Strategic Intelligence Ernie : Actually, the futures biz has been captive to the desires of its clients from day # 1. That takes us all the way back to ca. 1967 or thereabouts. OTOH, in that era there were any number of private forecasters, mostly in academia, who were free to make any projections / "predictions" they wanted , most of them guaranteed to be at least as wrong as right since their access to vital corporate information was limited to such an extent that most of what they could do was in the category "educated guesswork." Which I know quite well as someone who was part of that population of academics. Even in areas where independent forecasters might be useful, as in education or culture ( such as the evolution of tastes, hence markets ), there was another problem that was insurmountable, namely, the prestige needs of clients. I also recall a detailed proposal that a group of us in metro Phoenix put together for the city's education system. I know this all too well since I did most of the writing even if this was a team effort with countless hours of discussions and various people doing research. Oh, the city liked the idea, all right, but who were we, a startup group of forecasters and educators with no track record ? So the city took our concept and contracted with Herman Kahn and the Hudson Institute for a project that essentially lifted our ideas wholesale, no credit to us, of course. Well, of all projects in the world, Kahn and Hudson were the least well prepared. Hell, for them the whole area was terra incognita. Several hundred thousand dollars later Khan produced a feel good pile of paper with little or no intrinsic value but it had the Hudson Institute imprimatur and bestowed an aura of professional grandeur upon various city executives which could be used to impress others. Not that all forecasting is useless, quite the opposite is true. I think that professional futurists do reasonably well in tech forecasting, at least if you don't ask them for specs for specific new products. And demographic analysis is what it is, fairly foolproof, even if some people prefer to go into denial about what the data, which usually is very reliable, actually implies. The article you provided gives a classic case of exactly that. But there is another part of the equation that the article implies but never puts on the table, the effects of careerism. I have been thinking about this problem for a few weeks now, anything but all the time, more like occasional odd moments, yet with some sense of importance. And here is a conundrum about which an answer is elusive. All institutions and businesses of consequence need careerists. You want people who will invest their lifetimes --or at least many years-- and stay with the organization and help see it accomplish its goals. Understood. But along with that goes a serious problem, namely, careerism itself, a term denoting a mindset that is essentially narrow-minded about a whole range of issues, a way of thinking that precludes objectivity about most things since one's mentality is pretty much owned by the company or university or association. And when that happens objectivity goes out of the window no matter how good a professional may otherwise be. OK, you have got to have careerist professionals. Without them an organization cannot exist. It needs their expertise and dedication. How, then, do you get objectivity, which you also very much need ? Indeed, objectivity is absolutely essential. All I can tell you is how I think I would do it if I occupied a corner office on the top floor and was pulling in a few million per annum for my efforts. ( 1 ) Hire no-one who does not have serious experience outside the world of my business / school / association. That way, with each professional employee having the benefit of years "outside the cocoon" he or she would always have a frame of reference that was de facto objective at least in terms of memory and private inner histories of making decisions very different than what is typical in the present. Mostly I have asked myself this kind of question from the perspective of a university. I would not want to hire teachers unless they had a minimum of, say, 5 years in non-academic employment, at a business firm , in the military, in a non-profit, or still other areas. In other words, no-one ( NO-ONE ) who has been an academic all along, from the day he or she graduated with an MA or doctorate. Not sure how this would translate into the realm of business, but at least here is an analogy to make use of. ( 2 ) Create a service department whose job it is to be contrarian. No-one in the department would be "line." Strictly service The task of the people in it would be to prepare objective studies, recommendations, etc based on thorough analyses of hard data. They might start with a long term contract, let's use the magic number 5 years again, and would be retained entirely on the basis of the value of their forecasts for that 5 year period. Those seeking further advancement would have another 5 year contract and additional true ( could simply be "useful" ) forecasts would be rewarded accordingly. Competition in the "Contrarian Department" would be for accurate forecasts or empirically useful recommendations. Any "sucking up" to the institution would be pointless and counter-productive. Of course, this begs the question, how do you get management to value the work of the Department of Contrary Research ? Especially in getting such a unit off the ground, the first few years, there surely would be HUGE resistance. ( 3 ) Hire outside contractors for a number of kinds of projects. Make sure, in other words, that inbreeding is minimized. Keep a steady stream of fresh ideas and outlooks flowing into