Intelligence Vs Decisionmaker


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Intelligence Vs Decisionmaker

  1. 1. t Douglas Bernhardt is a visiting lecturer in Competitive Intelligence at Wits Business School and the University of Stellenbosch Business School. He also provides consulting and training services for firms in Africa, Europe, and the Middle East. Douglas previously served as Managing Director for the Geneva-based con- sultancy, Business Research Group SA. His last book, “Competitive Intelligence: Acquiring and using corporate intelligence and counterintelli- gence”, was published in London by FT Prentice-Hall in 2003. An American citizen, Douglas is now based in South Africa, and can be reached at Copyright © 2009. Decision Processes International. All Rights Reserved. Intelligence vs. Decision-Maker: Who Cares and So What? by Douglas Bernhardt | AUTHOR, CONSULTANT, LECTURER “One of the chief errors of Western intelligence analysis during the Cold War was its frequent failure to take the long view. Had analysts remembered the tendency of autocrats through the ages to be told only what they are willing to hear, they would have found it less difficult to grasp the striking contrast between the frequent success of Soviet intelligence collection and the poor quality of Soviet intelligence analysis.” — Christopher Andrew, Professor of Modern and Contemporary History, Cambridge University learly the most worrying aspect spread doubts over the very integrity radically new approaches to strategic C of so many of today’s business strategies is that they simply will not work. Put another way, the medium- to longer-term strategies of most large-scale companies in 2009 of the free enterprise system itself, to name just a few—they continue to tell themselves, their shareholders, and the world at large that management have now fully atoned for their past thinking and action. Equally, it will require significant paradigm shifts in organizational culture and business models. But perhaps the most difficult challenge of all for managers, many of seem to more reflect the over-optimistic sins, and that freshly crafted plans that whom are still wondering how and why ambitions and projections of chief virtually guarantee future commercial they have been so unexpectedly executive and chief operating officers success are now firmly in place. Of plunged into “the worst of times” from than they do blueprints for building course, they add, all they really need “the best of times”, will be their sustainable competitive advantage and now to restart their corporate engines willingness to accept that winning superior returns. are rather large bucketfuls of govern- tomorrow’s competitive battles means, This is not good news. As managers ment funds. Unfortunately, under-per- in part, that they must embrace, everywhere continue to squirm under forming companies, and economies accommodate, and integrate “knowl- the uncomfortable realities of global generally, are not basketballs; they do edge and foreknowledge” of the exter- recession—wholesale job losses, credit not bounce back quickly, or necessarily nal environment into all aspects of droughts, the collapse of formerly in the same shape. high-level policymaking and planning. ‘invincible’ corporate icons, the resur- The reality is that managing for Executives, in short, must become rection of protectionism, and wide- future competitive success will require eager, open-minded consumers of D e c i s i o n P ro c e s s e s I n t e r n a t i o n a l 15 Strategic Thinking Consultants
  2. 2. The Strategist strategic intelligence; i.e., intelligence financial system and those charged improve operational effectiveness “designed to provide [them] with the with regulating it let us down badly, but (‘doing the thing right’) rather that re- ‘big picture’ and long-range forecasts it’s just too easy to blame “the banks” thinking, or reconfiguring the firm’s they need in order to plan for the for all our woes. There can be little strategic positioning (‘doing the right future.” After all, good intelligence doubt that many corporate leaders thing’). Ask yourself, when was the last ‘product’ is nothing less than “informa- have a case to answer for. time you tested the rigour of your own tion that meets [their] stated or under- Given that a major development or key assumptions? Indeed, when was stood needs… and has been collected, event—from a “surprise” competitor the last time you instructed your com- processed, and narrowed to meet those move to poor financial results—rarely, pany’s competitive intelligence unit, or needs.” And today, as we bear witness if ever, occurs ‘overnight’, one is com- an external intelligence consultancy, to to the unhappy consequences of mak- pelled to ask: to what extent have cor- investigate a major rival’s key assump- ing decisions based on ‘gut feel’, porate leaders focused on enhancing tions about their business, their mar- instinct, unchallenged