Macro versus micro

February 18, 2015

I’ve been very critical of efforts to conduct true, long-range, strategic intelligence. I am not going to list all of my references here, but they’re easy to find. I’ve been thinking more about it and wondering why we do not seem to have much success in terms of applying CI techniques to generate truly long-range intelligence.

Let me touch on a couple of issues:

  1. Do we know whether high-level long-range strategic intelligence actually works or not? Does it produce actionable intelligence? A friend of mine once told me (I hope my memory is correct, and I’m not having a Brian Williams moment) that when his firm reviewed its long-range intelligence estimates, it was unable to tell whether or not the CI team was correct. Why? Because so much had changed in the several years that had passed; in other words, what might have been an accurate forecast on day 1 had no relationship to what was going on day 2000. It could not determine that the intelligence was either a hit or miss.
  2. Can other disciplines do this?
    1. Going to economics, we find that there is an intellectual disconnect between macro-level and micro-level economics. First, we had yet to come up with an economic theory that is demonstrably correct, and that fully links and integrates micro to macro or vice versa. Second, while micro-level tends to have a fairly high predictive value, macro-level theories seem to have real problems there. When I was studying economics, there was an ongoing joke that a particularly well-known econometric forecasting firm’s macro-economic model was so accurate that it successfully predicted “seven of the last five recessions”.
    2. We are always fascinated with the concept of using historical trends or psychology to predict the actions of large groups of people[1]. One of the most interesting expositions of both is in the “Foundation” series by the late Dr. Isaac Asimov. That series relies on the concept of “Psychohistory” – being able to chart and even control the direction of large masses of people over long periods of time by tweaking the actions of small groups of people or even of individuals. However, that concept, even though developed by a scientist, was in fact pure fiction.

My question then is, if other disciplines and thinkers cannot generate consistently reliable, demonstrably predictive analyses at the macro-level covering extended periods of time, why then should we think that we can do better in competitive intelligence?

Now, I am not saying that conducting a long-range/early warning/very strategic forecasting process is not without value. While it is not likely to be actionable, it certainly is educational – training executives to be able to react to (now) unforeseen circumstances. However, in this world, actionable gets budget, but educational get cut.

[1] See for example, http://cliodynamics.info/, Charles Mackay, Extraordinary Popular Delusions and the Madness of Crowds (Farrar, Stray and Giroux, NY 1932), Erich Fromm, Escape From Freedom  (Discus Books, New York, 1941), and almost anything on mob/mass psychology, the Nazis, or the Butterfly effect in Chaos theory.


5 Comments on “Macro versus micro”

  1. tripkrant says:

    The world has become nonlinear and its complexity increases every year, making causality opaque if not indeterminable. Conventional strategic intelligence & long-term planning is of little use in such a world.

  2. […] I’ve been very critical of efforts to conduct true, long-range, strategic intelligence. I am not going to list all of my references here, but they’re easy to find. I’ve been thinking more about it and wondering why we do not seem to have much success in terms of applying CI techniques to generate truly long-range intelligence.  […]

  3. mchenrydc says:

    So…the key takeaway here might be to call the long-range, early warning, scenario type stuff something other than “educational”.


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