the company or university. Of course, if, from time to time, these outside people are seen as highly useful and valuable, make them an offer they cannot refuse and hire them. But keep this part of the overall system intrinsic to the system because of its high value. How this would work at a place like Apple which is know for secretiveness I do not know, and maybe it simply could not work, but as an ideal I do not think that any other approach could possibly be better. ------------------------------ All of this said, I also think I will drop the subject since the payoff for me can only be nothing at all, a big fat zero. Any further ideas it would be best to leave to myself for my own uses. Which is also why I prefer not to say much of anything about the project I am working on. Better to say as little as possible. No-one needs to know one damned thing for sure until the whole thing is ready for prime time. That is still weeks away, or even months. I simply cannot forecast a date of completion at this stage of things. Complicated as hell, that much I can say, and frustrating to get all the parts to "work out right." But it is delicious by way of anticipation to think ahead to the unveiling; no-one can possibly be prepared for what is to come. Ceteris paribus, of course, presuming that there are no meteors that fall on my head in the meantime, no major distractions that sidetrack my work , or the like, about which my life has been filled with such things. But otherwise............. Billy ==================================================== 4/6/2012 11:18:36 A.M. Pacific Daylight Time, [email protected] writes:
I for one totally believe that the 'futurist' industry has been capture by its customers... _http://www.theatlantic.com/international/archive/2012/04/peak-intel-how-so- called-strategic-intelligence-actually-makes-us-dumber/255413/_ (http://www.theatlantic.com/international/archive/2012/04/peak-intel-how-so-called-strat egic-intelligence-actually-makes-us-dumber/255413/) Peak Intel: How So-Called Strategic Intelligence Actually Makes Us Dumber An industry that once told hard truths to corporate and government clients now mostly just tells them what they want to hear, making it harder for us all to adapt to a changing world -- and that's why I'm leaving it. A lone worker looks out the window at an otherwise empty London office. Reuters I recently quit my job as a "futurist" and "strategic intelligence analyst" after a successful 15-year career of writing books and consulting to corporations and governments around the world. I spent a decade and a half analyzing disruptive new technologies, predicting the effects of the Internet on the international construction industry, helping executives decide whether to spend billions in the nuclear power market, profiling the customer of the future -- and training thousands of executives to do likewise for their own companies. It was exciting and fulfilling, but this is the end of the road. My employment status is interesting to nobody except my wife and I, but why I am leaving the business of intelligence is important to everybody, because it stems from the endemic corruption of how decisions are made in our most critical institutions. I am not quitting this industry for lack of passion, as I still believe -- more than ever -- in using good information and sophisticated analytical techniques to decode the future and make decisions. The problem is, the market for intelligence is now largely about providing information that makes decision makers feel better, rather than bringing true insights about risk and opportunity. Our future is now being planned by people who seem to put their emotional comfort ahead of making decisions based on real -- and often uncomfortable -- information. Perhaps one day, the discipline of real intelligence will return triumphantly to the world's executive suites. Until then, high-priced providers of "strategic intelligence" are only making it harder for their clients -- for all of us -- to adapt by shielding them from painful truths. Many people have not encountered the job title, "intelligence analyst." For the past 50 years, since the rise of the Central Intelligence Agency as a clearing house for information about the Soviet Union, this has been a job that involves researching trends, analyzing their potential impact, and reporting the possibilities to decision-makers. In the age of nuclear weapons, the world was changing too fast for leaders to make decisions based only on their own outdated assumptions. Organizations learned to critically assess their futures -- or literally lead humanity into possible mass extinction. The model mostly worked, and eventually the CIA was joined by other agencies, as well as for-profit consulting companies, which mimicked many of the techniques pioneered in the Cold War. Since the middle part of the 20th century, both corporations and governments have used strategic intelligence, forecasting, scenario planning, and other intelligence tools that keep decision-makers informed and ready to lead their institutions safely through tumultuous periods. According to the private intelligence industry's view of itself, a phalanx of analysts collect data, assess the risks and opportunities inherent in trends, and provide a series of scenarios that help their clients make contingency plans, such that no matter what future arrives, people will thrive. But the reality of 2012 is quite different. A large number of people promise these services, from generalist mega-consultancies such as Booz Allen, Accenture, and McKinsey, to more boutique providers such as Global Business Network, the Institute for the Future, Frost & Sullivan, and countless individual practitioners. And many executives