Halogen Software, a Canadian firm, is squarely in the crosshairs of a fraud lawsuit launched by SuccessFactors of San Mateo, California. As arch rivals in the human resources software market, it is alleged that Halogen established a fictitious company to pose as a prospective customer, to surreptitiously elicit proprietary information from their larger competitor. Although this is now with the courts, the bigger question is, “Will they be judged differently in the court of public opinion and the market?”
Defending such suits, companies usually adopt one of two public stances. Either, they state they can’t comment on the situation as it is currently with the courts, or they announce that they will vigorously defend themselves against these baseless charges. Surprisingly, Halogen apparently didn’t deny their involvement in this clandestine operation. Instead, they claimed that the information received from it was publicly available. If true, this makes Halogen look rather foolish for creating such an elaborate scheme that only yielded public information.
Setting aside the legal issue, what does the market think about this kind of manoeuvre? Some will quietly chuckle at Halogen’s cleverness, applauding their ingenuity and wishing they had thought of something similar themselves. Others, however, may voice complete disbelief at how easily SuccessFactors was duped. Equally, both sides have made some mistakes. But in comparison, I am more willing to forgive the unbridled zeal of a salesperson pursuing a lead than the systematic and calculating attempt by an organization to unscrupulously extract proprietary information about another firm, in this case their fiercest competitor. Despite Halogen’s cunning, I would also be concerned about their behaviour, especially if I was a prospect, a customer or a partner. If they can engage in such subterfuge to gain a competitive advantage, what might they do or say to have me sign an agreement?
Corporate cultures are defined at the executive level. Their behaviour is closely scrutinized by the rest of the organization and forms the template for its ethics. The deception perpetrated by Halogen obviously had executive support, so it will form a guideline of acceptable behaviour for its employees—and that should worry the Halogen executive team. Knowing that you have played ‘fast and loose’, it won’t be surprising if lies, omissions, half-truths, and deliberate misrepresentations become commonplace, all in the name of winning. Or, will employees now listen guardedly to Halogen executives, not sure if this is simply another slight of hand?
The price Halogen pays for this alleged fraud is yet to be determined by both the courts and the market. Halogen demonstrated some creativity—it’s just a shame they didn’t focus these efforts to improve their product or their execution in the market.
Ryck Marciniak (Guest Blogger)