Should CI departments do more to warn their management about pending "depression", or other economic upheaval?

[Mark Johnson]

Eric Garland asked a question regarding the fact that most companies were totally blindsided by the economic meltdown. Should CI departments have done more to warn? How do we ensure resources within our function for analyzing things management hasn't thought of, rather than just the questions they have actively requested? How do we sell them on answers when nobody asked the question?

What changes in skillset and method would be needed to tackle these kinds of IMPORTANT BUT NOT ON THE RADAR types of intelligence?

[Eric Garland]

We need the government to appoint a COMPETITIVE INTELLIGENCE CZAR.

What the heck, we have a czar for everything else, right?

[Eric Garland]

Seriously, this is an important question for everybody in management to visit. It really seems like the popular narrative in the United States is, "Well, it was nobody's fault. Nobody could see it coming. The bankers did it, mostly in the fall of 2008. We can't be expected to deal with information outside of our industry. Thus, everybody did a great job: CEO, VPs, Strategists and Intelligence, Product Managers."

I understand that within the hierarchy of most organizations - especially American - this narrative makes some sense. It's also a completely cop out. Can we just have shuttled the world's largest economy against the rocks, possibly taking several other economies with us (Iceland, UK, Eastern Europe) and it's really nobody's responsibility? That's fine with me, but if we're going to go in that direction it strikes me that globalization should really recede to local levels, because management doesn't really have enough interest in managing the complexity involved when capital starts crossing continents.

It seems that most competitive analyses of the majority of our careers have had one GIGANTIC canvassed assumption as a backdrop:

THE GLOBAL ECONOMY WILL GROW STEADILY FROM ITS CORE (US, EU, JAPAN) AND QUICKLY FROM LESS DEVELOPED COUNTRIES (CHINA, MEXICO, BRAZIL, RUSSIA)

Never have we revisited the concept that the U.S. would go broke, or that Eastern Europe could yet again turn into the tinderbox of Europe. We've had the luxury to only focus on our own industries, and to make strategies based on a few active competitors. It strikes me that with this crisis, we'll only be looking at such luxury in the rearview mirror. Insofar as we want to compete in a global market, we had better not allow ourselves such comforting macroscenarios of constant, easy growth in the global economy. The real story is more interesting, and puts much more on the plate of strategy and intelligence professionals.

Spread the word.

[Chris Hote]

Tough question Mark:
It is like convincing someone to visit a dentist predicting he will get some pain soon. Most people will wait to get in pain unless you work as a teeth model.

I think (naively?) decision makers react to costs and it is possible a particular skillset to develop would be cost analysis if not taught yet.

There is a cost about doing something and there is also a cost of not doing anything or not changing anything. I believe the cost of not doing anything about the economic meltdown might have been undermined.

PS: On another perspective and may be beyond the scope of this discussion, what the CI community can do to estimate for corporations the cost of not doing anything about climate change?

[Mark Johnson]

Eric Garland and I had a spirited Twitter discussion around this topic at the blazing speed of 140Char/msg. I'm injecting the counter view - not because I disagree, but because this viewpoint faces some hurdles.

1. Companies used to have a staff economist to advise on key industry trends and broad financial conditions. Today however, few CI analysts have any serious economic training. The average MBA has one or two classes in economics, generally a mere introduction. It's like trying to handle a complex billion-dollar merger with only a freshman finance course.

2. CI is already the department charged with challenging sacred assumptions. The "perpetual growth" myth is definitely one of these. In many organizations, this unfortunately places the messenger in great jeopardy. Arguing with cherished assumptions is considered disloyal, non-team-player behavior. So the CI analysts who take this charge seriously have to walk a delicate line. Almost every CI analyst I know has stories of excellent intel delivered to a management audience that is not listening. It's an unfortunate truth that the safe course is to soft-pedal the bad news.

3. If economic and/or financial monitoring of the global banking system isn't one of the KITs, diverting resources for deep analysis is difficult to impossible. This is one of the classic conflicts between activities which are IMPORTANT, but not URGENT. The current economic meltdown is a once-in-a-lifetime event. Predicting it would take serious information gathering and analysis resources.

This is not a simple question, because the skills for this kind of analysis aren't typical CI practitioner skills, the resources are hard to free up, and the target audience is resistant - perhaps even antagonistic. I've long believed CI should adopt Cassandra (of the Iliad) as our patron saint.

Scenario analysis or contingency planning could be a big helper, but this situation is actually the result of several worst scenario events. Speculation with high volatility financial instruments, fraudulent mortgage-writing behaviors, lack of visibility due to strong wave of deregulatory actions, mountains of consumer debt, and domino effects where seemingly healthy companies were impacted by financial institutions that engaged in covert risky behavior.

Perhaps the key is not to "swallow the elephant" of predicting the whole crisis, but to ask smaller bite-sized questions:
- How could the company be affected by demand downturn? Which industry segements most important for this?
- How could company operations be affected by tight credit markets?
- Which customer segments are most likely to be affected by tight credit and/or demand downturn?

[Vivek Raghuvanshi]

What differentiates us from the rest of the World, is our ability to identify "Strategic Inflection Points".

Anything that happens around the world, has implications and we must join the dots and see the Big Picture and identify the subtle Trends and subtle Patterns.

Whether it was CDC creating a Domino Effect, we as professionals should have seen it coming.

Rather than Focussing on the Radar ie Existing Competitors, we should look at Parallel Competitors and Latent Competitors. This way we will be able to identify subtle shifts. So, when we scan the Environment for very subtle shifts such as:

1. New Emerging Technology
2. Shift in Consumer Preferences

We must not limit ourselves to our Industry only ie Existing Competitors, but understand that any Corporate through Un-Related Diversification or Related Diversification or through Backward Integration or Forward Integration can become a Threat and make our company's product and services redundant.

This is why we Focus on Latent Competitors and Parallel Competitors.

Unless we are able to identify Strategic Inflection Points - ( Reference Andy Grove of Intel ) we can never identify subtle shifts in Technology. We do not have to Focus on our Industry only, for a New Emerging Technology in any Industry can be acquired by our Existing Competitors and make them competitive ie from a Low Cost Strategy, they may shift to Broad Differentiation Strategy or a Best Cost Strategy or a Focussed Differentiation Strategy or Focussed Low Cost Strategy.

It is not necessary that a organisation may use only one of the above mentioned Strategic Options.

An organisation may use a multi-pronged attack ie use a different Strategic Option for each of its products and services.

This is where we come in, ie we are able to interpret the maneuvers.

We must not forget that Strategy Formulation means Continuous Strategy Revision