Strategic Intelligence versus Investigations

November 27, 2007 | Filed Under Due Diligence, Value Chain Relationships | No Comments

Today, there is much confusion in the marketplace regarding the difference between a strategic intelligence exercise and an investigation. To the untutored eye, these efforts are deceptively similar. Unfortunately, as recent events have shown, the penalties for confusing the two can be very harsh. Avoiding confusion requires an understanding of fundamental differences in three areas: Time orientation; Data gathering and analytical techniques; and Skill set requirements.

Time orientation: The first major difference between an investigation and a strategic intelligence exercise can be found in time orientation. For investigations, think about your favorite TV police show or detective novel. Simply stated, investigations tend to focus on determining causative factors explaining past events. Emphasis is on an analysis of history, looking for a single right answer.

Strategic intelligence, on the other hand, focuses on the extrapolation of current events to provide plausible representations of the future. While history and past events are often considered in strategic intelligence exercises, they are used normally to support projections of what may come. Moreover, since it deals with the future, strategic intelligence normally yields multiple acceptable answers.

Data gathering and analytical techniques: Much of the confusion between investigations and strategic intelligence is traceable to the fact that they both use very similar data gathering techniques. Interviews of knowledgeable individuals, physical observations of sites, and reviews of documentation are techniques common to both activities. There are certain data gathering activities that are more associated with one activity versus the other. Investigations, with its strong law enforcement roots, will sometimes rely on securing trash as abandoned property, commonly referred to as “dumpster diving.” Strategic intelligence, on the other hand, may focus on detailed reviews of patents as a way of discerning how key manufacturing processes operate. Regardless of the sources of data, the most important differentiating factor between investigations and strategic intelligence is how data is analyzed.

Analytical techniques in investigations focus on getting the right answer. They are normally deductive, employing a high level of directed thinking. Process of elimination is used to identify answers that don’t fit. Iterative application of this process leads to the identification of the right answer. As a by-product of the effort, data gathered is arrayed as evidence in support of the chosen answer.

Analytical techniques in strategic intelligence focus on determining appropriate courses of action based on anticipated future events. They are virtually all derived from traditional general management consulting and include such things as scenario analysis, SWOT analysis, competitive positioning assessment, and various microeconomic evaluation methods. Since such approaches generally produce an array of answers, there is heavy dependence on lateral thinking by those conducting the analysis. The ideal outcome is a series of actionable initiatives supporting a robust strategy to achieve long term objectives in the face of an uncertain future. This is very far from “getting the right answer.”

Skill set requirements: Not surprisingly, the people who do the best investigations tend to have experience and backgrounds in law enforcement and related fields. Over time, they internalize the type of deductive, directed thinking that leads them to identify causative factors for past events. Practitioners of strategic intelligence, on the other, should have a strong grounding in the type of analysis techniques cited previously. Most gain this through experience either in management consulting or as part of a corporate strategic planning function.

Why is it so important to distinguish the difference between investigations and strategic intelligence exercises? Consider the following headlines taken recently from the business press:

“Misdirected Intelligence Exercise Focused on Illegally Securing Board Member Cellphone Traffic Data Leads to Dismissal of CEO”

“Apprehension of Intelligence Operative in a Trash Bin at a Remote Manufacturing Plant Site Engenders $10 Million Payment to Aggrieved Competitor “

“Sensitive Private Financial Information Secured from Big 4 Accountant by Business Intelligence Operative”

In all three cases, the situation was characterized by the press as an intelligence gathering exercise gone bad. Deeper review of these situations revealed that all were carried out by investigators who had chosen to present themselves for sales purposes as intelligence professionals to their corporate clients. A more detailed review of the background and techniques of these investigators would have avoided significant economic costs and PR embarrassment for the corporations involved.

Unfortunately, it remains very easy to confuse strategic intelligence exercises and investigations. From our perspective, judicious application of the information in this blog should help potential users to identify the technique most appropriate for their circumstances.