Despite the advances made in the
sophistication of many companies' strategic
planning processes, companies still cannot
develop models of the increasingly complex
environment in which they operate, according
to a recent Harvard Business Review article
("Strategy as a Wicked Problem," Harvard
Business Review, May 2008 pp. 98-106). The
article cites frustrations
expressed by several CEOs that they face
complex issues that cannot be resolved by
gathering additional data, defining issues
more clearly, or breaking them down into
smaller problems. Why? Because these
complex strategy issues aren't just difficult
or persistent, they're "wicked."

According to the article, wickedness is more
than a degree of difficulty. Wicked issues
are different because traditional processes
can't resolve them. What constitutes a
wicked problem?

• The problem involves many stakeholders with different values and priorities
• The issue's roots are complex and tangled
• The problem is difficult to come to grips with and changes with every attempt to address it
• The challenge has no precedent
• There's nothing to indicate the right answer to the problem

I would contend that a well developed
competitive intelligence capability,
intrinsically linked to the strategy
development process, can help shed light on
wicked issues. Indeed, as we have observed
in the course of our consulting work, many of
our clients' Key Intelligence Topics -- the
complex external issues that carry
implications for a company that the CI
function must address -- embody wicked issues.
They include the persistent threat of new
entrants into an industry, unpredictable
regulatory developments, macroeconomic
conditions, and ongoing competitive
challenges.

While there are no set answers
to such topics -- and therefore no single
intelligence assessment or report that can
"answer" the issue -- it is the responsibility of
the CI function to provide the latest
insights and assessments of the impact these
issues are having on the organization.
Persistent intelligence deliverables that
don't try to solve wicked issues, but that
provide updates, a context, or judgments
about likely outcomes,
help management come to a common viewpoint on
the degree of impact of such issues, and to
help develop a strategic position on them.

Careers in intelligence can be a blessing and a curse. I have learned that my analytical brain tends to lock on to whatever is available in the moment – much like you can find yourself blandly reading the same billboard at a stoplight over and over again.

So I noticed at some point that bathroom soap has a story to tell. “Wash your hands – with soap!” As a parent of young kids, I find myself uttering these words maybe ten times a day. Children are dirty creatures. I spend a lot of time waiting on little hand-washers in restaurants and other public places – so much time, in fact, that it depresses me to think of it. For the diligent neat freak, there is an endless supply of soaps to be found out in the world. Collectively, this surfeit of surfactants can reveal some useful information about businesses that house the places in which you lather and rinse.


Soap is a commodity that businesses must procure in the regular course of their activities. A washroom without soap is like a day without sunshine. Most businesses have shifted to liquid or foam soaps – solid bars are as rare as washroom attendants anymore. The range of soap options in the market reflects the range of procurement options available to managers:

Color. Most of the pastel spectrum is represented in the market. Anecdotally, I would say that pink is the most common color you see, and thus is probably among the least expensive. Upscale businesses seem to gravitate toward blue or yellow. Kimberly-Clark offers its institutional customers a bilious green bulk liquid soap that seems to make your hands retain the scent of the paper towel. Is this a desirable feature?

Bulk versus bottle. Larger businesses seem to prefer bulk soap, which will come in a sealed plastic bag with a funky connector specific to the dispenser. Now and then, you see a company that opts to stay with individual bottles. The example that comes to mind is the Outback family of restaurants, which appears to use Yardley English Lavender pump bottles in all of its locations.

Marketing relationships. If you see a brand name on a soap dispenser, usually it’s the name of the supplier or the institutional manufacturer. The presence of a consumer brand, like Yardley at Outback, may imply a marketing relationship. Restaurants affiliated with Wendy’s feature Safeguard liquid soap, and each dispenser has the Safeguard logo prominently stamped on its face.

Centrality of organization. Centralized organizations buy the same soap for all locations; decentralized organizations buy based on local requirements and decision-making.
I offer my two alma maters as examples. Carnegie Mellon runs a centralized organization, with all units sharing a common facilities management service. Washroom soap is the same everywhere on campus. The University of Pennsylvania allows each of its colleges to operate autonomously, with a different soap in every building.
The exception to the rule is franchise businesses in the retail sector, which often seem to buy their soap as part of their overall procurement agreement with the umbrella organization. McDonald’s locations all seem to use the same soap, irrespective of ownership structure.

