aeschylus  Yesterday I stumbled on this excellent article – Know Thy Enemy- in The American Interest, that links competitive knowledge and insight to strategy making.

The piece reaches back 2,500 years to buttress points I’m constantly making with clients: Your rivals are NOT you. They think differently, and operate with different goals and motivations. What you consider irrational on their part could be perfectly rational from their vantage point.

Until you accept this and take a shot at understanding opponent’s interests and motivations, any strategy you adopt is necessarily flawed.

As the article’s author points out, the ancient Greek city-states understood this. Today, in both the public policy and business space, we seem to want to avoid it.

Good strategy requires a sound understanding of one’s rivals. A rival in any walk of life is, in a sense, an interlocutor. To engage him effectively in debate one must understand his speech and reasoning patterns. Without that knowledge, conversation is at best pointless, at worst self-defeating. So it is in strategy. It is futile to engage in competition with a rival power without having at least an inkling about his thoughts, fears, and desires.

The modern Western penchant for trusting in the equal rationality of all suggests otherwise. According to this conceit, there is no reason to plumb the nature of an enemy’s thinking because it is no different in essence from one’s own. But this is wrong…

So often I see business strategists, market researchers and competitive analysts thoroughly focused on the data while they neglect the harder and more slippery work of analyzing and speculating about behavior.

The promise of “big data” is the latest trend here. Somehow more data and more robust analysis methods will yield greater certainty. They don’t.

Through a wonderful review of Aeschylus’s great tragedy, The Persians, the author notes that this preference for measuring things versus speculating on intent is age old.

… we often fall back on measuring the enemy’s armies, economies, and populations as indicators of what he may achieve. In such an assessment of material variables, the implicit logic is: If the enemy can, he will; and if he cannot, he won’t. In modern academic parlance, we use capabilities as proxies of intentions.

This is a weak foundation to rest upon nowadays, as it was 2,500 years ago. The Persians did exactly that with the Greeks, and they lost. As the messenger bringing the bad news of the defeat to the Persian court puts it, “so far as numbers are concerned, the fleet of the barbarians would have prevailed.”

Indeed, so far as numbers are concerned nearly every idea or strategy should succeed.  Yet it doesn’t.

How many great organizations have banked on scale and fallen to the assumption that rivals would do “what they are supposed to do” instead of what they actually did?

As both strategists and intelligence leaders, we would do well to remember our Aeschylus. And we should challenge ourselves and our organizations to do a better job of trying to understand rival intent!

Here’s a little clip for your Friday from AEI’s Arthur Brooks (no relation).

This is a great juxtaposition to this week’s nonsense in Davos, where “decision makers” flew 1,700! private jets to Switzerland to talk about how “we” can reduce our standard of living and combat “climate change”.

WHAT A BUNCH OF HYPOCRITES! Despite the fact that the press will label these luminaries “capitalists”, they are actually spoiled rich people with more money than sense. The real solutions and miracles of tomorrow will come from ONLY one place:  The FREE MARKET!


UPDATE …

Nice comment from Christian.  And excellent appraisal of the Davos crowd by the brilliant Kevin Williamson at National Review:  Davos’s Destructive Elites.  Gotta love this line…

“Taking an international commercial flight is one of the most carbon-intensive things the typical person does in his life, but if you’re comparing carbon footprints between your average traveler squeezed into coach on American and Davos Man quaffing Pol Roger in his cashmere-carpeted intercontinental air limousine, you’re talking Smurfette vs. Sasquatch.”

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Here are some leadership lessons from Marine General James Mattis.

17 Brilliant Insights from Legendary Marine General James Mattis.

You may find some of Mattis’ insights brutal. But perhaps we all need to look at the brutal facts of life, both in business and the broader world and steel ourselves to our circumstances, face forward and get on with it!

I particularly like:

“You cannot allow any of your people to avoid the brutal facts. If they start living in a dream world, it’s going to be bad.”

