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Strategic intelligenceforexecutives


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Strategic intelligenceforexecutives

  1. 1. Strategicintelligencefor executivesBy Douglas BernhardtI T IS UNLIKELY that any senior manager today would its double-digit growth in sales. As the music industry dispute the proposition that organisational strategy suffers steadily declining sales of physical recorded is – or should be – “all about managing to achieve music, more music than ever before is making its way superior performance”.1 Although the pathway to to consumers through electronic distribution channels what Professor Richard D’Aveni of the Tuck School that the record companies do not, and cannot, control. of Business refers to as “strategic supremacy” (or And although Microsoft’s suite of Office applicationsfailure?) is, in part, defined by the underlying strategic still dominate the desktops of millions of users, Googlenotions that shape the views of a firm’s leadership, it Docs – which admittedly does not provide as manyis, in equal measure, a function of the extent to which features as the Microsoft product – does offer three bigtop management embrace and integrate strategic advantages: it’s free, it’s simple, and for many of us it’sintelligence into their decision-making processes. “good enough”. In one sense, we argue, a corporate strategy cannot In a business world that bears virtually no resemblanceexist without a strategic intelligence component. The to the one we knew just 10 short years ago, and which 10reality of the world in which most of us do business years from now will almost certainly be unrecognisable Strategicis increasingly one where external forces – social, from the one in which today’s battles for market sharetechnological, economic, political and more – continue and profits are fought, executives do not have the luxury intelligenceto play a major, and often decisive, role in the success or of ignoring or marginalising strategic intelligence. in particularfailure of the firm. So what exactly is the role of intelligence – whether Yes, in many countries there remain powerful, often in a national security context or in the business arena? represents thestate-owned monopolies that exercise a full or partial In part, it is “to provide [decision] makers with the “intelligencestranglehold over one or more industry sectors but, information and analysis [including warning analysis]in the 21st century, their long-term sustainability is needed to formulate effective... policies”2, while strategic necessary tovery much in doubt. While the political rhetoric of left- intelligence in particular represents the “intelligence create andwing populists such as Venezuela’s President Hugo necessary to create and implement a strategy, typicallyChávez may, for some population groups and in some a grand strategy”3, whether at corporate, divisional implementmarkets, play well in times of financial disequilibrium or business unit level. Put another way, strategic a strategy,and uncertainty, seldom do monopolies – or any other intelligence is information designed to provide decision- typically a grandmanner of artificial trade barriers – serve the best makers “with the ‘big picture’ and long-range forecastseconomic interests of customers or the taxpayer. they need in order to plan for the future”.4 Intelligence is strategy”, whether In 2010 and beyond, companies have no option but not market research or “news”. at corporate,to face the challenges of a growing host of intensifying But isn’t the importance of intelligence simply a mattercompetitive forces – in all forms and from all quarters – of what today’s teenager might call a “no brainer”? After divisional orin what today, if we’re brutally honest, is nothing less than all, what CEO would be foolish enough to put his or her business unitglobal economic warfare. Consider that, while GM, once “stamp of approval” on a strategy that does not, forthe world’s largest automaker, was filing for bankruptcy example, include a comprehensive assessment of the in June 2009, Tata Motors of India continued firm’s rivals – their capabilities, intentions, objectives and • vol 3, 2010 • issue 22 65
  2. 2. Enhancing business STRATEGIC INTELLIGENCE FOR EXECUTIVES plans? To develop and proceed with a “grand” strategy and act upon the dangerous array of misalignments that based on flawed or untested assumption, gut instinct, or exist between economic fundamentals and the world asNow think, when just plain intellectual arrogance is pure folly at a time when we have for too long chosen to perceive it. How could we every facet of business is changing and moving at Internet have been so wrong? Where was the strategic intelligencewas the last speed. Thus, the big question that corporate leaders in, say, late 2007 that could, and should, have triggeredtime your CEO need to ask themselves is this: do we routinely demand the ringing of alarm bells in boardrooms from London,or executive and receive information “combined with analysis that is to New York, to Tokyo? How many CEOs can you name pertinent to [our] decision making in gauging threats”5 that based their “take” of how the future was unfolding,board requested against our interests? Even the most accomplished at least in part, on “all source” information, evidence andan intelligence chief executive will