Outliers. Disney has long used powdered hand soap in its Florida theme parks, while using liquid hand soap in is resort hotels. The theme parks are models of efficiency. Is there some operational advantage that Disney gains by using powder in high-volume locations?

I will admit that revealing all of this collected knowledge in public is… unflattering. You can imagine backing away from me slowly at a cocktail party while I rave about the tactile umami of the liquid Safeguard at Wendy’s. I’m more fun than this. Honest.

Still, I was delighted to discover several years ago that I am not alone in my observational obsession. In fact, there exists a lively trade in the kind of close inspection of the everyday world that has cluttered my mind with trivia. The ringleader of this circus is Harvard professor John R. Stilgoe, author of a remarkable book called Outside Lies Magic.

Turns out you can learn a great deal about history, culture, and even business from simple observation. Stilgoe explains that he has been teaching a course on exploration at Harvard for the past 20 years. His students and former students see interesting data everywhere:

“One has just noticed escape hatches on the floors of inter-city buses and inquired about their relation to escape hatches in the roofs of new school buses. … Yet another reports that he can separate eastbound and westbound passengers at O’Hare Airport by the colors of their raincoats. … Noticing dates on cast-iron storm drain grates and fire hydrants introduces something of the shift of iron-founding from Worcester and Pittsburgh south to Chattanooga and Birmingham.”

Soap can tell us many things – about the cost structure of a business, about its target audience, about its marketing relationships, and even perhaps about its organizational structure. You wash your hands every day. What are you learning about your intelligence practice in the process?

I’ve come to believe that thinking differently about how to find useful data might be a valuable analytical exercise all its own. I am careful to shield dinner guests from my creepy knowledge of institutional hand soaps. I have even learned that my wife will no longer even feign interest in the commonality of tail light designs among late-1990s Dodge vehicles, signaling the rise of “parts-bin engineering” among automakers. (Look at the Durango and the Caravan – identical!)

But quietly, in my cluttered mind, I know I’m on to something useful.

Contributed by Michael Sperger, Competitive Intelligence at SAP

Why Now is the Time to Bolster Your CI Network

Concerns about a recession are looming as key indicators such as increased unemployment, shrinking payrolls and house price declines persist.  According to The Wall Street Journal, "U.S. employers shed 63,000 jobs last month, the most in five years, reinforcing a widening view that the U.S. is falling into recession.  Among economists and politicians, the debate is shifting to how deep the downturn will be and how to ease it." (WSJ, March 10, 2008) 

In a soft market cycle, companies need to use every asset available to them, especially their intelligence assets.  One of the most important and underutilized intelligence tools at your disposal is your own internal network of employees.  Market-facing employees can provide insights on how a company can improve its competitive offerings to cross-sell, up-sell or introduce new products or services.   The key for organizations is to harness these insights through a few key steps.

• Identify key sources within your company and what information they have access to that can increase your intelligence on the competitive environment.
• Develop a process that educates your employee network on how to share key insights that can contribute to the intelligence function.
• Establish regular communication with our internal network to provide ample opportunities for sharing.

In a soft market, organizations need to be on top of their game.  Companies cannot afford to overlook one of the most valuable assets available: their own internal network of employees.

Why CI Is Essential to Effective Thought Leadership

A recent survey by the Economist Intelligence Unit shows that B2B companies are rapidly installing sophisticated global business intelligence systems.  Indeed, 65% of survey respondents said that greater integration of external and internal business intelligence systems is the top change their companies will make to how they receive and share external information. (10 Megatrends in B2B Marketing, 2008, The Economist Intelligence Unit, March 2008)

Why?  For B2B companies, demonstrating distinctive thought leadership has become the most effective marketing tool at their disposal, and survey respondents admit that richer sources of business intelligence that assess and validate industry trends are crucial for an effective and integrated thought-leadership campaign.  Clearly, these executives believe that impact assessments of external information are valuable in setting their companies' marketing efforts apart from the competition.  What kinds of intelligence are B2B marketers looking for?  Four of the top six types cited include:

• Industry analysis and forecasts
• Analysis of news and key developments
• Competitive intelligence
• Regulations and business conditions

Whether your company provides B2B products and services or not, the implications of the survey results are clear.  A systematic and thoughtful approach to competitive and business intelligence is essential if integrated marketing campaigns are to succeed.

