Competitive Intelligence

PAM, DARPA, Decision Markets and Dumb Agents

DARPA came under fire this week for its plan to launch August 1st, the Policy Analysis Market, or "PAM", to help predict the future. Though the Web site is down now, the plan had been to use so-called "dumb agents" to predict the likelihood of terrorist and other disruptive events in the geo-political arena, specifically the Mid-East.

Unfortunately, the political firestorm of "wagering death", as some have called it, led Senators Byron Dorgan and Ron Wyden to declare the plan not only “offensive” but also “useless” and “harebrained”. The problem is, decision markets such as PAM really work - markets around the Internet predict which movies will flop or fly, while orange juice futures are better predictors of Florida weather than weather forecasts are… et cetera, ad nauseum.

But, we'll never get the chance to find out whether the aggregate predictions of thousands of bets on future events might have improved American intelligence or averted disaster, thanks to the moral grandstanding of a few politicos. Maybe somebody in the private sector will give it a try...

- Arik

Sierra Club vs. the Hummer H2

I noticed today the Sierra Club came up with a great shot across the bow of the hugely popular (and just plain huge) new Hummer H2. Very effectively executed parody - enjoy!

- Arik

Boeing Mea Culpa, Lockheed Martin Victory & Billion-Dollar Consequences for Espionage

Boeing found out just how costly libertine ethics by employees can be – in the past few days, it was revealed that Boeing will lose about $1 billion worth of Air Force rocket launch contracts that have since been shifted to rival Lockheed Martin, in response to the admission that Boeing acquired tens of thousands of confidential and proprietary documents from Lockheed during a 1998 contract bid on the Air Force's Evolved Expendable Launch Vehicle rocket program competition.

Boeing Chairman and CEO Phil Condit responded to the Air Force announcement with a mea culpa:

"We are extremely disappointed by the circumstances that prompted our customer's action, but we understand the U.S. Air Force's position that unethical behavior will not be tolerated. We apologize for our actions. We will continue to work with the Air Force to address the issues that caused this suspension. Last week, I asked former Senator Rudman to review the company's policies and procedures regarding ethics and the handling of competitive information. His review will include looking at any management or cultural factors that could affect how these policies and procedures are respected and enforced. To reinforce the impact unethical behavior has on the customer and the company, a stand-down will take place on July 30 for all 78,000 employees in our Integrated Defense Systems business unit. These employees will be briefed on today's action taken by our Air Force customer and the events that caused it, and participate in specialized interactive ethics and procurement integrity training. As I've said before, I am proud of the 160,000 men and women of The Boeing Company. The unethical conduct that led to this action does not reflect the high standards that we exhibit day-in and day-out to our customers, suppliers and communities. We want to ensure that Boeing will never again have to face such criticism."

Three of Boeing's Integrated Defense Systems units were suspended from competing for new government contracts until the Air Force thinks the company is ready to fairly compete for new work. The ban includes Boeing launch systems, launch services and the Delta rocket program. Three workers were also suspended. The actual Air Force decision appears here.

Additionally, the Justice Department in June charged two former Boeing managers with conspiring to steal secrets from Lockheed. Boeing denied a broader role, but if Justice Department investigators decide that Boeing was involved in stealing secrets, it could be banned from space-related contracts for a limited time, although, as such an important aerospace and defense contractor, it would be nearly impossible to ban them for long. High-level talks between Chicago-based Boeing and the Air Force, which personally involve Air Force Secretary James Roche, are ongoing, The Wall Street Journal said.

The decision also makes it clearer for Lockheed to develop further launch facilities at Vandenberg Air Force Base in California for its rival design, the Atlas V.

The contract award goes back to 1999 but recently became an issue again after more documents were found to have been used in the bidding for the EELV contract, which was to share at least part of the work between the two companies. Lockheed launched a lawsuit against Boeing in early June, alleging that more than 37,000 proprietary documents were taken, according to Lockheed spokesman Tom Jurkowsky. Lockheed Martin spokesman Jeff Adams added: "The Air Force reached its decision using its own best judgment and we acknowledge that decision. We would, however, thank the Air Force for its thorough investigation, and for the fact that the investigation verifies that there was in fact a Procurement Integrity Act violation."