claim to practice state-of-the-art strategic management, dutifully using the insights of these providers in their day-to-day operations. Still, the culture of intelligence has been in free-fall since the financial crisis of 2008. While people may be pretending to follow intelligence, impostors in both the analyst and executive camps actually follow shallow, fake processes that justify their existing decisions and past investments. The War Against Foresight When the intelligence business works, it helps create organizational cultures where empirical evidence and concern for the long-range strategic impact of a decision trump internal politics and short-term expediency. And in the past, many such cultures have thrived in businesses and government agencies alike. But three trends are making this harder, or even leading these intelligence providers to have the opposite effect. First, the explosion of cheap capital from Wall Street has led major industries to consolidate. Where a sector such as pharmaceuticals or telecommunications (and, of course, banking) might have had dozens of big players a couple of decades ago, now it has closer to five. When I began in the intelligence industry 15 years ago, I did projects for Compaq, Amoco, Wyeth Pharmaceuticals, and Cingular -- all of which have since been rolled into the conglomerates of Hewlett Packard, British Petroleum, Pfizer, and AT&T. There are fewer firms for an intelligence analyst to track, and their behavior has to be understood on totally different terms than when this discipline was created. Where once an automotive industry analyst might have based her predictions on the efficient marketplace theory or classical competitive analysis, now she has to use very different analytical tools. Most of these firms are considered Too Big to Fail by their respective nation-states, as evidenced by General Motors and Chrysler in 2009, and the markets are thus convoluted by subsidies, special regulations, and protectionism. One cannot predict the future of a marketplace by trend analysis alone, because oligopolies do not compete the same way as do firms in free markets. Second, industry consolidations have created gigantic bureaucracies. Hierarchical organizations have a very different logic than smaller firms. In less consolidated industries, success and failure are largely the result of the decisions you make, so intelligence about the reality of the marketplace is critical. Life is different in gigantic organizations, where success and failure are almost impossible to attribute to individual decisions. Though a given conglomerate might have hundreds or thousands of "executives," each is much more beholden to a complex culture of bosses. Even if people mean well, they're living and dying by a system where the incentives are to seek advancement by pushing responsibility downward and pulling credit upwards. In large, slow-moving bureaucracies, conventional thinking and risk avoidance become paramount, irrespective of how many times a day people at that organization use the word "strategy" or "innovation." It is far more preferable to fail conventionally than to make a daring but uncertain decision without the full backing of the entire organization. Because massive bureaucracies are so much more common than they were even a few years ago, decisions are simply not in vogue right now. Finally, and most importantly, the world's economy is today driven more by policy makers than at any time in recent history. At the behest of government officials, banks have been shielded from the consequences of their market decisions, and in many cases exempt from prosecution for their potential law-breaking. Nation-state policy-makers pick the winners in industries, such as automotive, and guarantee the smooth operations of others, such as Verizon and General Electric, _both of which received zero-interest cash flow via the TARP program in 2008 and 2009_ (http://www.washingtonpost.com/wp-dyn/content/article/2010/12/01/AR2010120106870.html) . Eventually, states might do less of directing specific outcomes in the world markets, but for now, these policy-makers have suspended many critical free market principles, and at times the rule of law, on the notion that we are in a crisis, and keeping the system together comes first. Thus, what use is the old model of competitive analysis if you are looking at markets in Greece right now? Which would have more impact on a given market: the clever, innovative actions of a CEO in Athens, or the politics within the European Central Bank? And how about analyzing the future of the housing market in the United States? Are you going to examine how much people are able to pay for accommodations and the level of housing stocks available in given cities, or shall you look at the desires of central bankers and Congressional policy-makers able to start new financing programs to end up with a desired outcome? How can you use classical competitive analysis to examine the future of markets when the relationships between firms and government agencies are so incestuous and the choices of consumers so severely limited by industrial consolidation? There is no good way to reliably predict the future in these markets anymore, except maybe by being privy to the desires of an ever-decreasing number of centrally connected power players. Companies still need guidance, but if rational analysis is nearly impossible, is it any wonder that executives are asking for less of it? What they are asking for is something, well, less productive. The Anti-Intelligence Culture Strategic intelligence is more and more like reading the Harvard Business Review through a fun house mirror. Sure, people use the words strategy, future, and foresight, but