Business Intelligence

The Effectiveness of Strategic Intelligence and its Impact on the Performance of Organizations

Corine Cohen

• Publisher: Wiley-ISTE
• Year: 2013
• Print ISBN: 9781848211148
• eBook ISBN: 9781118619629
• Edition: 1
• Topic: Business
• Subtopic: Operations
• Index: Business

Effective Strategic Intelligence (SI) is vital for organizations in an international context of instability, complexity and intense competition. Following a long process of qualitative, quantitative and empirical research next to SI experts and large companies, this book proposes a way to improve SI and its impact on the performance of an organization. From an exploration, description and evaluation model of SI, a measurement tool in two parts, for the producer and the user of SI, has been built. For all kind of firms and all advancement levels of SI, it allows the construction of a control panel which can be used to pilot SI and its impact on the performance of an organization.

Chapter 1

Scanning the Environment: A Vital Necessity for Companies

1.1. Getting informed: a very well-established and necessary requirement

The rapid evolution of the concept of scanning the corporate environment naturally leads to questioning its origin(s) and the reasons for its development within organizations. Is this concept really new? Where does it come from? Why do managers feel the need to monitor the environment of their companies?

Whether it is at the individual, government or company level, getting informed is a very well-established requirement.

1.1.1. A fundamental need

Getting informed is first and foremost a basic human need. In an often hostile natural environment, man had to acquire information to ensure his survival.

However, man is also curious by nature and eager to learn. He searches, interprets and constantly uses this information to improve his understanding of the world and to act in accordance with his environment. The discoveries of great explorers and the evolution of sciences are constant reminders. This natural curiosity seems to be different from one country to another. We observe for example that it is more prevalent in Asian cultures than in Western cultures.

1.1.2. “To be beaten is excusable, but to be taken by surprise is unforgivable” (Napoleon Bonaparte)

Obtaining information has always been vital in battlefields. All great commanders-in-chief were familiar with the strategic importance of information in armed combat. Obtaining strategic information was vital to better understand the enemy, avoid surprises and to be able to implement defensive and offensive actions. The military thus has long-standing knowledge of fact finding — intelligence — and companies find this expertise appealing. That is the main reason why we see so many military professionals go into the private sector. In addition to the necessity of finding new opportunities after the fall of the Eastern Bloc and the end of the Cold War, the defense department is now linked to economic defense. In fact, the activity of information collection and processing is also well-established in economic and political fields. It has often made it possible to ensure the supremacy of empires and continues to be a development lever for governments.

1.1.3. Acquiring or maintaining economic and political power

Numerous historical examples illustrate the enduring role of information in the power of countries. They show that colonial, industrial or commercial adventures always form the basis of contemporary intelligence systems (H. Martre).

There are pioneers such as the Republic of Venice, Sweden and Great Britain and modern intelligence systems from Japan, Germany, the USA or France.

The pioneers

THE EXAMPLE OF THE REPUBLIC OF VENICE

Founded in the 6th century, the Republic of Venice was part of the Byzantine Empire in the 9th century. From the 10th to the 12th centuries, its power was built on commercial maritime trade, particularly between the East and the West. Its ambassadors throughout Europe formed a network of informers. From the 12th to the 15th centuries, Venice became master of the seas and developed a true colonial empire.

THE CASE OF SWEDEN

In the 18th century, newspapers often reported European inventions described by Swedish merchants and travelers. This information then made it possible to introduce production methods in industries such as porcelain manufacture. From the middle of the 20th century, Sweden chose a winning internationalization strategy using education in language and strategic information management. The use and study of intelligence was a national affair, supported by the large network of businessmen and BISNES academics.

THE CASE OF GREAT BRITAIN

Great Britain was the leading international economic power during the Industrial Revolution. The first textile manufacturing plants were devised in Great Britain, along with numerous technical innovations such as the cotton spinning machine. Employees divulging information about these inventions were punished. In the petroleum field, the country used its own intelligence department to reinforce dominance, defend its colonial interests and to control its grounds and concessions. Large British corporations were the first to implement Marketing Intelligence services in the 1950s. Today, this intelligence activity is concentrated in the City, around banks, insurance companies and consulting firms.

