K logix in Forbes.com - How American Businesses Are Giving Away Ideas to China

K logix COO Kevin Pouche's article on the dangers of poorly protecting intellectual property is featured on Forbes.com:


Kevin Pouche is COO of K logix, a data security firm.

A recent New York Times article on China’s aggressive efforts to steal American intellectual property ended with the following ominous quote from Scott Aken, a former F.B.I. agent: “We’ve already lost our manufacturing base … Now we’re losing our R.& D. base. If we lose that, what do we fall back on?” This quote makes me think of my dad. He worked in a General Electric manufacturing plant his whole life. Jobs like his were the heart of America, and they are long gone to places like China.

As we experienced dramatic loss of manufacturing jobs, politicians reminded Americans that we are the great ideas country. It’s Americans’ continuing belief that our ideas and innovations will always create more jobs and more opportunities. A survey of international executives by GE confirms as much. According to a new “Global Innovation Barometer” report from GE,which polled 1,000 senior executives from 12 countries, the U.S. is the clear “innovation champion” in the world, followed by Germany, Japan and China.

However, technology, a mobile workforce, and our own reluctance – or inability -  to recognize the importance of our own data have made it easy for China (and other countries, including Russia) to steal our best ideas. Even as we come up with innovative new products, China is in a position to take the idea, produce it and sell it – faster and more cheaply than we can. In fact, a client told me just last week that they know China has stolen one of their patents and is now producing an exact replica of one of their products, selling it 30% cheaper.

While we can’t compete with China’s low-cost workforce, we can vigilantly defend our intellectual property and make it much more difficult for China to steal our ideas – if we step up and secure our data. A recent Gartner survey found that only 5% of IT budgets were allocated to security. This means a company with revenue of $3 billion, spending the average amount on IT for a company of its size (3.2% of revenue) would spend less than .016% of total revenue on security. Companies spend far less than 1% of revenue securing the very information that is the foundation of their business.

What can we do to save our intellectual capitalism from China?

First, know your data. Organizations need to understand what data is most critical to business success, who in the company has access to that information, where it resides within the company, and importantly, where it moves, and how it is secured at every step. While companies are not required by US law to protect intellectual property, it needs to be the single most important aspect of any company’s efforts. Less than one percent of revenue simply will not effectively secure this data against sophisticated international cyber criminals. Too often American corporations are making business decisions that put data at greater risk.

Second, stop making bad technology decisions. The two biggest threats to our data security are actually driven by technology-based policies that organizations are increasingly adopting – Cloud Computing and “Bring Your Own Mobile Device”.

Cloud computing, popular for its cost-saving abilities, is a detriment to data security. Cloud computing is a fancy term for the Internet. The Internet is responsible for nearly all of the recent data exposures. When you make your data available in the cloud, you are posting your most valuable information on the Internet, and exposing your information to third party security rules – which may not be as strict as your own. The more organizations and people that have access to your data, the more vulnerable it is to theft.

“Bring Your Own Device” policies allow employees to use their own smart phones, iPads and other devices to access critical data on the corporate network. More than 50% of employees do not even lock their portable devices down with a password. When your employees travel internationally, cyber criminals have a field day with the corporate data left exposed.

I wonder, will our ideas go the same way as our manufacturing jobs, or will we step up and secure our intellectual capitalism before it is too late?


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