analysis and proactive intelligence needs, they have developed in-house operations to satisfy these requirements. Their economic power, political influence, and operational resources of some of the transnational enterprises often exceed those of governments in underdeveloped countries.

The growing strength of non-governmental intelligence is partially based on its high degree of operational flexibility, a minimal need to acquiesce to political constituencies, a higher level of efficiency and often, a better return on investment ratio than their official counterparts. (Defined by the cost of the input [resources] and the benefit of the output [results].)

One of the factors driving privatization is the Government’s need to improve the efficiency, to reach this goal, intelligence agencies are increasingly subcontracting some functions that consultants can accomplish more efficiently. Since some of these contracts are classified, information about them is anecdotal and hard to come by.

Another factor is the influx into the private sector of several former intelligence officers. Intelligence operations and the professional background of its practitioners place a high premium on secrecy, discretion and often duplicity. Much of the activity often takes place in a veiled context, in which public scrutiny of internal procedures is shunned. Therefore, there is a lack of detailed information about the operations of commercial enterprises and private organizations providing tactical, strategic and operational intelligence services.

Whether intelligence activities take place in the private or governmental sector, we need to consider issues of control and accountability. What is the proper role of non-governmental intelligence in a democratic society? Are private entities justified in collecting vast quantities of data and conducting surveillance on citizens who oppose their organizational interests? This is nothing new; news media reports document several cases where commercial enterprises conducted extensive intelligence operations against individuals whose constitutionally protected activities conflicted with the enterprise’s economic or political goals.

What mechanisms should be developed to ensure private sector intelligence operations are managed within a framework of equity and in accordance legal principles? Should legislation be enacted to control these activities? To what extent? As passive and active electronic surveillance becomes ubiquitous, how can individuals assert a right to privacy, or to freedom itself?

C. OBJECTIVES OF THIS STUDY

Developing public awareness of non-governmental intelligence operations increases the likelihood these activities are not used to subvert legal rules or violate individual rights. There is a valid public benefit in providing information that is useful to current and future political science analysts. Keeping this in mind, the aim here is to offer a case study on how intelligence is developing within the private sector and to whatever extent is possible, reduce the often-self-contrived complexity of these activities.

In a historical context, intelligence activities as we now know them, are a relatively new development, the charter creating the U.S. intelligence community was signed in the 1947.⁵ Private sector intelligence operations are an even more recent development, less than 20 years old. Therefore, a substantial volume of reliable qualitative studies is not available. The function does not lend itself to useful qualitative analysis since it is poorly defined and in a process of rapid evolution.

To understand the rapidly changing field of intelligence, we need to include information that cannot be easily quantified, this entails judgements of which phenomena are “more” of “less” alike in degree (i.e., quantitative differences) or in kind (i.e., qualitative differences). A case study approach is used in this study because intelligence activities in the governmental and private sector are in a state of flux, their relationship and interdependence with other functions is shifting, the nature of the activity periodically redefined and its legitimacy questioned. This increases the need for a detailed description of these changes and altering the systemic context within which observed interactions take place.

One of the often-overlooked advantages of the in-depth case-study method is that the development of good causal hypotheses is complementary to good description rather than competitive with it. Framing a case study around an explanatory question may lead to more focused and relevant description, even if the study is ultimately thwarted in its attempt to provide a single valid causal inference. (King, 1994)

The question around which this study is framed is relatively simple. It asks to what extent are intelligence activities in the private sector supplanting, subverting or eroding government efforts in the same area. There are two related issues that are germane to this question. The first seeks to explain the internal factors in governmental intelligence that impede or accelerate the process of privatization, The second provides specific detail about the scope of intelligence activities in the private sector and discusses their strengths and weaknesses.

The objective is accomplished by identifying and clarifying those elements about which public domain data was found. By making the information available and exposing hidden assumptions and values, this study encourages informed judgement. It also counters the subjective assertions by advocates of increased security and surveillance. This is accomplished by forcing proponents to defend their positions and address the facts rather than expressing personal or professional opinion. (Quade, 1989)

CHAPTER II

REVIEW OF THE LITERATURE

In 1955, Sherman Kent, long time head of the CIA’s Office of National Estimates, wrote a monograph entitled The Need for Intelligence Literature. In it he noted that since World War II, intelligence had become “not merely a profession, but like most professions it had taken the aspects of a discipline... What it lacks is literature.” (Peake, 1989. p. 1)

Kent’s comments dealt with governmental intelligence and his concern was that without a significant body of literature a profession couldn’t be adequately defined and evaluated. The purpose of this chapter is to develop an understanding of how the literature on intelligence activities evolved and thus provide a sense of perspective. But first a brief overview of the basic elements of intelligence, which are:

- Concealment of strategic objectives from adversaries by misinformation, deception and ruse.
- Discovering and documenting the intentions, resources, weaknesses and strengths of adversaries and allies.
- Constantly scanning the environment to identify potential threats and opportunities and exploiting social and political circumstances to advance organizational objectives.

These activities are commonplace in most organized human activity, they are part and parcel of warfare, diplomacy and statecraft. For this reason, intelligence is often referred to as the missing dimension of history. History’s great political and military triumphs were often based on efforts that now are considered intelligence activities. Many involved extra-official, illegal, or subversive activities, which violated commonly accepted standards of morality and fair play; consequently, governments endorsing them do not openly acknowledge the fact. Even after the intelligence itself has long ceased to be of anything but historical interest, governments tend to hold secret the means used to acquire it. (O’Toole, 1991)

Intelligence, prior to the Twentieth Century, was viewed as an important element of statecraft, but not necessarily a standalone discipline. Most historical references to the topic are submerged under discussions of diplomacy and military campaigns. Intelligence was not the focus, but a tangential element of managing a large enterprise, such as the realm, religion, or a nation.

The consolidation of monarchies, the emergence of nation states in Europe in the 1600 and 1700’s, the expansion of colonial empires changed the nature of governance. Subsequent wars of independence, technological and scientific advances (such as the invention of the printing press and the evolution of scientific methodology) presaged the future of conflict. Sheer numbers of troops and charismatic leaders no longer won wars. Success came from outmaneuvering and having better technology than the enemy did. Both conditions depended on information and knowledge.

Eighteenth and nineteenth century literature portrays espionage as an important function, but not necessarily an occupation. Politicians, military officers, diplomats, even merchants collected information of interest and passed it on to appropriate officials, nonetheless, this activity was incidental to other responsibilities.

The number of governmental, academic and popular books on the topic increased at a rapid pace after the War’s end, many celebrated Allied exploits and the role of intelligence in winning the war. Few publications focused on the technical and operational elements of intelligence even less offered a critical review of function within the context of an open democratic government. Almost none of the publications mentioned intelligence as a private sector commercial activity.

The emergence of a culture of secrecy within the intelligence community and the anti-Communist witch-hunts of the 1950’s created a climate where credible critical comments about intelligence organizations or their activities could be considered unpatriotic. With few exceptions⁶, the best critical reviews of the discipline, were those conducted by intelligence agencies, however, many of these reviews remain classified. No wonder Kent rued the profession’s lack of literature.

By the 1960s the literature generally considered intelligence as an element of military strategy and statecraft, not as an activity applicable to the private sector, much less as a commercial service. In the ensuing years several significant events changed this condition.

The first was an increase in the number of regional military conflicts involving political or paramilitary organizations supported by the Soviet Union or the United States. The second was the international expansion of European and North American multinational corporations. The third entailed a significant number of former military and intelligence officers migrating into the private sector (most of them entered service during World War II and were reaching retirement age). The fourth resulted from a worldwide increase in social and political unrest that took place during the decade.

The stakes were high indeed the tension between the superpowers could spin out of control and result in a nuclear confrontation. The threat posed by the proliferation of nuclear weapons and the mutual mistrust between the United States and the Soviet Union, was part of the equation. Efforts to limit each other’s sphere of influence represented a clear and present danger to each adversary. Maintaining strategic parity required human and technical intelligence of historically unprecedented scope and depth. This tension generated considerable public and academic interest and fueled the expansion of genre.

Addressing post-war consumer demands and satisfying the need for raw materials required by the arms race, pushed U.S. corporations to expand their operations overseas. In doing so, many had to operate in politically and socially inhospitable environments. Dealing with these problems required people with area knowledge, language skills and a military or intelligence background. By the 1960s commercial enterprises were hiring former military and intelligence officers in increasing numbers to assist them in securing their personnel, facilities and profits. The precedent had been set earlier. Many World War II veterans took advantage of educational and occupational training programs. This provided industry with an influx of personnel who were familiar with military operations and terminology. During the 1960s, many of these professionals reached executive positions and despite the counterculture they felt comfortable applying military operational concepts within the civilian workplace.

Many of the most skilled and successful intelligence officers that served during the burgeoning growth of the intelligence community and reached senior positions of considerable influence and power reached retirement age; were eager to join the private sector. Others buffeted by the impact of political and ideological conflict within their organizations or victims of one intelligence debacle or another (Bay of Pigs, Vietnam, Watergate, etc.) left their agencies before retirement age and went to work for private enterprises.

Most of these skilled intelligence practitioners applied their knowledge to deal with the problems faced by federal, state, and municipal agencies such as racial conflict, student activism, and the violent fringe of the antiwar movement among others. Others joined commercial enterprises and handled activities as divergent as marketing and competitive research, a few helped companies deal with boycotts, product contamination, abduction for ransom, terrorist, industrial espionage and other criminal activities, domestically and abroad.

As the influence and amount of intelligence officers in the private sector grew several professional organizations were established. Among them are the Association of Former Intelligence Officers (AFIO), the Society of Former Agents of the FBI, Central Intelligence Retirees Associations, the American Society of Industrial Security (ASIS) and others. These organizations encouraged their members to publish and assisted in the production of in-house newsletters, magazine articles, books, monographs and other publications. At the same time not a few former intelligence officers published their memoirs, or crafted fictional accounts based on their real-world experience. Notable among them are Ian Fleming (creator of James Bond), John Le Carre and E. Howard Hunt.

Fictional accounts glamorized the occupation and did much to spark public interest in intelligence activities. The tenor of the Cold War encouraged the entertainment media to exploit the topic, producing hundreds of films and television programs. Frequently, as it often happens in popular culture, many of the fictional and non-fictional accounts distorted and exaggerated the nature and limitations of real-world intelligence. Therefore, the publics’ perceptions of intelligence and the true nature of the tradecraft are worlds apart. Public expectations of what intelligence agencies can accomplish clash with the well-publicized abuses and failures by these same agencies. For this reason, many Americans question the value and appropriateness of secret intelligence in a democratic society.

By the 1970s, literature dealing with the application of intelligence in the private sector began to emerge. Russell Bowen, former Army officer, MIT graduate, scientist, and CIA analyst noted there are relatively few good books from any period, in any language, that address the essence of the subject. A distinct shift in the quality and quantity of intelligence books is evident by mid 1970s. (Peake, 1989. p. 219)

Bowen’s comments are authoritative; because he developed, what at the time (1970s), was the largest known digital database of books and articles related to intelligence. It’s officially known as the Digital Bibliography of the Russell J. Bowen Collection of Works on Intelligence, Security, and Covert Action. (Bowen, 1983)

Towards the end of the decade, the volume of publications on the subject grew to such an extent specialized periodical started tracking the prolific output. Notable among them was the Foreign Intelligence Literary Scene (a newsletter of the National Intelligence Study Center), and Surveillant , a publication of the National Intelligence Book Center, both located in Washington, DC. In the ensuing years the number of articles and books dealing with private sector intelligence (variously referred to as competitive intelligence, industrial espionage, and business or commercial Intelligence) increased to the point that fictional and historical accounts of intelligence activities number tens of thousands of books and articles.

A few excellent bibliographic compendiums were developed notable among them are : Intelligence and Espionage: An Analytical Bibliography by George Constantinides; Bibliography of Intelligence Literature by Walter Pforzheimer, and the CIA’s Intelligence Literature: Suggested Reading List . For private sector intelligence, an excellent source is the Bibliography of Business/Competitive Intelligence and Benchmarking Literature , published by Washington Researchers, Ltd.

The modern literature on competitive intelligence also received an impetus from yet another source. Throughout most of the 20th Century marketing research developed several quantitative and qualitative analytical and investigative tools that could be profitably applied in commercial settings. Members of the marketing profession were interested in the strategies, capabilities, and options of rival organizations. It was a natural process that the analytical tools developed by government agencies to assess the intentions of those threatening national security would also find acceptance and applicability in marketing research. (Walle, 1999)

A database search with a major on-line service (Nexis/Lexis) provides another perspective of the genre’s growth. The number of hits for pre 1960 literature dealing with private sector intelligence is minimal, similar search for post 1990 publications and articles will results in hundreds of references. These do not include in-house reports issued by governmental, academic and commercial entities, nor the number of publications dealing with intelligence, which are not generally available or easily located (frequently referred to as “Grey-area” literature). Even in academia not all the existing literature on the topic is available, as it often happens, U.S. libraries do not buy all the books, monographs, periodicals and newsletters on a given topic, nor do they keep all they buy. Even when they have large collections, they at best record in their indices only the approved Library of Congress [subject] Headings (LCH) and frequently they fail to identify the intelligence links in all their books.

The output generated in other languages is not generally found in U.S. repositories, yet represents a significant dimension to the topic’s literature which is not generally visible to most researchers in the U.S.

In the unlikely event the current information technology infrastructure collapses, the future is likely to bring full-text digital versions of both historic material and current publications. This will allow hypertext searches of single terms, concepts, ideas, and events among vast repositories of structured information, both vertically (searching terms/concepts in virtual stacks of unrelated publications) and horizontally (searching terms/concepts in broad arrays of related publications). This capability will probably increase an understanding of intelligence related topics.

Developing a useful taxonomy of the literature applicable to private sector intelligence is both premature (given the rate of growth) and beyond the scope of this study.

The following categorization offers a preliminary guide to the sources, the topics and issues covered by the literature dealing with intelligence in the private sector.

The following was adapted from Hayden B. Peake’s The Reader’s Guide to Intelligence Periodicals. (Peake, 1989)

- Primary Intelligence. This is material focused primarily with intelligence history and practice and generally available to the public.
- Secondary Intelligence. Material dealing with intelligence related topics, such as military history, national security, government operations, and other related issues.
- Limited Distribution. This material is generally produced for internal use and is not distributed outside of the organization. This would include “Restricted” and “Classified” information.
- Limited Availability. This is historical material whose utility for research purposes is limited because of its unavailability. They are generally found in private or institutional repositories and locating it requires inordinate time, efforts, or expense.
- Relevant. Material that contains information with a degree of applicability to the topic, but not to the extent of Secondary Intelligence.
- Compendiums. This includes bibliographical compilations or topical encyclopedias.
- Specialized Databases. These are fully searchable digitized databases, full-text or bibliographic. Due to their specialized nature, access to them normally incurs a substantial fee.
- Commercial Databases. These are repositories of hard-copy publications or digitized public records, which facilitate research. Access to them is normally fee-based.
- Internet. This is possibly the most extensive repository of open source data in the world, but the veracity, source or reliability of the information is often difficult to establish.

As the intelligence literature, both on-line and hard copy, continues to grow, it is inevitable that someone will develop a thesaurus to facilitate research. By including lists of descriptors or terms used to index the literature this document will expedite research.

The National Institute of Justice used this approach to develop its 1993 National Criminal Justice Thesaurus (NCJT) it relied on two types of terms, descriptors and synonyms or near synonyms. Descriptors are authoritative terms that are acceptable for indexing and searching. The term selection in the NCJT was based on the vocabulary used in the documents entered in the National Criminal Justice Reference Service (NCJRS) database, on the frequency of the term usage in the literature, and on the language of the user community. (NIJ, 1993)

Even when a large quantity of books and other lengthy documents are available, full text, via the Internet, a thesaurus will be of considerable value because it expedites and improves the efficiency of a search.

Currently most of the literature on intelligence and its activities in the private sector can be classified in the following topic categories:

Business Intelligence

Commercial Counterfeiting

Competitive Intelligence

Computer Facility Security

Corporate Counterintelligence

Counterintelligence

Counter-terrorism Intelligence

Covert Operations

Crypto logical Analysis

Data Security

Disinformation

Electronic Surveillance

Industrial Espionage

Information Processing

Informants

Information Collection

Intelligence Acquisitions

Intelligence Analysis

Operations Security

Reference⁷

Strategy and Tactics

Technical Intelligence

Training and tradecraft

Visual Electronic Surveillance

White Collar Crime

Reviewing private sector intelligence literature provides a glimpse of the recent and rapid growth of the genre, but it does not offer a clear view of the function’s future. Its divergence from governmental intelligence and marketing research is obvious. The potential advantages of having intelligence form an independent “freestanding” organizational function is not clear. Military analogies are seductive, but organizations in the private sector should continue to embrace the commercial concept centering on cooperation and service not conflict. (Walle, 1999)

An unresolved question is whether intelligence in the private sector is just another management fad that will soon fade away or a discipline that will mature into a profession? This is an important question since senior executives and policy makers in the private sector often shy away from using intelligence related terminology and opt for euphemisms such as business research and competitive analysis. Notwithstanding the growth of the literature on the topic, in 1996, less than 7 percent of large America companies had full-blown competitive intelligence divisions, most of them relatively new, 80% were less than five years old. (Kahaner, 1996, p. 16)

Judging from the membership growth in the Society for Competitive Intelligence (SCIP) it appears the discipline is expanding rapidly but is this true? A review of SCIP’s 1998 directory disclosed most of the members’ titles do not include the term intelligence.

By 1999 the uncertainty of intelligence as a corporate activity is still evident; even as news reports highlight the importance of competitive intelligence, corporate departments handling the function are disappearing. A survey conducted by one of the premier companies in the intelligence field, Fuld, Inc. documented the trend. The survey based on the responses of more than fifty Fortune 500 companies, found that approximately 20% of all competitive intelligence departments have closed.⁸

What the literature makes clear is that competitive intelligence -- or its various synonyms -- is likely to evolve into a function dealing with “knowledge.” Perhaps Kent was prescient when he pointed out that “intelligence is a simple and self-evident thing. As an activity it is the pursuit of a certain kind of knowledge; as a phenomenon it is the resultant knowledge.”(Kent, 1949, p. vii)

The mind-set that facilitated the application of military/governmental intelligence concepts and procedures in commercial enterprises (i.e., viewing competitors as adversaries) if unchanged, will cause it to be superseded by a discipline whose core mission is the development of actionable knowledge.

