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15D 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 S t r a t e g i c T h i n k i n g C o n s u l t a n t s

t

learly the most worrying aspect

of so many of todays 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

seem to more reflect the over-optimistic

ambitions and projections of chief

executive and chief operating officers

than they do blueprints for building

sustainable competitive advantage andsuperior returns.

This is not good news. As managers

everywhere continue to squirm under

the uncomfortable realities of global

recessionwholesale job losses, credit

droughts, the collapse of formerly

invincible corporate icons, the resur-

rection of protectionism, and wide-

spread doubts over the very integrity

of the free enterprise system itself, to

name just a fewthey continue to tell

themselves, their shareholders, and

the world at large that management

have now fully atoned for their past

sins, and that freshly crafted plans that

virtually guarantee future commercial

success are now firmly in place. Of

course, they add, all they really need

now to restart their corporate enginesare rather large bucketfuls of govern-

ment funds. Unfortunately, under-per-

forming companies, and economies

generally, are not basketballs; they do

not bounce back quickly, or necessarily

in the same shape.

The reality is that managing for

future competitive success will require

radically new approaches to strategic

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

whom are still wondering how and why

they have been so unexpectedly

plunged into the worst of times from

the best of times, will be their

willingness to accept that winningtomorrows competitive battles means,

in part, that they must embrace,

accommodate, and integrate knowl-

edge and foreknowledge of the exter-

nal environment into all aspects of

high-level policymaking and planning.

Executives, in short, must become

eager, open-minded consumers of

C

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 FTPrentice-Hall in 2003. An American citizen,

Douglas is now based in South Africa, and can

be reached at stratcon1@hotmail.com

Copyright 2009. Decision Processes International. All Rights Reserved.

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

Intelligence vs. Decision-Maker:Who Cares and So What?

by Douglas Bernhardt | AUTHOR, CONSULTANT, LECTURER

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The Strategist

16D 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 w w w. d e c i s i o n p ro c e s s e s . c o m

strategic intelligence; i.e., intelligence

designed to provide [them] with the

big picture and long-range forecasts

they need in order to plan for the

future. After all, good intelligence

product is nothing less than informa-

tion that meets [their] stated or under-

stood needs and has been collected,

processed, and narrowed to meet those

needs. And today, as we bear witness

to the unhappy consequences of mak-

ing decisions based on gut feel,

instinct, unchallenged assumptions, or

inadequate information, the alterna-

tive is to look inwards, dismiss the

notion of intelligence as an essential

component of strategic decision-

making, and hope for the best.

Considerable evidence exists to sup-

port the argument that one of themajor causes of strategic failure on the

part of once revered industry

goliathsAIG, Chrysler, General

Motors, Lehman Brothers, Royal

Bank of Scotland, Woolworths UK, and

scores of otherswas the unwilling-

ness of their management to antici-

pate, monitor, and understand the

changing nature of environmental

forces that have such a decisive impact

on their businesses. The surprising

thing is that while executives are right-

ly expected to know in advance thewaters into which they steer their cor-

porate ships, it seems that over the

past decade or so they have spent

rather more time dining at the cap-

tains table than looking out from the

helm. How else can one explain the

mess that prevails in an ever widening

array of companies globally? Yes, the

financial system and those charged

with regulating it let us down badly, but

its just too easy to blame the banks

for all our woes. There can be little

doubt that many corporate leaders

have a case to answer for.

Given that a major development or

eventfrom a surprise competitor

move to poor financial resultsrarely,

if ever, occurs overnight, one is com-

pelled to ask: to what extent have cor-

porate leaders focused on enhancing

the capacity of their organizations to

recognize emerging threats, prioritise

action, and mobilize available

resources to mount effective preven-

tative responses? In other words, are

managers demanding and receiving

the sort of intelligence on external

threats and opportunities that govern-ment policymakers rely upon (or

should rely upon!) as they consider

their nations interests, plans, and

strategies? It would appear not. To

illustrate: McKinsey & Company, a

consultancy, recently published the

results of their 2008 survey on compet-

itive behaviour, How Companies

Respond to Competitors. Based on

responses from a worldwide sample of

business executives, their findings

should make frightening reading for

any shareholder or employee of thefirms concerned. These include:

A majority of executives say their

companies found out about a signifi-

cant innovationor price-related com-

petitive move too late to respond

before it hit the market

Companies are not doing a good job

of conducting ongoing, sophisticated

analysis of their competitors potential

actions

Despite the potential for serious

earnings drops when a competitor

introduces a significant price change orinnovation, executives say their compa-

nies assess surprisingly few options for

responding

Any response to a competitive move

tends to be rather slow

The message is obvious: executives

typically devote more time trying to

improve operational effectiveness

(doing the thing right) rather that re-

thinking, or reconfiguring the firms

strategic positioning (doing the right

thing). Ask yourself, when was the last

time you tested the rigour of your own

key assumptions? Indeed, when was

the last time you instructed your com-

panys competitive intelligence unit, or

an external intelligence consultancy, to

investigate a major rivals key assump-

tions about their business, their mar-

kets, or the industry? A principle aim

of intelligence is to compel decision-

makers to routinely reassess their per-

spectives and their strategies.

Intelligence has, of course, long been

regarded as part of the furniture in

the national security arena and the mil-

itary, where it serves as a powerfulforce multiplier. Indeed, whatever

the political complexion of a nation

state, modern intelligence agencies

have, for some 100 years, been tasked

to inform senior policymakers and

warfighters in an effort to provide

them with decision advantage. Some

18 years ago US President George

H.W. Bush put it this way:

Intelligence remains our basic

national instrument for anticipat-

ing danger, military, political, andeconomic. Intelligence is and

always will be our first line of

defence, enabling us to ward off

emerging threats whenever possi-

ble before any damage is done. It

can also be a means of anticipating

opportunities.

