by Arik Johnson
Recent U.S. Government Intelligence Mistakes and Changes at the Federal Bureau of Investigation Have Lessons to Teach Intelligence Practitioners in Business
Well-publicized announcements lately that the FBI and other investigative arms of the U.S. Government had clues that something was afoot in the days leading up to the September 11th terrorist attacks last year on New York City and Washington D.C. have caused a great deal of trouble - most particularly, political trouble, in this election year - for the Bush Administration and it's War on Terrorism. Predictably opposing the Bush administration's current swell of popular support nationally, Congressional partisanship threatens to make an issue out of "what he knew and when he knew it" before year's-end. This provides an irresistible opportunity to compare and contrast how intelligence works (or doesn't work) in business and in government.
Nine months after the nation was shocked by a human tragedy so powerful as the deaths of 3000 of its citizens and those of its international allies, through attacks on two such prominent national symbols of "American Capitalist Expansionism" as the World Trade Center and the Pentagon, the FBI has finally announced a sweeping overhaul of their operations and objectives - away from their traditional roles as solely domestic crime fighters to a focus on terrorism prevention. At the same time, as the summer of 2002 gets into full swing, we've heard warnings from government intelligence officials and political leaders alike telling us to remain watchful and vigilant about possible future terrorist attacks on U.S. soil; that such attacks are not a matter of "if" but of "when".
Significantly, as must be noted, FBI Director Robert Mueller took over the job just seven days prior to 9-11, and so his recently announced changes are perhaps a superceding example of the reorganization that might otherwise be expected take place under new direction at any such agency. However, it is certain that the current changes taking place at the Bureau, as well as across the U.S. Intelligence Community, will be the subject of a great deal of scrutiny in the weeks and months to come.
It should be noted that, while nearly all of my intelligence peers in the business world find comparisons to government intelligence organizations and activities counterproductive at best and downright suicidal under the most extreme circumstances, it strikes me that some of the mistakes made in predicting and identifying the possibility and timing of the 9-11 attacks on America nine months ago are similar in kind to mistakes made in corporate decision making - i.e., a fundamental lack of due diligence. So, let's forget about raising the ire of general counsel and the legal department for a minute and consider what lessons might be taken away.
Knowledge of the Marketplace is All About Awareness and Responsiveness
It's always useful for any intelligence team to reevaluate its objectives and purpose in support of its constituency, as the FBI has done. Of course, for any intelligence team in a business setting, its foremost goals often begin with simply remaining aware of one's competitors; and, as their capabilities become more sophisticated, the general market environment, the company's customers, technology changes, trends in the business, and other risks and opportunities displayed before the firm. Like government intelligence organizations, competitive intelligence professionals rarely make policy decisions - more frequently (and ideally) producing the critical due diligence in the decision- and policy-making realm for the executives of corporate missions, both tactical and strategic.
However, awareness remains only half of the role of intelligence in business, as in government - responsiveness, both reactive and proactive, are more or less equally important traits to be contributed by the intelligence team. While anticipatory capabilities are often considered to supercede those of reactionary needs, the ability of an organization to react to events that were patently unpredictable is still mission critical. However, I believe we would all agree that any intelligence organization must focus on the future and strategic needs of its constituents - "go where the puck will be", in the immortal words of Wayne Gretzky.
Moreover, if you think anticipatory or proactive capabilities are lacking in government intelligence, take a peek at the business world! In an era where surprise has generally come to be considered inexcusable, how many intelligence failures happen every day to some of the world's fiercest and most respected competitors? Can anybody say, "dot-com meltdown"? How about "inventory liquidation"; or, "reporting results below analysts' expectations"?
Analysis is More Than a Collection of B-School Models
Over and over in the CI realm, we are taught that "analysis is what matters" in the Intelligence Cycle - another government intelligence adoption. Collection is a commodity and "actionable intelligence" is where the rubber meets the road. But, what do we really mean by that? I think most CI practitioners have fundamentally misunderstood what this kind of analysis is all about. In fact, how many times have we heard or talked about "analysis" in the context of anything other than the naïve goal of building a toolkit of sophisticated-looking models and templates that can be cookie-cuttered into any situation or circumstance without regard for doing the hardest part of the job? That is, piecing together patterns from the noise of signals attacking us in information saturated environments.