they mean something quite different. In my experiences, and based on what my colleagues in the field tell me, executives today do not do well when their analysts confront them with challenging, though often relatively benign, predictions. Confusion, anger, and psychological transference are common responses to unwelcome analysis. While executives pride themselves on being supremely rational technocrats able to calmly assess changes in the world without letting their personal emotions cloud their analysis, the reality is often quite a bit more human. One senior executive shut down a half-day event about future trends within the first ten minutes after a slide warning about "global aging populations" came up. The silver-haired alpha dog not only refused to discuss the fact that their average customer was near the age of social security and getting ready to leave active economic life, he asserted that Baby Boomers are not in fact aging, that "60 is the new 40," that all future strategic problems will be solved by "getting our numbers up," and that nobody in the company was to mention aging populations ever again. One group of government officials, while discussing the anticipated tax base from housing and retail, became suddenly unhinged when an analyst suggested that those sectors would not immediately re-inflate back to pre-2008 levels. When shown charts illustrating that Americans have ten times as much retail square footage as Europeans, and that housing bubble was, well, a bubble, the politicians angrily retorted that America was special and its population required ten times as many options when shopping. They blustered that houses always regain value and that the multi-trillion dollar bailout was "a one-time mistake." In early 2009, many European executives were quick to point out to me that the "financial crisis" was a "uniquely American problem" -- and that Portugal and Greece were fine, thank you very much. As European central banks privately rushed to keep the peripheral countries solvent in 2010, I was told not to publicly discuss any such possibilities while working with European groups. They didn't want to hear it. When a colleague of mine was brought into his employer's "corporate strategy group" a couple of years ago, he saw it as a great honor to be included in the one unit dedicated solely to the company's long-term success. Once allowed in to the secretive confines of the group, he discovered that the mandate of the position had, after 2008, been radically altered. Rather than mapping out how the markets were likely to change and his company might stay ahead, he was made to flip through old spreadsheets to find which products were most profitable, then get salesmen to "sell more of them." When he asked if he should perhaps include analysis of trends in society, technology, and economics to anticipate what long-term options they should be exploring, he was informed, "You need to go back to grad school if you just want to study stuff for no reason." A 2008 U.S. government report on "_Future Trends 2025_ (http://www.dni.gov/nic/PDF_2025/2025_Global_Trends_Final_Report.pdf) " made the following predictions: that the U.S. dollar might not be the world's reserve currency forever, Iran would continue to be a rogue nation, China would have more economic power, Russia would be rife with corruption and organized crime, and oil would be replaced by some other magic, stable, powerful, liquid fuel for the world's increasing fleet of cars and trucks. The report cost the U.S. government millions of dollars, all to produce a document that effectively predicted 2006, plus an extra pipedream forecast of getting out of the world's peak oil predicament, supported by zero technological forecasts from experts in the field. It looked and smelled like strategic forecasting, but was carefully produced to keep from upsetting anyone with scary challenges to their assumptions about the future strategic position of the United States. This is the new business model for an intelligence industry that once lived to disrupt its customers' thinking, not reassure it. For too many business and government executives, foresight is a luxury that is hardly necessary in this new "hypercompetitive" post-crisis world. Perhaps it's always been superfluous, we just didn't notice. The study of the future used to be easier to sell, maybe because the analysis usually predicted the growth of the consumer economy or the next great gadget. But the future is no longer nearly as palatable, and the customers are less interested. That's too bad, because companies and governments still need help planning for the future. But it takes discomfort, courage and humility to face that future, and who wants to pay for bad news? It will not always be this way. When the real pain of our losses and poor decisions finally occurs to people, when the last quantitative easing bailout no longer hides the logical incongruities that are fundamental to the system, and when enough people refuse to believe that "the new normal" is normal at all, we will then return to a real discussion of what is next. In the meantime, the remnants of the strategic intelligence world will be happy to take your money in exchange for telling you that everything is fine. -- Centroids: The Center of the Radical Centrist Community <[email protected]> Google Group: _http://groups.google.com/group/RadicalCentrism_ (http://groups.google.com/group/RadicalCentrism) Radical Centrism website and blog: _http://RadicalCentrism.org_ (http://radicalcentrism.org/) -- Centroids: The Center of the Radical Centrist Community <[email protected]> Google Group: http://groups.google.com/group/RadicalCentrism Radical Centrism website and blog: http://RadicalCentrism.org
