Montgomery et al. / Freedom of Information Act 10 not yet clear what impact it will have. It may be that, just as with the original 1966 FOIA, further amendment is required before substantial changes in practice occur. (Popular press stories with titles such as "Sunshine Act Gets Clouded Results" have begun to appear.)" The FOIA and the Sunshine Act, by making government decision. making more visible, may lead to better understanding of that process and indicate areas where a proactive approach by business may have a substantial impact. Increasingly, businesses are finding that it is insufficient just to understand and react to government policy pronouncements. In many cases, it is also critical to understand an agency's point of view as policy is in the formative stages. An effective proactive policy requires that the overall decision-making process be understood from the standpoint of both the substantive side of the issue as well as the process implications. For example, as reported in a Business Week article in early 1977, Philip Morris, Inc. negotiated a sale to Bic Pen Corp. for its American Safety Razor (ASR) Division which competes against Gillette in the "wet shave" market. Philip Morris had apparently decided to put its emphasis on some of its other businesses (e.g., beer and tobacco), while Bic was apparently considering entering the razor market in an aggressive manner because of the complementarity of the marketing and distribution systems for its disposable lighters and pens. ASR would thus provide a critical mass for Bic's entry into this business. Shortly thereafter, it was reported that Bic had decided to withdraw from the transaction in response to a number of restrictions that the FTC sought to impose so as to prevent an anticompeti tive situation. Subsequently, Philip Morris announced closure of ASR's main plant. Although the government can be criticized for not anticipating this result, it is possible that a proactive policy which emphasized a participative approach in the FTC decision-making process could have altered the outcome. The need for management understanding of agency decision processes may be further illustrated by noting the way market research may be viewed by the FTC at different stages in its advertising review process." Research data which may discourage further FTC pursuit of a complaint in an exploratory phase may well be used against a company by the FTC in litigation. For example. s mary statements of product benefits may have to be literally defended it the litigation stage. Although largely unrecognized in the legislative history of the Act, a potentially important implication of the FOIA is its long-run impact on government decision making. The government has traditionally been reluc tant to reveal its decision-making processes. A prime example is the history of the FOIA. The testimony in support of the amended FOIA Sloan Management Review / Winter 1978 11 reveals many episodes of delay and obfuscation by Federal agencies as a means of coping with FOIA requests. The amended FOIA provides no fundamental philosophical change, but primarily a set of procedural rules which substantially reduce the use of discretion in withholding information. One perhaps significant outcome of the FOIA is that government agencies will likely have to act in a more consistent manner across companies within an industry group. For example, the openness of the FDA's records could allow determination of preferential company treatment through a quick scan of the appointment calendars of key officials and the minutes of meetings with companies. OSHA reports could be examined to reveal whether inspection and enforcement practices are uniform within an industry. Although it is unlikely that perfect equity will ever result, more consistent policies should occur. As the FOIA and Sunshine Act become established, the question arises as to whether govemment decision making will be forced through scrutiny to come closer to a theoretical norm of rationality with carefully developed alternatives evaluated on the basis of a clearly defined objective function. Although decision outcomes are often visible, the decision processes have remained hidden for the most part. Consequently, the recent legislation, by increasing the openness of the decision-making process, may substantially change the nature of that process. Summary and Action Implications In summary, the FOIA provides another useful tool for the compilation of strategic competitive information. The value of the FOIA in tactical situations is likely limited to special circumstances (e.g.. the specific item of information and its location are known and a means for its timely retrieval can be arranged). The company relying on the FOIA for government input on a tactical issue will usually be disappointed unless the above conditions can be met. In the short term, companies which exploit this relatively new and little used source of information may realize some differential competitive advantage. In the longer term, the FOIA may raise the general level of available competitive information. But. perhaps more importantly, the potential for insight that the FOIA provides on patterns of govemment policy making may result in a useful perspective for a more proactive approach by business to management of the public-private sector interface. Companies must recognize the defensive as well as the offensive implications of the FOIA. A competitive information opportunity for one company may raise a substantial competitive threat for another. These three summary points, keying on business policy and goverment policy, strategy and tactics, and offense and defense, suggest a number of action implications for the manager. First, treat reports for submission to government agencies as Montgomery et al. / Freedom of Information Act 12 sources of potential threats to the security of competitively valuable information. Not only may your company's data become available to a competitor through an FOIA request made by a competitor or some other agent (e.g., a business news reporter or a financial analyst), but it may easily be traceable in a published government report. The anticipatory defensive strategy and tactics discussed earlier are usually a small price to pay in order to avoid a future crisis. • Second, be constantly aware that other companies are submitting similar reports to government agencies, and government personnel are compiling records on other companies just as they are on yours. How useful could this information be to your company if it could be obtained? Access to records filed by, or on, competitors is generally the easiest to obtain. The type and location of the record tend to be much less difficult to pinpoint, because the company is usually familiar with the agencies its