In the world of government intelligence, I think it's safe to say that the "analysis breakdown", as one commentator put it, happened in three areas. First, a lack of HUMINT, or knowledgeable human intelligence sources, close enough to the issue to understand the truth while also possessing a willingness to share it, without also bearing an unacceptable risk of deception or misinformation. Second, an inability to collate and synthesize what can truly be called massive amounts of both structured and unstructured information coming from trusted as well as unreliable sources around the world. And finally, we can cite the American Intelligence Community's ongoing deficit of resources, wherewithal and respect (as trusted advisors to the nation's leadership) to produce finished intelligence and recommendations for their intelligence consumers.
Human intelligence is just plain sloppy - whenever human personalities are involved, the opportunity for mistakes is enriched to the point of absurdity. That's why government intelligence prefers satellite imagery to paying off informants - satellites can't lie to you.
From the perspective of government intelligence analysts, the foreknowledge necessary to have interpreted and advised decision-makers on the sundry indicators of potentially imminent terrorist attack was arguably never within their grasp. They were unable to analyze the signals they received from the field. They didn't need analytical models - what was lacking was the ability to integrate and synthesize the information they were already getting in order to make sense of it. Likewise in the business world, rather than an array of academic techniques for confusing the heck out of anybody that skipped that day of their MBA training 20 years ago, why can't we just present the clues that form a consistent picture of reality? It doesn't even have to be all that sophisticated - of course, that wouldn't be nearly as much fun or make us look nearly as smart a bunch of research analysts in the eyes of intelligence consumers. Right?
Our government analysts simply couldn't connect the dots: the FBI alert that Arab men in American flight schools were reported by their instructors to be uninterested in how to take off or land a commercial passenger aircraft, simply to steer and fly one; warnings from French intelligence that another attack on New York was rumored to be coming in August or September of 2001; the CIA warning that Osama bin Laden might want to hijack a plane someday soon; or the arrest of alleged al-Qaida conspirator Zacarias Moussaoui in Minnesota days before September 11th and the subsequent inability of FBI investigators to establish probable cause to search his laptop for additional evidence. Even the recent announcement that finally, the FBI will be able to search the Internet like the rest of us (which until very recently, unbelievably enough, it was not allowed to do!); or the long-overdue authorization to recruit hundreds of new computer and linguistic specialists to deploy in the war on terror.
One might assume - incorrectly of course - that these capabilities were already in the toolkit of one of the Free World's foremost law enforcement agencies. Ironically, many of our most successful corporations make the same mistake. Rather than obscure b-school analytical models, actionable intelligence - and the pattern recognition that produces it - should be based on understanding meaning behind events and activities in the marketplace by friend and foe alike to predict potential consequences for the firm at large. Likewise, the recommendations, both generally and specifically, for decision-makers that explain the policy or situational options available to them, the arguments behind selecting one over another and the resulting potential outcomes that are likely to result all come from this ability to understand the meaning behind the risks and opportunities available to one's intelligence constituents.
I read a newspaper column recently that cited a 1997 essay appearing in Studies in Intelligence written by Defense Intelligence Agency analyst Russ Travers called, "The Coming Intelligence Failure". In the paper, the author diagnoses the problems, and potential consequences, of the nation's then-current approach to understanding changes in the international environment and their effects on the objectives of America's leaders and populace. Some subsequent examples we might cite range from the 1993 World Trade Center parking-garage bombing, to the 1996 truck bomb outside the Dharan, Saudi Arabia military complex, the 1998 U.S. embassy truck bombs in Nairobi, Kenya and Dar-es-Salaam, Tanzania and finally with the boatload of explosives that smashed into the USS Cole in Aden, Yemen in 2000. Add to these the rather startling fact that the country's then-Chief Executive (President Clinton) was the first president in memory not to receive morning briefings directly from the Central Intelligence Agency along with his copy of the written "President's Daily Brief", and Travers goes on to predict the kinds of consequences this attitude might take - eventually materializing in the form of the 1999 U.S. military bombing of the Chinese embassy in Belgrade and the surprise nuclear weapons testing by India in 1998.