But what is the future of government intelligence? Rathmell contends that whatever the problems faced by intelligence services; privatization is not the answer. “The sum and substance of the privatization of intelligence is the reintegration of portions of governmental intelligence into wider society. The national security imperatives of the nuclear age turned intelligence into a specialized, clandestine activity, where its practitioners cherish their difference and distance from the rest of society.” (Rathmell, 1998).

A few writers question the excessive secrecy of government intelligence. (Laqueur, 1985, Turner, 1985, and Wise, 1976). Secrecy itself is not the problem; the issue is “excessive secrecy.” It is suggested the function must adapt to technological, economic and social changes. “Wherever possible the intelligence community needs to reintegrate itself into society and share information. Intelligence needs to be transformed from a world of secrets to a world of knowledge.” (Steele, 1994)

The paradox of intelligence is that to its governmental/military practitioners, it requires obtaining denied secret knowledge from adversaries, by whatever means possible. To its private sector advocates, it is another management tool useful in improving the profitability of the enterprise. But even the latter cannot completely agree on this point. The differences are subsequently discussed.

Overall, the literature on private sector intelligence clearly reveals an evolving discipline with several conflicting paradigms. Evolution many trends show initial promise, then fade away because they failed to adapt to changing circumstances or were based on flawed premises.

Competitive/business intelligence literature advocates a methodology largely based on espionage and military intelligence precedents. This is evidenced by the emphasis on adversarial activities such as industrial espionage, counterintelligence, etc. Both fields specialized in evaluating diverse, often fragmented data from multiple sources, much of which possessed low rigor and weak reliability. To improve the “professionalism” of the function, some private sector practitioners have experimented with quantitative data in effort to devise methodologies that provide decision-makers with actionable information with a reasonable degree of reliability. These efforts are mostly normative studies or surveys; many tend to be cumbersome, expensive, labor intensive, and often flawed.

Current business intelligence literature is advocating the merging of qualitative methodologies with the traditional scientific/quantitative methods that long dominated decision-making in the private sector. Examples of this, are works by John Mc Gonagle, Jr., and Carolyn Vela (A New Archetype for Competitive Intelligence ), George Friedman (The Intelligence Edge. How to Profit in the Information Age ), and Larry Kahaner (Competitive Intelligence: How to Gather Analyze and use Information to Move your Business to the Top ).

Given current business trends that include flatter hierarchies, multi-disciplinary groups, cross-functional responsibilities and knowledge workers, it is likely that the term competitive or business intelligence will lose favor in the future. Part of the reason is the inability to make a clear distinction between the activity as a military strategy (which emphasizes secrecy and subterfuge) and its application in the business sector (which requires increased information-flow and collaboration).

CHAPTER III

FACTORS INFLUENCING THE PRIVATIZATION OF INTELLIGENCE

A. EVOLVING TECHNOLOGY AND OUTDATED MINDSETS

Throughout history, technology has profoundly influenced human culture and progress. The ability to control fire, to develop simple tools for hunting, farming, to build shelters and manufacture weapons, ensured the survival of our ancestors. Inventions such as the wheel improved mobility and the ability to refine metals led to the development of offensive weapons that in turn facilitated military adventures. The importance of technology in shaping culture is so great that the “Ages” of humanity are defined by technological breakthroughs.

Whether we are in the “Age of Information” is debatable, but there is no denying information technology, specifically telecommunication, electronic data processing, and related technologies are profoundly impacting human life.

Although these changes are impressive, experience demonstrates that there is normally a lag-time between the emergence of new technology and its effective application. There are several reasons for this. One is dependent upon the level of previous investment in now obsolete methods. The other is the cost of training personnel to achieve higher levels of efficiency that new technology makes possible. This entails expense and change within the organization, both likely to meet with internal resistance. Jo Ann Yates, for example, has found multi-decade lags between early adoption of technology and the point at which they led to significant changes on organizations behaviors, systems and processes. (Yates, 1989)

In evaluating the intelligence community’s frame of reference regarding technical and organizational change, it is important to keep in mind the impact the attack at Pearl Harbor had on the U.S. military. It left political leaders with the resolve never to be the victims of a surprise attack. The feeling endures to date. Even though it is not clearly articulated, the U.S. intelligence community’s highest priority is ensuring the nation is never again the target of unanticipated aggression.

Its centralized nature reflects the World War II view that this approach improves efficiency, coordinates work, and leads to clear accountability. The Cold War fostered an intelligence community that was centralized in concept, but, is vertically integrated into isolated compartments and dangerously politicized. (Goodman, 1998)

The imperative of transnational commerce and communications to grow and expand is overpowering the inertia of politics and institutions, which deal with change in incremental moves and often-outdated mindsets. The IC’s spheres of influence and its accommodations with previous friends and foes are increasingly disrupted. Like a tidal wave, the changes brought about by economic and information flows affect different countries with varying intensity. These trends are destabilizing established political order throughout the world, impacting industrialized and Third World nations. The forces of change are palpable, but the final outcomes and their unintended consequences are only vaguely discernable. (Greider, 1997)

The same economic forces buffeting nations also affect their institutions. For example, the U.S. armed forces, whose growth paralleled the development of the U.S. as a world power, are structured to fight major wars against adversaries whose technological achievements are comparable to ours. However, U.S. Armed Forces have a dismal record with low intensity and low-tech regional conflicts. As was the case in Vietnam, El Salvador, Nicaragua, Afghanistan, and most likely in the Balkans.

The focus of intelligence is not the same in all nations. In industrialized countries the forces of national security (intelligence and military) are generally directed outwards. In the case of developing countries, the national security apparatus is normally responsible for dealing with internal control issues. This is a significant distinction, while the U.S. has considerable experience in dealing with major adversaries, it has been less effective in supporting or influencing internecine conflicts (those based on ethnicity, ideology, religion or land reform) in other countries. Precisely the type of low-intensity warfare the U.S. is likely to confront soon.

To meet future threats involving the merging of low intensity conflict and telecommunications technology, such as computers and the Internet, the Office of the Assistant Secretary of Defense for Command, Control, Communications and Intelligence commissioned a study with RAND, Inc. The study was undertaken in recognition that future U.S. national security strategy is affected by the evolution of technology and cyberspace. Commonly referred to the global information infrastructure. The system’s interconnectedness has created a situation where the U.S. must depend on the infrastructure of other nations, thus rendering it vulnerable. The study concluded “key military (and intelligence) strategic assumptions are obsolescent and inadequate for confronting the threat posed by strategic information warfare.” (Molander, 1996)

Given the pace of technological change and its penetration in even remote areas, conflict based on economic and social inequities is likely to increase dramatically. Historically economic and social revolutions originate with the invention of a new power source, whether a machine or a process that has a more efficient, cheaper, and faster output. The arrival of radical inventions generally generates other fundamental changes. First it encourages the migration of resources (money and people) from the outdated (inefficient) to the new (efficient). Second, production moves to locations where it is cheaper to build new productions systems without the social, legal economic and operational restraints faced by more established organizations. (Greider, 1997)

As is the case with the military, the intelligence community is having a difficult time recruiting, training and retaining adequate personnel, because potential recruits are often more interested in working in the private sector. The private sector is better option for many young people, than working in a closed system whose senior members are more interested in retaining their hard-won perks and seniority than to advocate revolutionary change. As a Washington Post reporter highlighted, “once the best and brightest graduates of computer science departments flocked to nuclear and military laboratories to fight the Cold War. Today they go to the Internet and entertainment industries.” (Arkin, 1999)

Futurist Alvin Toffler argues knowledge is at the crux of the struggle for power. Advances on information technology are revolutionizing current methods of production. Whether the product is a service, a consumable, or a technology, the process itself is evolving from mass production toward increased customization. This leads to niches and to serving narrow market segments, beyond monolithic organizations to decentralized operations and loose alliances, beyond domestic enterprises to transnational operations. He contends governments’ efforts to control and manage future information flow using an outdated institutional structure, is likely to result in failure and further weaken governmental legitimacy.

In a concurrent development, technology is also altering the basic relationship between politicians and bureaucrats. In order to handle the large volumes of information with efficiency and speed, governments are forced to streamline their operations substantially by using improved technology. This is not a matter of choice; to survive these agencies need flexibility, innovativeness and customer focus. (Toffler, 1992) The ability of bureaucracies to accomplish these goals clashes with the need of politicians to be reelected. Politicians normally accomplish this by pleasing the narrow interests of their constituencies. As the pressure for change increases, friction between intelligence career bureaucrats and politicians will increase and derail the intelligence community’s effort to change.

Innovation and flexibility require establishing partnerships to syndicate potential risks. In turn these partnerships require a degree of collaborative effort and transparency. The technological advances of the 20th Century are likely to continue their expansion. Given the resources of the U.S. government, purchasing the latest technology is not the biggest challenge. Its biggest challenge will be the IC’s ability to balance the political agenda of the executive and legislative branches with its institutional priorities.

Ironically the challenge of an intelligence operation is to constantly scan the environment to anticipate threats and opportunities. How effective the IC is in managing the political environment will be a test of skill. For that the IC needs to develop a broader base of public support, this will be extremely difficult if it persists in keeping its operations secret. The fundamental obstacle faced by the IC is changing the institutional mindset. In the Age of Information, a centralized national intelligence apparatus obsessed with compartmentalizing information and keeping large volumes of knowledge secret is counterproductive.

Another factor highlighting the growing obsolescence of an intelligence apparatus based on outdated mindsets, is the power of economics in international affairs. In the past several national security analysts argued military means are needed to safeguard the country. (Garten, 1993). However, Edward N. Luttwak, a director at the Center for International Studies in Washington, noted that the U.S. military establishment must now take a back seat to a new breed of warriors imbued with a different way of looking at the nature of international power. Soon power will be exercised through economic diplomacy and used not just to gain national advantage but also to inflict damage on other countries. He illustrates his concept of geopolitical economics with stories of cutthroat competition between nations. Luttwak calls for a national strategy, which mobilizes economic assets in the same way, we once mobilized for the military to fight wars. (Luttwak, 1993)

In a world where information exchange, technology, creativeness and economics wield substantially more power than military weapons (as the former Soviet Union belatedly found out) an outdated national intelligence system is a risky proposition. There are entities such as non-governmental organizations dealing with environmental, public health and human rights, which also serve as centers of economic power, creativity, or utility as nodes of information exchange. Their information gathering, knowledge building activities can only increase in scope and importance in an unstable future, which values traits such as flexibility and opportunism above all.

B. RELEVANCY IN THE MIDST OF CHAOS

In a recent documentary entitled “The Real CIA”⁹ New York Times Washington correspondent Tim Weiner noted:

“In the 1990’s with the cold war ended, the CIA faces different enemies – terrorists, criminal gangs, and rogue nations trying to build nuclear, biological and chemical weapons. To know these enemies, the CIA must try to recruit terrorists, criminals and weapons dealers. It’s like dining with the devil. To do that, you’d better bring a very long spoon, as the CIA’s former in-house inspector general, Fred Hitz, tells us.”

If the past is any indication of the future, the CIA’s recruitment of unsavory characters to accomplish its mission (acknowledged by the Agency’s Inspector General) will create a fertile ground for future scandals. The Agency’s claims that to its job it needs to partner with the very people it’s supposed to neutralize, does not bode well for the future.

Major environmental catastrophes, health pandemics, massive refugee/immigrant flows, egregious human rights violations, lack of access to natural resources, transnational terrorism, multinational crime cartels and drug trafficking, are problems that individual governments cannot solve, no matter how powerful. The resources required to confront these problems are of such scope in economic and human terms that domestic political support is unlikely to materialize. Into this chaotic and unpredictable environment, the CIA is attempting to extend its reach just to maintain a relevant mission. This will require the Agency to collaborate with the intelligence services of other countries, including those previously targeted as part of data-collection, asset-recruitment or covert action operations.

Another area where the CIA seeks to increase relevance for its efforts is commonly referred to as economic intelligence. The topic, “National Intelligence and the American Enterprise: Exploring the Possibilities” was discussed in the Intelligence Policy Seminar held on December 14, 1991 at the John F. Kennedy School of Government, Harvard University. The debate centered on the degree to which the U.S. government should use its existing national intelligence resources for the collection, analysis, and dissemination of intelligence intended to improve the economic competitiveness of the nation. Specific issues discussed included: (1) What should the nature of (US) national policy objectives be? (2) What national intelligence strategy is required to achieve these objectives? (3) What are the implications and consequences of the policy choices proposed? (4) What are the legal implications and requirements? What are the President’s priorities? What are the resource implications and, what Congressional and/or political concerns would they rise?

Efforts by the intelligence community to increase relevance by engaging in economic intelligence are likely to prove elusive as well. The flow of money and information has created a state of interdependence between most of the world’s nations. The combined effect of the technical and economic cross-fertilization, transnational operations and multinational ownership of major commercial enterprises and the need to maintain economies of scale, render the concept of economic intelligence (in a grand scale) implausible.

Commercial enterprises with appropriate technical, cultural and linguistic skills will gather the prerequisite competitive data on a case-by-case, market-by-market fashion with a greater level of efficiency than a governmental bureaucracy is able to do.

To increase its relevance, the intelligence community should improve international cooperation an effort that must overcome three major obstacles. First, the community could end up working with services that were targets of past collection efforts and mistrust close collaboration with the U.S. Second the traditional hesitation of intelligence services to share information on their sources and methods. Finally, their reluctance to rely on allies for all-source assessments on which political and diplomatic policies are based.

Despite the increased collaboration resulting from efforts to meet common threats, these obstacles will continue to inhibit close collaboration between intelligence services.

To one extent or another, intelligence services have relied on open source information, from journalists to academics, from diplomats to businesspeople. Dr. A. Rathmell from Kings College, U.K., noted intelligence services will derive increasing amounts of data from open sources, but argues that the privatization of intelligence will push the IC to open areas formally considered off-limits, specifically Targets, Sources and Methods. (Rathmell, 1998) These are briefly discussed below:

- Targets. Focus upon a broader range of potential or actual targets by the intelligence community is required. In a few instances, the activities of rouge states or transnational criminals require consistent, in-depth monitoring, others require a broad-brush overview combined with a surge capability. This is already resulting in a convergence of defense/national security and law enforcement/criminal intelligence. The cross-fertilization is bound to breakdown Cold War engendered secrecy.
- Sources. Comprehensive monitoring of open source intelligence satisfies most of the Country’s intelligence requirements. Outsourcing more IC community projects to the private sector (research institutes and companies) will relieve budgetary pressures.
- Methods. The Intelligence Community has methods, mechanisms and technology unmatched by the private sector. These assets should be maintained and optimized for certain core missions that provide substantial benefit to national security.

To increase relevance and efficiency the intelligence community needs to participate as a creative, collaborative partner with other academic and private entities. This is not easy because it requires a profound transformation of long-established traditions in the intelligence community.

C. COST BENEFIT ANALYSIS, IMPROVING RETURN ON INVESTMENT

Efforts to conduct a cost benefit analysis of the Intelligence Community must deal with the security classification of budgets and the dispersal of programs across several agencies. However, the size of the budget is not the whole problem, it is more important to recognize that the intelligence community’s lack of measurable efficiency is one of its greatest weaknesses.

In assessing the cost and benefits of intelligence operations we need to focus on key processes. Considering their hierarchical, functional structure will, at best, result in a two-dimensional (vertical and horizontal) view of responsibilities and reporting relationships. Hierarchical structures are difficult to measure. On the other hand, processes have cost, time, output quality, and customer satisfaction components amenable to quantitative analysis.

Well-defined processes lend themselves to structured analysis: (1) Vertically: how they fit in the organization’s structure, (2) horizontally: how they provide a synergy with other lateral functions (by communication and integration), and (3) depth: how effective they are in advancing the organization’s goals and mission. Processes are also quantifiable in terms of the time and cost associated with their execution and the ultimate results. Their usefulness, consistency, variability, freedom from defects and other factors facilitate benchmarking to evaluate quality and efficiency. In their totality, these measures become the criteria for assessing the worth of the operation and establishing ongoing improvement programs. (Davenport, 1993)

Improving benefits versus costs is a trend affecting the intelligence communities of both the U.S. and that of other advanced countries as well. Rathmell, for example, emphasized that as defense and intelligence budgets shrink across Europe, the armed forces are reconsidering the use of in-house expertise. For example, Britain has privatized the education of its staff officers in order to both save money and to improve quality. (Rathmell, 1997)

Current data is anecdotal, but European and North American national security agencies are relying on “off the shelf” equipment and software systems for their operations. The trend is likely to continue, not as a matter of strategy, but rather as a matter of economy and convenience. Increased dependence on public, open-source intelligence for certain operational requirements is likely to expand, because it requires a low level of security classification. This encourages increased collaboration and pooling of resources between states. It also reduces costs and improves transnational intelligence coordination in a time of crisis. (Rathmell, 1997)

The Cold War emphasis on hardware development (super-computers, reconnaissance satellites, communication intercepts and sensors) may account for the efficiency problems the intelligence community confronts. Such “stove-piped” (vertically integrated) operations usually isolate data within proprietary functions developed for specific applications.

More than 30 years ago a systems analyst observed that “A philosophy dedicated to the status quo will never put the most sophisticated tools for the modern world at the service (of the organization)”. (Optner, 1960, p. 11) The IC’s preoccupation with compartmentalizing and classifying information make it extremely difficult to cut across functional lines to develop the kind of system which ties the organization together without sacrificing secrecy.

The “Need to Know” doctrine required distribution of information to elements of the intelligence community only after demonstrating a clear need for access to specific information in order to accomplish their mission. The sequential movement of information is expensive, time consuming, and often does not serve the best interests of end users/customers. In vertically integrated organizations, information flow between function is frequently uncoordinated and inefficient.

Improving the community’s costs/benefit ratio requires enhancing communications between functional units and agencies. This will enhance synergy in some case or lead to the elimination of functions that do not add value. Wherever possible sequential flows across functions should parallel the rapid and broad movement of information in the marketplace. (Davenport, 1993)

These improvements will require the IC to make major changes in the utilization of advanced technology by its core disciplines: operations, collection, analysis, covert-action, and signal intelligence. Changes are also needed between the units/department vertically integrated around those disciplines, and between analysts and end-users. Adaptation requires reopening issues of technical and operational designs users assumed were resolved and lead to unfreezing organizational routine. This ensures standard operating procedures are challenged and changed as needed. (Leonard, 1998, p. 105).

