The 3 Information Leaks – A Business Taboo

Everyone talks about malicious data breaches, like this piece from The Economist. I’ve written why most companies should never sell data. But very few talk about everyday data leaks and what they mean for companies and the economy. Well, hello then.

As an executive at Fortune 100 companies, I’ve worked with some of the top consulting firms in the world. I started my career with one. More recently, I’ve consulted to dozens of major brands on innovation, futurism and strategy. Along the way, it was impossible to ignore three major information leaks big companies can’t control – and often, don’t want to.

They are:

  1. Recruiting: No matter how diligent people are, job postings, resumes and interviews reveal something proprietary. And many new employees bring inside knowledge to new jobs. Short of a lobotomy or a surveillance state, this is hard to prevent.
  2. Consultants: Many competitors hire the same advisory firms, which can’t share proprietary information, but do share “best practices”. They also have a miraculous knack for finding competitive data. Miraculous. Staff also mingle socially or end up working within that industry. Naturally, knowledge bleeds.
  3. Vendors: Most vendors and service providers need proprietary information to perform their function. We’ve seen countless leaks of unreleased iPhone molds, data, or other products. That’s nothing compared to what we don’t see. Often, the same suppliers or partners serve multiple competitors because they have rare expertise, unique parts, or the scale required.  And people talk, mistakes happen, knowledge gets transferred.

(A fourth might be events and conferences, but only in private meetings. The rest are often insufferable generalities or public announcements, except my talks, of course.)

Some companies use secrecy, NDAs, lawsuits, or employee monitoring. They quickly learn that policing leaks is hard, creates bad PR, and hurts employee morale. Others don’t think about leaks at all or think they’re a competitive advantage. At worse, they help maintain industry parity. Talk about ambition! Occasionally, it’s intentional. Read up on “co-opetition“.

The net effect is less dynamism. It lowers the odds of major disruptions and breakthrough innovations, but also limits fatalities. Not a bad trade-off for some. This is one reason real disruptions often happen from substitute technologies or startups. (More on that in Why Big Companies Don’t Innovate or Get Disrupted.)

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