Intelligence Solutions Design The Past, Present and Future Evolution of Intelligence Tools and Methods ATELIS Symposium / ICI Conference Bad Nauheim, Germany 7 th April 2011 by Arik Johnson Founder & Chairman, Aurora WDC Managing Director, Center for Organizational Reconnaissance
Three Key Business Trends Driving Intelligence Evolution <ul><li>Human Capital & Enterprise Collaboration Everyone in the Firm becomes a Virtual Member of the Intelligence Apparatus, Better Engagement by Rank & File, Shared Visibility of Issues & Actions </li></ul><ul><li>Corporate Governance & Risk Oversight Board-level Priority Ensuring Reliability of Management’s Earnings Forecast & Assessing Risks to Status Quo </li></ul><ul><li>Business Model Disruption & Value Innovation Predicting the Outcome of Competitive Battles by Anticipating Changes in Product/Strategy Dynamics </li></ul>
CI Has Always Been About Improving Decision-Making <ul><li>Strategic Decisions </li></ul><ul><ul><li>What Business are We in and Where are New Opportunities for Growth? </li></ul></ul><ul><li>Operational Decisions </li></ul><ul><ul><li>How do we structure and align those business units to most effectively compete for and win Market Share? </li></ul></ul><ul><li>Tactical Decisions </li></ul><ul><ul><li>Which customers are available to us and how can we convince them to select us over any and all functional equivalents? </li></ul></ul>
CI has Focused on Decisively Minimizing Threats & Maximizing Opportunities <ul><li>Minimizing Competitive Threats </li></ul><ul><ul><li>Understanding Threats to Current Business Status Quo: Competitors, Legislation, Technology Shifts, Obsolescence, Substitutes, Customers Backwards Integrating, Vendors Forwards Integrating, etc. </li></ul></ul><ul><li>Maximizing Market Opportunities </li></ul><ul><ul><li>Identifying New Sales, Revenue and Profit Centers </li></ul></ul><ul><ul><li>Develop New, Innovative Products & Services </li></ul></ul><ul><ul><li>Benchmarking Cost Reduction and Efficiencies from Direct Rivals & Best-of-Breed non-competitors </li></ul></ul>
Key Intelligence Topics (KITs) <ul><li>Process of Interactive Dialog with Decision-Makers through KIT Interviews; Consists of 3 Protocols w/Subtle Differences: </li></ul><ul><li>Strategic Decisions/Issues </li></ul><ul><li>Key Marketplace Players </li></ul><ul><li>Early-Warning Topics </li></ul>
Competing head-to-head can be cutthroat especially when markets are flat or growing slowly. Managers caught in this kind of competition almost universally say they dislike it and wish they could find a better alternative. They often know instinctively that innovation is the only way they can break free from the pack. But they simply don’t know where to begin. Chan Kim and Renee Mauborgne
Success Breeds Complacency <ul><li>“ It is a classic conundrum for business titans: How much money and attention should be focused on a new, but growing, operation that is far less profitable than the core business?” </li></ul><ul><li>- Prof. Clayton Christensen, The Innovator's Dilemma </li></ul>
Disruptive Innovation Theory Sustaining Innovations Better Products Brought to Established Markets Low-End Disruptions Target Overshot Customers with a Lower Cost Business Model New-Market Disruption Compete Against Nonconsumption Difference Performance Measure Time Nonconsumers or Nonconsuming Contexts Performance
Customer Demand & Signals of Change <ul><li>Non-Market Contexts: External Forces (Government, Economics, etc.) Increasing or Decreasing Barriers to Innovation </li></ul><ul><li>Undershot Consumers: Opportunities for Up-Market Sustaining Innovations </li></ul><ul><li>Overshot Consumers: Opportunities for Low-End Disruption, Shifting Profits by Specialist Displacements (Modularity) and the Emergence of Rules </li></ul><ul><li>Non-Consumers: Opportunities for New Market Disruptive Growth </li></ul>Established Companies almost always Lose to Disruptive Innovators
THE STARFISH & THE SPIDER The Unstoppable Power of Leaderless Organizations Although spiders and starfish may look alike, starfish have a miraculous quality to them. Cut off the leg of a spider, and you have a seven-legged creature on your hands; cut off its head and you have a dead spider. But cut off the arm of a starfish and it will grow a new one, and the severed arm can grow an entirely new body. Starfish can achieve this feat because, unlike spiders, they are decentralized; every major organ is replicated across each arm. But starfish don’t just exist in the animal kingdom. Starfish organizations are changing the rules of strategy and competition and are organized on very different principles than we are used to seeing in traditional organizations. Spider organizations are centralized and built around org charts; on the other hand, Starfish organizations tend to organize around a shared worldview or ideology. And the Internet has helped them flourish.