This was also recommended in a Staff Study of the Permanent Select Committee on Intelligence, House of Representatives, 104th Congress issued a report on April 9, 1996. IC21: Intelligence Community in the 21st Century.

“Services of common concern should be consolidated at the community level. Programming and budgeting and personnel management must be more centrally managed. Collection must be managed coherently across the disciplines, with increasingly difficult resource trade made at the community level in an informed all-source process.” (p. 52)

The report also emphasized that a critical factor for success was the ability to improve operational synergy, this required moving away from the Community’s traditional stovepipe approach.

In the private sector there are several proposals to improve the overall efficiency of intelligence have been made. The development of an open source intelligence confederation is one of the most creative. This is a process like the collaboration that emerged between computer programmers and researchers in the 1970s and 1980s. Information and source code were openly shared, and routines worked under mutually agreed upon terms with minimal central control in order to maximize cooperation. Its proponent, Anthony Fedanzo noted that developments in telecommunications, encryption, and electronic commerce, ensure secure and redundant communications for the open source intelligence confederation. Given the nature of technology, physical presence at specific centralized locations is not required; participants could remain at remote locations, if their contributions are centralized.

The key features of this model¹⁰ are:

- Autonomous researchers aware of strategic objectives
- Access to decentralized, non-standardized information repositories
- Development of a common information exchange format and medium
- Centralized repository of information and knowledge
- Low cost (or free) access to the exchange medium
- Multiple, concurrent ad hoc coordinating bodies
- Continuous statistical and qualitative peer review of contributions for usefulness and quality;
- Continuously updated indices to researchers listing their areas of experience, expertise, and interest.

Collaboration of this nature is already taking place in the private sector. Forrester Research in Cambridge, Mass., estimated businesses bought and sold $ 43 billion in goods over the Internet in 1998, versus only $8 billion bought by consumers. By 2003 more than 90% (of the predicted $1.4 trillion in Internet commerce) will take place between businesses and the government or with each other. The lynchpin of this trade is what Vope Brown Wheland analyst Charles Finnie calls “infomediaries”: online exchanges linking buyers and sellers by efficiently distributing market information. (Schwartz, 1999)

Another example is “OSS.NET” which described its services as a “marketplace”:

“A single place through which to access the "best in class" open sources, software and services. OSS Inc. is pleased to share with members and visitors this selection of the finest sources of information, including commercial imagery; useful software well-suited to addressing business and open source intelligence processing and analysis needs; and value-added open source information services in niche areas.”¹¹

For those clients who want to maintain anonymity OSS offers a “proxy service” in which OSS

“Will use our access and our identity to provide discreet secure "mix and match" collection together with advanced processing technology applied on the client's behalf, and expert human analysts putting it all together.”¹²

There are no doubt commercial providers of intelligence services will play an increasingly significant future role in this process by collecting relevant data, developing usable information and creating actionable knowledge for clients that want to improve efficiency and competitiveness.

Analysis is another area where the efficiency of the intelligence community is questionable. Russ Travers research highlighted how bureaucratic politics and legislative priorities have perpetuated about a dozen national-level agencies involved in producing intelligence, unwittingly perpetuating an unproductive division of analytical labor. Consequently, intelligence analysis within the U.S. government has become dangerously fragmented. The community still collects “facts,” but analysts have long been overwhelmed by the volume of available information and are no longer able to distinguish consistently between significant facts and background noise.” Overall, Travers identifies two major problem areas: “Lack of Fusion” and “Lack of Objectivity.” (Travers, 1997)

The intelligence community is not efficient at culling critical facts and fusing them into analytic products that respond directly to the consumers’ needs. Travers contends that these weaknesses stem from:

- A glut of information.
- Substantial personnel cutbacks that occurred at the end of the Cold War.
- Retention of Cold War organizational structures in the face of those cuts.
- The division of labor that occurred partly in response to the preceding factors and to congressional pressure.

Analysis is all about context and the notion of dividing labor represents the destruction of that context. Currently, no agency has either the critical mass of analysts or, in most cases, the charter the look in depth at the political, military, social, economic, and cultural aspects of a problem. In the end, the lack of fusion and integration capability means that the Intelligence Community “whole” is substantially less than the sum of its parts. (Travers, 1997)

The lack of objectivity problem is based on the high potential for bias in the current system, striking at the integrity and core of the Intelligence Community. Travers emphasized that by dividing labor within Defense Intelligence “we have given an increased voice to the Command Joint Intelligence Centers and allowed the Service intelligence production organizations to speak virtually for the country on many matters of interest to their particular service.” (Travers, 1997)

Under these conditions, the corporate objective becomes questionable. There are many brilliant analysts in these organizations, but in each instance, they respond directly to the agenda of a higher authority. These agendas involve a competition for forces in the case of a Command, or funding for weapons systems and force structure in the case of the Services. Second the analysts narrow charter results in an excessively conservative risk equation stemming from a perception of “what is really important.” According to Travers, this in-turn is picked up by those with an ideological agenda and leads to shopping among intelligence services in search of the appropriate level of threat for an avowed political goal. When each of these organizations is focused on advancing its organizational goals and the division of labor argument is used to preclude any capacity for quality control, there is no basis upon which to assess risk objectively. (Travers, 1997)

This lack of objectivity makes any efforts to effectively conduct a cost-benefit analysis cumbersome and very difficult. In the end, the process tends to raise more questions than it answers.

A related problem is volume, the sheer amount of data produced and the ability of analysts to process it, is a situation the agency acknowledged in 1993. In remarks made by the Deputy Director of Central Intelligence, Admiral William O. Studeman, he identified two significant factors. One was the amount of data the intelligence community obtained from open sources; the second was the problems of analyzing the sheer volume of information generated.

The Intelligence Community has drawn broadly on open sources for many years, such as the Foreign Broadcast Information Service (FBIS), which collected, analyzed and reported open source intelligence from all over the globe for more than 50 years. The challenge for the community, noted Admiral Studeman, is not necessarily to produce raw open source data. The goal is to glean information of intelligence interest from these sources, either as background reference material or as a source of information to be fused with data from classified sources and methods.

One of the ways the intelligence community could improve Return-on-Investment (ROI) is by maximizing the utility of information produced by classified sources and methods and fusing it with open source data. Developing single independent agency which integrated analytical services for the entire community and was responsive to the widest range of U.S. institutions and allied customers, would also enhances ROI.

A sense of the growth, quality and quantity of open source information is provided by the following figures, which reflect 1992 conditions: (Studeman, 1992)

- The intelligence community has identified more than 8,000 commercial databases, many of which have intelligence value.
- The number of worldwide periodicals has grown from 70,000 in 1972 to 116,000 in 1992.
- The explosion of open source information is most apparent in the Commonwealth of Independent States, where there are more than 1,700 newspapers, none published three years ago.
- The number of TV and radio stations around the world has not experienced rapid growth, but the broadcast time, breadth and depth of their coverage and the availability of cable TV are clearly on the upswing.
- The sources of "gray literature," (i.e., private or public symposia proceedings, and academic studies) around the world are also increasing dramatically.

Studeman cautioned that unlike the other collection disciplines, which are highly structured, open source is not a tightly integrated discipline in the Intelligence Community. Over the years, open source information collectors, processors, and users were diverse and formed decentralized clusters spread across the breadth and depth of the Community. Consequently, the Intelligence Community didn't know the extent of unclassified holdings of other agencies and had virtually no capability to share electronically the information they possess.

Regarding the volume of information intelligence community analysts must handle, Adm. Studeman provided the following statistics. A single intelligence collection system alone generates a million inputs per half hour; filters throw away all but 6,500 inputs; only 1,000 inputs meet forwarding criteria; 10 inputs are normally selected by analysts and only one report is produced.

In the open source arena, FBIS monitors more than 3,500 publications in 55 foreign languages. Each day it collects a half a million words from its field offices around the world and another half a million words from independent contractors in the US.

Admiral Studeman concluded:

“These two examples show the magnitude of the classified data and translation problems facing an-already data-rich Intelligence Community. The open source challenge theoretically presents ever more daunting levels of reaffirming that information management will be the single most important problem for the Intelligence Community to address for the future. (Studeman, 1993)

Much of the Intelligence Community's current open source architecture was developed in an age when information processing and telecommunications were in their infancy. As we look to the future, the intelligence community should develop more creative approaches to manage the vast amount of data being produced.

Based on the recommendation of the Director of Central Intelligence Task Force, the Community-wide Open Source Steering Council has developed a Strategic Plan that presents a vision of the Intelligence Community's goals for open source collection ten years from now. The plan establishes the goal of creating an integrated Community open source architecture. The new architecture must provide, among other things:

- Flexible collection
- Networked access to external data bases
- Immediate user and customer feedback and automated, profiled delivery of collected open source information based on user requirements. (Studeman, 1993)

To-date, the community is not where it needs to be, and the volume of data generated in the private sector has increased significantly. In the end it is not clear how the Intelligence Community will improve its efficiency or even measure the value of its output. Several questions remain. How can intelligence operations improve Return-on-Investment? By the scope and depth of the information developed? By the relevance of the analysis and its applicability to the problem at hand? Or, by the consequences of the actions taken, based on the intelligence developed? The answer is not clear yet and requires the development of appropriate measurements that will consider the nature, processes and objectives of intelligence.

D. REVOLVING DOORS AND CLOSED NETWORKS

Commercial intelligence services are unregulated and require no special licensing, educational requirements or professional certification. As in other areas of free commerce, it is the buyer’s responsibility to ascertain the qualifications and credibility of the provider. The number of “intelligence” services offered is broad and limited only by the client’s requirements, desires or gullibility and the seller’s imagination and ethics.

In this type of business, success is difficult. Since the author started compiling data on private sector intelligence in the late 1980s, the number of enterprises still in business after five years was less than 20% of the total. The data was obtained from advertisements, reports in the news media, announcement in trade publications, conferences and by word-of-mouth.

As in other trades and professions the strong usually survive. Using the Power Triad model outlined at the inception of this thesis, power in the field is predicated on Position, Information and Action. The most enduring enterprises include founders that had established positions within government or academia and whose professional accomplishments were well known. Two notable examples include Kissinger Associates and Kroll Associates (founded by a former New York City prosecutor). The legitimacy of the position ensures financial backing and equally as important, access to privileged information. Other successful entrepreneurs in the field belong to networks that include current government officials, influential journalists and distinguished academics. Under these conditions, the power triad is complete; they have the position, the information and the ability to apply action and initiative to a situation.

Others get their information and develop their contacts through membership in professional and fraternal organizations serving as networking-tools and information clearinghouses. Notable among them are the Association of Former Intelligence Officers (AFIO); Central Intelligence Retirees’ Association (CIRA); National Counterintelligence Corps Association; National Military Intelligence Association (NIMA) and the Society of Former Agents of the FBI. Former intelligence officers with the military, federal, state, and municipal law enforcement agencies have formed professional associations of one sort or another.

Quantifying the actual proportion of former government intelligence officers in the private sector is a relatively uncomplicated but time-consuming task. It merely requires a cross reference between the membership of these “alumni” associations and the membership lists of private sector professional associations, such as the Society of Competitive Intelligence Professional (SCIP), The American Association of Industrial Security (ASIS), or the Council for International Risk Management among others. Ironically to do so could violate the right to privacy of these individuals and possibly result in legal action for disclosing information intended for “members only.” The results would be skewed because several practitioners’ work as subcontractors or freelancers, others have small firms that market by word-of-mouth, are highly specialized do not belong to professional organizations or keep a very low profile.

Because the activity is unregulated, key players in the field can exert considerable influence on who succeeds, thus informally establishing professional standards. One of the means this is enforced is by selectively subcontracting projects to newcomers who have the right connections. Other methods include endorsement for presentations in professional conferences or publication in trade journals, by referrals or verification of bona fides, in other cases, by recommending appointment to leadership positions or committee service in professional organizations. The self-regulatory function of these networks has both positive and negative potentials.

In 1989 Edward S. Herman and Gerry O’Sullivan published The Terrorism Industry. The book contends that the experts and institutions helping the U.S. to deal with the threats to its economic and security interests, such as terrorism and industrial espionage, reflected the process of division of labor in a highly developed political-economic order within the “national security” establishment.

The book goes on to document how many of the industry’s leading firms are closely associated with programs, grants and contracts funded by the Departments of Defense, Justice, and Treasury or by the CIA and FBI. In other cases, they are spin-offs of former proprietary operations or classified projects.

The economic model of an “industry” is used because “the production and sale of an informational output is well developed and located in a set of identifiable individuals and institutions.” (Herman, 1989, p. 7) This is appropriate because these enterprises and associated experts meet a demand for intellectual-ideological services required by the government and by other powerful economic and political interests. Herman and O’Sullivan emphasized that the informational services provided by this system are sensitive and responsive to the market.

Ideas and the people who produce them are bought and subsidized by those with the resources and needs. Therefore, private sector intelligence practitioners and their former colleagues in the government or academic constitute the “experts” who establish and expound the elements of a loosely structured (but well focused) agenda established by key players in politics, government and industry. (Herman, 1989)

The issues may shift, but the players remain the same. From the late 1970 to the late 1990s many of the major firms in the field have made the transition from dealing with counterterrorism and other related security services to competitive intelligence, cyber-terrorism and other high-technology threats.

These conditions result in a closed system in which conflicting or alternative frames of reference are generally ignored. Newcomers or those with inappropriate credentials who have rare access to the mass media are required to use the dominant definitions and mindsets to maintain a semblance of credibility. This self-referential process allowed concepts of terrorism in the 1980s and industrial espionage or cyber-threats in the 1990s to be used as an instrument of news management and ideological or economic manipulation serving limited but powerful political and economic interests. (Herman, 1989)

A study conducted by Business Trends Analysis in the late 1980s estimated U.S. spending for non-military security equipment and services exceeded $120 billion, of which $42.4 billion was spent in the private sector. (Anthes, 1987). Terrell Arnold, former deputy director of the U.S. State Department’s Office of Counterterrorism noted that non-governmental services in intelligence/security were likely to generate $50 billion in revenues by the year 2,000. (Livingston, 1988). This has provided considerable impetus for many former intelligence officers to pursue their profession on a profit-making basis.

The expenditures noted above occur at a time when crime rates are going down and in a country that has one of the lowest rates of incidents of terrorism in the Western World. The country’s perception that terrorism is a clear and present danger are based on less than half a dozen major incidents in the past ten years. The only memorable ones were the bombings at the World Trade Center and the federal building in Oklahoma City. The rest have been the work of single-issue splinter groups related to pro-life and animal rights organizations.

It is highly unlikely the future will be kinder, gentler and more stable than the present. Several current conditions point out to increased ethnic, economic, religious, and cultural conflict. The disintegration of established order in parts of the world is evident in places as diverse as Africa, Asia, Latin America and Europe. These conditions increase the relevance of private sector intelligence.

Efforts to predict the future are laden with pitfalls. Nonetheless, it is legitimate to analyze current events and trends, judge their direction and momentum and attempt to extrapolate future scenarios. The power of nation states and the large bureaucracies supporting them is declining, but at the same time the influence of non-governmental political or social organizations and those of criminal cartels is increasing. This trend coincides with the consolidation of business sectors such as automotive, telecommunication and pharmaceuticals into influential multinational corporate conglomerates.

The weakening of the state is highlighted by yet another phenomenon, the increase of violent single-issue groups along religious, cultural, linguistic and ethnic lines. Given the complexity of society, the growth of densely populated urban centers and the unrestricted flow of people around the world, environmental catastrophes, health pandemics and their immediate social consequences are major risks. These problems are largely beyond the ability of most governments to control, short of imposing draconian measures, which are likely to meet with popular resistance.

Samuel P. Huntington, professor of government and director of the Olin Institute for Strategic Studies at Harvard noted in 1993 that the world was entering a new phase in which the fundamental source of conflict is neither ideological nor economic. The dominating source of conflict in mankind is culture. He identified five major fault lines. First, differences among civilizations are basic, involving history, language, tradition, and most important, religion. Second, the world is becoming smaller. The interactions between peoples of different civilizations are increasing. These interactions intensify cultural consciousness. Third, economic and social changes are separating people from long-standing local identities. Religion is moving in to fill this gap, often in the form fundamentalist movements. Fourth, the growth of cultural consciousness and the return-to-the-roots phenomenon counterbalances the cultural and economic influence of the U.S. and Western Europe. Finally, cultural characteristics and differences are less mutable, less easily compromised and resolved than political and economic ones. (Huntington, 1993 and Friedman, 1999)

To some degree or other, these trends are already evident, and the level of friction will increase soon. As that happens, governmental intelligence will have its hands full attempting to deal with low intensity conflict in dispersed locations, domestically and abroad.

Other problems that represent a lesser threat to national security, but considerable impact to commercial and non-governmental enterprises, such as crime, sabotage, and civil disturbances will be addressed by the private sector. This will fuel the growth of commercial intelligence and related security services.

In the future, as in the past, the big players in the field are those with academic credentials, relevant government service, and contacts that ensure access to the spheres where consequential economic and political decisions are made.

The trend is evident; the Fall 1998 issue of Foreign Policy focused on the privatization of war. In his introduction to the issue, the editor, Moises Naim highlighted that privatizing government activities is not new, throughout the middle ages most wars were fought by mercenaries. In this issue, David Shearer’s article, “Outsourcing War” shows how privatization is taking on a distinctly post-Cold War cast. Capitalizing on the political and strategic uncertainties of this era, taking advantage of an abundance of experienced personnel and surplus of weaponry, today’s private (military and intelligence) companies are attaining a remarkable level of influence and legitimacy. From training the armed forces in Croatia to overturning coups in Sierra Leone, they are privatizing an activity that has long been the sole province of the nation-state. (Shearer, 1998)

In the same issue P.J. Simmons analyzes the diverse and complex universe of the Non-Governmental Organizations (NGOs) and argues the question of governments, multilateral institutions, and corporations need to address is not whether but how to work with these new players. (Simmons, 1998)

Stephen Kobrin’s article raises the paradox globalization creates. Even as it erodes international boundaries and empowers non-state actors, it simultaneously strengthens national sovereignty. Several other articles in this issue note the same contradiction. Private military and intelligence companies, for example, may fulfill a function that was once the prerogative of the nation state, but they are often hired to defend and strengthen existing national governments.

