Insight is where the game is won and lost

with Liam Fahey

Intelligence enables superior decision making when it generates insight

Every organization faces a critical need: to understand the emerging and future world better and faster than rivals.

All rivals are looking at the same world, so the real battle is to determine who “sees” the underlying change more incisively than the competition. Capturing “change insight” before rivals creates the potential for competitive advantage: knowing where the marketplace opportunities may be, where the risks or vulnerabilities may be and, importantly, knowing what to do. In short, without superior insight, winning over time is simply not possible.

Successful intelligence operations focus on helping make better decisions, faster.  Those that don’t, fail. Companies can benefit enormously, for example:

• By identifying how to capitalize on emerging customer needs better than competitors, one company doubled its after tax margins and tripled its share price;
• Another, by identifying a competitor’s capabilities, protected a $400 million revenue stream during the time it took to develop a leapfrog product that pre-empted future competitive entry; and
• By reassessing its competitive position, yet another firm launched a new strategy that grew revenues by 14% a year over six years while successfully realizing four major acquisitions, resulting in the doubling of its market value.

So, how do organizations generate better insights? The most effective way to do this is to fully engage decision-makers, helping them answer questions such as:

• How can I quickly test my assumptions regarding a critical initiative, decision, or investment?
• How can I get early warning on which emerging market opportunities represent the best probability for success and on which emerging competitive threats are most serious?
• Why were we surprised by the actions of one of our largest competitors?
• Why do we accept our own marketplace projections when they continually prove to be significantly off target?
• How can I quickly develop a professional intelligence team that will enable sharper thinking on the part of the executive team?

Insights for better decision-making

Intelligence as an influence on decision making has not yet fully bloomed in many companies. This is because data and analysis outputs, by themselves, have no intrinsic value. One hundred percent of the value is created when the analysis findings and outputs are used to make a better decision. Here’s the “state of play” with respect to intelligence work in far too many companies:

• Those charged with intelligence work more often than not are dislocated from the executives and managers at the heart of decision-making:
• Ongoing processes (e.g. the annual planning process) are frequently not designed to ask for or receive the necessary intelligence outputs; 
• Capital allocation and budgeting processes and decisions are often divorced from what should be standard intelligence contributions; and
• R&D sometimes is so internally focused that it downplays or ignores readily available intelligence inputs.
• Marketing, even though marketplace intelligence should be its “bread and butter,” often doesn’t transform good data into valuable intelligence;
• Many intelligence units focus on production, following an industrial-age military model first articulated in 1948*. It details steps “from identifying the need for data to delivering an intelligence product to a consumer.” Like all industrial models, “products” are prepared by personnel hired to follow a repeatable process, not for their understanding of how decision-makers actually make decisions. As one senior executive noted, many intelligence personnel “gather lots of data, create less information and do too little by way of insights or proposed actions.” 

Next post: What an intelligence-drive organization looks like.

*“Intelligence is for Commanders,” Military Service Publishing Company, 1948 (out of print)