A dedicated intelligence function,

with a mandate to deliver objective,

unbiased and forward-looking analy-

ses, estimates, and warnings to corpo-

rate decision-makers is just plain com-mon sense. Or is it? Organizations such

as Johnson & Johnson, IBM, Microsoft,

Nokia, and F. Hoffmann-La Roche cer-

tainly see it that way. But what about

your company? How many managers

do you know that actually welcome

information and analysis that challenge

their agendas and viewpoints?

strategywithout

intelligenceisnt strategy,its guessing.

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17D 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 S t r a t e g i c T h i n k i n g C o n s u l t a n t s

How many executives are you famil-

iar with that are prepared to suspend

their egos when confronted with bad

or uncomfortable news and informa-

tion that indicate a course correction

might be the smart thing to do? And

how many aging corporate leaders can

you think of that are willing to modify

their decisions or behaviour based on

what they are told by a 29 year-old

intelligence analyst whose evidence,

logic, and conclusions suggest that cur-

rent policies and strategies are, at best,

sub-optimum? Lets face it, virtually

every element of todays competitive

landscapecompetitors, changing cus-

tomer preferences, discontinuities in

the economy, technology advance-

ments of all kind, and much more

tend to evolve very differently thansenior business leaders expect or hope

for. The truth is often hard to take.

In my introductory remarks to MBA

students that I teach at South African

and European business schools, I sug-

gest that strategy without intelligence

isnt strategy, its guessing. Think

about it: if your organization did not

have competitors, if it was a monopoly,

why would you need anything more

than relatively short-term operational

plans? If, on the other hand, we accept

Professor Michael Porters propositionthat The state of competition in an

industry depends on five basic compet-

itive forcesi.e., the threat of new

entrants to the industry; the threat of

substitute products or services; buyer

power; supplier power; and the intensi-

ty of rivalry among existing competi-

torsit should take no great leap in

imagination to understand that the

corollary to this implies the need for

an organized mechanismsome sort

of competitor intelligence system to

collect, analyse, and disseminate theintelligence that managers require.

Next, consider Professor Gary

Hamels argument that competition is

no longer between products or ser-

vices, its between competing business

concepts. The implication here is that

managers are duty bound to seek as

deep an understanding as possible of

rivals business models, let alone their

own. Ask yourself, can you describe, in

any detail, the most important aspects

of your major competitors core strat-

egy, customer interface, strategic

resources, and value network? What

about the critical economic, political,

social, and technological forces which

affect your industry and your market-

place every day and everywhere? And

last, is your companys intelligence

unit tasked to continuously monitor

these and related topics, then report

back to management with impartial,

evidence-based analysis that may, on

occasion, help save your bacon? Or is

your intelligence team used mainly for

putting out fires when all other

attempts to meet critical information

requirements fail?If youre ready to suspend your ego,

and place your bets on informed strat-

egy, rather than educated guesses in

your companys race to the future, it is

your job to take intelligence seriously.

Even the best intelligenceand it can

never be perfectwill not tell you

what to do, but it will certainly paint

more accurate, more dynamic, and

more up-to-date pictures of the com-

petitive realities you confront than

those youre probably seeing now.

So what are the metrics of relevant

intelligence deliverables? Here are the

top three:

1. Accuracy. Since no data on the

future exists, the accuracy of

intelligence depends largely on the

reliability of sourcesincluding

human sources, or HUMINT

and the quality of analysis (which

involves judgments).

2. Relevance. Relevant intelligence

answers the proverbial so what?

question for the user, or set of usersconcerned. It has a clear and direct

bearing on the intelligence con-

sumers policy agenda. It makes a

difference to the consumers thinking

and behaviour. It may provide early

warning of threats. It could take

the form of unbiased assessments of

current problems. Or it might be a

longer-term estimate of future devel-

opments likely to have an impact on

the firms objectives, strategies, and

interests?

3. Timeliness. Intelligence delivered

too late has no value; its just

information.

Ultimately even intelligence units

whose products consistently meet the

basic tests for accuracy, relevance, and

timeliness are simply wasting their

time if their output is ignored or reject-

ed altogether by users who simply

cannot abide analysis or reporting that

[runs] counter to their own view.

Intelligence which is not integrated into

the mix of factors that influence the

thinking of decision-makers represents

little more than intellectual impotence.

As this author argued in an earlierpaper, the most overwhelming chal-

lenge faced by intelligence teams and

their users (i.e., decision-makers) is

what I refer to as the consumer-pro-

ducer disconnect. The underlying

problem is that decision-makers and

intelligence analysts are very different.

Although united in common purpose

(i.e. the success of the organisation), as

individuals they have very different

missions and very different world

views. At best, this state of affairs leads

to healthy debate and helps sharpenthinking. At worst, it leads to counter-

productive arguments about whats

right, or whos right, as the lines

between evidence, facts, and opinions

become ever more blurred.

If Competitive Intelligence is to

make a difference to organisational

performance, it is managements

responsibility to integrate intelligence

into the firms strategic processes.

Equally, it is a joint responsibility of

decision-makers and analysts to recog-

nize and overcome the very human dif-ferences that exist between them.

Overcoming the disconnect is tough,

but its not impossible and its certainly

something managers should care

about. Why? Because intelligence does

make a difference; often the difference

between winning and losing, and

between survival and failure.