Travers continued by finding fault not just with the executive branch and intelligence community at-large, but also with legislative oversight. Specifically calling the Clinton Administration's foreign policy reactive rather than anticipatory, he said: "Any attempt to program resources according to consumers' needs is a recipe for getting whipsawed from crisis to crisis and cannot be sustained". While this sounds a little extreme by business standards where times of crisis are hopefully less frequent, Travers goes on to cite that Congress "will bear some responsibility for our forthcoming intelligence failure" due to its insistence on a division of labor that had "significantly diminished competitive analysis within the Community and should, therefore, be seen as an acceptance of increased risk".
How many executives in the managerial ranks of business today understand there even exists an intelligence function in their organization, let alone comprehend a realistic understanding of its capabilities?
Travers continues, "By operating under the premise that we can divide intelligence analysis into military, economic and political subcomponents and then parcel out discrete responsibilities to various agencies, we are sowing the seeds for inevitable mistakes." At the time of its writing, this dividing of duties was relatively new - and "we are setting ourselves up to do bad political, economic and military analysis; by implication, support to all our consumers is going to get worse." Travers' rather prescient foreknowledge of the intelligence mistakes of the next five years to come are therefore diagnosed as systemic and chronic problems - not incidental, accidental or otherwise non-structural in nature. These passages are explicitly noteworthy in that it describes the parallels in attitude of many intelligence functions in business - that there is a technical intelligence group, a sales and marketing intelligence group, a legislative and regulatory group, a mergers-&-acquisitions group et cetera, ad nauseum.
It's clear from these citations of the failure to notice that something specific in the works prior to 9-11 that we desperately need to centralize our anti-terrorism intelligence capabilities so someone is in a position to connect the dots, interpret and analyze these signals and make recommendations to leadership for action. The business world's various intelligence capabilities and reports face a similar need for centralization of mission.
While I would not argue that mission specialties be dissolved wholesale as described above, there stands a significant opportunity for centralization of understanding at the highest levels of executive decision making - whether that comes in the form of a "VP of Intelligence" or some other CXO-report equivalent is relatively less important than that it comes in a form that presents as comprehensively as possible the indicators of present and future risk and opportunity from the external environment in a synthesized and easy-to-digest format, with arguments for the recommendations contained therein. Only in this way, can intelligence practitioners in business build their eventual reputations as trusted advisors to their constituents and succeed in their overall strategic mission - to exploit for its stakeholders the opportunities available to the firm, and defend it from risk. The argument at the government level should similarly be examined in corporate enterprise.
A Simple Task, Really
Because business organizations tend to be just as (or more) bureaucratic as government when it comes to their own perpetuity and survival, I know that many of these such parallel arguments between American national intelligence and intelligence in business will be automatically considered impractical. Obviously, the stakes are not equivalent nor are the consequences of failure as severe between each realm. Likewise, comparisons between intelligence in the government and business realms can be dangerous for CI practitioners to espouse from a legal and public relations perspective.
However, I don't believe it would really be that challenging an undertaking to conduct a brief yet thorough examination of one's own internal competitive intelligence resources and figure out how to make them more efficient and apply them more effectively. Perhaps if we did, corporate practitioners and their champions could follow the American Intelligence Community's lead - perhaps deciding that taking action today to reconsider how best to use CI resources could help avoid such costly mistakes tomorrow - and the much more dire consequences - of their government counterparts.
Arik R. Johnson is Managing Director of the Competitive Intelligence (CI) outsourcing & support bureau Aurora WDC. Learn more about Arik at his firm's Web site www.AuroraWDC.com/arik.htm.