Corporate Spying: Snooping, by Hook or by Crook

Corporate spies come in many guises, but they all have one thing in common: They want to use your company's secrets for competitive gain. This is a five-step guide to how snoops operate.

Those pieces of data tell a competitor what your company is doing. Combined, the right details might help a rival reduce your first-to-market advantage, improve the efficiency of its manufacturing facility or focus research in a profitable direction. "The dots of data are out there in different forms; it's a matter of somebody piecing together that picture," says Fuld, who compares his job to looking at the dots of a pointillist painting and being able to imagine the greater picture.

And if the dots aren't in public places? He can start making phone calls.Work the PhonesYou'd be shocked by the things people tell John Nolan. This is the man who got his fingers burned in the infamous "dumpster diving" espionage case in 2001 involving Procter & Gamble and Unilever. Nolan won't comment on the case, which was settled out of court, but he insists that there's no need for his company to break the law. "In our experience, it's just not worth it," says Nolan, founder of the Phoenix Consulting Group. "It's just not necessary. It's a pain in the neck."

Nolan has other ways of getting people to talk. In fact, people like him are the reason that seemingly benign lists of employee names, titles and phone extensions, or internal newsletters announcing retirements or promotions, should be closely guarded. That's because the more information Nolan knows about the person who answers the phone, the better he can work that person for information.

"I identify myself and say, 'I'm working on a project, and I'm told you're the smartest person when it comes to yellow market pens. Is this a good time to talk?'" says Nolan, describing his methods. "Fifty out of a hundred people are willing to talk to us with just that kind of information."

The rest? They ask who Phoenix Consulting Group is. Nolan saysand this is truethat Phoenix is a research company working on a project for a client he can't name because of a confidentiality agreement. Fifteen people hang up, and the other 35 start talking. Not a bad hit rate. Nolan starts taking notes that will eventually make their way into two filesone, information for his client, and the second, a database of 120,000 past sources, including information about their expertise, how friendly they were, and personal details like hobbies or graduate school.

A former intelligence officer, Nolan doesn't ask direct questions but instead uses a method known as "elicitation," guiding the conversation in ways that seem innocuous. Suppose he wants to know how a company is pricing a product for government procurement so that his client can win a bid. He calls someone in accounting. "Nobody ever runs down to accounting and says, 'Ooh, this is so exciting.' So I convince him I'm interested in who he is and what he does. I can be really slow, and I can be confused. I can make purposely erroneous statements: 'You guys are probably getting $5,000 a widget out there.' And he'll say, 'You gotta be kidding, times are tough. We had to reduce our prices down to $3,200.'"