IT IS UNLIKELY that any senior manager today would dispute the proposition that organisational strategy is – or should be – “all about managing to achieve superior performance”.1 Although the pathway to what Professor Richard D’Aveni of the Tuck School of Business refers to as “strategic supremacy” (or

failure?) is, in part, defi ned by the underlying strategic notions that shape the views of a fi rm’s leadership, it is, in equal measure, a function of the extent to which top management embrace and integrate strategic intelligence into their decision-making processes.

In one sense, we argue, a corporate strategy cannot exist without a strategic intelligence component. The reality of the world in which most of us do business is increasingly one where external forces – social, technological, economic, political and more – continue to play a major, and often decisive, role in the success or failure of the fi rm.

Yes, in many countries there remain powerful, often state-owned monopolies that exercise a full or partial stranglehold over one or more industry sectors but, in the 21st century, their long-term sustainability is very much in doubt. While the political rhetoric of left-wing populists such as Venezuela’s President Hugo Chávez may, for some population groups and in some markets, play well in times of fi nancial disequilibrium and uncertainty, seldom do monopolies – or any other manner of artifi cial trade barriers – serve the best economic interests of customers or the taxpayer.

In 2010 and beyond, companies have no option but to face the challenges of a growing host of intensifying competitive forces – in all forms and from all quarters – in what today, if we’re brutally honest, is nothing less than global economic warfare. Consider that, while GM, once the world’s largest automaker, was fi ling for bankruptcy protection in June 2009, Tata Motors of India continued

its double-digit growth in sales. As the music industry suffers steadily declining sales of physical recorded music, more music than ever before is making its way to consumers through electronic distribution channels that the record companies do not, and cannot, control. And although Microsoft’s suite of Offi ce applications still dominate the desktops of millions of users, Google Docs – which admittedly does not provide as many features as the Microsoft product – does offer three big advantages: it’s free, it’s simple, and for many of us it’s “good enough”.

In a business world that bears virtually no resemblance to the one we knew just 10 short years ago, and which 10 years from now will almost certainly be unrecognisable from the one in which today’s battles for market share and profi ts are fought, executives do not have the luxury of ignoring or marginalising strategic intelligence.

So what exactly is the role of intelligence – whether in a national security context or in the business arena? In part, it is “to provide [decision] makers with the information and analysis [including warning analysis] needed to formulate effective... policies”2, while strategic intelligence in particular represents the “intelligence necessary to create and implement a strategy, typically a grand strategy”3, whether at corporate, divisional or business unit level. Put another way, strategic intelligence is information designed to provide decision-makers “with the ‘big picture’ and long-range forecasts they need in order to plan for the future”.4 Intelligence is not market research or “news”.

But isn’t the importance of intelligence simply a matter of what today’s teenager might call a “no brainer”? After all, what CEO would be foolish enough to put his or her “stamp of approval” on a strategy that does not, for example, include a comprehensive assessment of the fi rm’s rivals – their capabilities, intentions, objectives and

Strategic

intelligence

in particular

represents the

“intelligence

necessary to

create and

implement

a strategy,

typically a grand

strategy”, whether

at corporate,

divisional or

business unit

level.

Strategic intelligencefor executivesBy Douglas Bernhardt

www.wbsjournal.co.za • vol 3, 2010 • issue 22 65

plans? To develop and proceed with a “grand” strategy based on fl awed or untested assumption, gut instinct, or just plain intellectual arrogance is pure folly at a time when every facet of business is changing and moving at Internet speed. Thus, the big question that corporate leaders need to ask themselves is this: do we routinely demand and receive information “combined with analysis that is pertinent to [our] decision making in gauging threats”5 against our interests? Even the most accomplished chief executive will benefi t from analytically derived “insights based on detailed knowledge of obstacles and opportunities and enemies and friends”.6

Another question: to what extent are your company’s intelligence analysts – if there are any – tasked with producing equivalents to the National Intelligence Estimates (NIEs) prepared for senior American policymakers? An NIE represents the US intelligence community’s most authoritative and coordinated written assessment of a specifi c national-security issue. While “NIEs usually provide information on the current state of play” of a strategic topic, they “are primarily ‘estimative’ – that is, they make judgments about the likely course of future events and identify the implications”7 for policy. Now think, when was the last time your CEO or executive board requested an intelligence estimate intended for use in support of strategy creation? Or are they satisfi ed with basing their decisions upon existing, typically static and outdated assumptions? Regretfully, only a handful of companies appear to generate a “product” similar to an NIE. The reason? The fi nancial pay-off for an investment in strategic intelligence estimates cannot be “quantifi ed” in advance. And since intelligence focuses on the future, and can never, therefore, be perfectly accurate – it is sometimes wrong. Try selling that to your company’s “number crunchers”.

