Industrial espionage, stealing trade secrets, sounds like something out of a comic book. It’s not comical at all. It’s very real. Although little attention is given to it, this kind of espionage is of immense proportions and growing every day.
In this story, the name of the process, the trade secret, has been changed considerably in order to avoid … well, you’ll see.
I had a client whose company manufactured a product that was very specific to the end-customer use. We will call the process “fusion.”
Normally fusion was a long and laborious process with many steps to it. It took three to four days before everything was dry and ready to be shipped to the customer. It was used by cosmetic companies. Very complicated stuff.
Well, Nelson had come up with a way of condensing the time involved while still producing a first-class product. His customers and competitors tried but were unable to duplicate his process.
I said to Nelson, “Look, you should keep this highly confidential. Nobody should be allowed in the back of your plant until they’ve bought the business. It’s highly confidential. It’s proprietary. It’s secretive, like the Coca-Cola recipe. It’s not patented, but nobody knows what it is or how to do it.”
I worked with him for about three months. He called me up one day and said, “Doug, I think I’ve got a problem.”
“What’s your problem?”
“Well, my major customer’s vice president of sales was over to see me. And we went out for lunch. We each had a bottle of wine.”
“Man, that’s a lot of wine,” I said. “I hope you didn’t drive back.”
“No. We got into a cab and went back to the office. But I gave the guy a tour and we stopped at my fusion machine. He said, ‘Oh, that’s how you do it! I’ve often wondered how you do that.’ And he looked at the machine very closely.”
Four weeks later Nelson’s major customer chartered a 747 and flew in a machine from Germany to duplicate the process.
Nelson’s sales dropped 60%.