'Soft' Competitive Intelligence in the 21st Century

Blogs, wiki’s, and virtual worlds creates new opportunities for gathering intelligence. What is unique about these venues is that they are not additional published sources but a form of primary intelligence available through the 21st century’s latest electronic media.

What sets these vehicles apart from more traditional sources is that the individuals participating in these media are freely volunteering their opinions. Folks are usually more open when they believe they are interacting with their peers. The information shared in such venues is honest and raw, and not usually uncovered in traditional surveys or phone interviews, which can feel more like an official contract than an open dialogue.

So what exactly can blogs, wiki’s and the rest reveal from a competitive intelligence standpoint? Plenty. If analyzed properly, they hold insights into a wide variety of customer’s views including that of your and your competitors’:

 products, both likes and dislikes
 unique issues and challenges
 unmet needs and more.

Furthermore, the information shared is not outdated. In fact you can watch a real-time conversation unfold before your eyes on the Internet. And what’s more, you can join in on a conversation to dig deeper and learn more about a topic.

The intelligence you uncover is more of a “soft intelligence” than solid facts and figures. It reveals opinions, feelings and possible reasons and explanations behind the actions of consumers.

This type of intelligence can be just as important as hard-core statistics that come from more traditional market research.  Why?  It can not only provide insights into the underlying assumptions of consumers - which can explain their behavior today - but also how they are likely to act in the future.  Combined with qualified market research and secondary data, it can create the ultimate holistic view of the needs of customers. 

The 21st century is fast and furiously here. Don’t fall behind and miss out on some of the softer intelligence gems that can help you outsmart your competition today.

The Evolution of CI Software

Just as organisms and species evolve to meet the ecological requirements and environmental conditions in which they thrive, so too do dominant business models necessarily adapt to the ever changing landscapes of the unique operating environments in which their firms compete. Just look at the evolution of the software industry over the past few years. As the supporting technologies upon which software systems were intended to run evolved over time, the dominant business model (installed, server-based solutions) has begun to give way to a more stream-lined, web-based hosted solution. Commonly referred to as ‘software as a service’ (SAAS), the new model carries major implications for traditional software providers.

Often, when we think of competitive intelligence software, we can’t help but recall the almost dauntingly sophisticated full-scale packages that dominated the CI software space until recently. As a breed, these full-service software suites proclaim to be a panacea for almost all your CI needs, from planning and information collection on to analysis and reporting, these suites offer a host of tools that are able to address nearly every stage in the CI lifecycle. Interestingly, the all-inclusive nature of these packages, responsible for their greatest strengths, is simultaneously the root of their greatest weaknesses as they are often cumbersome to install, costly to maintain, and often require a steep learning curve not to mention the need to jump through corporate IT procurement policies and lengthy roll out procedures.

For a variety of technological reasons, full service CI software packages evolved in an environment that rewarded large, installed, server or mainframe-based technology packages. As Internet bandwidths increased over time and the software as a service (SAAS) model began to gain traction, CI software firms (like many others) were slow to get in on the ground floor. This opened the door for a cavalcade of hosted CI software solutions that were more dexterous, functionally targeted, and easily implemented. In fact, because the operating environment began to favor the hosted solution business model with its low installation and maintenance costs, shorter learning curves, and ability to bypass corporate IT departments, the large, full-scale software solutions, though admittedly more feature-rich, have been put at a disadvantage.

