Security Director of the Year 2005: Stu Herrington, Combating Copycat Clubs

Sep 1, 2005 12:00 PM, By Corrina Stellitano

AFTER 30 YEARS in the U.S. Army, Stu Herrington made an interesting retirement choice: He took the job of protecting a worldwide golf equipment manufacturer against intellectual property theft.

Herrington's work as director of global security and investigations at Carlsbad, Calif.-based Callaway Golf Co. has earned him the respect of his co-workers and industry associates — and resulted in his choice as the 2005 SECURITY DIRECTOR OF THE YEAR by Access Control & Security Systems magazine.

Callaway Golf Co., operating under the mantra “one company, four brands,” is perhaps most famous for its Big Bertha clubs. The company generated $934 million in sales in 2004 from the sale of balls, clubs and accessories through its Callaway Golf, Ben Hogan, and Top-Flite brands, and putters through its Odyssey Golf brand.

The theft of intellectual property is a foremost concern. “The damage to profits and to the brand identity, and the loss of consumer confidence in buying the brand (‘why should I pay $400 when I can pay $79 for the copy?’) — all of those negative downsides can add up to losses to the company's bottom line. What greater asset is there than the brand?” Herrington says.

Herrington's experience, affection for the game of golf and a vested interest in Callaway's success — as a shareholder — led him to offer his expertise.

“(After all,) counterespionage is the protection of government secrets,” Herrington says. “In 1998, when I retired, it was natural to contact Callaway — which has a serious problem with protecting its intellectual property — and offer my services.”

“I knew that Callaway golf clubs were being counterfeited and marketed internationally and that the legal department was waging a war against this,” Herrington says. “Lawyers play an indispensable leading role, but you need a really experienced investigator who knows how to run worldwide investigations. When I made the call to the general counsel and pitched my idea, it resonated.”

Defining “secure”

Herrington spent several years conducting investigations as the investigative manager in Callaway's legal department. When the company's director of corporate security retired in March of 2001, Herrington assumed the position; however, his duties did not narrow to fit the traditional definitions of corporate security. “I brought with me the continuing responsibility to investigate, defend and enforce the company's intellectual property against counterfeiters and copycats,” Herrington says.

“Physical security, information security and personnel security are the traditional focus of corporate security,” Herrington says. “Most security departments can and do investigate an employee who makes a mistake and takes product out the back door. And we do that — we conduct that sort of traditional investigation. But which are larger — the losses to the company over a year from one or two bad apples, or the losses from products being illegally made and marketed on the global market?”

“All losses affect the corporate bottom line, and it is an important part of the role of the corporate security director to protect against such losses,” Callaway says. “So we spend a lot of time in my department on that piece. Many companies hire outside firms or investigators. We do, too, but the program is run internally day-to-day.”

Speaking from California before departing for a week in Australia to deal with the counterfeiting problem there, Herrington describes the walls of his office. Hanging there are checks for $175,000, $800,000 and others in substantial amounts. The checks, he notes, are reminders of payments made to his company by copycats unmasked by Herrington and his team.

“We keep track of the concrete results from the point of view of how many golf clubs are seized each year (in the thousands), and of the amount of money paid to Callaway in settlements by discovered counterfeiters — but you can only achieve those kinds of results if you have a solid program,” Herrington says.

Herrington's security team consists of 16 security professionals, augmented by contract security officers who monitor the company's large campus, and a flexible number of outside investigators around the globe who can be retained as needed. He is known to be hands-on: assisting in orchestrating sting operations against suspected counterfeiting operations in foreign countries, coordinating busts in the United States and Canada with local law enforcement and even making undercover buys.

Global actions

Realizing also that intellectual property theft is global and victimizes the industry, Callaway Golf teamed up in January 2004 with other golf equipment manufacturers. The group has petitioned support from the governments of the United States, China and Thailand to combat the problem of counterfeit golf clubs and equipment.

Herrington says that counterfeiters in nations such as China succeed annually in making copies of Callaway Golf clubs that are sometimes “cosmetically persuasive, even though they are usually built with the wrong materials and without the design technology of authentic clubs (using steel, for example, instead of titanium).”

“They bear little resemblance in workmanship, materials and technology and performance and durability,” he continues. “Often, the heads fly off these fakes — and our first clue that someone has been victimized by a counterfeiter is when they send it in for re-shafting, telling us that ‘The head flew off the first time I hit it.’”

“The Chinese authorities are responsive when you ask for help, for example, in raiding a counterfeiting factory, but there is so much more they could do,” Herrington says. “We are now raiding dozens of businesses a year in China, but the problem remains extensive. The Chinese government is revamping or creating new intellectual property laws, but counterfeiting in today's China is about jobs, and the government cannot stop it all at the same time. For this reason, we strive to be the squeaky wheel.”

A set of Callaway golf clubs can cost $2,500 or more in the United States; a counterfeit set can be bought for $200 or less in China. Purchasers of fake clubs in China — who may be aware they have bought copies — often venture into the more risky practice of selling the clubs on Internet auction sites to the unsuspecting public, without revealing the clubs' origin and lack of authenticity.

The pervasive problem has drawn attention in the United States. In September of 2004, the television news program “60 Minutes” toured a Chinese golf club factory with hidden cameras and discovered various Callaway product counterfeits, including the Great Big Bertha II club. Time Asia magazine profiled the issue and Herrington's efforts in July of 2003.