Seven years earlier Rod Paschall, former commander of the U.S. Army’s elite unit Delta Force, emphasized the desirability of privatizing counterinsurgency services. He pointed out that the use of private enterprises would likely avoid the dangerous results of past government practices. Too often, Washington has thrown good money after bad because U.S. military personnel were involved and thus Washington’s prestige was at stake. By centralizing counterinsurgency assistance programs in a single organization, intergovernmental bureaucratic squabbling would vanish. Concluding “if the corporation failed to measure up, it would simply be replaced by a more capable, competitive firm. This would be a healthy and occasionally necessary commercial practice, unfortunately, alien to government apparatchiks.” (Paschall, 1992, p. 40-41)

The delivery of intelligence and paramilitary services by private companies or freelance mercenaries is a well-established trend. In the future as in the past, former officials with good government connections are in the best position to exploit them in order to deliver the best service for their clients. As the adage goes, “who has, gets.”

CHAPTER IV

INTELLIGENCE IN THE PRIVATE SECTOR

A. WHAT IS IT?

Intelligence in the private sector is known by several terms such as: Business Intelligence (BI), Competitive Intelligence (CI), and even industrial espionage. Essentially it is nothing more than a systematic method for gathering, analyzing and disseminating information about the social, political, economic and competitive elements of the environment in which non-governmental enterprise operates. Notable characteristics follow:

- BI systems are offensive and defensive.
- The role of a defensive BI system is to provide intelligence to help the company maintain its position in the marketplace.
- The role of an offensive BI system is to identify new market opportunities and potential in those markets.
- In practice most BI units will fulfill both roles and the emphasis given to the two aspects will depend on several factors such as the maturity of the company and the marketplace.

Business intelligence is not limited to the mere processing of information but includes four separate phases - direction, collecting, processing and disseminating; when combined are known as the intelligence cycle. This cycle is the process by which information is acquired, converted into intelligence and disseminated to consumers.

The cyclic activity of the system, from which the term intelligence-cycle is derived, stems from the constant need to check, confirm or refute and reassess every inference, deduction, or conclusion.

Consumers (normally an executive or decision-maker in the enterprise) set the intelligence cycle in motion by defining the type of information or intelligence required to achieve a desired objective.

Initially the four stages will follow in sequential order. But as soon as information begins to flow through the channels, processed and disseminated as intelligence, these stages will overlap and coincide, in time, they are all going on continuously and concurrently.

Several requirements normally control the intelligence cycle. These are not hard-and-fast rules or principles, but they are a commonly accepted business practices and include:

- Centralized control – Centralized intelligence avoids unwarranted duplication, provides mutual support and ensure efficient and economic use of all resources.
- Timeliness – Usefulness demands accurate, reliable and timely intelligence. Collectors and analysts require the ability to respond without delay to any significant changes in the situation.
- Systematic exploitation – The methodic and consistent utilization of sources, whether technical (Internet, in-house databases, etc.) or human, to ensure as much of the information and data required is collected. The decision-maker needs to be notified where information is not available.
- Objectivity – The value of information is predicated on its veracity, relevance, impartiality and transparency. Collectors and analysts should resist efforts to distort analysis or output to fit a specific agenda or the expectations of the decision-maker. To the extent the intelligence estimate deviates from this requirement, its utility is greatly eroded.
- Accessibility - The relevant information and intelligence must be readily available for intelligence staff and consumers. Intelligence is of no value if it is not disseminated, nor accessible to those who require it.
- Responsiveness - Intelligence should always respond to the requirements of the consumers. The operative’s challenge is to satisfy the requirements of the decision-maker without violating the requirements to keep collection efforts objective and the analytical process independent of the consumer’s preconceived notions, biases, preferences, or agendas.
- Continuous Review – The output of the intelligence cycle is continuously reviewed and where necessary revised, considering new information and comparing it with what is already known.

To date there has been a tendency for private sector intelligence operations to concentrate on the immediate competition, to answer questions such as: What is the meaning of a competitor's strategic move? How seriously should it be taken? But the objective of business intelligence is wider than this. The aim is still to answer questions like those above, but it also requires consideration of the wider external environment.

Examples of External Environments

Abbildung in dieser Leseprobe nicht enthalten

Nonetheless, intelligence in the private sector is in its infancy, a dynamic commercial activity rapidly evolving and difficult to analyze quantitatively. This is compounded by the elasticity of the industry; the number of practitioners cannot be accurately quantified, and the lack of industry standards does not allow benchmarking. The scope of the activity could be indirectly measured by the number of web sites in the Internet containing information on intelligence related matters.¹³ However, even this approach offers a flawed measure, many sites simply regurgitate second hand information, other advertise services, the rest are affiliated with professional organizations, academic institutions and government agencies.

The author downloaded more than 1,500 articles, monographs, studies, and research reports; even though the quality is unpredictable they provide an incredibly rich pool of information. Whatever the limitation of the information, the Internet significantly enhance the task of research for both practitioners and public policy analysts, but the issue of what intelligence in the private sector consists of, is elusive and difficult to pin-down.

The bottom line is that intelligence is what one wants it to be. Fundamentally intelligence merely refers to the pursuit of knowledge and efforts to further define the discipline are as awkward as they are incorrect.

The literature does provide a sense of how viewing the function in the aggregate provides a fuzzy but standardized frame of reference. Business intelligence is a new name for an old invention. It has existed in one form or another throughout the centuries. Throughout history, successful leaders in government, religion, politics, and just about any other human endeavor predicated their success on the ability to obtain the best information available and base their actions on the knowledge derived thereof.

Throughout history warfare was the human activity that developed the most disciplined approach to data collection and analysis. It represented an enterprise where the risks to life, welfare, tribal, cultural or national security were the highest. Over the year’s military establishments practiced the most efficient, methodical and objective utilization of intelligence. Therefore, much of the mind-set and conceptual framework of intelligence (as a function) has its roots on military experience. It is not surprising then to find intelligence practitioners in the private sector consistently utilize military terminology. Terms such as tactical and strategic operations, scenarios, contingency planning, intelligence cycle, critical mass, etc. are now part of the business language.

As noted earlier, military analogies are seductive, but in the private sector they create confusion. Is intelligence a defensive or offensive activity, or both at the same time? Are the elements of intelligence tradecraft developed by military establishments over centuries applicable to commercial activities? The answer is a qualified yes. The devil is in the details, the qualifications attached to this activity in the private sector is at the root of the confusion.

Intelligence in the private sector takes place in separate but interrelated environments. The first, as corporate function where the efforts of full-time practitioners, working as employees, are designed to benefit the enterprise exclusively. The second involves freelance practitioners or consultants, which provide services to several clients on an ad-hoc basis, often with a narrow area of specialization.

First let’s consider the activity within a corporate/organizational context. In 1993 Ruth Stanat conducted a Survey of Global Competitive Intelligence Practices in corporations. The survey had a response rate of 4.6% (8,900 mailed, 408 returned); 78% of the respondents were U.S. based, 11% from Western Europe, 5% from Canada, 2% from Asia and Australia, 2% from Latin America with less than 1% from Africa and the Middle East. The geographical distribution highlighted that private sector intelligence is a phenomenon largely limited to advanced democratic governments in the Western World.

Equally as significant is the low volume of responses. Several reasons may account for this: 1. The turnover in many corporate intelligence units is very high and mailing lists are quickly outdated. 2. Persons performing intelligence-like research do so as an adjunct to other duties, not as a primary responsibility. 3. No personal or organizational benefit is perceived. 4. The organization does not want to disclose it has an intelligence function.

Stanat identified four levels of formalization. The first has no intelligence function or organized collection effort, sometimes a library, but no management awareness of, or use for, competitive intelligence. The second has research or collection capability, limited to secondary public sources and supported by a small, clerical support staff. The third has a formal process that includes routine collection from a few internal and external sources and limited analytical efforts. It includes a primitive intelligence network and a database in place to store and manipulate data. The most advanced units normally include a comprehensive intelligence program, a company-wide collection effort linking management, strategic planning, sales, marketing and finance into a network. It incorporates external contacts, which provide intelligence of interest to the organization.

A similar topology was identified five years later by Ram Subramanian and Samir T. IsHak. The companies in their study were classified as, primitive (Phase I), intermediate (Phase II), and advanced (Phase III). The characteristics used to classify the operations included: 1.A distinct and separate group of people involved in the activity, (2) the frequency of competitor analysis, and (3) the number of people dedicated to performing the activity. Their research established that most of the firms surveyed exhibited Phase II systems of competitor analysis. As was the case with Stanat, the response rate was low (21.8%). (Subramanian, 1998)

As the business world incorporates intelligence skills into its management practices (especially in sectors such as marketing, customer relations, technology and strategic alliances) it is important to distinguish business intelligence (BI) and management information systems (MIS). Both are quite different, MIS provide technical solutions to data management problems, while BI is based on intellectual knowledge irrespective of the technology used to develop it.

Under ideal circumstances the business intelligence function is related to the organization’s internal structure, this is because there is substantial information available in every enterprise through the brainpower of its employees and managers. It is not the computers and communications systems that help enterprises survive and develop, but rather the proper use of the knowledge base found among the enterprises’ associates. (Hamilton, 1992)

Even though most successful enterprises have always valued the knowledge of their employees. Business intelligence as a specific, well-defined technique traces its intellectual roots to Michael Porter’s early work on competitive strategy. (Porter, 1980 and McGonagle, 1996.)

A properly developed intelligence function helps an organization sharpen its competitive advantage and keep abreast of rapidly changing technologies. An understanding of changing cultural and demographic patterns, even in unpredictable or unstable times, permits a company to benefit from change by understanding the nature of the transformation. R. Eells and P. Nehemkis also emphasize the importance of understanding the environment, they contend that business faces a significant loss in efficiency and profitability because of a generalized lack of integrated organizational intelligence. (Eells, 1984) R. Eells and P. Nehemkis identify certain intelligence requirements as especially crucial for an enterprise.

- Political. This involves analysis of domestic and foreign events that have potential impact on the organizations’ goals and profitability.
- Technological. Intelligence on technical and process developments, which allow a company to modify research, development, production or marketing/distribution practices in order to minimize losses, maximize profit, and avoid being outperformed by a competitor.
- Cultural. Currently the globalization of businesses requires in-depth analysis of cultural trends and preferences. Technology tends to exert a homogenizing effect among different cultures by creating consistent frames of reference among consumers. However, this effect is not strong enough to overcome deeply held beliefs based on language, religion and ethnicity. The enterprise needs to understand this and use it to its advantage.
- Violence. Organizations’ need to develop plans to deal with criminal activity and political violence, this requires collecting information on actual or potential threats. These efforts are driven by the legal liability an enterprise incurs when it fails to take measures to protect its employees and operations; particularly then the threat is foreseeable. (Eells, 1984)

Kahaner provides yet another perspective on the issue. He emphasizes its adversarial nature but noted that competitive intelligence is a systematic program for gathering and analyzing information about competitors’ activities and general business trends that further corporate and organizational goals. (Kahaner, 1996.) He enumerates areas where business intelligence provides services:

- Anticipating changes in the marketplace.
- Forecasting actions of competitors
- Discovering new or potential competitors.
- Learning from the successes and failure of other organizations.
- Increasing the range and quality of acquisition targets.
- Discovering new technologies, products, and processes that impact the organization operations
- Detecting political, legislative, or regulatory changes that can affect the enterprise.
- Exploring new business ventures
- Reviewing internal practices and process and benchmark to competitors.
- Successfully implementing new management tools.

Notwithstanding these developments, business intelligence is still not a well-defined function. Given the right circumstances it could evolve into a management process emphasizing integration and collaboration. Kahaner identifies the reasons why business intelligence does not meet expectations:

- Top management is not involved
- Tasks are not focused or issue oriented (a scattershot, be-all-thing-to-all-people spell doom for intelligence programs.)
- Too much emphasis on collection (warehousing data without adding value to it).
- Not everyone in the company is involved
- No established ethical guidelines

A study conducted by Anamaria Profit in 1994 noted that the most troublesome issue from the practitioner’s point of view is the difficulty of getting senior management to integrate output of the intelligence unit into corporate operations. Her research discloses that corporations often embark on extraordinary collection efforts without a clear action plan or strategic goal. A related problem involves executives overlooking analysts’ input because it did not meet their expectations or coincide with their opinion. Other cases cited involved investigations that produced a wealth of raw data, but no resources for analyzing it. She quoted an executive who called his company’s annual intelligence budget “the elephant that gave birth to a gnat.” (Profit, 1994)

The author’s experience with Fortune 100 corporation highlights the problems of corporate intelligence operations. The main one involves efforts to apply military intelligence concepts (those emphasizing adversarial actions), rather than focusing in open, collaborative knowledge building activities with other corporate functions. The result is the introduction of yet another layer of professionals to provide a different perspective. This is at odds with current trends that seek to flatten the organization’s hierarchy, increase cross-functional collaboration and reduce the size of middle management.

The production of knowledge is a universal responsibility within a company, rather than the domain of specialists. That is why there is a need to link our understanding of intelligence with the redefinition of business as a system of knowledge. (Friedman, 1997) The real solution is to diffuse the collection, production and use of intelligence throughout the organism, so that the organization is literally an intelligent entity throughout. (Mc Gonagle, 1996)

Not surprising, most popular books for business and competitive intelligence practitioners do not necessarily deal with intelligence, but with knowledge management. (See Davenport, 1998, Leonard, 1998, Harvard Business Review, 1998, and Friedman, 1997)

In the past we have witnessed several management buzzwords, emerge. Books are written about them, pundits pontificate and extol their virtues; sometime later the concepts fade away and are soon forgotten. Will this happen to business intelligence? The incoherent and conflicting message business intelligence practitioners convey is the main danger faced by the function. Is the function competitive, adversarial and defensive or business oriented with an emphasis in collaborative efforts and open systems?

Several studies reveal the confusion senior executives have about an “intelligence” function within their operations. The growth of competitive intelligence during the past 30 years is significant, but procedures (what sources are used and how information is internally processed) have not change much. (Taylor, 1992)

A1998 study disclosed corporate America, to a large extent, did not consider competitor information as a vital input in strategic planning.” (Subramanian, 1998) This was reinforced by a survey completed in March 1999. The results were perplexing, based on responses from more than fifty Fortune 500 companies, revealed that approximately 20% of all competitive intelligence departments have closed. According to Leonard Fuld, the firm’s president and author of a number of studies on competitive intelligence the statistics are particularly interesting because competitive intelligence is one of the fastest growing areas of corporate interest today.¹⁴ This interest possibly reflects a media bias, where journalists focus on issues that make good copy, i.e., industrial espionage and other corporate skullduggery, rather than tackling complex issues and fundamental problems. However, with senior executives, the issue is completely different. The focus is profit and not interesting copy, therefore while media attention on business intelligence is increasing, interest is declining among senior executives.

Discussing the nature of intelligence outside the corporate context is substantially more difficult, particularly when it comes to defining and quantifying the process. Many independent subcontractors, consultants and freelancers provide their services to major corporations that use them to supplement their in-house intelligence staff or assign them to special ad-hoc projects. There is no reliable way to quantify their numbers. The Society of Competitive Intelligence Professionals, in its 1998 Membership Directory noted that 17% of the members were vendors or consultants, 77% were practitioners, and the remaining 6% were academics and students. Even though the source is credible, these percentages are deceiving because they do not include other practitioners who are not SCIP members, but nonetheless provide defensive, security oriented, paramilitary intelligence services. A better sense of their activities is provided in the next two sections: Who is Doing It? How They Do It.?

B. WHO IS DOING IT?

The previous section discussed intelligence in the corporate context; this section will focus in the companies that provide services to third parties. Unless otherwise noted, the enterprises mentioned are engaged in legitimate activities. Nonetheless, these services raise significant concerns.

Some of the larger business intelligence firms have subsidiaries abroad, because it is more cost effective to hire a local to manage the office and provide the services in-situ than to use an expatriate. It also makes business sense to contract a person with the right credentials and contacts (such as former high-raking military, law enforcement or intelligence officers). Frequently, these employees are provided with sophisticated training in order to improve their level of proficiency to U.S. and European multinational standard. This may benefit the hiring company in the short-term, but considering the industry’s turnover, local employees often return to government service, leave for a higher paying position with a competitor or set-up shop by themselves. The training received, the contacts made, and the knowledge gained makes them more efficient and sophisticated, however, their new skill set remains in country and used against U.S. commercial and even national security interests.

In other instances, their work on behalf of U.S. based clients makes them privy to sensitive internal information such as strategic plans involving key expatriate personnel, investments, new processes or technology.

A related problem occurs when these multinational competitive intelligence firms are hired by foreign organizations to conduct investigation on U.S. citizens as part of a business dispute, a due diligence effort, or pending litigation.

It is not unusual to find providers of intelligence services raising the specter of espionage against U.S. companies by foreign interests or competitors in order to generate interest in their services; on the other hand, they often offer the same services to foreign interests.

Major private intelligence firms, whose carefully cultivated reputations are their biggest asset, are careful not to involve themselves in a potential conflict of interest. This is not the case with smaller companies or freelancers. The scope of the problem is not well known due a lack of public information about it.

There is no single source that identifies all the enterprises and consultants providing intelligence related services in the private sector. A good start is the examination of trade publications and membership directories of professional organizations. The following are some of the few currently available: American Society for Industrial Security Security Industry Buyers Guide Business Espionage Control and Countermeasures Association Council for International Business Risk Management International Association of Professional Security Consultants National Military Intelligence Association Society of Competitive Intelligence Professionals There are other organizations and publications that provide identifying information on practitioners but are too numerous to identify herein.

As of mid-1998 the author identified more than 400 firms in that purport to provide “intelligence” and “counter-terrorism” services. These ranged from large operations with offices in various countries to one-person operations.

To provide the reader with an overview of the companies and the services provided, a representative list is provided below. The information was obtained from news reports as noted or from the marketing brochures distributed by the firms themselves.

