When people think about intelligence, they usually focus on such organizations as the US Central Intelligence Agency (CIA), the British Secret Intelligence Service (SIS), or perhaps the Chinese Ministry of State Security—all government-run agencies specializing in espionage, analysis, and usually some form of covert action. Most countries have similar intelligence organizations as well as counter-intelligence bodies to stop spies

and protect national security secrets. In the aftermath of September 11, a great deal of attention has focused on intelligence and its role in national security. Intelligence in the private sector, however, has largely been ignored, although business intelligence, too, has been energized by recent events and reflects many of the same characteristics.

In fact, the field of intelligence has become significantly privatized as technology has advanced. Today, high-tech information collection through the use of satellites and electronics has replaced a great deal of old-fashioned espionage by government agencies such as the CIA. The once top-secret world of overhead satellite photography has become a commercial enterprise, and intelligence agencies that could not afford to launch their own satellites in the past can now buy photos to help spy on their adversaries. Commercialized high-tech spying is widely accepted as a non-intrusive method of espionage, while purchasable electronic countermeasures—such as firewalls, encryption programs, and scrambler phones—have become common as well. Private intelligence is emerging as an important part of the new world intelligence order.

Sectoral Distinctions

What are the differences between private and governmental intelligence? Governmental intelligence and security are designed to protect countries, while private sector intelligence and security are essentially activities for profit, designed to benefit owners, shareholders, and managers.

Moreover, the kinds of operations routinely undertaken and sanctioned by governmental intelligence and security services, especially overseas, are illegal and immoral. In the private sector, there is no such sanction or protection. Espionage and covert action are illegal activities in most countries, especially when carried out by private agents. Espionage operatives are not protected by government, their activities are banned by professional intelligence associations, and their operations carry stiff penalties.

In the area of counter-espionage, different rules apply as well. The governmental practice of countering the work of hostile intelligence services involves either trying to penetrate the hostile service with inside agents, converting enemy operatives, or using defensive techniques such as the polygraph or surveillance to keep penetration by hostile agents to a minimum. In the private sector, many of these techniques are forbidden by law or are unworkable in practice. Thus, the private sector has had to develop less intrusive methods to stop industrial espionage, or white-collar crime. Their tools to combat terrorism are limited.

The battle against foreign industrial espionage in the United States has been enhanced by a new law called the Economic Espionage Act (EEA) of 1996. This law was originally designed to stop industrial espionage by foreign intelligence services or operatives, but it has been broadened both in language and in application to cover the theft of trade secrets by private companies or individuals. Still, recent espionage cases demonstrate that the EEA and such statutes as the Uniform Trade Secrets Act (UTSA), as well as laws against wire and mail fraud, have not prevented industrial espionage, although they have made it more costly for potential spies. The legal rules and ethical mandates of private sector intelligence are easily violated, and practices can quickly overstep these bounds.

Like most, but not all, governmental intelligence, data gathered in the private sector comes from open sources. Open sources are free and readily available sources of information, including print and electronic media, books, journals, and Internet sources. The growth of Internet-based electronic databases has increased the amount of open-source information so dramatically that some intelligence observers have suggested that traditional collection methods are no longer necessary. In reality, the open-source database makes collection from espionage more meaningful, since these more sensitive sources, which are often fragmentary or incomplete, can be compared, augmented, or corrected by what the open sources have already revealed.

Although private sector intelligence operatives are not supposed to engage in espionage, they do have access to some high-tech methods unavailable just a few years ago. This is especially true in such areas as data mining, a technique for finding information in computer databases. And the once top-secret world of overhead reconnaissance using satellites is now quite public and accessible. Photos taken from space with one-meter resolution—good enough to distinguish considerable detail on the ground—can be purchased on the Internet by anyone with a credit card.

Another major difference between governmental intelligence and private sector intelligence is that governmental intelligence organizations are integrated into the state bureaucracy and become part of the regular governmental infrastructure. In the private sector, intelligence units are either integrated parts of a larger company or specialized consulting firms to which intelligence work is outsourced. These private intelligence firms may specialize in gathering and analyzing information about marketplace competitors, risks in overseas investments, or various aspects of security.

Intelligence vs. Security

US business officials seem uncomfortable with the notion of an intelligence unit integrated into the firm, thinking that this indicates that the company is somehow involved in industrial espionage or at least in something unsavory. Managers have trouble understanding how intelligence contributes to the bottom line since the results of intelligence work are often hard to measure. In fact, intelligence units are often among the first to go in times of downsizing. Nonetheless, business leaders need intelligence for the same reason that governmental leaders need it. Intelligence can prevent surprise, contribute to strategic planning, monitor ongoing events, and help defeat competition.

Interestingly, concerns about profit and cost do not seem to apply quite so much when it comes to security. Loss prevention is more easily measured, the costs are more obvious, and the concept seems easier for managers to accept. Thus, in the United States, there is a pattern in which intelligence work is given to outside consultants but security is integrated into the firm. Many start-up firms, especially in the service sector, are casual about security. As a result, there are many instances when security practices are instituted only after a firm has suffered some form of loss.