Tom Darcy looks and sounds like a retired military officer. He punctuates his speech with terms like “tactical” and “strategic.” His wiry frame is topped by regulation closely cropped salt-and-pepper hair.

     But Darcy isn’t a former soldier. He’s a former spy.

     After 11 years in the Central Intelligence Agency, Darcy quit in 1993, moved to Clive and opened International Security Associates. Darcy doesn’t spy anymore; he helps companies spy on each other.

     International Security Associates is one of a growing number of firms providing “competitive intelligence” to businesses. In the lexicon of its operatives, “CI” means knowing what your competitors are doing.

     “It’s about not being surprised,” Darcy says.

     It’s a growing field. For about $100 an hour, former CIA agents will help you set up your own intelligence-gathering operation. They’ll also show you how to protect your company from the competition’s spies.

     Some, like Frederick Rustmann Jr. of Florida’s CTC International Group Ltd., will do the spying for you.

     Most competitive intelligence professionals are quick to point out the difference between legal snooping and industrial espionage. Culling data from company reports, news media and internal sources is kosher; burglary and theft aren’t.

     Competitive intelligence is growing, Darcy says, because it is difficult to do business without it.

     Imagine, he says, if Younkers Inc. had been keeping up with Carson Pirie Scott & Co. last year. Younkers could have foreseen a takeover bid and taken a defensive posture.

     After such a bid, Darcy says, the need for intelligence becomes critical. Carson’s could have anticipated Younkers’ reinstatement of CEO Tom Gould and two others to the board of directors after they were ousted.

     Darcy details other hits and misses: Automakers should have known Chrysler Corp. was up to something when it introduced minivans in the early 1980s. Japan’s Komatsu recognized a ripe market when it went after Caterpillar’s share of heavy equipment. And no one in retailing thought Sam Walton could turn a profit by locating his Wal-Mart stores in the sticks.

     Former spies like Darcy got into the business of competitive intelligence after the CIA, stripped of its foe by the demise of the Soviet Union and looking to hold onto its budget, suggested it turn its eyes and ears to the international business community.

     After much discussion, the CIA opted not to start swing on overseas businesses. But corporate leaders recognized the need for competitive intelligence, both abroad and at home.

     Companies began tapping into databases to keep themselves abreast of industry changes. Firms that always kept track of competitors’ products and prices began watching more closely.

     But many still ignored the benefits of intelligence. Even those that had units didn’t always know how to make the most of the information.

     “The concepts and theories of intelligence are not brain surgery,” Darcy says. But it may require the development of a different lobe in your brain.”

     After all, they don’t teach spying in most MBA programs.

     Moreover, once a company decides to set up and intelligence unit—a decision that has to be supported at all levels of the company, Darcy says—it usually takes 18 months to two years to start seeing tangible results.

     It takes patience. It also requires a high tolerance for ambiguity because “there’s going to be stops and starts. You could be wrong.”

     Companies first decide what kind of information they need from their competitors. “Every CEO on Earth knows what kind of information he’d like to have become more competitive,” says CTC International Group’s Rustmann.

     Then they go about collecting it. From “open sources” like databases, the library and the news media. From the “primary source”—the target company’s quarterly and annually reports. Through press releases, trade show displays and advertisements.

     Salespeople and distributors often have contact with competitors’ clients; rumors and tips they pick up are often useful. The key is getting the information to the central CI unit where it can be processed, analyzed and distributed.

     Typically, a team of three or four employees is set up to receive, store and analyze information.

     Or you could let others do the spying for you. That’s what Rustmann—who put in 24 years at the CIA before retiring in 1990—does for a living.

     His team of six former CIA agents zero in on a target company’s employees as well as their spouses and friends. An agent will approach these people disguised as a fellow clerk, engineer or manager. Strike up a work-related conversation, Rustmann says, and in 10 minutes you should have what you need.

     It requires agents to study the industry they’re targeting. But using cover stories is almost always effective.

     “If a woman is at a cocktail party, and she has a yeast infection, she’s going to be a lot more likely to talk about it with a man who says he’s a gynecologist than with a man who says he’s a lawyer,” Rustmann says.

     “We don’t break any laws ever. But we tell little fibs.”

     That’s probably a bit extreme for Darcy, who says he doesn’t misrepresent himself and advises his clients not to either. Darcy prefers to concentrate on helping the customers make the most of information.