- Ackerman Group. This Florida-based Company is staffed with former intelligence officers. Established in the early 1980s it was one of the first professional intelligence boutiques. In the early 1990s the company’s main partners, E.C. “Mike” Ackerman and Louis Palumbo split. In 1993, Kroll Associates absorbed Palumbo Partners, Inc. The firm’s principals have considerable experience in counterterrorism, risk analysis and hostage recovery.
- Burdenshaw Associates, Ltd. News media reports noted the firm specializes in advising corporations on how to do business with the intelligence community, particularly the Pentagon. The head of the company is Brigadier General William B. Burdenshaw, who retired from the U.S. Army in 1978. To comply with rules restricting former military officers from representing commercial interests before the U.S. Government, the company uses a stable of retired officers and former senior government executives to assemble project teams. These teams advise corporate clients how to organize programs that meet government specifications. Other associates include General William R. Richardson (ret), former head of the Army’s Training and Doctrine Command, and Vice Admiral Thomas J. Bigley, a senior officer that worked for the Joint Chiefs of Staff on future configuration of military forces. (Halloran, 1987)
- Control Risks, Ltd. Based in the U.K. the company has offices in Australia, Colombia, England, Germany, Holland, Japan, Philippines and Singapore. The firm’s research and analysis staff track international security and political events; it is considered one of the premier services. Through its worldwide network of offices, consultants visiting countries on behalf of clients, several hundred contacts and retained correspondents, the firm provides security and intelligence services to hundreds of multinational corporations and scores of governments. Its worldwide staff exceeds 100 people, many of who are former military and intelligence officers from several agencies in the United Kingdom and the U.S., also academics, linguists and specialists in a few technical fields.
- Fairfax Croup, Ltd. With offices in New York, Washington, D.C., Los Angeles, Hong Kong, London, and Mexico City, the firm is headed by a former Deputy Auditor General for the Foreign Assistance Program of the U.S. Agency for International Development, Michael J. Hershman. One of the services provided by the firm is to help corporations establish their own intelligence units. They also help create customized programs to select and train security/intelligence specialists, establish operational requirements, organize analytical processes, and develop information protection systems
- Frost & Sullivan, Inc. Operating out of the United Kingdom and the United States the firm provides broad-based security and political risk assessment services. They claim to provide a unique Washington instrumentality for obtaining complex information and note most of their key personnel served senior positions in the Federal Government.
- Kissinger Associates. Formed in 1982 by President Nixon’s former national security advisor and Secretary of State, Henry Kissinger, the firm had gross annual revenues of more than four million dollars after only three years in existence. Other associates include, Lawrence S. Eagleburger, who served as Under Secretary of State during the Bush Administration; Brent Scowcroft who served under Kissinger during the Nixon Administration and had important assignments in the Reagan, Bush and Clinton Administrations. (Nussbaum, 1985)
- Kroll Associates. The company is one of the world’s premier private intelligence services. It has become a troubled government’s natural choice, particularly when its needs are beyond the abilities of its own police or intelligence services. For example, the Government of Kuwait engaged them to search the immense private fortune of Iraq’s Saddam Hussein; a Congressional Committee in Peru retained the company to investigate allegations that the Country’s former president, Alan Garcia stole millions of dollars during his term of office. The Russian government hired Kroll to help it locate an estimated six billion dollars, taken out of the country by the directors of the state enterprises when they realized privatization was inevitable. The firm’s staff runs into the hundreds, including a few former CIA, FBI, Secret Service, Special Forces officers, along with veterans from other local, state, and federal law enforcement agencies. With offices in London, Paris, Honk Kong, Los Angeles, San Francisco, Washington, D.C. and New York, the company has developed a high profile. It also has a vast network of consultants and experts in most scientific disciplines.
- Parvus Co. Headed by Gerald Burke, former Assistant Director of the National Security Agency, the company specializes in guarding American companies against industrial espionage and threats from intelligence agents, insiders, corporate raiders, terrorists, computer hackers and white-collar criminals. Richard Helms, former CIA director is on the company’s advisory board. (LaChica, 1991). (Southerland, 1992).
- Wackenhut Services. A former FBI Agent established the firm, which specializes in providing investigative and security services. In the early 1990s it expanded to offer international risk forecast services, providing tactical intelligence in 80 countries.

This is an extremely competitive field in which there is a high rate of attrition. A brief profile of discontinued enterprises is included below. Few were renamed; others acquired by competitors or simply dissolved. As is often the case in business, long-term survival is related to size, market niche or product/service demand, and resources. Applying the Power Triad model previously discussed, a firm’s survival is determined by three elements. Position (based on the principal’s professional reputation, range of action and experience). Information resources based on access to significant intelligence about the competitive environment and by taking the initiative in a timely basis. The following firms in one way or another failed at the task.

- ATLAS (Anti-terror, Logistics and Systems). Based in Israel, the company was established in the mid-1980s by former IDF (Israeli Defense Forces) intelligence and counter-terrorism officers. According to its brochure, they specialized in conducting “risk-surveys” to determine threats faced by clients. It also offered to design “preventive programs” that include personnel selection and training, advice on equipment and operational systems for tailor-made protective packages. Military training for commando units used in “special assignments” was also provided.
- Countermeasures International, Inc. The company’s brochure, (circa 1987) noted its principals represent a vast spectrum of sophisticated intelligence and counterintelligence tradecraft. Resources included an in-place a global network of former law enforcement and intelligence associates. Services described as security audits and collateral tasks, such as foreign intelligence, industrial counterintelligence, unobtrusive information collection, computer and telecommunications security, electronic counter-surveillance, clinical terrorist psychology and crypto-analysis.
- International Intelligence Network. A Texas based company formerly known as the Asset Search Corporation specialized in obtaining public information and records tracking. A 1985 brochure noted the firm’s methods proved so successful it was retained “by several federal agencies, including the FBI, DEA, and IRS, to perform background investigations on a grant or contract basis.”

The latest breed of public sector organization is Open Source Solutions (OSS), a company established in Virginia in 1992 by Robert D. Steele. An OSS brochure described its goal as facilitating understanding –both within governments and in the private sector of all countries – of issues that increase an enterprise’s competitiveness in the Age of Information. OSS also facilitates discussion of how governments and private sector enterprises coordinate open source collection, processing and translation efforts to avoid wasting manpower and dollars in duplicative efforts.

In 1995 the CIA held a contest to see who could compile the most data about Burundi and the winner by a large margin was Open Source Solutions, whose clear advantage was its mastery of the electronic world. (Gwynne, 1999)

The company’s founder Robert Steele is a former USMC Management Analyst for the National Foreign Intelligence Program (NFIP) with an emphasis on the General Defense Intelligence Program (GDIP). He worked for the Assistant Chief of Staff, Command, Control, Communications, Computers and Intelligence (C4I), headquarters U.S. Marine Corps. In his capacity as a civilian intelligence manager and analyst, he contributed to Defense Intelligence in 1990’s , a study chartered by the Assistant Secretary of Defense for Command Control Communications and Intelligence (C3I). He also represented the USMC at the Foreign Intelligence Priorities Committee (FIPC), the Future Intelligence Requirements Working Group (FIRWG), the Open Source Council (OSC), the Advanced Intelligence Processing and Analysis Steering Group (AIPASG) and the Council of Defense Intelligence Producers (CDIP) among others.¹⁵

Another example of an intelligence-oriented NGO is the Monterrey Institute of International Studies’ Program for Nonproliferation Studies. Relying on the support of several graduate students and full-time staff, the institute systematically searches hundreds of domestic and foreign publications, compiling abstracts into an electronic database. It has also developed excellent relationships with the Office of naval Intelligence and the Naval Postgraduate School.

These types of arrangements are a prototype for outsourcing of selected open source intelligence missions. This approach allows the utilization of military and civilian students with special linguistic or cultural qualifications, thus enhancing the depth of analysis.

The dynamic nature of the market is such that new companies providing these services appear with regular frequency as others, seemingly established organizations fade from sight. Their employees and in-house experts migrate to other enterprises, set-up a solo consulting practice or return to corporate life. The author knows over a dozen former intelligence officers who have changed jobs every two years on the average. Without a central repository of information about this market, tracking developments, trends, and practitioners is a formidable, though not an impossible task.

C. HOW DO THEY DO IT?

In both the corporate and private sector, the terms used to identify, market, or provide intelligence services are too numerous and inconsistently named to enumerate here.

In the past similar services were offered by legal counsel, private investigators, or accountants among others. With the emergence of private sector intelligence as a discipline, many of the previously provided services were renamed to reflect the new intelligence paradigm. The list provided below is comprehensive enough to offer a profile of currently available services. Unless otherwise noted, the description was based on brochures, news media reports, or the author’s own experience. For the sake of clarity and brevity the data was aggregated into specific categories. The list is representative, not exhaustive. It is possible to find services such as those identified here, referred to with different labels or terms.

- Competitive Intelligence. This function is defined by using public sources to develop data on competitors or the operating environment; in-depth analysis of the data collected is often used as a precursor to strategic planning efforts.
- Strategic Intelligence. Compared to CI, this activity provides a view of the social, economic, competitive, regulatory and political environment, in time to take needed action.
- Market Intelligence. Utilizing internal or external sources of information efforts in this area, provide the client-company with information on the performance of its products or services at the retail level. It includes customer behavior, purchasing patterns, demographic data, et cetera.
- Defensive Intelligence. Corporate security emphasizes protecting the company’s tangible assets (employees, facilities, and information), but defensive intelligence focuses on analyzing the competition’s efforts to collect (properly or improperly) proprietary information and processes of the client-company. (Mc Gonagle, 1993)
- Benchmarking. This activity requires development of efficiency measures on specific processes; these are compared to those of another company or an industry standard to identify where improvements are possible.

In the non-corporate sector, independent firms, consultants, subcontractors and freelancers provide yet another set of services. These are not mutually exclusive to those offered within corporations, sometimes they may overlap, and often are subcontracted. The most common include:

- Asset Search and Analysis. This requires the ability to successfully track and locate assets on a worldwide basis. It also calls for developing detailed financial profiles on individuals or businesses.
- Contest for Corporate Control. Activities include hostile takeovers and proxy battles requiring the development of information on the adversary’s background, strategy, financing and operations. Collection efforts are focused on the character and intentions of opponents; past acquisitions tactics; non-disclosure of material facts; potential legal or regulatory compliance issues, as well as the availability and source of funding.
- Litigation Support. Legal counsel uses these services in preparing for litigation or formulating strategy for a settlement. The information collected could include evidence to substantiate material allegations or facts upon which to base an effective strategy. Other tasks include data on the background and whereabouts of witnesses or parties to the litigation and the nature or location of assets of purported judgement proof parties.
- Country/Political Risk Analysis. This is designed to provide detailed specific information to assess the impact of political changes on the business of corporate clients. Teams of professionals with regional expertise, area knowledge, cultural and linguistic proficiency normally handles these studies.
- Sensitive Investigations. These involve a wide range of business practices. They are designed to uncover and document violation of fiduciary duties, kickbacks, malfeasance or corrupt practices, including theft of trade secrets or improper use of insider information. Often outside consultants are used in those cases where the issue is of such complexity and scope most senior executives or legal counsel do not want it handled within the corporation’s normal administrative channels.
- Information Protection. Companies often seek the expertise of former intelligence officers to assist internal staff in countering espionage efforts from competitors or even foreign governments. These efforts often require levels of technical expertise beyond the ability of corporate staff.
- Monitoring and Oversight Responsibility. These are cases where former senior intelligence/government officials are contracted to serve as independent factfinders. Their work product could be turned over to regulatory agencies, the company’s board of directors or even the news media to quell rumors.
- Product contamination. These are also cases where the skills of former intelligence officers are sought. These incidents, whether accidental or deliberate, real or rumored, can impose enormous financial losses. The service provided help corporations analyze threats, plan responses and test preparedness.
- Crisis Management. Major incidents require making decisions of great consequence based on limited information, often under extreme time pressure, and frequently under intense scrutiny by the news media. Crises have involved the abduction or assassination of a senior executive or a family member, threats to consumer or employee welfare or safety, environment problems, damage to corporate image, or even the public perception of management incompetence. These services provide a prompt recognition and accurate estimate of the threat’s scope, enabling quick identification of key issues or decisions needed, and formulation of the strategies and corporate resources needed to carry them out.
- Disaster Recovery Planning. These services deal with managing the aftermath of a disaster or operations in a patently unstable environment. The ability of a company to recover from a natural or man-made disaster frequently depends on the quality of recovery planning, consequently, consultants are hired to do the planning because they have considerable experience in managing them.
- Emergency Evacuation. Natural disasters, epidemics, civil wars, coups or attacks against the company or its personnel are few of the threats endangering the lives of travelers or expatriate staff and their families. Generally, these services are coordinated with government agencies attempting to evacuate nonessential personnel. In other cases, the extraction of a single individual could involve violation of local statutes, such as the case of expatriate executives who have run afoul of local law or are unlawfully detained or accused of acts over which they had no responsibility.
- Grey Market and Counterfeit Products. Manufacturers and licensees frequently discover their products appearing in unintended distribution channels, thus creating parallel markets that seriously erode profits. In other cases, the products are counterfeit or infringe on trademark or copyright. These services are designed to locate the source of bogus or diverted products, developing information about the suspects, and proposing an effective course of action to forestall further business damage.
- Hostage Negotiation and Rescue. During the past 15 years the U.S. Department of States has reported hundreds of cases where American citizens were kidnapped for ransom. In many these cases, the services of specialized firms such as the Ackerman Group, Control Risks and other companies successfully managed hundreds of incidents.

At the present time there are no commonly accepted standards for these services and the methodology used varies in accordance with individual experience, education and professional qualifications of the consultant.

There is a process commonly referred to as the “intelligence cycle” which is utilized with a degree of consistency, by those persons who have received even basic training on intelligence tradecraft. The “cycle” has several variations, for our purposes, we will consider the Intelligence Cycle distributed by Insight Institute of America, Long Beach, CA. Modifications from the original format are made for the sake of clarity and consistency.

At the most basic level intelligence cycle consists of three phases: Collection, Analysis, and Dissemination. The output is used on a feedback loop to modify, refine, and focus further collection efforts. The one utilized by the Insight Institute expands the process and identifies the following steps.

- Goal Identification:

1. Identify objectives
2. Formulate key intelligence topics
3. Define desired results

- Team Organization

1. Select team members
2. Assign tasks: Manager, Collector and Analyst
3. Brief team members
4. Establish a central repository (database) for data

- Plan Development

1. Develop an assessment plan
2. Establish project milestones
3. Develop a data acquisition plan
4. Develop an intelligence collection plan
5. Develop an analysis plan
6. Provide feedback to reformulate goals and objectives if necessary.

- Plan Implementation

1. Acquire data
2. Collect intelligence
3. Analyze intelligence
4. Assess implication
5. Report results
6. Provide feedback to reformulate goals and objectives if necessary

- Results Presentation

1. Produce a formal report
2. Provide briefings as necessary
3. The outcome of the process and the customer’s feedback is used to reformulate goals and objectives as needed.

Effectively managed programs maintain a continuous evaluation process throughout the project, consistently monitoring the output and making necessary modifications. At the heart of the cycle is the methodology utilized to store, manipulate or utilize the data. If the data or information is not effectively warehoused using a process or method that facilitates extraction and analysis, then the cycle is doomed. Consequently, analytical capability is the critical factor that largely determines the success or failure of the enterprise.

The 1960s technological advances in data processing, data storage, and telecommunications fueled the explosion in information networks and knowledge accumulation in the non-governmental sector. Since then economies of scale have resulted in a significant drop in the price for access to electronic repositories of information such as Nexis/Lexis, Data-Times, and others. The Internet’s provides access to a few academic, governmental, institutional and private electronic libraries in the U.S. and abroad.

Within the Intelligence Cycle, the two essential challenges are information collection and analysis. The definition of collection processes varies from one organization to another and includes functional differences between them. In practice they overlap and are variously known as; data warehousing, data mining, data-marts, decision-support systems, on-line analytical processing, among others. Overall, the effort is one of developing databases that facilitate analytical efforts and knowledge extraction to support competitive intelligence operations.¹⁶

To effectively provide these services the practitioner requires excellent collection skills.

Without the ability to gather information based on a coherent strategy and then, organizing, analyzing and satisfying the clients’ needs, a consultant could not endure.

Collecting data is not the only challenge; the practitioner must also know where the data is available. If he or she does not know where the most appropriate repositories of information are located and the terms and conditions necessary to access them, they will surely fail.

The next step analysis is the single most important element of the intelligence cycle and to a significant extent determines the value of the information collected. It is the central process that converts data and information into knowledge and thus actionable intelligence.

Intelligence services in the private sector select employees based on some internal logic and economic requirements; consequently, there is a widely divergent level of experience, education, and skills among practitioners. Professional standards have not yet been developed and work methodologies not well established. This is one of the reasons, why even one of the concepts central to the intelligence process is not well understood.

Jan Herring, a former case officer for the CIA and one of the best-regarded practitioners in the field of business intelligence emphasized the problem. He found most definitions of intelligence analysis used in the field, were not only wanting but also rather misleading. Most non-practitioners generally presuppose competitive intelligence analysis is an adaptation of various types of business analysis, such as financial assessments, portfolio analysis or business and market profiles of competitors. Herring defined it as “A step in the production of knowledge in which intelligence information is subjected to systematic examination in order to identify relevant facts, determine significant relationships and derive (actionable) findings and conclusions.” (Herring, 1998, p. 13-15)

According to Godson, there are two major perspectives on the value of analysis in the government sector. One is that analysts cannot predict what is going to happen, because this is literally impossible. The analyst’s goal is to identify trends or events that can have a negative impact on the goals of the enterprise, and to plot long-term trends based on whatever factual evidence is available. (Godson, 1983) The emphasis is on “factual evidence,” the effort is one of empirical validation. This approach makes sense to practitioners; it helps them hedge their bets when they predict possible future scenarios. Hedging is important to analysts because they have no way of knowing exactly what is going to happen in any given situation. Even the subjects being analyzed are themselves in a context where they are not aware of all possible variables. Their efforts are often predicated on flawed assumptions, intuition or misjudgments.

In the second perspective the analyst playing an active role, one in which they not only evaluate the (social, political, economic, or competitive) environment in which their organization operates; but they also pro-actively articulate and evaluate alternative options/policies. In this scenario, the decision-maker retains responsibility for the decision made and the course of action taken. The analyst encourages the decision-maker to consider alternative options or views. This option is less common than the preceding one, because it requires the analyst to accept a higher level of responsibility for outcomes. Senior officials often voice alternative options to the executive decision-maker, but it is rare for the analyst to do so.

In discussing the importance of analysis, Godson also emphasizes that developing theoretical constructs about the behavior of other actors is necessary to help give meaning to short-term data. This requires developing hypotheses about likely courses of action before all the facts become available . Analysts start by developing tentative assumptions that are then modified as additional data is developed and premises validated. Proponents of this perspective emphasize that an important element of all analytical efforts is to estimate the possible effects of the organization’s actions on other actors. In the government sector, this function is of such importance that entities within the intelligence community have specific responsibility for developing and testing National Estimates. (Godson, 1983)

The methodology of governmental intelligence analysis has some applicability in the private sector but is limited by several factors. Most practitioners have not received appropriate training to use this methodology effectively. Others appropriate analytical methods from marketing, statistics, and the social sciences, but their use lacks required academic rigor.

