Information Security and Long-term Competitive Advantage
Commenting on the misappropriation of U.S. military technology by foreign nation-states, Jason Healey, the Director of the Cyber Statecraft Initiative at the Atlantic Council and a longtime friend to JAS Advisors, posted an outstanding article entitled The F-35′s Cyber Death Spiral?.
While focused on the strategic military implications of stolen R&D, the commercial parallels are obvious. Any company will be at a significant — potentially firm-ending — competitive disadvantage if its intellectual property were systematically compromised by a competing firm.
Michael Hayden, Former Director of the Central Intelligence Agency (CIA), commented on evolving private sector cybersecurity risks at an security industry conference:
“We steal secrets, you bet. But we steal secrets that are essential for American security and safety. We don’t steal secrets for American commerce, for American profit. There are many other countries in the world that do not so self limit.”
In other words, General Hayden confirmed that the intelligence services of “other” countries are actively helping their domestic industries gain competitive advantage over foreign firms by, in part, facilitating industrial espionage. Anyone who thinks that this is limited to the military industrial complex is fooling themselves.
The Bottom Line: Any firm with foreign competitors must protect their intellectual property from sophisticated adversaries, including foreign intelligence services. To not protect one’s IP is to risk the firm’s long-term competitive advantage — and the firm’s very existence.