     Intelligence is useless unless it’s reported and used, he says. Before Pearl Harbor was bombed in 1941, Japanese mini-subs were spotted off the coast of Hawaii. Japanese planes were even picked up on radar the morning of the raid.

     But that information was either misinterpreted or not reported.

     Darcy admits the example is a touch melodramatic. But a sneak attack is as big a surprise whether it comes from the sky or from the boardroom.

     So it’s imperative that employees report all information they come across. “You want them to say, ‘Well damn, that’s kind of interesting. I think I’ll follow up on that.’”

     Terry Grapentine, who has an intelligence assessment company in Ankeny, says workers often hoard information for their own benefit.

     “Motivating employees in general is difficult,” Grapentine says. “It is more so in competitive intelligence gathering. You don’t want people to think that by holding [information], it will help their political status in the company.”

     Sometimes incentives are necessary. Employees of Blue Cross and Blue Shield of Iowa who report information to the CI unit are entered in a monthly drawing for $50.

     It pays off. Vivian Hayashi, who heads Blue Cross’ 3-year-old unit, said a tip she received about The Principle Financial Group could help Blue Cross get more clients.

     Principle’s health maintenance organization is reducing the number of hospital days it provides following a caesarian section from three to two. The information can be used by Blue Cross’ marketing department to attract young women.

     Their unit also learned a competitor’s short-term major-medical policy was better. Blue Cross’ plan was quickly made more ambitious.

     Hayashi’s team gleans data from media and public records. Employees hear about items over lunch or on airplanes. Spouses who work for competitors of subscribe to competing plans are also good sources, she says.

     Though Hayashi can offer no tangible figures, she has no doubt CI has made Blue Cross a better company. It’s well worth the $50 monthly prize.

     But for every piece of information gleaned from a target company, your company could be losing secrets of its own. So most programs include counter-intelligence training.

     Simply put, it means recognizing what your company can release and what it needs kept quiet. This job often falls to the CI team; it knows which details are most sought-after.

     Employees are warned against discussing projects. If they’re questioned by outsiders, they’re encouraged to report it to the CI unit.

     Sensitive documents should be kept off desktops, away from snoops planted in the cleaning crew. What isn’t needed is shredded.

     Employees with access to trade secrets should take oaths forbidding them from selling their knowledge, even after they leave.

     Protecting secrets is imperative for companies doing business overseas. Other countries have much more relaxed attitudes about industrial espionage than the United States.

     “If you’re going to enter that arena, it’s your fault if you get clobbered,” Darcy says.

     French agents in 1993 admitted bugging first-class seats in Air France to scam secrets from American executives. A 1994 study by consultants Richard Heffernan and Dan T. Smartwood revealed a French intelligence plan to target 49 American defense firms.

     About half of the G7 countries take an active role in helping industries spy on American companies.

     But companies doing business inside the United States have to be careful too.

     Some investigators, anxious to uncover info about their targets, resort to “Dumpster diving”—going through a company’s trash. With more and more business being conducted on cellular phones and wireless communications, eavesdropping is easier than ever.

     Trade shows—especially in high-tech industries—are rife with opportunities for poking around. Compaq Computer Corp. pulled out of the Comdex trade show last fall after deciding the risk of revealing secrets was greater than the benefit of attracting new customers.

     Grapentine, who started the Grapentine Co. in 1980 as a market research firm, says companies with CI units need to keep training employees.

     Clients often bring Grapentine in before setting up CI units to prepare employees for the concept. Then, every 12 to 18 months, Grapentine returns to survey workers on the effectiveness of the unit.

     His customers include American Cyanamid Co., Dow Chemical Co., Honda of America and American Express Co. Grapentine makes sure their employees are confident the information they provide will benefit the company.

     He also helps companies acquire the computers and software they’ll need to collect, store and distribute data.

     It sounds very shadowy. But intelligence isn’t all cloak-and-dagger, spy vs. spy stuff. In fact, Blue Cross’ Hayashi says she sometimes confirms rumors about target companies by contacting the companies themselves. CI units from competing firms sometimes even share information.

     And it isn’t always what the competition is planning that’s important.

     “We’ve learned as much, if not more, from other companies’ mistakes,” Hayashi says. “Which is nice.”