Private sector practitioners frequently use some of the following analytical methods:¹⁷

- Benchmarking. Benchmarking is the process of continuously comparing and measuring an organization against business leaders anywhere in the world to gain information that will help the organization take action to improve its performance. These comparisons allow improvements in efficiency, quality, and allows the identification of relative strengths and weaknesses. The method generally appeals to management because differences are normally clearly visible and easily proved. The danger of this approach is that analysis based on the present strategy of another organization fail to consider future opportunities and threats in the environment.
- Chronologies. If properly used this method can help identify a pattern of behavior and offer a clue to future activity because most organizations usually repeat past successes and often repeat their failures.
- Content Analysis. This technique originated in the field of literary criticism and has been applied with a degree of success, albeit sporadic and not well documented. Efforts emphasize the analysis of statements made by senior executives to identify subtle shifts of emphasis hinting or revealing important new developments. For example, is the organization meeting its objectives and expanding? Did it suffer a recent setback, which senior executives discuss? The availability of documents and the capacity of the analyst to accurately interpret the terms in the context they were used represent a significant limitation of this method. Overall, it is better suited for assessing competitive intentions than capabilities.
- Financial Analysis. A typical financial analysis of a competitor would contain a study of a firm’s operating statement for five or so years, including analysis of sales, profits, earnings per share, debt-to-equity ratios, return on investment trends. One of the principal objectives is to watch for certain red flags when analyzing financial statements in an annual report or prospectus. (Spitalnic: 1984).
- Forecasting. Humans generally try to predict their future, by whatever means, and always with minimal success. Because they cannot peek into the future, they settle for shrewd guesses, based on analysis of past events. Several forecasting methods are available, but their reliability is questionable. Some of them include persistence forecasting which is based on the premise that organizations favor incremental change and with minor variations, will advance linearly and predictably. Cyclic forecasting attempts to predict economic or trade cycles, but its utility is limited because there is no valid method to predict the duration of each cycle. In associative forecasting one event is used to predict the behavior of a second similar event. The difficulty with this method (also called causative forecasting) is that it is so difficulty to prove that one series is relevant to another, let alone that there is a causal relationship. Analogue forecasting is like associative forecasting; it uses experience to develop analogies with current ones, thereby drawing some inferences. Probability forecasting is a popular method of business intelligence forecasting, because it requires the analyst to explore all alternatives and rate the probability of each occurring. (Kelley: 1968) In the end forecasting is nothing more than a leap of faith into the future. Incomplete information and faulty underlying assumptions are the most frequent cause of forecasting errors.
- Growth-Share Matrix. This method divides business units into one of four quadrants, stars, cash cow, dogs and question marks, representing different cash flow characteristics. It is based on the premise that gaining a strong relative share in key value-added activities is more relevant to competitive position than gaining shares of the related product markets.
- Patent Analysis. The patents filed by competitors are an important source of technological intelligence that companies use to gain strategic advantage. Traditionally patents from one county were counted to provide an indication of the level of technological activity or output. Recently researchers developed the method to included citation mapping and patent grouping.
- Personality Profiling. Extensively covered by Walter Barndt, personality profiles aim to answer the question “what a person is like” and “what his/her course of action under a given set of circumstances is likely to be.” Through analyzing the past behavior to identify patterns, inferences are drawn about current and future behavior. (Barndt, 1994)
- Scenario development. The most widely used forecasting technique after trend extrapolation is the development of scenarios. Scenarios are focused descriptions of fundamentally different futures present in coherent script-like or narrative fashion. The utility of this method is that it requires decision-makers and analysts to consider and evaluate alternative probabilities and a wider range of responses.
- Strengths, Weaknesses, Opportunities and Threats (SWOT). A SWOT matrix is one of the most popular methods of analysis. The goal is to determine the strengths and weakness of the competition or organization and the opportunities and threats the marketplace represents.
- Timelines. Described by Fuld to chart the order of how companies do things, tag the information spun-off from these activities and place into an analytical framework. (Fuld, 1995).
- Value chain analysis. Originally an accounting technique used to shed light on the value added by separate steps in complex manufacturing processes. It is widely used as a means of describing the activities within and around an organization, then relating them to an assessment of the competitive strengths and weaknesses of an organization (or its ability to provide value-for-money products and services). It is important to identify those competencies that critically underpin the organization’s competitive advantage. They are known as the core competencies and will differ from one organization to another depending on how the organization is positioned and the strategies it is pursuing.

Other excellent sources for analytical techniques include Edward R. Tufte’s “The Visual Display of Quantitative Information .” Morgan D. Jones, “The Thinker’s Toolkit ” and the articles in the Competitive Intelligence Review , published by the Society of Competitive Intelligence professionals, and Data Collection and Analysis edited by Roger Sapsford and Victor Jupp.

For newcomers and experts, there is a large body of electronic and hard copy information that provide guidelines for identifying and utilizing analytical methodologies. One of the best sources for books, periodicals, or articles on the tradecraft of competitive intelligence is found in the Bibliography of Business/Competitive Intelligence and Benchmarking Literature published by the Washington Researchers, Ltd. Other sources include the Monthly publication and Conference proceedings of the Society for Competitive Intelligence Professionals, (SCIP) and the Annotated Directory of Information Resources available at http://www.osis.gov and http://www.oss.net. (c. Spring 1999).

D. ETHICAL PRINCIPLES AND PROFESSIONAL GUIDELINES

Notwithstanding the nature and limitations of private sector intelligence, the function is like to evolve by adjusting to market changes and customer demands. Developments in telecommunications technology have greatly increased the capacity to collect and store very large volumes of data. Intelligence operatives will exploit these resources to collect vast amounts of information (on individuals and institutions) then use it without the subject’s knowledge. This factor emphasizes the importance of ethics within the context of private sector intelligence.

As businesses globalize, many find cultural norms and accepted business practices vary from country to country. Activities clearly illegal in the U.S. such as discrimination or bribery are condoned in other regions. In many Third World countries, expatriate employees discover the unavoidability of bribing officials to expedite routine business goals. Often, the activity is deeply ingrained in the culture, viewed as perfectly normal and often required to compensate for serious economic disparities between political appointees and bureaucrats. This is particularly true when the service requested is access to official data. The cost of the data depends on its sensitivity, uniqueness and the level of the public official providing it. In a practical sense these activities represent a conflict with U.S. law.

Enacted in the wake of Watergate-era scandals, the Foreign Corrupt Practices Act (FCPA)¹⁸ prohibits public and private U.S. companies from making payments to foreign officials for the purpose of obtaining or retaining business. The FCPA prohibits public and private companies from offering, payment or promise to pay anything of value to any foreign official, foreign political party (or official thereof), or any candidate for foreign political office for the purpose of (i) influencing any official act of that official, (ii) inducing the official to act or omit to act in violation of his or her official duty, or (iii) inducing such official to use his or her influence with a foreign government, to obtain or retain business for the payor.

Of particular relevance to private sector business intelligence activities are the 1988 amendments to the FCPA which expanded the existing exception for ''grease money” (payments made to expedite routine government action) to include payments made to officials whose duties are minor or clerical.

The FCPA defines routine government action as an activity ''ordinarily and commonly performed by a foreign official'' in connection with (i) obtaining permits, licenses or other documents to do business in the foreign country, (ii) processing visas or government work orders, (iii) providing police protection, mail service or government inspections, (iv) providing telephone service and utilities, loading or unloading cargo or protecting perishable products, or (v) actions of a similar nature. (Peloso, 1997)

The FCPA does not specifically cover “information” obtained from foreign officials. In the author’s experience abroad, it is common practice to pay foreign bureaucratic and public safety officers for official documents¹⁹ or information needed for an investigation, background investigation, business plans or pending litigation, even when the disclosure is contrary to law, policy, departmental procedure or established practice.

The FCPA currently does not cover the issue of information, which in many cases has a higher strategic value than the actions of a politician on behalf of the payor of the bribe.

There are other gray areas in private sector intelligence not adequately addressed by existing competitive intelligence literature or even by the industry’s ethical guidelines.

A 1993 study of ethics in competitive intelligence literature, Shaker Zahra identified five shortcomings:

- It consists mostly of normative studies and examples of ethical violations.
- It builds mostly on case studies or the opinions of middle managers on the practical practices.
- It is unclear why a few companies are willing to engage in unethical practices in analyzing their competition
- The implications of violations of ethical practices in competitive analysis are not identified
- There is little or no documentation of the sources of variations of managerial views of the ethics of competitive intelligence. (Zahra, 1993)

Lynn Sharp Paine, associate professor at Harvard Business School, catalogued questionable intelligence gathering activities into three broad ethical categories, those involving:

- Deceit or misrepresentation
- Attempts to influence the judgement of persons entrusted with confidential information, particularly the offering of inducements to reveal information
- Covert surveillance without consent. (Sharpe Payne, 1991)

In the ensuing time, nothing much has changed, for example, during the 1998 annual conference of the Society of Competitive Intelligence Professionals, all the presentations focused on data collection and analysis techniques, not even one discussed ethics as a primary topic. (SCIP, 1998)

Many practitioners pay lip service to the issue of ethics, but, competition among practitioners, the corporate environment, and even society itself, often places more emphasis on “getting results” than on the means used to get there. Past research uncovered a surprising lack of information on the attitudes of corporate personnel identified as the key sources for gathering intelligence. (Montgomery, 1979). Ten years later, the situation had not changed significantly.

A 1998 study attempted to measure the extent to which businesspeople in large corporations believe that their own and other companies use competitive intelligence gathering techniques. It also analyzed whether the respondents view these techniques as ethical and to what extent their views are shaped by the corporate culture.

The study concluded organizational influences have an impact on intelligence gathering activities but is also established that 70 percent of the respondents believed competitors engaged in unethical or inappropriate practices. Regardless of the roots of the perception, viewing the competition as unethical can legitimize the practitioners own gathering techniques, and can escalate to the level of dirty tricks. (Cohen, 1988)

Nonetheless, professional organizations such as the Society for Competitive Intelligence Professionals try to provide members with at least minimal acceptable standards, these include: (SCIP, 1977)

- To continually strive to increase respect and recognition for the profession.
- To pursue one’s duties with zeal and diligence while maintaining the highest degree of professionalism and avoiding all unethical practices.
- To faithfully adhere to and abide by one’s company policies, objectives and guidelines.
- To comply with all applicable laws.
- To accurately disclose all relevant information, including one’s identity and organization, prior to all interviews.
- To fully respect all requests for confidentiality of information.
- To promote and encourage full compliance with these ethical standards within one’s company, with third-party contractors, and within the entire profession.

In 1997, SCIP and Conference Board’s Council on Competitive Intelligence compiled a collection of corporate codes of conduct and ethical guidelines that was more extensive than the Code of Ethics noted above. (SCIP, 1997) These were summarized, based on the author’s experience as an FBI Special Agent and corporate executive with several Fortune 100 corporations.

Information obtained by the following means is generally considered ethical.

- Information and document in the public domain
- Consultant reports and market surveys provided there is a good faith belief the consultants obtained the information ethically.
- Documentation the target makes public of their-own free will or as required by law.
- Trade fairs, exhibits and brochures or any other publication issued by competitors.
- Analysis of competitors’ products or services, such as reverse engineering, benchmarking, comparison shopping and special consultant reports.
- Field reports by salesmen and purchasing agents.
- Surveillance of the competitors’ operations, to determine shipping volume (by counting the number of trucks exiting the premises) or likely operational output (by noting the number of shifts worked and number of employees per shift, et cetera) provided the vantage point is from a public place.
- Disclosures made by current or former employees on their own volition or obtained without misrepresentation or subterfuge.

The following methods involve illegal, unethical, and questionable activities:

- Pre-employment interviews where the interviewer misrepresents his/her true intentions and the exchange focuses on the competitor’s research efforts, manufacturing processes, pricing or other proprietary information.
- Clandestine observation from an illicitly gained vantage point, of processes, equipment, devices or documents, particularly where reasonable efforts are made to keep the information confidential.
- Breach of confidentiality in negotiations for a licensing agreement (in which access to a trade secret is acquired and pirated).
- Hiring consultants, private investigators, or other third parties to obtain denied information.
- Planting an undercover operator on the competitor’s payroll for the explicit purpose of accessing trade secrets.
- Extortion of a key employee who has been compromised by his own indiscretion, threatened with exposure, or coerced by other means.
- Unauthorized penetration of a competitor’s data processing systems to scrutinize, manipulate, copy or corrupt proprietary information.
- Obtaining denied information by paying a third party.
- Unauthorized interception, eavesdropping, or copying of information transmitted in the competitor’s communication systems.
- Unauthorized recording or transmissions of conversations taking place in premises used or controlled by the competitor.

For practitioners utilizing their tradecraft within the context of an organization, the issue of ethics has a greater importance for their professional survival. Most companies or organizations have institutional reputations to protect and develop administrative and legal procedures to provide employee with ethical guidelines. The latter violate them at their own risk. In the case of consultants and freelancers, the issue of ethics becomes more problematic. As independent subcontractors, they can certainly abide by the industry’s code of ethics, and it makes a lot of sense for them to do so. In the end their own individual sense of morality or fear of legal action will determine the path they follow to obtain the requested information.

Ironically, competitive intelligence abuses in the field, and the concerns raised by the practitioners regarding the threat of industrial espionage led Congress to pass legislation to deal with the problem.

In passing the Economic Espionage Act of 1996 Public Law No. 104-294, 110 Stat. 3488, (1996) (Also known as the Federal Economic Espionage and Protection of Trade Secrets Law) Congress made the theft and misappropriation of trade secrets federal crimes.

The law includes forfeiture provisions, provides for extraterritorial jurisdiction under certain circumstances, preserves existing state law on the subject, and protects the confidentiality of trade secrets during enforcement proceedings. The law employs a two-tiered approach designed specifically to combat both economic espionage and more conventional forms of trade secret theft and misappropriation.

Economic espionage, as described in Section 1831, addresses activity coordinated or sponsored by a foreign power, which is directed at the U.S. government or corporations, entities, or other individuals operating in the United States, for the purpose of unlawfully obtaining trade secrets. Section 1831 punishes the theft, misappropriation, wrongful alteration, and delivery of trade secrets when accused parties intended to, or knew their misconduct would, benefit a foreign government, instrumentality, or agent.

Section 1832 punishes the theft, misappropriation, wrongful conversion, duplication, alteration, destruction, etc., of a trade secret. The section also punishes attempts and conspiracies.

The section does not require an intent to aid a foreign government, agent, or instrumentality; rather, it is aimed at conventional commercial trade secret theft, misappropriation, criminal conversion, and so forth. Thus, it covers purely "domestic" offenses or crimes committed on behalf of foreign corporations and individuals not affiliated with a foreign government. (Kelley, 1997)

The intangible nature of trade secrets required that the section be written broadly enough to cover both conventional thefts, where the physical object of the crime is removed from the rightful owner's control and possession. And, nontraditional methods of misappropriation and destruction involving electronic duplication or alteration in which the original property never leaves the dominion or control of the rightful owner.

The Department of Justice, through the FBI and the U.S. Attorneys’ Office has implemented several programs to ensure successful enforcement. For example, in 1997-1998 the FBI’s National Security Division sponsored a series of regional Economic Espionage These conferences brought together elements of industry and U.S. federal criminal and intelligence sectors to discuss issues concerning economic espionage. In addition, more than twenty-five thousand companies joined a network called Awareness of National Security Issues and Response (ANSIR). Membership in ANSIR offers U.S. corporations free access to the FBI's threat-warning system, which provides alerts about computer viruses, espionage techniques and foreign intrusions. (Kelly, 1997)

The Justice Department also has paved the way for active prosecutions under the Act by establishing the Computer Crime and Intellectual Property Section and staffing it with twelve lawyers charged with investigating alleged violations of the Act.

D. Brodksy documented recently enforcement actions, these include:

United States v. Patrick and Daniel W orthing, Patrick Worthing, who was employed at PPG Industries Inc.'s fiberglass research center, misappropriated diskettes, blueprints and other types of confidential research information and offered the material to rival fiberglass maker Owens-Corning.

United States v. Kai-Lo Hsu, et al., the technical director of a Taiwanese paper company and a professor were charged with misappropriating trade secrets relating to Bristol-Myers Squibb's anti-cancer drug, Taxol.

United States v. Pin Yen Yang involved an employee of Avery Dennison Corporation (a manufacturer of special adhesive-backed papers for sale to manufacturers) who was passing trade secrets to a Taiwanese competitor. (Brodsky, 1998)

In part the act was aimed at addressing the disparities of the Uniform Trade Secrets Act (UTSA), which was adopted by many states, but not all. The UTSA proscribed the theft of information. This included a formula, pattern, compilation, program, device, method, technique or process that: (1) Derives independent economic value, actual or potential from not being generally known, or not readily ascertainable by proper means by other persons who can obtain economic value from its disclosure or use. (2) Are efforts to maintain secrecy reasonable under the circumstances?

The EEA closely follows the UTSA but expands it to include all forms and types of information including financial, business, scientific, technical, economic, and engineering. It includes plans, formulas, designs, prototypes, methods, techniques, processes, procedures, computer codes, and so on. Most important, it protects both the tangible and intangible. (Kahaner, 1997)

The issue of what constitutes ethical behavior in private sector intelligence activities receives considerable lip service, but in practice it is far from being settled or widely accepted.

Intelligence activities, whether in the public or private sector pose a complex ethical and legal paradox, one based on the very nature of survival itself. At its most fundamental level survival requires successful access to, and effective utilization of, limited resources. It demands competition with one’s equals and with other actors in the environment.

It is a fact of life that the strong have a higher probability of survival than the weak. Alluding the previously noted model on the nature of power, strength and hence survivability is based on position (one providing physical or social advantage), information (an understanding of environmental factors and other’s behavior) and initiative (striking out first). Survival requires the presence and interplay of all three elements simultaneously and the absence of any one of them makes survival infinitely more difficult.