THE BLACK SWAN <ul><li>The Impact of the </li></ul><ul><li>Highly Improbable </li></ul><ul><li>The human mind suffers from three ailments as it comes into contact with history, called the triplet of opacity: </li></ul><ul><li>the illusion of understanding, or how everyone thinks they know what is going on in a world that is more complicated (or random) than they realize; </li></ul><ul><li>the retrospective distortion, or how we can assess matters only after the fact, as if they were in a rearview mirror (history seems clearer and more organized in history books than in empirical reality); and, </li></ul><ul><li>the overvaluation of factual information and the handicap of authoritative or learned people, particularly when they create categories – or "Platonify." </li></ul>
U.S. Intelligence Community Failed to Evolve Unexpected new threats from non-traditional enemies like al Qaeda emerged on the geopolitical stage in the vacuum of America's return to international economic, political and cultural hegemony after the end of the Cold War.
Unsound Strategy, Policy and Decisions are the Product of an Intelligence Agenda Dictated from Above
Marshall McLuhan <ul><li>“ I don’t know who discovered water, but it wasn’t a fish.” </li></ul>Strategy is concerned with what the corporation wants to do in the world. Intelligence is focused on what the world wants next.
Strategy should be a Response to Intelligence Not the other way around…
Intelligence 2.0 The Era of Asymmetric Interpretation <ul><li>Intelligence 1.0 was about acquiring short-lived information advantages ( Competitive Advantage through Asymmetries of Information ), though fleeting and risky to the firm's reputation and ethics. </li></ul><ul><li>The transition is now complete to an open source world of "info-glut" where assymetric information gaps are increasingly difficult to obtain and maintain and interpretation becomes far more important as everyone looks at the same corpus of data but sees something different. </li></ul><ul><li>Web 2.0 and Enterprise 2.0 pinpoint a shift in organizational culture – the “Facebooking” of the workforce means everyone in the enterprise can become a casually-engaged virtual member of the intelligence apparatus and should be instructed how to help most productively. </li></ul><ul><li>Intelligence will extend into aspects of organizational culture and workforce engagement – which I differentiate from full-time intelligence staff as “reconnaissance” – but centralized, specialist intelligence staff will persist and embed themselves into the domains of organizational problem-solving. </li></ul>
Intelligence 2.0 Asymmetric Interpretation Depends on Both Decisive & Incisive Sensing Incisive Scanning for Trends, there may be no Decision made Historical Patterns & Anomalies Implications for the Reader Bottom-Up Exposition Driven by Trends Product is Observation Emergent & Skeptical Open Source Decisive Frame of Reference is the Decision Compares Options & Outcomes Recommendations & Trust Top-Down Imposition Driven by Issues Product is Decision/Action Factual & Hypothetical Confidential & Proprietary
Intelligence 2.0 Engages the Workforce in Collaborative Sensing to Anticipate and Act on Industry Change Signals of Change Strategic Choices Influencing Success Likely Outcome of Competitive Battles
RECON <ul><li>RISK </li></ul><ul><li>EFFICIENCY </li></ul><ul><li>CUSTOMERS </li></ul><ul><li>OUTLOOK </li></ul><ul><li>NOVELTY </li></ul>Intelligence Should Concentrate on Five Domains of Business Problem Solving
RISK Ensuring against risk to the core business is critical to making sure there is time for investments in new growth to start paying off. Maintaining a positive status quo by protecting the core is the chief role for managers in every business, with one caveat: good businesses can often be the foremost enemy of great businesses. Cannibalization of a company’s current market share should not exclude innovative ideas that might be foreign to the corporate immune system.
EFFICIENCY The ruthless cutting away of unnecessary costs in the value chain is essential for a new market innovation strategy to work. Create or build up that which is not yet good enough and diminish or destroy that which is unnecessary. Most of the unnecessary elements in the incumbent value chain have long-since outlived their usefulness or were never very important to customers in the first place .
CUSTOMERS Companies become too dependent on their best customers’ input for signals about how they should innovate, but new forms of competition usually present themselves at the current consumption market. The day your customers begin complaining about how complicated or expensive or difficult your product is, you should ask, “why was it good enough for them yesterday” and who has offered an alternative?
OUTLOOK Traditional market segmentation based on demographic, geographic or sociographic data are fleeting at best and illusory at worst and many decisions have been based on flawed definitions of the fastest growing markets. Defining the market by the “jobs” customers wish to accomplish is more helpful in defining fast growing target markets. Focus groups are often the worst mechanism of market testing.
NOVELTY Differentiation is mandatory for all organizations to master and new market or “novel” solutions to customer problems are often ecosystems of providers working together to produce sought-after value. Companies must build a business model designed to test breakthroughs in the market more regularly but kill off those that do not work early on, so support and development resources can be allocated to those that do.
Leadership to Act is Based on Confidence Intelligence Combats the Paralysis that Accompanies Uncertainty
What’s Next? <ul><li>Feel free to ask for help: </li></ul><ul><ul><li>Email : Arik.Johnson@AuroraWDC.com </li></ul></ul><ul><ul><li>Phone : +1-715-720-1616 </li></ul></ul><ul><ul><li>Twitter : @ArikJohnson </li></ul></ul><ul><ul><li>LinkedIn : www.linkedin.com/in/ArikJohnson </li></ul></ul><ul><ul><li>Skype : ArikJohnson </li></ul></ul><ul><ul><li>Web : www.CI2020.com & www.IntelCollab.org </li></ul></ul>Leadership to Act is Based on Confidence Intelligence Combats the Paralysis that Accompanies Uncertainty