Strategic
intelligence
for executives
By Douglas Bernhardt
I
T 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, defined by the underlying strategic
notions that shape the views of a firm’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 firm.
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 financial disequilibrium
and uncertainty, seldom do monopolies – or any other
manner of artificial 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 filing for bankruptcy
protection in June 2009, Tata Motors of India continued
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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 Office 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 Strategic
from the one in which today’s battles for market share
and profits are fought, executives do not have the luxury intelligence
of ignoring or marginalising strategic intelligence. in particular
So what exactly is the role of intelligence – whether
in a national security context or in the business arena? represents the
In part, it is “to provide [decision] makers with the “intelligence
information and analysis [including warning analysis]
needed to formulate effective... policies”2, while strategic
necessary to
intelligence in particular represents the “intelligence create and
necessary to create and implement a strategy, typically
a grand strategy”3, whether at corporate, divisional
implement
or business unit level. Put another way, strategic a strategy,
intelligence is information designed to provide decision- typically a grand
makers “with the ‘big picture’ and long-range forecasts
they need in order to plan for the future”.4 Intelligence is strategy”, whether
not market research or “news”. at corporate,
But isn’t the importance of intelligence simply a matter
of what today’s teenager might call a “no brainer”? After divisional or
all, what CEO would be foolish enough to put his or her business unit
“stamp of approval” on a strategy that does not, for
example, include a comprehensive assessment of the level.
firm’s rivals – their capabilities, intentions, objectives and
65
 Enhancing business
STRATEGIC INTELLIGENCE FOR EXECUTIVES
plans? To develop and proceed with a “grand” strategy
based on flawed or untested assumption, gut instinct, or
Now think, when just plain intellectual arrogance is pure folly at a time when
every facet of business is changing and moving at Internet
was the last speed. Thus, the big question that corporate leaders
time your CEO need to ask themselves is this: do we routinely demand
or executive and receive information “combined with analysis that is
pertinent to [our] decision making in gauging threats”5
board requested against our interests? Even the most accomplished
an intelligence chief executive will benefit from analytically derived
“insights based on detailed knowledge of obstacles and
estimate intended opportunities and enemies and friends”.6
for use in support Another question: to what extent are your company’s
intelligence analysts – if there are any – tasked with
of strategy producing equivalents to the National Intelligence
creation? Estimates (NIEs) prepared for senior American
policymakers? An NIE represents the US intelligence
community’s most authoritative and coordinated written
assessment of a specific 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 satisfied
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 financial pay-off for an investment
in strategic intelligence estimates cannot be “quantified”
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
Douglas Bernhardt is a
guest lecturer at WBS, multiplier”. Its impact on an organisation’s medium-
where he teaches MBA to long-term success, and on occasion its very survival
electives on competitive can be profound. Rather like the headlamps of a car
intelligence and on travelling at night, it illuminates the road ahead, albeit
industry and competitor imperfectly. Even though intelligence does not – nor
analysis. He also teaches
should it – dictate company policy or a particular course
at the University of of action – that’s senior management’s job – it can make
Stellenbosch Business an invaluable contribution to your leadership’s strategic
School and other leading thinking and actions. It also helps to ensure that decision-
business schools in
makers do not hang their imaginations on the coat racks
Europe and South Africa.
Previously, he served outside their office doors. Moreover, regular dialogue
as managing director with intelligence staff ensures that executives are more
for the Geneva-based likely to be responsive to changing their opinions if the
consultancy Business strengths of alternative analyses and arguments suggest
Research Group SA, and that that is the smarter course.
before that he worked Unfortunately, the worldwide recession from which
for the international we are all emerging, still bloodied and shocked, and
marketing arm of a major which apparently took even the bluest of the “blue
defence manufacturing chips” by surprise, reflects, if nothing else, the failure of
group.
companies (and governments) everywhere to understand
66
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.
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: Office of
the Director of National Intelligence.
8 M Sorrell, 2010. How We Do it: Three Executives
Reflect on Strategic Decision Making. McKinsey
Quarterly [online], March.
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