Competition is an essential requirement for individual, institutional or even cultural survival. Based on our human experience we intuitively understand that competition, at its basic level, is neither fair nor moral; it is a morally neutral imperative with a single value, success. Survive or die. Notwithstanding the social and political sensibilities of the present, in the end survival requires a collaborative effort on an individual level, because it difficult to survive without the partnership of other human beings. In an organizational (tribal) level survival depends on daring, cunning and ruthlessness. This dichotomy results in concepts of morality that are ambiguous and defined by context, rather than equally applied to all, without exception.

We know from our daily experience that law and morality are full of circumvention, schemes, and subterfuges. Three notable examples in the ethical ambiguity of competitive behavior are those of evasion, using information to gain an unfair advantage, and undeserved glory. (Katz, 1996)

Schemes reeking of evasion are ubiquitous throughout society. We consistently try to find ways around burdensome restrictions that get in the way of our goals. There are even professionals to help us reach our objectives without running afoul of the law, such as attorneys, accountants, and financial consultants. As is the case with evasion, most people are familiar with using information to gain an unfair benefit. We consistently use it to deny advantage to others or share it with those that provide us with a benefit. A significant portion of our behavior, social mores and cultural structures revolve around the need to control information flow between people and thus enhance not only the survival of the individual, but of the group, tribe, organization or society itself. Other examples of using information to gain an unfair advantage are activities such as blackmail and insider trading both ostensible illegal, but the clarity blurs the closer we analyze them.

We all agree extorting money or other benefit from someone by threatening to disclose damaging information is illegal. Let us suppose the information concerning the potential extortion victim of such reprehensible and odious nature, its disclosure serves a public good. In this case our initial stand would likely soften because a lesser evil was violated to achieve a higher good. The criminal justice system consistently rewards disclosures of forbidden information for selfish, self-serving reasons or monetary profit.

How do these maneuvers differ substantially from the normal ordinary bargaining between people, where threats to resist, retaliate, acquiesce, provide benefits or grant advantages are used as bargaining chips? These differ in degree but not in principle.

As for insider trading, in privately held companies this type of activity is encouraged and accepted. This is not the case in publicly held corporations. Even when economists have shown under a variety of plausible circumstances that insider trading is beneficial for all shareholders and investors, because, it’s a particularly efficient form of incentive compensation for corporate executives. (Katz, 1996, p. xi)

As for undeserved glory, most people know first or second hand persons who have received awards, public glory, professional accolades and the like, by accidental circumstances, timing, the vagaries of institutional priorities or the fickleness of public opinion, when others more richly deserving, go largely ignored and without reward.

In the field of intelligence, whether in the private or public sector, our conscience is surprisingly uninterested in final outcomes and astonishingly sensitive to how we get there, which is why sins of commission are so much abhorrent than sins of omission. The more peculiar implications of this phenomenon are that much behavior we intuitively judge devious or even illegal is perfectly moral, and behavior considered the very model of morality, is quite opposite. (Katz, 1996)

E. PROFESSIONAL DEVELOPMENT AND ACADEMIC PROGRAMS

Although governmental intelligence has been the subject of many academic programs since the late 1940s, the topic of competitive intelligence is not significantly embraced or even seriously analyzed by academia. This reflects the dysfunctional nature of the activity in the private sector. Is its competitive intelligence or knowledge building and is the corporate version like the commercial service provided by freelancers? The answer can go either way but requires several qualifiers. At the present time, the different versions and varieties of competitive intelligence complicate any efforts to define it as a discipline. This is not the case with the historical and operational aspects of governmental intelligence.

A detailed overview of the institutions of higher education providing courses on intelligence is found in publication entitled Symposium on Teaching Intelligence: Syllabi of Intelligence-Related Courses (1993). The document is available through the Center for the Study of Intelligence, Central Intelligence Agency, Mc Lean, VA.

Another possible reason for the lack of interest or support for researching competitive intelligence in major universities is that the activity is a bastard child. Does it belong in the History or Business Departments? Arguably, it could even be included in a Criminal Justice program.

Judging from the number of news media reports on the topic, there is considerable corporate interest in the topic. But, a 1998 Fuld survey revealed there is interest on the topic, but it does not translate to support for the function.²⁰

Another factor to consider is that currently a degree in competitive intelligence does not confer the student a noticeable advantage in the job market and could even be detrimental, considering the image most senior executives have of intelligence. No reliable statistical data was found upon which one could base a valid conclusion that there is widespread acceptability and benefit from an academic degree on this subject. Instead, as previously noted by Fuld in 1998 and Profit in 1994, at least in the corporate sector, this is not the case.

Because private sector intelligence operations are increasing, it is possible that in the future, when the activity is better defined and its utility in the marketplace acknowledged, it will develop into a full-fledged academic discipline. Present trends make that unlikely.

Competitive intelligence is not driving change. At best its practitioners emulate methodologies from other established disciplines and adapt them to suit their needs, rather than developing innovative approaches and processes that demonstrate consistent reliability and achieve wide acceptance. A related problem is the lack of commonly accepted business practices or even professional standards.

In the non-academic sector, competitive/business intelligence and analysis training is provided or endorsed by the Society for Competitive Intelligence Professionals. Many of the instructors have advanced academic or technical degrees and make a serious concerted effort to improve the knowledge and skill set of the association’s members. An example of professional development courses is available from SCIP, by requesting their Annual Conference Programs and Proceedings.²¹

In the academic sector, the Research Intelligence and Analysis Program (R/IAP) and its adjunct, the Center for Information Analysis and Training (CIRAT) Mercyhurst College in Erie, Pennsylvania is well regarded. CIRAT started in 1995 and its goal was to fully utilize resources generated by the Research/Intelligence Analyst Program (R/IAP), a unique undergraduate four-year History degree. The program was designed to produce a qualified entry-level analyst for government and the private sector. Its computer laboratory is nationally recognized as a clearinghouse for software related to the intelligence and investigative processes, as are its efforts to create a virtual intelligence workstation environment, from which the entire intelligence process may be conducted.

In 1996 R/IAP was selected by Lexis-Nexis (one of the world’s largest provider of on-line information) as a testbed for the application of open source information for government and private sector intelligence. As R/IAP enters its fifth year it has in excess of sixty students, who are required to maintain 3.0 grade average and develop skills in a foreign language and handle a curriculum that includes, history, political science, statistics, computer applications, analytical techniques, philosophy, economics and communications.

Another example is the University of Lund, Department of Business Administration, School of Economics and Management, which offers a program on Business Intelligence and Security.²² The objective of their program is to provide students with theoretical knowledge and practical experience on issues relating to business intelligence. Typically, the topics covered will include a general industry analysis, competitor analysis, corporate intelligence systems and issues relating to knowledge transfer within an organization

The approach generally includes three primary instructional methods: 1. Theoretical frameworks. 2. Guest Lecturers. 3. Case studies.

The theoretical section includes such elements as:

- History and Purpose of Business Intelligence
- Connections with strategy, marketing, finance and organizational learning
- External Context of organizations
- Intelligence Cycle as a model for intelligence activities
- Determining intelligence needs, methods and sources for information retrieval
- Storage, analysis and presentation of intelligence
- Legal and Ethical Issues
- Cognitive, organizational and political opportunities and limitations
- Managerial perspective – What is the Difference?

There are other Business Intelligence courses at several Universities in Europe and North America, but the discipline is not a standalone program leading to an academic degree.

To some practitioners’ competitive intelligence is considered primarily a defensive and adversarial activity (a scaled down version of governmental intelligence), others portray it as a knowledge building, collaborative effort within an enterprise. This duality and the resultant ambiguity make it unlikely it that the function will develop into a true academic discipline, simply because it is nothing more than a support function for the corporate decision-maker or senior executive.

On the other hand, programs that focus on intelligence as an important element of statecraft and develop comprehensive curriculums to analyze paramilitary, covert, and clandestine operations, technical and human data collections systems, and advanced technology-based analytical methodology, are likely to increase in relevance.

The reason for this is that the privatization of warfare is likely to accelerate and develop into a robust industry. As the editor of Foreign Policy noted:

“The growing clout of non-governmental organizations (NGOs) also provides one of the most dramatic examples of proliferation of centers of international influence. P.J. Simmons surveys the increasingly diverse and complex universe of NGOs and argues the question governments and multilateral institutions must face is not whether but how to work with these new players.” (Naim, 1998. Simmons, 1998)

Another reason academic studies on the classic elements of intelligence are likely to grow, is the impact that privatized intelligence (not business intelligence) will have in the future. Stephen Kobrin’s research indicates that even as globalization erodes international boundaries and empowers non-state actors, it simultaneously strengthens national sovereignty. (Kobrin, 1998).

Most major Western governments are reluctant to engage in protracted low intensity conflicts involving ethnic, religious or cultural conflicts. Part of the reason is the lack of political support from an electorate that discerns no vital national interest at risk and has no stomach for large number of casualties. Therefore, both governments and commercial entities will rely on private paramilitary and intelligence services in the future. (Paschall, 1990. Kobrin, 1998. Naim, 1998.)

The training requirements of the personnel used by these companies will increase in order to keep pace with the evolving nature of conflict, with changes in technology, and with the need to understand the cultural, ethnic, and religious issues causing the conflict. Academia is likely to play a significant role in this respect.

CHAPTER V

FINDINGS, PUBLIC POLICY IMPLICATIONS AND RECOMMENDATIONS FOR FUTURE RESEARCH

A. FINDINGS

This project’s objective is to provide a case study on private sector intelligence, consequently there are no conclusions based on quantitative analysis. There are several findings that provide a sense of perspective on the information collected.

The most significant findings have to do with the nature of intelligence. The need to know what is going on, to understand the environment, to anticipate problems and thus avoid harm; but also, to develop productive and collaborative relationships with others, is a trait found in almost all humans and their institutions.

Not only do humans have an intrinsic need to know but also the nature of survival itself demands balancing collaboration and competition. Collaboration ensures adequate exploitation of resources by leveraging individual skills and knowledge with that of others, while competition is based on the need access to essential resources. Both require information and knowledge of the other party’s skills, intentions and resources. In the case of collaboration, this need is satisfied by good-faith communication. In the case of competition there is added urgency in that the adversary seeks to keep his plans, intentions, strategies and resources secret.

As noted in the in the power triad model discussed at the beginning, a substantial advantage is gained by controlling Position, Information and Initiative. Consequently, in competitive or adversarial relationships, access to secret, denied or forbidden knowledge, satisfies not only natural curiosity but also the need to survive.

Throughout history, human institutions have engaged in activities, which given present paradigms, are classified as intelligence operations. The Bible, Koran and Talmud and other documents from antiquity refer to it. Even though the activity of “intelligence” is an ancient element of institutional survival, the concept of “intelligence” is relatively recent. It emerged during the expansion of the European colonial powers, at the time when running the realm evolved from managing a feudal protectorate to controlling a far-flung, exceedingly complex empire which demanded an increasingly specialized division of labor. Intelligence was finally defined as a unique discipline during the Nineteenth Century. In historical terms a very small fraction of time.

The problem with intelligence, whether in the private or public sector, is ambiguity. Kent and Godson define it as simply a natural endeavor to get the sort of knowledge upon which a successful course of action is predicated. But isn’t that the same activity most human enterprises engage in?

Not only is there a definitional problem with intelligence, there is also a question of how to measure its efficiency. Should we use the breadth and depth of the information developed as a measure of efficiency? Perhaps we can measure importance by the uniqueness of the data or the consequences of its use? Any answer, whether positive or negative is at best incomplete. Even if all three were considered, the answer would still be based on a purely subjective evaluation. The ambiguity of intelligence and the difficulty of measuring efficiency create a tension between the “spies” (collectors and analysts) and the decision-makers. The relationship is generally one of mutual, albeit civilized mistrust. In modern times, this mistrust has been reinforced by the periodic scandals most intelligence agencies endure. From the public standpoint, this mistrust is exacerbated by the fact that most intelligence successes are generally kept secret and the failures often become painfully public. Decision-makers can rely on the counsel of their intelligence advisors but are under no obligation to abide by it and often do not. To protect themselves from internal and external threats, and survive in a patently hostile environment, intelligence agencies shroud themselves in veils of secrecy. Cloaking their tradecraft in ritualistic procedures and arcane terminology, intelligence like other secret societies of the past, fascinate and frighten those who look at it from the outside.

As Baumard pointed out in his 1992 essay on intelligence:

“The true hypocrite is the one who ceases to perceive his deception, the one who lies with sincerity.” (Guide, 1955, p. 393) Are we all going to remain true hypocrites toward intelligence? Or, are we going to become “ex-self-deceivers who at last acknowledge their egoistic aims – and whose self-reproaches, far from leading to self-reformation, become -- by a brilliant about-face -- the supreme medium of expression for their now fully conscious egoism” (Fingarette, 1969, p.61). Every statement one could make about intelligence will certainly lead to a deeper self-deception, because we are not able to say today what exactly will become of intelligence tomorrow.” (Baumard, 1992, p. 95)

Governmental intelligence was a product of large empires, most of which have been crumbling for the past century. They were in turn replaced by heavily armed ideological and political adversaries (the U.S., the Soviet Union and their respective client states) both of which are now in a process of relative decline. As the world realigns again based on religion, culture, language and ethnicity, rather than arbitrarily set political and geographical boundaries; government intelligence, as currently structured, will have a difficult time maintaining a high level of relevance. The current technological infrastructure and operational mind-sets compound this problem; both are the product of experience and offer scant value in dealing with a fragmented and chaotic future.

The challenge private and public sector intelligence face is to accept that intelligence (in whatever flavor) is nothing more than useful knowledge. Once this is accepted, the next step is obvious. Secrecy, now perceived as the essential element of intelligence, is its greatest weakness. For if intelligence is knowledge, secrecy greatly diminishes its potential value. The process utilized to reach specific knowledge may rightfully be kept secret, but knowledge must eventually be shared and utilized. To gain power from knowledge it must be combined with a position that has a range of legitimate action and an initiative advancing the survival interests of the organization.

B. PUBLIC POLICY IMPLICATIONS

Intelligence operations raise two fundamental public policy issues; the first is equity and the second privacy. Neither is a right equally claimed by all, yet both derive their significance from the interdependence between the rights and responsibilities of other institutional or individual actors.

Is it equitable for a government, organization or individual to collect, analyze, and utilize information in a way it provides a disproportionate advantage over another individual or entity? The following are examples of how non-governmental intelligence operations were unfairly used:

Investigators working for Wackenhut Corporation, a security firm founded by a former FBI agent was accused of illegally spying on a whistle-blower that publicized oil pollution problems in Alaska. A consortium of seven oil companies paid more than $50,000 a month for the investigation, which lasted at least five months. The head of investigations for Wackenhut admitted his staff routinely purloined people’s garbage and sifted it for incriminating evidence; they traced telephone calls, and set up elaborate sting operations complete with false identities, phony offices and hidden cameras to trick people into giving up information. (Dewer, 1991)

In 1993 the U.S. Nuclear Regulatory Commission investigated allegations that Houston Light and Power Co. used surveillance devices to spy on employees, and possibly NRC resident inspectors, at a South Texas nuclear power plant. At the time, HL&P was already the subject of a criminal investigation into charges it harassed and fired South Texas workers who had called attention to safety problems. (Morris, 1993)

In another case, a volunteer working in the Ross Perot presidential campaign filed a $10 million slander suit, alleging Perot hired the San Francisco-based Callahan & Gibbons Group, headed by John Gibbons, a former federal prosecutor and counterespionage expert, to probe into the volunteers’ background. (Holmes, 1992)

Another incident that received considerable publicity in 1993 involved Thomas Gerard, a San Francisco Police Department inspector who was assigned to the Department’s intelligence unit and is alleged to have done contract work for the CIA. An investigation by the District Attorneys’ office disclosed Gerard obtained many police and government records on a wide variety of individuals and organizations for the Anti-Defamation League (ADL).²³

There are hundreds such cases reported in the news media, but only the most serious ones receive national attention, others do not make it into the local newspapers. This highlights the importance of finding a balance between the interests of organizations with the rights of individuals to exercise constitutionally protected rights.

Workplace surveillance is another instance where the individual is forced to confront the power of a superior entity. The premises supporting surveillance in the workplace are powerful indeed. They respond to pressing corporate problems such as drug abuse, sexual harassment, employee theft, and fraud; also, to the threat of litigation for failing to take proactive action to prevent foreseeable problems harming employees or third parties. These incidents cost U.S. businesses billions of dollars every year. Although most people can understand the need for surveillance to protect life and property, few can agree what the proper limits should be.

This blurred boundary, between what is right and proper or unfair and unacceptable, is where the issue of equity becomes most relevant. The public’s perception of equity is based on commonly accepted notions of fairness. For many things in life we are quite willing to accept unequal results if we know the process is fair. Only openness can ensure fairness. If it isn’t transparent, at least the procedures and value judgements made should be described, documented, and available for evaluation by anyone with the desire and right to do so.

If intelligence persists in considering secrecy as one of the most important elements of its mission, the issue of equity will not be adequately resolved.

In turn, the issue of secrecy is closely related to that of privacy. Ironically, privacy is based on the individual’s asserting the right to maintain some activities or knowledge secret. How can we justify a person’s right to secrecy, but not an organization’s?

“In fact, secrecy remains the essence of relationships between all social systems, be they firms’ or persons, and it is particularly the essence of competition. In that sense, secrecy individualizes organizations through nominative agreements that attach the individual to the secrecy genesis of the social group. Social process is a self-deceiving secret pursuit that is based on the confidence each individual has in his/her own false construction of reality.” (Baumard, 1992, p. 94-95)

This creates a dilemma for all intelligence operations, the issue of secrecy and privacy are two sides of the same coin, its meaning dependent on a subjective perception rather than on independent reality.

To most people the concept of privacy is at the core of what a democratic society is all about. “Without a premise supporting a measure of individual control over personal matters, it would be impossible to preserve the indispensable respect for identity, plans, actions, and belongings that all of us need and should legitimately be able to claim.” (Bok, 1989, p. 27)

With the advent of computing technology, life’s most personal events, such as birth, health, marriage, lifestyle choices, and business affairs are recorded by third parties in electronic databases, often without our knowledge or consent. This creates a condition where someone can take a course of action, which can have considerable impact in our life. If in addition to this, the process of collecting and storing data is secret or inaccessible and we cannot challenge the veracity of the information that pertains to us, then the process is indeed a threat and patently unfair.