assumptions, or “the capacity of their organizations to kets, or the industry? A principle aim inadequate information, the alterna- recognize emerging threats, prioritise of intelligence is to compel decision- tive is to look inwards, dismiss the action, and mobilize available makers to routinely reassess their per- notion of intelligence as an essential resources to mount… effective preven- spectives and their strategies. component of strategic decision- tative responses”? In other words, are Intelligence has, of course, long been making, and hope for the best. managers demanding and receiving regarded as ‘part of the furniture’ in the sort of intelligence on external the national security arena and the mil- “strategy threats and opportunities that govern- ment policymakers rely upon (or itary, where it serves as a powerful “force multiplier”. Indeed, whatever without should rely upon!) as they consider their nations’ interests, plans, and the political complexion of a nation state, modern intelligence agencies strategies? It would appear not. To have, for some 100 years, been tasked intelligence illustrate: McKinsey & Company, a consultancy, recently published the to inform senior policymakers and warfighters in an effort to provide isn’t strategy, results of their 2008 survey on compet- itive behaviour, How Companies them with decision advantage. Some 18 years ago US President George it’s guessing.” Respond to Competitors. Based on responses from a worldwide sample of H.W. Bush put it this way: business executives, their findings “Intelligence remains our basic Considerable evidence exists to sup- should make frightening reading for national instrument for anticipat- port the argument that one of the any shareholder or employee of the ing danger, military, political, and major causes of strategic failure on the firms concerned. These include: economic. Intelligence is and part of once revered industry • A majority of executives say their always will be our first line of goliaths—AIG, Chrysler, General companies found out about a signifi- defence, enabling us to ward off Motors, Lehman Brothers, Royal cant innovation—or price-related com- emerging threats whenever possi- Bank of Scotland, Woolworths UK, and petitive move too late to respond ble before any damage is done. It scores of others—was the unwilling- before it hit the market can also be a means of anticipating ness of their management to antici- • Companies are not doing a good job opportunities.” pate, monitor, and understand the of conducting ongoing, sophisticated changing nature of environmental analysis of their competitors’ potential A dedicated intelligence function, forces that have such a decisive impact actions with a mandate to deliver objective, on their businesses. The surprising • Despite the potential for serious unbiased and forward-looking analy- thing is that while executives are right- earnings drops when a competitor ses, estimates, and warnings to corpo- ly expected to know in advance the introduces a significant price change or rate decision-makers is just plain com- waters into which they steer their cor- innovation, executives say their compa- mon sense. Or is it? Organizations such porate ships, it seems that over the nies assess surprisingly few options for as Johnson & Johnson, IBM, Microsoft, past decade or so they have spent responding Nokia, and F Hoffmann-La Roche cer- . rather more time dining at the cap- • Any response to a competitive move tainly see it that way. But what about tain’s table than looking out from the tends to be rather slow your company? How many managers helm. How else can one explain the do you know that actually welcome mess that prevails in an ever widening The message is obvious: executives information and analysis that challenge array of companies globally? Yes, the typically devote more time trying to their agendas and viewpoints? D e c i s i o n P ro c e s s e s I n t e r n a t i o n a l 16 w w w. d e c i s i o n p r o c e s s e s . c o m
  3. 3. How many executives are you famil- rivals’ business models, let alone their longer-term estimate of future devel- iar with that are prepared to suspend own. Ask yourself, can you describe, in opments likely to have an impact on their egos when confronted with “bad” any detail, the most important aspects the firm’s objectives, strategies, and or uncomfortable news and informa- of your major competitor’s core strat- interests? tion that indicate a ‘course correction’ egy, customer interface, strategic 3. Timeliness. Intelligence delivered might be the smart thing to do? And resources, and value network? What too late has no value; it’s just how many aging corporate leaders can about the critical economic, political, information. you think of that are willing to modify social, and technological forces which Ultimately even intelligence units their decisions or behaviour based on affect your industry and your market- whose products consistently meet