Strategic intelligence serves as a powerful “force multiplier”. Its impact on an organisation’s medium- to long-term success, and on occasion its very survival can be profound. Rather like the headlamps of a car travelling at night, it illuminates the road ahead, albeit imperfectly. Even though intelligence does not – nor should it – dictate company policy or a particular course of action – that’s senior management’s job – it can make an invaluable contribution to your leadership’s strategic thinking and actions. It also helps to ensure that decision-makers do not hang their imaginations on the coat racks outside their offi ce doors. Moreover, regular dialogue with intelligence staff ensures that executives are more likely to be responsive to changing their opinions if the strengths of alternative analyses and arguments suggest that that is the smarter course.

Unfortunately, the worldwide recession from which we are all emerging, still bloodied and shocked, and which apparently took even the bluest of the “blue chips” by surprise, refl ects, if nothing else, the failure of companies (and governments) everywhere to understand

and act upon the dangerous array of misalignments that exist between economic fundamentals and the world as we have for too long chosen to perceive it. How could we have been so wrong? Where was the strategic intelligence in, say, late 2007 that could, and should, have triggered the ringing of alarm bells in boardrooms from London, to New York, to Tokyo? How many CEOs can you name that based their “take” of how the future was unfolding, at least in part, on “all source” information, evidence and impartial analysis? More worryingly, how many business leaders can you point to that persist in “escalating their commitment to losing endeavours that they have an emotional stake in”?8

Although professional intelligence analysts cannot, of course, predict “the” future, they are equipped to critically evaluate and report information, compiled from both “open” (public domain) and human sources, which helps reduce residual uncertainty and provides decision-makers with value-added insight and foresight.

For decades, policymakers in Australia, North America, the UK and most European nations have relied upon strategic intelligence to help them better anticipate and understand the threats they face to national security, as well as the opportunities they might grasp to advance their goals and protect their countries’ interests. Businesses, too, face a myriad threats to their ambitions, plans and, ultimately, their own economic security. Should not our most important engines of economic growth and prosperity – enterprises big and small – also begin to take strategic intelligence a little more seriously? The archetypical Englishman would never think of leaving home without his umbrella, even when storm clouds are nowhere in sight, “just in case”. Why should executives behave any differently? Their competitors don’t.

Enhancing business

Now think, when

was the last

time your CEO

or executive

board requested

an intelligence

estimate intended

for use in support

of strategy

creation?

STRATEGIC INTELLIGENCE FOR EXECUTIVES

Douglas Bernhardt is a guest lecturer at WBS, where he teaches MBA electives on competitive intelligence and on industry and competitor analysis. He also teaches at the University of Stellenbosch Business School and other leading business schools in Europe and South Africa. Previously, he served as managing director for the Geneva-based consultancy Business Research Group SA, and before that he worked for the international marketing arm of a major defence manufacturing group.

1 RM Grant, 2005. Contemporary Strategy Analysis. 5th ed. Oxford, UK: Blackwell Publishing.

2 JJ Wirtz, 2007. The Intelligence-Policy Nexus. In: LK Johnson (ed). Strategic Intelligence: Understanding the Hidden Side of Government. Westport, CT: Praeger Security International, pp. 140-150.

3 JG Heidenrich, 2007. The Intelligence Community’s Neglect of Strategic Intelligence. Studies in Intelligence, 51(2), pp. 15-25.

4 BD Berkowitz and AE Goodman, 1989. Strategic Intelligence for American National Security. Princeton, NJ: Princeton University Press.

5 RL Russell, 2007. Sharpening Strategic Intelligence: Why the CIA Gets it Wrong, and What Needs to be Done to Get it Right. Cambridge, UK: Cambridge University Press.

6 JG Heidenrich, 2007.(posted) 7 National Intelligence Council, 2007. Iran: Nuclear

Intentions and Capabilities. Washington, DC: Offi ce of the Director of National Intelligence.

8 M Sorrell, 2010. How We Do it: Three Executives Refl ect on Strategic Decision Making. McKinsey Quarterly [online], March.

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