“I don’t lose any sleep at night over the potential for failure. I cannot even spell the word.”

“You can overcome wrong technology. Your people have the initiative, they see the problem, no big deal … you can’t overcome bad culture. You’ve gotta change whoever is in charge.”

“PowerPoint makes us stupid.”

“No war is over until the enemy says it’s over. We may think it over, we may declare it over, but in fact, the enemy gets a vote.”

“Ultimately, a real understanding of history means that we face NOTHING new under the sun.”

Last January I posted some Intelligence New Year’s resolutions. Looking back, they are just as relevant as we start 2015 as they were last year. For both those practicing this fascinating profession and for those customers and managers of the intelligence project, here they are:

Put Winning First … Our raison d’etre is (or needs to be) to help our firms succeed in the market. Too often we get wrapped around the wheel of process and forget this simple mission. In 2015, let’s put winning front and center. Read more….

Take Responsibility with Passion … Too many intelligence professionals adopt a dispassionate, stand-offish … dare I say, “clinical” … attitude to their work. They want to leave the hard work of “owning” decisions to others, to their bosses. If we want to make a deep and lasting impact on our firms … if we want a healthy profession … we need to stop this and join the team. Read more….

Take it to the Street … If we can’t translate intelligence insights into BOTH tactical and strategic actions that are practical and tuned to current market realities, whatever brilliance contained in our analysis will be lost. If we act like theorists and not like operations, marketing or sales lieutenants, then our impact on business results will be forever limited. Read more….

Think Financially … Good, bad or ugly, the world marks organizational success and failure in financial terms. All the best primary source evidence, analytical sophistication and analyst passion can’t overcome financial market opinion. So let’s not dismiss the Wall Street or Fleet Street point-of-view. Let’s understand it and make it part of our intelligence toolkit. Read more….

What resolutions and goals do you have for your intelligence team? Let’s talk about them. Add your comments or send me a note. Happy New Year!

When executives in your business talk about the “street’s” expectations, do you tune in or tune out? When the subject of “high finance” enters the intelligence realm, can you talk the language? Do you understand the concepts, the issues, the implications? How well do you factor them into your analyses?

I was recently presenting at a SCIP event and was a bit shocked by the lack of Finance IQ among meeting participants. In my talk I was reviewing the tension caused by high stock price multiples and DCF (Discounted Cash Flow) implied growth rates that various players in a given industry would have to achieve to keep investors happy.

Eyes glazed over. Folks needed me to clarify the definitions of stock multiples and DCF. Then there was some push-back. “Wall Street expectations are so short term.” “That stuff is so unrealistic.” “We need to focus on real game-changers, not ignorant analyst opinions.”

WOW … this is a problem!

While I certainly share some of these opinions and frustrations with the fickle nature of the financial world, Intelligence leaders CANNOT be so cavalier in dismissing them.  The fact is we can never rise above the power and pull of the financial world … even in privately held companies.

The reasons are simple. The financial world and, in particular, stock investors and their analyst community proxies, represent the “voice of the investor”. We must remember that most of our firms run at the pleasure of the investor.

Whether we like it or not, it is their money that builds our plants and offices, funds our inventories, and pays for the big marketing campaigns. Stock prices, despite their apparent fickleness and volatility, represent the market value of our firm’s prospects for success.

This impacts private companies as well. Borrowing costs are impacted by Wall Street’s opinion of the prospects for the publicly traded firms in the space. The availability of capital to expand markets and capacity, both up-stream and down-stream of a particular business, can impact a private company’s goals and results.

And, of course, while we may dislike it intensely, Wall Street’s expectations are the foremost report card for senior executives. Their compensation, reputation, and future prospects are tied directly to the stock price. And SO ARE OUR COMPETITORS!  (And so too are our suppliers and customers!)

This means much short term -and long term- behavior is driven by Wall Street.

So, rather than fight this reality, our final Intelligence Resolution needs to be to learn to think financially … and talk financially!

