Making a Difference with Competitive Intelligence?

In far too many instances even the most competent Competitive Intelligence (CI) managers and analysts become frustrated by the marginal impact they seem to have on the strategic thinking and actions of CEOs and other senior managers. The struggle to strengthen corporate leaders’ perspectives on the value of CI is often met with resistance in various forms: sometimes intelligence is ignored altogether; sometimes ‘the message’ doesn’t correspond to what decision-makers want to hear; and on occasion executives are already convinced that there isn’t anything of consequence that a young analyst can tell them that they don’t already know. But why, CI practitioners often ask, do decision-makers fail to appreciate the current intelligence assessments, medium- to longer-term estimates, and warning analyses we so painstakingly produce? “We know our stuff is good!”

In most cases, the underlying problem stems from at least three factors:

1. The ‘world views’, personal agendas, and responsibilities of executives and CI practitioners are very different. Although we’re all ‘on the same side’–and thus share a common stake in the performance and success of the firm–behaviourally business leaders and analysts share little else in common. For example, how many senior executives can claim an academic, military, or national security background that may have equipped them to better appreciate what CI actually is, why it matters, and how it can help them, collectively as well as individually, with their decision challenges? Business leaders are expected to ‘lead the charge’. Analysts are focused on finding landmines.
   
   

2. The realities of long outdated business models and practices, as well as archaic organisational structures and systems (bureaucracy, company ‘politics’, departmental and functional silos, etc.) impede the effectiveness of CI in the decision-making process. As Professor Gary Hamel, a business scholar, puts it, “most of the essential tools and techniques of modern management were invented by individuals born in the 19th century.” Competitive Intelligence largely concerns itself with future possibilities and probabilities; thus it’s a tough call when intelligence analysts are forced to work within a business context likely to be firmly anchored in the past.

3. Many CI practitioners are guilty of basic flaws in the internal ‘marketing’ of CI. In many instances CI is regarded by executives as a cost, rather than a ‘force multiplier’, whereas its potential value-added to business decision-making is, similar to a new work of art, seldom, or poorly, quantified. Competitive Intelligence is not positioned in a way which executives understand; it is not sufficiently differentiated from the more traditional management information flows and sources (including all-important human sources) they are familiar with. Last, CI is badly “sold”; its raison d’être is not sufficiently compelling. How much time, for example, do CI managers spend in profiling their internal ‘consumers’, or in educating these same consumers about CI? Taking fifteen minutes or so to explain, and reinforce, the value of CI in an executive committee or board meeting will usually have a positive impact on how CEOs and their colleagues perceive the discipline. Nothing beats face-to-face dialogue. Branding, too, can make critical, organisation-wide difference to CI’s positioning.
   
   

Ask yourself: if the CI we are delivering is not causing our executives to think and behave differently whose fault is that?

HUMINT

When competitive intelligence practitioners consider the sub-discipline of ‘intelligence collection’ – i.e. the systematic collection of raw data and information for intelligence purposes – the focus tends to be on questions such as: How can we gather more information, and gather it more quickly? What additional, usually Internet-based, ‘feeds’ and other resources are available to us? What are the best applications and search tools? What filtering technologies can we use to improve our effectiveness (or, more honestly put: How can we ensure that we haven’t missed anything?)?

Rarely is there any in-depth discussion about what I believe to be the most critical ingredient in the raw information mix; human sources. Why? In part because we, or at least those of us whose thinking and actions are rooted in Western-based cultures, are much more comfortable with quantitative data than we are with ‘softer’, qualitative information. People lie, or otherwise (sometimes unwittingly) deceive us, and often what they might tell us is ‘unproven’ or unreliable; or so goes the refrain. Thus we tend to be suspicious of feelings, opinions, rumours, assumptions, and impressions; typically, we assume that these things just do not stand up as ‘evidence’. Senior managers in particular want information supported by ‘facts’. Anything else, in the view of many corporate leaders, amounts to little more than hearsay; and executives are not paid – nor are intelligence analysts for that matter – to base hard decisions on soft information. The irony, of course, as that these same executives will often place great trust in what they are told by family, close friends, colleagues, and their friendly investment bankers (which recent events have shown is a big mistake), despite the fact that the information that is shared is seldom verified.

Although one can easily spend hours debating the pros and cons of human-source intelligence (HUMINT), there can be little doubt that the information and insight senior executives require regarding the intentions and plans of competitors and other key players is often unavailable without HUMINT. Consider your own company’s secrets: who, apart from employees, subcontractors, suppliers, and others who may be directly involved in a confidential development project or plan, actually know the detail? It’s unlikely to be posted on a website. And let’s face it, open source (or public domain) information is seldom complete, almost never up-to-date, and no more reliable than that which well-placed human sources can provide. Technology can, and does, help us hear and see, but it doesn’t help us smell; only people can do that.

