Strategic Warning WBS Journal Sep2011

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poised to begin ‘eating its lunch’ to initiate a close and

re-energised monitoring of Zara?Consider what a former director of the US Defense

Intelligence Agency has to say about the subject ofwarning:

Warning intelligence differs significantly from current

intelligence and preparation of long-range estimates.

It accepts the presumption of surprise and incomplete

intelligence and requires exhaustive research upon which

to build the case for specific warning. Relationships

among events or involving the players may not be

readily evident at first and initial signs often consist of

fragmentary evidence, conflicting reports, or an absence

of something. It is not merely a compilation of facts. It is

an abstraction, and intangible, a perception or belief.

Whether in the private or public sector, the mainfunction of I&W “is to examine continually – and to reportperiodically, or daily if necessary – any developmentswhich could indicate that a competitor or other keyindustry player is preparing, or could be preparing, somenew action” likely to jeopardise the interests of the firm.This author’s experience and research suggests that“nothing is more important in the world of intelligencethan providing strategic warning to policymakers”.But the frightening thing is that, historically, surprise‘attacks’ (say, unexpected competitor moves) are“successful because the other side was the captive ofobsolete assumptions and beliefs that led, in the absence

of counter-mechanisms, to ignoring signs of risk”. Whenwas the last time your executives challenged their ‘time-tested’ assumptions – in effect, their cognitive biases –about your industry, your markets, your company andthemselves? Richards J Heuer Jr, a 28-year veteran of theUS Central Intelligence Agency, provides evidence “thatpatterns of expectations become so deeply embeddedthat they continue to influence perceptions even whenpeople are alerted to and try to take account of theexistence of data that do not fit their preconceptions”.Does this sound like you or your executives? Often thehardest job of the warning intelligence unit is to breakthrough the concrete-like mindsets of the very decision-

makers they exist to support.What are the attributes of a robust I&W system?Two stand out. First, warning intelligence represents,at best, a timely assessment of probabilities, coupledwith informed judgements. Second, decision-makers“recognise that warning cannot be issued with absolutecertainty” , and will, therefore, never perfectly matchuniversally accepted standards of proof. Rather,warning is based largely on the expert analysis of pre-defined indicators of a possible occurrence; i.e. knownor theoretical steps which “an adversary should or maytake in preparation” for a competitive action. Is that whatyour company does?

Ask your boss what they most want to avoid. And more

importantly, what are they doing about it?A company’s I&W activities form the core of its strategic

intelligence processes. Warning, we argue, representsthe very raison d’être for the intelligence function. Andit needs to be managed similar to any professionalfunction. According to Cynthia Grabo, a former USgovernment intelligence analyst, the following factors ofwarning need to be taken into account:• “Warning does not emerge from a compilation of

‘facts’ and indications alone, these are just the firststeps on the process;

• Warning does not flow from a majority consensus;• Warning depends on an exhaustive research effort;• Warning is an assessment of probabilities something

that many senior business leaders are uncomfortablein dealing with; and

• Warning produces a conviction that results in action.”After all, the aim is to enable decision makers “tomake the best possible decisions in the light of thefacts and judgments sent to [them]”.Thus, a firm’s early warning process can be thought

of in terms of three major steps: “risk identification,intelligence monitoring, and management action.”Although each of these steps involves examination thatgoes beyond the scope of this paper, the importantthing is warning doesn’t just happen; it is the outcomeof a dedicated, ongoing effort to identify, anticipate and

manage external risks and opportunities. The followingdiagram, suggested by Ben Gilad, a leading scholar in thefield of competitive intelligence, provides an illustrationof the process:

If your company does not have an effective I&W system,

it is operating at a significant competitive disadvantage.Being surprised by the often-disruptive initiatives ofcompetitors, customers, unions and other key playersis not only costly, it reveals an unacceptable andunnecessary failure – indeed, incompetence – on the partof the firm’s management. No major event occurs withoutsome prior indication that it will. The trick is to identifydiagnostically valid indicators in time, and successfullyassess their meaning. Thus, the question you must askyourselves is: do you possess the imagination, policy,capabilities and management competencies necessaryto ensure adequate warning of threats? Are you, in short,paying attention?

If your company

does not have

an effective

indications and

warning system,

it is operating

at a significant

competitive

disadvantage.

Often the hardest

job of the warningintelligence unit is

to break through

the concrete-like

mindsets of the

very decision-

makers they exist

to support.

F e e d b a

c kI n d i c a t o r s

AlertsManagementaction

Intelligencemonitoring

Risk identification

STRATEGIC WARNING

Enhancing business

64 www.wbsjournal.co.za• vol 3, 2011 • issue 26

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Strategic Warning WBS Journal Sep2011