Long-range Intelligence?

August 28, 2015

I am not a great believer in using CI to develop long-range intelligence reports. Why?

The first reason is that such a program can be costly and worse, difficult to justify, from a cost-benefit position. The accuracy and value of today’s finding/prediction may not be able to be evaluated for years.

“It’s tough to make predictions, especially about the future.” Yogi Berra, member Baseball Hall of Fame

The second reason is that most firms and their executives are not mentally positioned to deal with long-range issues. The focus of the majority of businesses is short-term – quarterly reports and reviews anyone? As for the executives (and managers), when the future comes, they may well not be there. So why should they worry take short-term pain for (a possible) long-term gain? If you do not believe that, ask yourself why so many long-term political problems, like Social Security, are just ignored, or have the “can kicked down the road”.

The third reason lies in being able to do something about what you find. If it is a trend like the declining availability of rare earth minerals, one firm probably cannot do anything about the underlying causes – it can only plan to respond (or not). If it is a different trend, one involving the actions of your competitors, and your possible response to them, then doing something about it may have (unintended) consequences.

Let me illustrate. Many observers said that the 2010 passage of the Patient Protection and Affordable Care Act (Obamacare) would fundamentally change the structure of US healthcare. OK – so what?

Take the case of the largest health insurers, who seem to be imploding into each other now. Say your prediction on the passage of Obamacare was that this could (not “would”) eventually occur. So, what would your company, an insurer do? Probably try to make an early, more attractive acquisition or sale to get ahead of the trend, and thus nail down the best deal.

But, once your firm takes that step, aren’t you in danger of triggering your competitors, who may not have wanted to do that at all or do it so quickly, into following on – now? What if you had not acted so quickly – or at all? Would they have held back too? So, in a very real way, your action taken in response to what you perceive as the future shapes the future which will eventually unfold – which may have been different if you had not so acted.

“The future depends on what you do today.” Mahatma Gandhi

How many long-range intelligence programs do you think actually take into effect this Pachinko effect? And how many iterations can they consider before losing all credibility or intelligibly?

Yes, we have to consider underlying long-range trends and actions of others, but there are very real limits.


Competitively sensitive data

August 18, 2015

The SEC announced indictments on August 11, 2015 for insider trading. What was unusual was that these were not indictments of corporate insiders, but rather of “hackers” who had been accessing corporate press releases before they were published.[1] These hackers hacked into information on earnings and arranged for trading on the impacted stocks before the releases were made public.

“In one particularly dramatic instance on May 1, 2013, the hackers and traders allegedly moved in the 36-minute period between a newswire’s receipt and release of an announcement that a company was revising its earnings and revenue projections downward.  According to the SEC’s complaint, 10 minutes after the company sent the still-confidential release to the newswire, traders began selling short its stock and selling CFDs [contracts for difference], realizing $511,000 in profits when the company’s stock price fell following the announcement.”

This case shows the value of sensitive information which is accessed before it is made “public” and also should reinforce the need to protect such information. In this case, there was only a short period of time before the information was made public, but, for those few moments, the non-public data was worth over ½ million dollars.

For those of us in competitive intelligence, there is a similar lesson. Competitively sensitive information must be kept from your competitors, at least so long as its loss would be damaging. However, very few firms work to protect themselves against CI (and, as this series of indictments shows, not always successfully against hackers, either).

Those of us who work with CI should be the most forceful advocates for the creation and maintenance of a business-wide program to defend against the CI efforts of our competitors.[2] Such a program is an invaluable supplement to your own (offensive) CI efforts.

“If I am able to determine the enemy’s dispositions while at the same time I conceal my own, then I can concentrate and he must divide.” — Sun Tzu, The Art of War

[1] http://www.sec.gov/news/pressrelease/2015-163.html

[2] For much more on that, see John J. McGonagle and Carolyn M. Vella, Protecting Your Company Against Competitive Intelligence, Praeger, 1998.


The Truth is Out There?

August 12, 2015

Our local paper, The Reading Eagle, recently ran a column on trustworthiness in the news[1].

The columnist, Andy Andrews, mused about recent developments raising substantial questions about the reliability of “news” on the Internet. In particular, he focused on online trolls that are continually spreading misinformation about business in the form of news releases or stories, ranging from chemical explosions to takeover offers.

These all had in common (1) that they were hoaxes, and (2) that they were believed by many readers because they “looked right”.

Lesson: When you find something new in the news on the Internet, particularly if it is just an emerging story, verify, do not just trust (with a tip of the hat to former President Reagan). While it is important to get new intelligence in circulation so you and your firm can (re)act, it is much more important to get it right!

The same danger lies in giving credence to stories in an emerging situation, from reliable or official sources. Many of details of a “breaking” story, whether about business, politics, or crime, are almost always incomplete, inaccurate, misdirected, or miscommunicated (select any or all of the above). Always keep that in mind.

You are not in the news business. You are in the intelligence business. Your job is to be right, not first.

[1] Andy Andrews, “In news we trust, part 2”, Reading Eagle, August 9, 2015, p. F1.

 


Is Secondary Now Your Primary?

August 7, 2015

One of the trends driving the digital age is the ability to store and then access vast (and growing) amounts of data, including digitized publications, access to government filings, and more. For those of us doing competitive intelligence (CI) research, this is a welcome situation, as it expands the raw data that our secondary research allows us to delve into to develop intelligence. But this carries with it a problem.

A problem? Actually, two problems.

The first is becoming so overwhelmed with raw data so that an analyst cannot manage to review all of it. While we think of this as primarily a problem with governmental data sweeps, it is becoming more of an issue for those of us in CI.

The second is that there is a danger that those doing this research tend to drift away from doing primary research – that is, actually talking to people.

And talking to people, or elicitation interviews, is hard work. You have to identify who you want to speak with, which usually requires significant secondary research, then contact them. If you get through, you must then convince them to talk with you, in an interview where you have a very limited time to extract critical nuggets of data.

As those who do this a lot know, you have to identify 10-20 people to speak to, and from them, perhaps 2-3 will even speak to you. And of those, perhaps 1 in 5 or 1 in 10 will actually provide you with that nugget.

Hard work? Yes, which is why more and more CI analysts and CI DIYers do less and less of this[1]. They go after the low-hanging fruit because dealing with that takes up most of their time, possibly pretending that it takes all of their time. So they tend to minimize (or ignore) elicitation as a critical source of data. And that trend is growing.

But these elicitation interviews often produce the gold nuggets that make the difference between a generic look at a competitor and generating real, competitively important, insights.

And primary research is where you more often can find out what will be going on; secondary is where you usually find out what was and is going on.

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[1] This does not even take into account the barriers created by employers who have policies which may bar talking with current or former employees of competitors. For those firms, elicitation is something that must be contracted out.