While it is not necessarily a decision-maker’s job to assess the credibility or reliability of a source – particularly a human source – it is his or her responsibility to ensure that any intelligence input under consideration includes a strong HUMINT element. Reports based on capabilities alone are not sufficient. That’s easy. A threat, however, is the sum of the capability plus the sum of the intent. Information about the capabilities - financial, material, technologies, human resources, etc - of adversaries, customers, suppliers, and alliance partners may, at best, indicate what they can, or are likely to do; but it hardly serves as proof about what they will, or are planning, to do. This is how former US Director of Central Intelligence Richard Helms put it:

“This idea that satellites … and all the rest of it–all those technical things – they’re Jim-dandy when it comes to … bean-counting mostly…. But it doesn’t tell you what’s inside [a rival leader’s] head; it doesn’t tell you what he is going to do....

Thus, there are at least three sets of questions managers should repeatedly ask themselves when reviewing intelligence product:

1. Has the information been verified by HUMINT sources?
2. To what extent can we believe it?
3. How credible are the sources; have they met the tests for reliability typically applied by our intelligence collectors and analysts? And what was the context (telephone conversation, meeting at a conference or trade show, etc.).

Even the best HUMINT is imperfect. But so, too, is a news report, a company’s annual set of accounts (remember Enron), a corporate or government press release, and much else that competitive intelligence analysts usually rely upon when preparing their assessments. The job of a business leader is not simply to integrate intelligence reporting into his or her thinking (and ultimately policy decisions), but to know and understand the very sources upon which analysts have based their conclusions and judgments.

One final, related note: even the best analysts cannot guarantee the accuracy of their estimates or warnings. Consider the scene in the film Pearl Harbour, ten years ago, where Admiral Chester W. Nimitz is pressing a Captain Thurman of Naval Intelligence for information regarding the location and planned destination of the ‘missing’ Japanese fleet. This is what follows when Thurman suggests that Pearl Harbour, the most distant target from Japan, is where he suspects the Japanese will strike:

Nimitz: So, sir, you would have us mobilize the entire fleet, at the cost of millions of dollars, based on this 'spine-tingling' feeling of yours?

Captain Thurman: No, sir. I understand my job is to gather and interpret material. Making difficult decisions based on incomplete information from my limited decoding ability is your job, sir.

The rest, as they say, is history.

Strategic Intelligence

In a Corporate Strategy Board report published in August 2000 – Strategic Intelligence: Providing Critical Information for Strategic Decisions – the authors found that strategic intelligence “operates based on distinct principles.” These include:

1. “Strategic intelligence should support senior decision makers in their capacity as strategists.”

2. “Strategic intelligence should monitor and analyse the issues that matter to [the firm’s] strategy.”

3. “Strategic intelligence should be coordinated in the corporate centre.”

Although these principles are, in theory, well known to competitive intelligence professionals everywhere, in light of the chequered performance of so many corporate icons over the past 18 months I suggest we should be asking ourselves the following questions:

· In practice, how effective are most corporate intelligence units in providing senior management with ‘product’, or deliverables that make a real difference to strategic thinking and action? However elegant or robust the underlying analysis may be, if intelligence is ignored or discounted by decision makers it’s of no value whatsoever.

· Are competitive intelligence analysts routinely focusing on issues of strategic consequence to the organization? Who makes the ‘call’ regarding where intelligence analysts should be concentrating their efforts? Ideally, topics, or ‘targets’ of interest should emerge from ongoing dialogue between end-user decision makers and intelligence staff.

· Does the intelligence function represent a centrally coordinated, fully integrated discipline within the company? If it doesn’t, the company will always risk falling prey to “predictable surprises.” The recent implosion of the world economy, and ten years ago the 9/11 tragedy serve as powerful reminders of what can go wrong when intelligence teams and management alike fail to separate and decipher the ‘signals from the noise’.

Strategic intelligence is not an optional extra. Indeed, however competent a company may be in finance, human resources, manufacturing, marketing, and technology development, if it fails to recognize the increasingly complex dynamics and potential impact of the forces at play in its external environment it is unlikely to achieve or sustain real strategic success.

Why were they surprised?

An article published on 7th February 2010 in South Africa's Sunday Times newspaper claims that "economic conditions and new regulations have made life tough at Vodacom," the country's largest cellphone operator. The company's CEO is quoted as saying that "Competition last year was fierce and we probably took too long to respond to it ...."

Vodacom's experience is not untypical of many firms that fail to deliver the 'superior returns' that shareholders and other stakeholders rightly expect in consideration for the generous remuneration packages paid to senior executives. The Vodacom case thus raises a number of important questions regarding the effectiveness of management decision-making. These include: Were the strategies that led to Vodacom's sub-optimal performance last year INFORMED strategies; i.e., informed by the estimates and judgments one expects from a competent intelligence function? If Vodacom's intelligence unit was doing its job, was management listening? To what extent, in 2007/8, was Vodacom's management anticipating the linchpin events likely to take place in it competitive environment that could disrupt, or otherwise affect its 2009 results?

The big question, however, is how many other firms in South Africa (and elsewhere) face the same dilemma: increasingly "fierce," rapidly changing, and apparently 'unexpected' competition? My questions are: Why are executives so surprised?