But while proponents of SAAS will have you believe that the shift towards a new business model is paradigmatic rather than fad, the new generation of CI technology tools has much ground to cover if it is to completely displace installed, server-based solutions. Critically, most new solutions do not offer support over the entire CI lifecycle, virtually ceding the market for those in need of an end-to-end solution to companies that offer full-service suites. In addition, newer hosted solutions tend not to be able to address the needs of complex CI functions as a result of their often-limited functionality (though this appears to be changing). Nevertheless, SAAS in the CI sphere may well be the future, but CI practitioners in need of a product that covers the entire range of the CI cycle may well have to wait for such a product to show up.

To be sure, the giants of the CI software space became behemoths for a reason – they were able to offer services and features that no other tool could match in a way that made sense within the operating context in which they evolved. But just as the lumbering dinosaurs came to recede from a rapidly changing ecology, so too has the software environment evolved, causing some to question whether or not the time has come for the lumbering giants of the software world to concede their place to a novel, more nimble generation of CI software solutions.

William J. Dragon
Will is a Senior Consultant at Outward Insights, a Boston-area strategy and competitive intelligence consulting firm. He can be reached at wdragon@outwardinsights.com.
© Copyright 2008 Outward Insights

Surprise: Strategic Planning's Achilles Heel

Think of all the ways your company manages its internal information – sales forecasts, ERP systems, and so on. Now, think about the resources spent tracking external events. If your company is like most, it is spending a fraction of its time and effort on the external as it is on the internal. Yet, isn’t the greatest source of strategic surprise found in the events and conditions that lie beyond the corporate walls?

Strategy guru Peter Drucker once said, “ninety percent of the information used in organizations is internally focused and only ten percent is about the outside environment. This is exactly backwards. “ At the heart of Drucker’s comments is the notion of competitive surprise. By failing to monitor external information, companies raise the likelihood of being surprised by external developments.

Research conducted by the Wharton School of Business found that two characteristics of surprise affect companies’ responses: the source of the surprise and the company’s ability to react. The source of the surprise can be looked at in two ways – is it from unknown sources (for example, terrorism) or is it a familiar surprise, such as the timing of a recession? While known threats such as recessions can be anticipated better than sudden ones, successful companies are the ones that can adapt to both.

Surprise acts as a risk-multiplier. It’s bad enough for companies to be confronted with an external development that complicates their strategy. However, if companies at least have an indication that such developments could occur, they can focus on remediation. When such developments happen by surprise, the company’s ability to act in a thoughtful and effective way is compromised. Surprise takes what could be a manageable – though perhaps unpleasant – situation and makes it almost completely unmanageable.

Why do companies do such a poor job of keeping tabs on information that has the potential to cause severe strategic disruptions? I believe there are two causes:

• First, companies have a hard time knowing what to monitor. Given the wide range of industry participants and conditions that can be at the root of external threats, firms struggle just determining what is significant. As a result, many companies attempt to monitor everything, and build elaborate “environmental scanning” systems that crumble under the weight of the mountains of information they accumulate.

• Second, even if companies are able to isolate those external conditions that pose a threat, there are few effective means by which to monitor those conditions. News alerts and filters usually are not precise enough to capture information that is truly diagnostic for assessing a developing threat. At the same time, knowledge management efforts that attempt to encourage employees to share information and observations related to strategic threats have for the most part been a failure.

The solution, I believe, lies in a system that combines structured analysis of plausible threat scenarios with a simple and effective approach to information monitoring. Both elements form the basis of a business early warning system that can allow strategy analysts to provide credible warning of external threats, thereby minimizing the effect that surprise has on executives’ ability to respond.

The early warning indicators a company will monitor may include areas such as technology disruption, competitive shifts, regulatory changes, environmental factors, consumer or social changes, economic conditions and political influences. Analysts should collect industry information from a mix of published and human sources. The information collected can be further synthesized through an IT application designed for just this purpose.

As analysts determine that certain indicators are behaving in such a way so as to present a developing threat, they can generate early warning alerts that argue for a particular strategic option – ideally one considered during the scenario-planning phase. This way, the element of surprise is almost completely eliminated from the equation, and managers can focus on deploying a response.