To Herrington, the problem of intellectual property theft is not restricted to Callaway. “The health of the nation's economy is a matter for national security. That was declared by George Bush Sr.,” he says. “If your industries are being undermined and your economic health is being threatened, that's a matter of national security. So corporations are assisted by the U.S. government through the offices of the U.S. trade representative, the Secretary of Commerce and by Congress in the form of the Economic Espionage Act of 1996.”

After years of spy catching, how do counterfeiters compare? “Counterfeiters are easier to catch,” Herrington says. “When you spy, you secretly steal something and give it to another government, which normally keeps secret the fact that they now have that information. So the entire operation is clandestine. Golf club counterfeiters suffer from the disadvantage that their products must be introduced into the marketplace, which blows the secrecy. It's like older model submarines, which had to surface for air and battery recharging, and that's when they could be nabbed. When we see the clubs in the market place, we attack.”

Personal connections

Such global actions sound like they would consume a normal work week for any security director, but Herrington also makes his mark at home. For example, he personally speaks at all new employee hire orientations. The motivation is not only to protect the company, but also to keep employees from making mistakes.

“The internal company investigations I conduct usually end with sad, bad news; someone made a mistake. Often this leads to someone losing their job, and the matter may wind up in the hands of the local police. So I asked myself, ‘I wonder, if someone would have looked this person in the eye when they started and shared a laundry list of eight mistakes employees sometimes make that can cost them their jobs and said ‘please don't make these mistakes’ — maybe the story wouldn't have such a sad ending.”

Such hands-on treatment has earned Herrington the respect of many of the 2,300 staff members and production personnel in Carlsbad, as well as those in Canada, the United Kingdom, Japan, Australia and Korea.

“I cannot think of anyone more committed to the security of our company, and the security of our nation and world as a whole,” says Stephen West, security systems administrator. “He is committed to the security of the assets of his employer, the personal security of all employees and the security of our nation and way of life.”

Caring for employees also includes training and preparing Callaway staff for possible risk events in the world.

“Stu meets with us regularly, giving us insight into investigative projects he's working on, including the well-being of the company, and when applicable, the nation as a whole,” West says. “He initiates company-wide procedures to prepare the company for unseen potential threats, from summertime California electrical power brownouts to protecting against industrial espionage.”

The department spent six months aiding employees during the SARS outbreak. They notified employees of which airports were conducting state-of-the-art screenings between flights, and issued travel warnings. When terrorism was predicted during the 2004 elections, Herrington composed a work group to devise contingency plans, planning for such provisions as emergency power.

Such preparations are essential, Herrington says. “The globe is so much smaller now, and companies are so much more interdependent. A catastrophe in China can affect your work here. The Internet and the ability to communicate and to market, and to shorten communication times, can essentially take an event that in the old days would have taken days to be announced and make it almost instantaneous — which requires decision-making to be more nimble.”

Expert leadership

In many ways, the security department's success can be attributed to Herrington's leadership, West says. “Stu leads by example…we see (and hear) of his work, throughout the security world, and I believe all of us here in the security department strive to do a little more … to do a little bit better … because of it.”

Experience in the governmental arena has lent him expertise in the corporate world, says Herrington, and it has taught him lessons he can now extend to others: “The challenge always in government is to have programs approved which take time and cost money, and it's the same in corporate America. You have to build consensus among many groups, develop relationships with key players, and be willing to compromise — just because your area is your favorite subject, it's not necessarily everyone else's.”

Herrington offers other advice as well: “You don't bring money to the bottom-line, so you have to really work hard to produce measures that are prudent and that people can live with. Don't be an all-or-nothing guy.”

“Take care of your people in your department,” he adds. “No one ever felt badly about being told thank you or being given recognition. Keep your team informed and give them credit for the good things they do.”

Callaway Security Manager Keeps Facilities Safe

Protecting intellectual property at Callaway Golf Co. requires constant attention to physical security. Callaway Security Manager Alan Smerican's daily attention to the security of the company's facilities has earned him the respect of his peers.

“Alan handles hundreds of matters a day without dropping the ball. He does all the things that are the stock of corporate security, without which the operation wouldn't work, but these are a real labor of love,” says Stu Herrington, director of global security and investigations. “He's a rock. Everyone knows if you call Alan, you'll have his undivided attention, and he'll work through the solution with you.”

Smerican came to Callaway with career experience from the Philadelphia police department and the Federal Bureau of Investigation. He is responsible for developing and administering physical security for eight Callaway buildings in the corporate headquarters of Carlsbad, Calif. He visits the international offices, helping them to establish security policies and procedures and evaluates new buildings.

The work is fun and satisfying, Smerican says. “No two days have ever been alike. In the law enforcement sector, you are investigating crimes 100 percent of the time. Here that is just a small part of what we do.”

“I love everything about this job,” he says. “I like what I do. I like the people. I like the company. It's a great place to work. And I'm lucky enough to have a very dedicated staff.”

Smerican earns this dedication, staff members say. “Alan is very fair,” says Stephen West, security systems administrator. “You always know where you stand with him, but if any problems occur, he will always talk through it with you and help you to prevent the problem from happening again. And he'll praise you when you do a good job.”

Access control and physical security systems at Callaway are strengthened by an emergency 9-1-1 phone system, a 24-hour communications center and a color-coded employee badge system. The badge colors signify the wearer's job duty or authorized shifts within company facilities.

Callaway's 24-hour communication center monitors all alarms and administers access control. “They do video monitoring — all buildings are protected by numerous cameras — and they have five telephones that ring off the hook,” he says.

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© 2012 Penton Media Inc.

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