industry deals with on a regular basis. However, it may be that information concerning actual or potential suppliers and end users is of at least equal importance. It tends to be more difficult to successfully access this information, since public-private interface mechanisms outside your industry may be imperfectly understood. • Third, take steps to become more informed concerning both the types of information and specific information available as a result of the FOIA, the Government in the Sunshine Act. and state sunshine acts. A company's purview of the competitive and government environments may be substantially expanded with a relatively limited investment of time. Private Washington newsletters and daily, weekly, and monthly agency bulletins are useful guides to both policy and, even more important, policy making. Fourth, be particularly sensitive to the opportunities to open a window on government policy making. Because policies evolve over time rather than arise spontaneously, scan continuously rather than relying on sporadic attention to major policy pronouncements. In the public sector as well as the "rivate sector, what the entity has actually done in the past is usually a rst reliable guide to future policy. Day-to-day operations tend to become policy. This window on government policy making should develop a general awareness as a basis for turning attention toward cues indicating opportunities to influence the govemment decision-making pro cess. • Fifth, middle-level working relationships with agency personnel may lead to a mutually beneficial exchange of knowledge with no risk of compromise on either side. Note that middle-level, rather than top-level relationships are stressed here. Administrations come and go, but civil servants remain and bridge the gaps. It is important that these relationships have their basis in the day-to-day operating decisions characteristic of the midlevel in both the public and private sectors. As noted in the fourth point. Sloan Management Review / Winter 1978 13 the emphasis should be on the development of policy, not on policy pronouncements. • Sixth, develop an awareness of the mechanics of using the FOIA. Although the amended Act has considerably reduced the bureaucratic difficulties, a little expert assistance such as that provided by the publications of the Project on National Security and Civil Liberties1o in Washington can be helpful. Some law firms, generally those based in Washington, have had extensive experience with the Act, and sometimes an FOIA service company can be of use. The FOIA Officer in each agency may also be able to help with many of the more mundane, mechanical aspects of a request. As a general rule, it appears to be useful to seek information aggressively and to be as specific as possible in making a request. • Seventh, such a new tool in the scanning portfolio may have organizational implications. An internal information center, generally located in the office of the internal corporate attorney, should be set up to manage defensive strategy and tactics and to serve as an information resource for using the FOIA offensively. A second organizational implication is appropriate training of company personnel who have any interface with government personnel. Points one, four, and five above clearly indicate that successful exploitation of and defense against the FOIA require sensitive and educated employees. • Finally, an awareness of the implications of the FOIA may trigger other scanning and interaction opportunities which may enrich the understanding and management of the public-private sector interface. References [1] Baumwoll. J. P. "Three Research Pitfalls in Fighting FTC Complaints." Adver tising Age. July 11. 1977. p. 141. [2] Burk, C. G. "A Group Profile of the Fortune 500 Chief Executives." Fortune, May 1976. p. 173. [3] "Gillette: After the Diversification That Failed." Business Week. February 28, 1977, p. 58. [4] Hershey. R. D. "Rummaging Through S.E.C.'s Secrets." New York Times. May 12, 1977. [5] Marwick, C. M.. ed. Litigation under the Amended Freedom of Information Act. Project on National Security and Civil Liberties and Freedom of Infor [6] Montgomery, D. B.. and Urban, G. [9] Wood. R. D. "Paperwork. Paperwork." 10 See Marwick [5]. Biographies Yair Aharoni, Professor of Management, Tel-Aviv University. Dr. Aharoni holds the Ph.D. degree from Harvard Business School. He has taught at universities in the U.S., Europe, and Israel and has consulted for various organizations. His publications span all areas of management, and his work in international economic development is widely recognized. Daniel J. Carroll, Jr., Material Distribution Manager. Western Electric Company. Mr. Carroll holds the B.S.E.E. and M.S.E.E. degrees from Newark College of Engineering and the S.M. degree from the Sloan School of Management at M.I.T. He has worked on numerous assignments in engineering and manufacturing at Westem Electric. He is a member of the National Society of Professional Engineers. James W. Driscoll, Assistant Professor of Industrial Relations, Sloan School of Management. M.I.T. Dr. Driscoll holds the B.A. degree from Harvard College, the M.B.A. degree from Harvard Business School, and the Ph.D. degree from the New York State School of Industrial and Labor Relations, Cornell University. His consulting and research interests include the introduction of technology and the effectiveness of various incentive systems in labor-management relations. Francine E. Gordon, General Manager, California Actors Theatre in Los Gatos. Dr. Gordon holds the A.B. degree from Vassar College and the M.A. and Ph.D. degrees from Yale University. She has been a lecturer and consultant on the integration of women into management and has written. several articles on the subject. Charles R. Greer, Assistant Professor of Management, Oklahoma State University. Dr. Greer holds the B.A. degree from Emporia State University, the M.S. degree from Wichita State University, and the M.B.A. and Ph.D. degrees from the University of Kansas. He is a member of the Industrial Relations Research Association, the Academy of Management, and the American Institute of Decision Sciences. His special interests include the legislative environment of labor and compliance with social legislation, and he is the author of several articles on sunset legislation and the measurement of effectiveness. Irwin W. Kabak, Professor of Operations Research, Graduate School of Business Administration. New York University. Dr. Kabak holds the B.A.. M.S., and Ph.D. degrees from the Department of Industrial Engineering and Operations Research, New York University. He is a consultant in corporate development, and his work in the fields of modeling and applications of probability has been published by numerous professional associa |