We need to understand financial markets explicitly and implicitly. We need to factor financial market expectations into our analyses (both backward and forward looking). We need to determine the weight of financial market pressure on direct rivals, as well as other key market players.

And instead of dismissing Wall Street’s “short-termism”, let’s use our knowledge of Wall Street’s ways to help our teams make better short AND long term decisions.

Besides, winning and satisfying fickle investors are the best ways I know to gain the time and space needed to chart successful long range moves.

THIS POST FIRST APPEARED JANUARY 10, 2014

While the New Year is still fresh and we are still ruminating on how we grow our skills and make a greater impact, I have another resolution for you. It follows logically from a focus on winning and a commitment to lead with passion. It is about getting off the bench and getting into the game.

One of the best pieces of feedback -really push back- I’ve gotten in my career came many years ago from a general manager during a war game.

Typical of these events, once the group got to the “problem solving” stage, the juices started to flow. Great ideas …or at least I thought they were great… started to fill the flip-charts. I thought we were going great. Then the boss dropped the bomb!

“This is all very easy for you to say, except I have no way to take these ideas to customers. We can’t just wave a wand and have them do what we want, even if we spend a lot more money.”

Ugh! Talk about a wet blanket.

In reality, this manager was making a plea for help.  Specifically, he wanted insights and ideas that he could use to negotiate the market battle as it was being fought that very day. Big, earth-altering ideas were of little help in getting his new item on the shelf next quarter or winning the next contract cycle.

Too often this is the problem with intelligence analysis and facilitated events. Too many good ideas with little or no practicability:  You can’t fix selling windows … You can’t change industry driven trade terms … You can’t radically alter supply chains … You can’t change the reach of chosen marketing vehicles, etc., etc.

In the real world, moving heaven and earth does prove to be a lot more difficult than just saying so.

So here’s the challenge and resolution. This year, concentrate on how to take your ideas and insights directly to the enemy!

This means putting your recommendations and ideas through a much tighter filter. They must pass this test:  How can the business take them to the street?

Stop lamenting or blaming others for the intractability of reality. Instead, spend time down at the level of action. Work to understand the degree of maneuverability and flexibility that exists at the transaction level of your business:

How and when would customers consider breaking existing contracts? What rules govern supply-chain changeovers? How can promotional windows be altered? What flexibility exists in trade terms? Who are potential allies and enemies among distributors, agents, suppliers or other important third parties? What product or service benefits are going unheralded or unrecognized by key customers? Etc., etc.

The questions are endless and unique to different businesses. But this is where the game moves. If you can outsmart competitors at this level, then intelligence can truly move the needle on revenue and market share.

So, spend more time at ground level and take it to the street!

THIS POST FIRST APPEARED JANUARY 9, 2014

Every new year brings out the pundits and prognosticators of doom, gloom and “uncertainty.”

Those of us in the Intelligence game need to steer clear of these siren singers and their verbose observations of the obvious. Whatever work we’re doing, we should not overwork “uncertainty” in the analysis. And we should not let our organizations use “uncertainty” to justify inaction or avoidance of decisions.

Rather, we should build off yesterday’s Intelligence Resolution of putting winning first and foremost. Our second resolution should be to jump in with both feet!

In all the areas where we can help the organization improve its chances to win, we should demonstrate passion and commitment to the cause. We should not wait to be asked or expected “to support”. We should lead!

Whenever I see intelligence professionals adopt the attitude of dispassionate observer -above the fray, calling their analyses without urgency or the will to act – I see someone who will have to spend more time updating his or her resume’.

You might get away with this attitude in large, bureaucratic organizations … for awhile, at least. But you are likely consigning yourself to only limited impact because your analyses will lack zeal or enthusiasm. And you maybe enabling an adversarial stance with decision makers when you habitually “leave the decision in their hands”. Business success (and life, for that matter) is too short-lived for “a just the facts” approach to intelligence.