Whether the dilution of personal privacy is merely a consequence of technological advances, or whether the desire to render our existence risk free created the required technology, is difficult to determine. The U.S. has reached a point where the private sector has developed an intelligence orientation and the technical capability to achieve the required collection and surveillance goals. The net result is that instead of minimizing danger, technology is eroding our freedom and limiting individual choice. But even in this case, resistance to the loss of privacy is neither general nor consistent; most people are ambivalent about taking it seriously, often choosing convenience over privacy. This right is easily compromised by its very nature. Preventing someone from harming us seems real but preserving policy in the face of a perceived threat seems too idealistic. (Abrams, 1993)

The issues of equity and privacy must constantly be balanced between conflicting personal, economic, and social interests; however, this equilibrium cannot be reached if claims to secrecy are asserted by a powerful actor against a weaker one. Because secrecy provides so many advantages, it spreads within agencies and executive departments and in so doing, invites imitation and retaliation. Subterfuge becomes more common, clandestine activity increases and suspicions grow. Leaks from executive offices are manipulated by senior officials or reflect dissent by subordinates. Security measures proliferate, vulnerability increases and since it is virtually impossible – practically and economically – to anticipate all potential threats defensive measures often fail. C. Bok emphasizes this phenomenon by pointing out “secrecy can then become an end in itself, creating subtle changes in those that exercise it, in how they see themselves and in the willingness to manipulate and coerce in order to uphold the secrecy shield for themselves. To the extent that they have used the cover of secrecy to commit [illegal and immoral acts] they reach out for even greater protection.“ (Bok, 1989, p. 177).

The argument used by government bureaucrats to justify secrecy is powerful indeed, but they cannot support practices undermining and contradicting the basis on which democratic government is based. Former director of Central Intelligence, Stansfield Turner noted “in a democracy, secret government agencies and secret operations in the private sector are anachronisms, because popular controls break down when citizens cannot determine what is being done. Secret, unaccountable power is subject to misuse, ranging from deliberate, improper diversions of resources, to just plain carelessness in making decisions.” (Turner, 1985, p. 4.)

Official secrecy, whether based on ritual or procedure has generally been utilized by those in power to retain their prerogatives and advances in technology have normally branded as revolutionary and harmful to public order. For example, during the middle ages, the invention of the crossbow provided untrained peasants with the means to kill horse mounted and armored targets at 50 meters, thus weakening the power of the feudal lords over their realms. The invention of the printing press ushered revolutionary fervor in Europe and indirectly lead to the Industrial Era, by accelerating the exchange of knowledge. Now the Internet, as we are often reminded, is a tool for anarchists, terrorists, pedophiles, and hackers, consequently it should be controlled and regulated.

Indeed, the Internet has an impact on social systems the most significant is the number and variety of organizations that have formed around it. In 1975 it was suggested that as the complexity of social organization systems increase, its component parts -- even the most totalitarian regimes -- usually develop “social slack,” which expresses a certain degree of freedom for organizations to act on their own. (Dedijer, 1975) Complexity and access to information increases the influence of citizens, consequently, to retain legitimacy and support, governments and other systems of social control need to be relatively more open toward the governed, than the governed toward government. (Dedijer, 1983.)

A comparable view is provided by Eells, who contends that, the weakening of the nation state and the dissolution of its primacy as a collective repository of component loyalties is already evident. He suggests people’s emotional identifications devolve upon entities and institutions providing direct support, such as church, family, ethnic, and affinity or life-style groups. This is not a conscious effort, but rather an instinctive response to the demands of ones’ immediate interests and economic needs. (Eells, 1984).

Concurrent to the coalescence of transnational cultural, ethnic and religious organizations are the proliferation of issue-oriented associations. Lawrence Friedman, who teaches at Stanford Law School notes that mass media and technological change are creating horizontal linkages, consequently people feel less beholden to traditional authorities and more connected to people like them, people they can identify with, elsewhere in the world. The horizontal society is a society of entertainment and at the same time a society of surveillance, where privacy is both valued and routinely invaded. (Friedman, 1999)

Most issue-oriented groups have cross-border interests and their own global linkages and agendas. Non-governmental organizations (NGOs) play an influential role in the emerging world order and include -- as a special class -- a host of transnational political movements as well. Most NGOs generally possess sophisticated information collection, analysis and dissemination operations, whose activities, whether they are referred to as research, lobbying, political action, or whatever, are identical (if not in scope, certainly in nature) to those previously conducted by government intelligence.

Perhaps one of the most valuable advantages of privatization is that intelligence, as practiced in the government sector, is being exposed to the light of day. This visibility will increase the public dialogue of what are the proper limits on intelligence activities. Additionally, some former intelligence officers will understand the importance to the future democracy of having an open government. Aware of the structural weaknesses of governmental intelligence, some will be willing to share their concerns in a variety of forums and thus provide depth to the public dialogue.

Given the ambiguity of private sector intelligence, the issue of whether it poses a threat to society is not satisfactorily answered. The U.S. judicial system provides injured parties with numerous avenues to seek redress for inflicted harm but does not resolve adequately the issues of equity and privacy. These will continue to pose the greatest challenge and opportunity to public policy analysts, the judicial system and legislative bodies.

In the private sector, these issues are important, but not as critical as in the public domain. The marketplace contains several social and legal mechanisms, which if flawed and at times inequitable, allow balancing disparities between individual and organizational actors.

The future of intelligence in the private sector is far from assured. Harold Wilensky’s research of Organizational Intelligence showed that hierarchy, specialization, centralization, and secrecy are the major sources of distortion and blockage of knowledge. His conclusions are as applicable to private as they are to government intelligence, “intelligence services are still centralized, holism is still regarded as a perfidious danger and hierarchy still has the last word when higher interests are in play.” (Wilensky, 1967, p. 319-334.)

To the degree that private sector intelligence emulates its governmental counterpart, emphasizing compartmentalization and secrecy, it will fade into irrelevance.

In the end the dilemmas of intelligence: (1) What is it? (2) How are needs to privacy and secrecy reconciled? Lead us back to the inescapable fact that what we are talking about is knowledge. Once we unload the unnecessary baggage that intelligence carries, it becomes clear that efforts to control knowledge are self-defeating. From a public policy perspective, the best argument that can be made about intelligence is the importance of balance. Balance between the rights of the individual and the responsibilities of the organization, balance between the need to consider the process whereby we achieve certain types of knowledge secret, only when this is essential, but not the resultant knowledge.

B. RECOMMENDATIONS FOR FUTURE RESEARCH

The most significant issue in the field of private sector intelligence is a lack of reliable quantitative data. What exists at the present time is generally limited to normative studies, opinion surveys and other self-reporting instruments. The absence of a reliable body of qualitative research is not surprising, to-date the field is poorly defined and lacks the normal elements associated with a profession. Practitioners themselves represent a fluid segment, the corporate units they work for, or the companies they form, emerge and disappear with considerable regularity. Even the number of individuals claiming to be in the field varies; the turnover for intelligence specialists is relatively high, perhaps more than 50% in half a decade. This estimate is based on a review of membership directories for the Society of Competitive Intelligence Professionals (SCIP), American Society of Industrial Security and others, by noting the number of people that maintained membership more than five years).

Even though the number of practitioners increased substantially during the last decade, the function is still poorly defined in the private sector. Judging from the members identified in the annual directories of the Society for Competitive Intelligence Professionals, a significant percentage do not have the term “intelligence” associated with their title.

Regardless what the long-term future holds for private sector intelligence, currently it represents a sizeable activity. The function’s ambiguity and lack of standards point the way for future research. At minimum it requires the following:

DEVELOPING A DATABASE OF PRIVATE SECTOR PRACTITIONERS

Abbildung in dieser Leseprobe nicht enthalten

PROFILING METHODS AND OUTPUTS

Abbildung in dieser Leseprobe nicht enthalten

* Newsletters: News items relevant to the business of the enterprise.

CITED LITERATURE

Abrams, F. (1993): Big Brother’s Here: And –Alas – We Embrace him . New York Times Sunday Magazine , March 21, 1993.

Agrell, Wilhelm. (1992): Shifting intelligence needs. In The Intelligent Corporation: The Privatization of Intelligence . J. Sigurdson and Yael Tagerud, Eds. Taylor Graham Publishing. 1992.

Arkin, William M. (1999) : “A Secretary Goes a Courtin” Washington Post Internet Edition . March 1, 1999.

Barndt, Walter D. (1994) : User-Directed Competitive Intelligence: Closing the Gap between Supply and Demand. Westport, CT. Quorum Books. 1994.

Baumard, Philippe. (1992) : Shifting intelligence needs. In The Intelligent Corporation: The Privatization of Intelligence . J. Sigurdson and Yael Tagerud, Eds. Taylor Graham Publishing. 1992

Bok, Sissela. (1989) : Secrets: On the Ethics of Concealment and Revelation . New York, Vantage Books, 1989.

Bowen, Russell J. (1983): The Digital Bibliography of the Russell J. Bowen Collection of Works on Intelligence, Security, and Covert Activities . Washington, D.C. National Intelligence Book Center. 1983.

Brodsky, David M. and Greenstone, Daniel A. (1998) “Update: Economic Espionage Act.” ALERT , March 1998. Electronically published, available at http://www.srz.com/bios/brodsky/html. (The web site of Messrs. Brodsky and Greenstone’s law firm.)

Cohen, William, and Czepic, Helena. (1988): The role of ethics in gathering corporate intelligence. Journal of Business Ethics , v.7, p. 199-203, 1988.

Constantinides, George C: (1983): Intelligence and Espionage: An Analytical Bibliography . Boulder, Colorado. Westview Press, 1983.

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VITA

NAME: James Ralph Sutton

EDUCATION: B.A. Criminal Justice California State University at Sacramento, California, 1974

POSITIONS AND

APPOINTMENTS Inspector, Sacramento County Sheriff’s Department, Sacramento, California.

Special Agent, Federal Bureau of Investigation, Manager of International Security, International Telephone and Telegraph, Inc. Brussels, Belgium, New York, NY.

Vice President, Security Plans and Program, Chase Manhattan Bank, New York, NY Director, Office of Security Programs. University of Illinois at Chicago.

Director, Asset Protection Service, Sears, Roebuck and Co.

GUEST LECTURES: Terrorism and Technology Office of International Criminal Justice, Annual Conference on Technology and Crime. University of Illinois at Chicago.

Chicago, Illinois. March 10, 1993 Competitive Intelligence. First Latin American Congress of Internal Audit, Cancun, Merida, Mexico. May 17, 1995

Corporate Security and Competitive Intelligence Office of International Criminal Justice, 1996 Summer Executive Development Program.

University of Illinois at Chicago. Chicago, Illinois. July 16, 1996

PROFESSIONAL

MEMBERSHIPS: Society for Competitive Intelligence Professionals

Society of Former Agents of the FBI American Society for Industrial Security

PUBLICATIONS: Sutton, James R. Latin American Insurgencies: A Personal Perspective. International Journal of Comparative and Applied Criminal Justice . Vol. 13, No. 2 p. 87. (Fall 1989)

Sutton, James R. The Future of Terrorism in Latin America. International Terrorism: Policy Implications . Susan Flood, ed. Office of International Criminal Justice. The University of Illinois at Chicago. 1991.

Sutton, James R. U.S. Counternarcotics strategy in Latin America: Good Intentions and Poor Results. Criminal Justice of the Americas , Vol. 4, No. 5. October-November 1991.

Sutton, James R. “Quo Vadis-CIA.” La Jornada , México City. Septiembre 24, 1997.

Sutton, James R. “Narcotráfico y Soberanía. La Jornada , México City. Septiembre 25, 1992.

APPENDIX I

The United States Intelligence Community

Throughout history, the leaders of nations and armies have sought to be forewarned of dangers and forearmed with information that reduces uncertainty and provides a critical edge for decisions. The effort to meet these fundamental needs of decision-makers is what lies behind the practice of intelligence. That practice consists of collecting and interpreting information, overcoming in the process any barriers erected to keep secret the activities, capabilities, and plans of foreign powers and organizations.

Today, intelligence is a vital element in every substantial international activity of the US government. Every day, the agencies and offices that make up the US Intelligence Community provide an important information advantage to those who manage the nation's strategic interests--political, economic, and military. Intelligence organizations support a broad range of consumers, from the national level of the President, the Cabinet, and the Congress, to the tactical level of military forces deployed in the field.

For intelligence officers, this means maintaining an ability to warn policymakers and military leaders of impending crises, especially those that threaten the immediate interests of the nation or the wellbeing of US citizens. It also means giving government and military officials advance knowledge of long-term dangers, such as the threats posed by countries that covet weapons of mass destruction. It means helping to safeguard public security by countering threats from terrorists and drug traffickers. It means supporting economic security by uncovering foreign efforts at bribery and other schemes to tilt the playing field of international trade. And it means multiplying the effectiveness of US military forces deployed for operations.

A series of statutes and Executive Orders provides legal authority for the conduct of intelligence activities. Key documents include the National Security Act of 1947 (as amended), which provides the basic organization of the US's national security effort, and Executive Order 12333, which provides current guidelines for the conduct of intelligence activities and the composition of the Intelligence Community. Together with other laws and orders, these two documents are meant to ensure that intelligence activities are conducted effectively and conform to the US Constitution and US laws. They also provide a statutory basis of accountability to the Congress.

The Director of Central Intelligence (DCI), who oversees the Intelligence Community organizations described in more detail in the following pages, leads the national intelligence effort. Resources for these organizations are tied together in the National Foreign Intelligence Program--the budget for these national activities, which support political, economic, and military decision-makers, is developed by the DCI and presented to the Congress annually. Intelligence activities that are more narrowly focused and intended to support tactical military forces are funded separately in two programs within the Department of Defense. These programs--the Joint Military Intelligence Program and the Tactical Intelligence and Related Activities aggregation--fall under the aegis of the Deputy Secretary of Defense. In recent years, the line between national strategic concerns and tactical operations has blurred and used in complementary ways. The goal of intelligence has remained constant--to²⁴ support decision-makers with the best possible information, not matter its source.

The Community Management Staff was established by the DCI in 1992, replacing the Intelligence Community Staff. It is an independent element and its Executive Director reports directly to the DCI. The mission of the CMS is to assist the DCI in fulfilling his IC coordination and management responsibilities. ²⁵ It is charged with developing, coordinating, and executing the DCI's Community responsibilities for resource management; program assessment and evaluation policy foundation and collection requirements management. It also performs other functions and duties as determined by the DCI, federal statutes, or executive action.

The National Intelligence Council, managed by a Chairman and a Vice-Chairman, is comprised of National Intelligence Officers--senior experts drawn from all elements of the Community and from outside the Government. The National Intelligence Officers concentrate on the substantive problems of geographic regions of the world and of functional areas such as economics and weapons proliferation. They serve the DCI in his role as leader of the Intelligence Community by providing a center for mid-term and long-term strategic thinking and production. Through routine close contact with policymakers, collection, research, and community analysis, the NIC provides the DCI with the information he needs to assist policymakers as they pursue shifting interests and foreign policy priorities. The NIC also draws on non-governmental experts in academia and the private sector to bring in fresh perspectives and analytic methods to enhance the intelligence process. Finally, the NIC assists the Intelligence Community by evaluating the adequacy of intelligence support and works with the Community's functional ²⁶ managers to refine strategies to meet the most crucial needs of our senior consumers.²⁷

[...]

---

¹ Refer to Appendix I for an overview of the U.S. Intelligence Community.

² Open Source Solutions, Inc. A privately held company staffed by former intelligence officers which provides research and analysis services. Refer to URL: http://www.oss.net.

³ Estimated by the Federation of American Scientists’ web site (http://www.fas.org/irp)

⁴ For a comprehensive list, refer to Compilation of Intelligence Laws and Related Laws and Executive Orders of Interest to the National Intelligence Community. Prepared for the Use of the Permanent Select Committee on Intelligence of the House of Representatives, 104th Congress, 1st Session. Superintendent of Documents, Washington, D.C. July 1995.

⁵ The National Security Act of 1947 (P.L. 80-253) established the statutory framework for the managerial structure of the I.S. Intelligence Community, including the Central Intelligence Agency (CIA) and the position of Director of Central Intelligence (DCI).

⁶ See Sherman Kent’s Strategic Intelligence for American World Policy, published in 1949 .

⁷ This would include biographies, bibliographies, compendiums, chronologies and other summaries.

⁸ Press release issued March 23, 1999, available at http://fuld.com.

⁹ Summary of the show available at (http://nyt.com/library/national/ciamaintext/html)

¹⁰ Adapted from Implementing Open Source Intelligence Through a Distributed Contribution Model . Unpublished, undated monograph electronically provided by its author, Anthony Fedanzo.

¹¹ Downloaded from http://www.oss.net. May 15, 1999.

¹² Downloaded from http://www.oss.net. May 15, 1999.

¹³ The author catalogued more than 914 such sources between March 1998 and April 1999.

¹⁴ Business Wire, March 22, 1999. “Competitive Intelligence Departments Vanishing from Fortune 500 companies.” Fuld, Inc. of Cambridge, Mass. conducted the survey; a firm specializing in providing research and analysis services.

¹⁵ Undated document “Biographic Information, Mr. Robert D. Steele .” Provided in an information package from Open Source Solutions, distributed on November 29, 1993.

¹⁶ Data Solutions – The Key Players . Distributed electronically by Palo Alto Management Group, Inc.

¹⁷ Catalogue provided by Adam Pode, Mercyhurst College, Erie, PA. March 1999.

¹⁸ Foreign Corrupt Practices Act of 1977, Pub. L. No. 95-213, 91 Stat. 1494 (codified as amended at 15 USCA §§78a, 78m, 78t, 78dd-1, 78dd-2, 78ff. (1981 & Supp. 1997).

¹⁹ These may include birth certificates, incorporation s, tax returns, investigative or intelligence reports, wills, lawsuits, and other similar documents.

²⁰ Press release issued March 23, 1999, available at http://fuld.com

²¹ SCIP’s web site http://www.scip.org

²² Guide for Exchange Students, Courses in Business Administration, at http://www.ehl.lu.se/guide/courses.htm

²³ New York Times , November 17, 1993. P. 25A.

²⁴ This skill set would include, education, specialization (as noted in the source documents), and professional affiliations and background.

²⁵ By developing a database structure with appropriate elements (tables) several analytical profiles can be developed and used of quantitative research. (For example, by profiling all the addresses, a determination can be made of which geographical areas contain the highest density of practitioners.)

²⁶ These restrictions could be imposed by the sponsoring institution, or by legal challenge.

²⁷ Asset Protection Service, Sears, Roebuck and Co.