An LA grand jury charged two former Boeing managers with "conspiracy to conceal and possess trade secrets," the Pentagon said. Both face up to 10 years in prison and a fine of $250,000, according to the Defense Department. Boeing said last week that it has hired former Sen. Warren Rudman to investigate the matter and he is expected to deliver his public findings within the next few months.

Air Force undersecretary Peter Teets said the Air Force probe found that former Boeing executives Kenneth Branch, William Erskine and Larry Satchell broke the law and would be barred from participating in any future rocket contracts.

Branch, 64, and Erskine, 43, were charged with conspiracy, theft of trade secrets and violating federal procurement laws in federal court in Los Angeles. Branch, a former Lockheed Martin employee, gave Boeing the thousands of pages of documents that included financial and technical details of Lockheed Martin's planned bid for the satellite launch contract. Boeing fired both men in 1999 after an internal investigation. Satchell, the Boeing official in charge of making sure its bid came in lower than Lockheed Martin's, was suspended by the company and later retired. He has not been criminally charged.

"Boeing is responsible and must be held accountable for the actions of its employees," Teets said at a Pentagon news conference. "We cannot tolerate anything but complete honesty in our contracting process."

This comes as a special disappointment in light of Boeing’s recent announcement of sweeping changes in its space operations to focus almost exclusively on government work because of weak demand in the commercial satellite and space launch business. The Delta IV program used in the EELV contract, which was to help keep costs low by offsetting government work with commercial work, was to be used just for government space launches.

- Arik

Competitive Intelligence - Now Online

Introduction

Every day, competition drives the world of business, as firms compete for resources, revenue and the relentless quest to outperform one another. At the same time consumers are demanding more and better choices in the products and services they buy and economic conditions flux through the business cycle, firms are intensely studying one another's capabilities, plans for the future and benchmarking themselves against their top competitors.

My name is Arik Johnson - I'm managing director at the competitive intelligence outsourcing bureau and best practices institute, Aurora WDC, which I founded in 1995. This is my new Weblog, which I'm tentatively calling "Competitive Intelligence" (although that name may evolve over oncoming weeks and months). This is a writing experiment that I've been trying to find time to initiate for a while now - and, I'm excited to see how the boundaries of this subject matter take shape. If you're interested in further info about me, see my biography at the company's Web site.

Today, after far more planning and procrastination than I'd ever thought reasonable, I have at long last launched my latest writing project - the "Competitive Intelligence" Weblog. What a way to spend the summer! It took most of the June and July, in fact, researching tools and comparing what I hoped to achieve with what was already available... trying to take a few best practices from those blogs that seemed to do things right, regardless of their domain of study. So, finally, I spent this past weekend installing and configuring a MoveableType Weblogging system on my firm's primary Web server - www.AuroraWDC.com - and then trying my hand at as much CSS and HTML hacking as I could figure out for the layout of the site itself.

Motivation and Purpose

There are several factors in my starting up Competitive Intelligence, and not all of them are completely lacking in self-interest; however, foremost in my mind, and maybe most ironic in an age of global hypercompetition, I've found there remains a relative vacuum of op-ed style analysis of matters affecting competitiveness and intelligence methods in modern business (at least with any frequency and timeliness) from the mainstream business press.

Moving forward, I'm hoping to look at various direct and tangential subjects - ranging from current events in the global marketplace to cases from business history to hot topics in fields related to competition, strategy, business research and analysis, lessons to be learned from other sectors (like government, non-profits and education) and the myriad sub-domains CI concerns itself with every day.

If you'd like to be notified of all entries, look for the notify section of this page to enter your email address and we'll forward the whole entry to you as I put them up, or get the RSS feed. If you'd prefer to just receive blog highlights once a month, then sign up for Aurora's Recon CI Newsletter.

With that, join me in the days ahead to explore Competitive Intelligence, share mutual insights and create a new commentary on the broader subjects of risk, opportunity, success and failure in the modern business enterprise.

Cheers,

- Arik