An executive, no matter how mean or magnanimous, needs his lieutenants to bring passion and commitment to lead. (You do see yourself as a lieutenant to senior decision makers, don’t you?) It is easier to drive action and align the troops when decisions are taken with passion and zeal. Great organizations adopt the attitude “right or wrong, do it strong” with reason. If right, they win and win big. If wrong, they accept the defeat and get right back into action.

Mealy mouthed intelligence analysts rarely break through in this environment in good times. In tough times, they are rightly cast to the curb.

Don’t be these guys! Lead, bring passion, be prepared to argue a case for action. Don’t try to stand above. Instead, jump in with all the brashness of one who believes “if it’s gonna be, it’s up to me.” You’ll be a lot better at your job if you do.

THIS POST FIRST APPEARED JANUARY 8, 2014

Whatever your ambitions or the state of your intelligence organization, let me suggest one critical resolution to help you succeed in the coming year. Keep WINNING front and center of all you do.

Too much of the advice we receive in the intelligence game tells us to focus our work farther out into the future: To look at the 5 year, 10 year or even longer time horizons. I strongly suggest you put this advice aside.

If you work in the private sector, you need to understand these long term looks, while often revealing and certainly interesting, are an indulgent luxury. It is wonderful when an executive team or board of directors invites or encourages these exercises. But make no mistake, an intelligence organization cannot succeed by making them a steady diet.

History is littered with the carcasses of great enterprises that established enormous and profitable franchises, then started to believe in their own invincibility, and lost sight of the basic blocking and tackling that delivered the revenue.

Many, if not all, of these firms invested time and talent in future-oriented or future-themed activities. But sadly, these activities often distracted management from the “hear and now” problems facing the company, or became desperate searches for ways to leap-frog the growing rot in existing revenue streams. Either way, these “future” focused activities rarely deliver salvation.

As intelligence professionals we should always focus first and foremost on today’s business … the existing products, services and revenue streams. The money behind our paycheck (and that of all our colleagues) comes from the company’s success in the current market battle, not from some scenario-planned, game-theoried future state.

This means the majority (not all) of your work needs to concentrate on helping your company WIN! Revenues and profits! Making the numbers! Winning the deals! Banging out some more market share!

Intelligence must serve these goals first.

Once you accept and commit to this, several important benefits accrue.  First, you are putting yourself in a stronger career position because you’re making yourself more accountable for delivering tangible results: “Hey the intel folks really helped us win that contract.”

Second, your engagement in the operating activities of the company – how you make, market and sell products and services – will help you better understand rivals at the behavioral level. This will enhance your ability to predict future moves and reactions, which can only make you more effective at the first point.

Finally, deeper understanding and engagement in today’s game, will increase your ability to discern developing threats and distinguish true game changers. This is a much better source for intelligence topics than asking a CEO what keeps him or her up at night.

Taken together, putting winning first is a more certain path to credibility and impact. It also earns you a legitimate right in talk to leadership about the future.

THIS POST FIRST APPEARED JANUARY 7, 2014

Out-with-the-Old-and-in-with-the-New

Friends, it has been an interesting and eventful year. Thanks to all who have supported this project. And thanks to my clients and friends who have afforded so many rewarding experiences and new (or renewed) lessons about life and business.

So much of what I get to do is accumulate, translate, and distill your learning and then try to “pay it forward” to others. I get better as my friends and clients get better. What a distinct privilege to be a part of this transaction!

Whatever your fears, hopes or ambitions, I wish you only the best in 2015. I look forward to sharing the experience.

“Once more unto the breach!”

Whatever your beliefs, know this:  You are lucky to spend a small time on this warm, lush and life-filled orb. Whether by chance or design, you have much to be thankful for. The hurts, disappointments and bad turns pass away. The manifest blessings of life march on. So pray!

If the only prayer you said in your life was, “thank you”, that would suffice.  Meister Eckhart

We can only be said to be alive in those moments when our hearts are conscious of our treasures.  Thornton Wilder

Now, let’s eat!

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