benefit from analytically derived impartial analysis? More worryingly, how many business “insights based on detailed knowledge of obstacles and leaders can you point to that persist in “escalating theirestimate intended opportunities and enemies and friends”.6 commitment to losing endeavours that they have anfor use in support Another question: to what extent are your company’s emotional stake in”?8 intelligence analysts – if there are any – tasked with Although professional intelligence analysts cannot,of strategy producing equivalents to the National Intelligence of course, predict “the” future, they are equipped tocreation? Estimates (NIEs) prepared for senior American critically evaluate and report information, compiled from policymakers? An NIE represents the US intelligence both “open” (public domain) and human sources, which community’s most authoritative and coordinated written helps reduce residual uncertainty and provides decision- assessment of a specific national-security issue. While makers with value-added insight and foresight. “NIEs usually provide information on the current state of For decades, policymakers in Australia, North America, play” of a strategic topic, they “are primarily ‘estimative’ – the UK and most European nations have relied upon that is, they make judgments about the likely course of strategic intelligence to help them better anticipate and future events and identify the implications”7 for policy. understand the threats they face to national security, as Now think, when was the last time your CEO or executive well as the opportunities they might grasp to advance their board requested an intelligence estimate intended for goals and protect their countries’ interests. Businesses, use in support of strategy creation? Or are they satisfied too, face a myriad threats to their ambitions, plans and, with basing their decisions upon existing, typically static ultimately, their own economic security. Should not and outdated assumptions? Regretfully, only a handful of our most important engines of economic growth and companies appear to generate a “product” similar to an prosperity – enterprises big and small – also begin to NIE. The reason? The financial pay-off for an investment take strategic intelligence a little more seriously? The in strategic intelligence estimates cannot be “quantified” archetypical Englishman would never think of leaving in advance. And since intelligence focuses on the future, home without his umbrella, even when storm clouds are and can never, therefore, be perfectly accurate – it is nowhere in sight, “just in case”. Why should executives sometimes wrong. Try selling that to your company’s behave any differently? Their competitors don’t. “number crunchers”. Strategic intelligence serves as a powerful “force Douglas Bernhardt is a 1 RM Grant, 2005. Contemporary Strategy Analysis. 5th guest lecturer at WBS, multiplier”. Its impact on an organisation’s medium- ed. Oxford, UK: Blackwell Publishing. where he teaches MBA to long-term success, and on occasion its very survival 2 JJ Wirtz, 2007. The Intelligence-Policy Nexus. In: LK electives on competitive can be profound. Rather like the headlamps of a car Johnson (ed). Strategic Intelligence: Understanding intelligence and on travelling at night, it illuminates the road ahead, albeit the Hidden Side of Government. Westport, CT: Praeger industry and competitor imperfectly. Even though intelligence does not – nor Security International, pp. 140-150. analysis. He also teaches 3 JG Heidenrich, 2007. The Intelligence Community’s should it – dictate company policy or a particular course Neglect of Strategic Intelligence. Studies in at the University of of action – that’s senior management’s job – it can make Intelligence, 51(2), pp. 15-25. Stellenbosch Business an invaluable contribution to your leadership’s strategic 4 BD Berkowitz and AE Goodman, 1989. Strategic School and other leading thinking and actions. It also helps to ensure that decision- Intelligence for American National Security. Princeton, business schools in NJ: Princeton University Press. makers do not hang their imaginations on the coat racks Europe and South Africa. 5 RL Russell, 2007. Sharpening Strategic Intelligence: Previously, he served outside their office doors. Moreover, regular dialogue Why the CIA Gets it Wrong, and What Needs to be Done as managing director with intelligence staff ensures that executives are more to Get it Right. Cambridge, UK: Cambridge University for the Geneva-based likely to be responsive to changing their opinions if the Press. consultancy Business strengths of alternative analyses and arguments suggest 6 JG Heidenrich, 2007.(posted) 7 National Intelligence Council, 2007. Iran: Nuclear Research Group SA, and that that is the smarter course. Intentions and Capabilities. Washington, DC: Office of before that he worked Unfortunately, the worldwide recession from which the Director of National Intelligence. for the international we are all emerging, still bloodied and shocked, and 8 M Sorrell, 2010. How We Do it: Three Executives marketing arm of a major which apparently took even the bluest of the “blue Reflect on Strategic Decision Making. McKinsey defence manufacturing chips” by surprise, reflects, if nothing else, the failure of Quarterly [online], March. group. companies (and governments) everywhere to understand66 • vol 3, 2010 • issue 22