the what they are told by a 29 year-old place every day and everywhere? And basic tests for accuracy, relevance, and intelligence analyst whose evidence, last, is your company’s intelligence timeliness are simply wasting their logic, and conclusions suggest that cur- unit tasked to continuously monitor time if their output is ignored or reject- rent policies and strategies are, at best, these and related topics, then report ed altogether by users who simply sub-optimum? Let’s face it, virtually back to management with impartial, cannot “abide analysis or reporting that every element of today’s competitive evidence-based analysis that may, on [runs] counter to their own view.” landscape—competitors, changing cus- occasion, help ‘save your bacon’? Or is Intelligence which is not integrated into tomer preferences, discontinuities in your intelligence team used mainly for the mix of factors that influence the the economy, technology advance- ‘putting out fires’ when all other thinking of decision-makers represents ments of all kind, and much more— attempts to meet critical information little more than intellectual impotence. tend to evolve very differently than requirements fail? As this author argued in an earlier senior business leaders expect or hope If you’re ready to suspend your ego, paper, the most overwhelming chal- for. The truth is often hard to take. and place your bets on informed strat- lenge faced by intelligence teams and In my introductory remarks to MBA egy, rather than ‘educated guesses’ in their users (i.e., decision-makers) is students that I teach at South African your company’s race to the future, it is what I refer to as the “consumer-pro- and European business schools, I sug- your job to take intelligence seriously. ducer disconnect”. The underlying gest that “strategy without intelligence Even the best intelligence—and it can problem is that decision-makers and isn’t strategy, it’s guessing.” Think never be perfect—will not tell you intelligence analysts are very different. about it: if your organization did not what to do, but it will certainly paint Although united in common purpose have competitors, if it was a monopoly, more accurate, more dynamic, and (i.e. the success of the organisation), as why would you need anything more more up-to-date pictures of the com- individuals they have very different than relatively short-term operational petitive realities you confront than missions and very different world plans? If, on the other hand, we accept those you’re probably seeing now. views. At best, this state of affairs leads Professor Michael Porter’s proposition to healthy debate and helps sharpen that “The state of competition in an So what are the metrics of relevant thinking. At worst, it leads to counter- industry depends on five basic compet- intelligence deliverables? Here are the productive arguments about “what’s itive forces”—i.e., the threat of new top three: right”, or “who’s right”, as the lines entrants to the industry; the threat of 1. Accuracy. Since no data on the between evidence, facts, and opinions substitute products or services; buyer future exists, the accuracy of become ever more blurred. power; supplier power; and the intensi- intelligence depends largely on the If Competitive Intelligence is to ty of rivalry among existing competi- reliability of sources—including make a difference to organisational tors—it should take no great leap in human sources, or HUMINT— performance, it is management’s imagination to understand that the and the quality of analysis (which responsibility to integrate intelligence corollary to this implies “the need for involves judgments). into the firm’s strategic processes. an organized mechanism—some sort 2. Relevance. Relevant intelligence Equally, it is a joint responsibility of of competitor intelligence system” to answers the proverbial “so what?” decision-makers and analysts to recog- collect, analyse, and disseminate the question for the user, or set of users nize and overcome the very human dif- intelligence that managers require. concerned. It has a clear and direct ferences that exist between them. Next, consider Professor Gary bearing on the intelligence con- Overcoming the “disconnect” is tough, Hamel’s argument that “competition is sumer’s policy agenda. It makes a but it’s not impossible and it’s certainly no longer between products or ser- difference to the consumer’s thinking something managers should care vices, it’s between competing business and behaviour. It may provide early about. Why? Because intelligence does concepts.” The implication here is that warning of threats. It could take make a difference; often the difference managers are duty bound to seek as the form of unbiased assessments of between winning and losing, and deep an understanding as possible of current problems. Or it might be a between survival and failure. D e c i s i o n P ro c e s s e s I n t e r n a t i o n a l 17 Strategic Thinking Consultants