Modern intelligence systems

THE JAPANESE MODEL

Japan has long been a model in this field. It built an impressive global information collection device which was at the heart of its exceptional growth in the 1980s, and its origin dates back to the Meiji era. Starting in 1868, this period marked the country’s modernization and its opening up to the West. The search for information was made in the interest of protection, to maintain Japan’s economic independence. The Japanese intelligence system is characterized by a collective and offensive information approach.

THE CASE OF GERMANY

In the 19th century, Bismarck’s Germany developed its information system to take advantage of the Industrial Revolution, and to fight against the domination of Victorian Britain. During this period, a strong synergy developed between banks and large German manufacturers, building a centralized information management system which further empowered the young German state in 1870.

Today, the uniqueness of the German intelligence system lies in the strategic alliance between banks, insurance companies and the large manufacturing groups centralizing information flows. This central organization connects trading companies, small businesses, consulting firms, etc. in a single national interest.

THE CASE OF THE USA

Towards the end of the 1950s, large American corporations started putting internal competitive intelligence services in place. Personnel and financial resources for these structures are important: the budget for the scanning device implemented by General Motors equals the funds dedicated to France’s foreign intelligence. However, because of their global economic dominance, the USA mostly focused on managing information about American competition and ignored foreign threats. For example, General Motors and Ford spied on each other for over 40 years.

Since the end of the 1970s and because of Japanese and then European competition, the USA developed a powerful global intelligence system. Greatly consolidated during the Clinton administration, it is supported by an undisputed leadership in information technology and computer and communication sciences. However, the effectiveness of the government’s intelligence services was widely criticized during the September 11^th 2001 attacks.

THE CASE OF FRANCE

France has also been using intelligence for a long time. French manufacturers were smuggling machine tools from Great Britain in order to compensate for not having kept up with the technical innovation of the first Industrial Revolution. Similarly, in order to beat the competition in high-precision clock making, then dominated by the British, manufacturing secrets were acquired from the leading expert in the field, allowing the supply of high quality chronometers to the Navy (Martre report).

Because of its policy of innovation, France had been a pioneer in technological watch since the early 1970s. It was, however, quickly left behind by other countries when the concept of intelligence was overcome by cultural barriers and prejudices: individualism, the notion of power connected to information, assimilation of industrial espionage, etc.

To make up for this setback, governments and corporations focused their energy on launching awareness and education campaigns in the 1990s. The contribution of the Martre report in 1994 then became significant.

The concept of research, processing and use of information is very old. It is inherent in humans and has always been practiced in the military, economic and political fields. Inquiring about the economic environment is also not a new activity for corporate players who have to make decisions on a daily basis. What is new, however, is that in this current period of uncertainty, it has become a necessity for most companies. The development of the surveillance concept in management sciences can be explained by different elements.

1.2. The corporation and its environment

The reasons why corporations use scanning are mainly linked to the nature and evolution of their circumstances in the post-War period.

1.2.1. The corporation: an open system interacting with its environment

After the Second World War, changes in the economic environment were observed, radically changing the concept of organization which went from being represented as a black box, or a closed system, to an open system in constant interaction with its environment. Understanding this environment and allowing better interaction with it seemed vital to the survival and competitiveness of corporations. The quality of information exchanges between the firm and its environment would influence the company’s viability. From then on, the environment evolved into an increasingly complex and disruptive state.

Instability and complexity of the environment

The causes of the increasing instability and complexity of the environment are numerous and interdependent. Among these are globalization and the transformation of information and communication technologies, requiring new game rules and a very rapid response time for economic players.

The race to internationalization is unavoidable for all companies regardless of their size and market (national or regional):

– the slowdown in growth and saturation of national markets generates more intense competitiveness and drives corporations to gain new markets, to search for new opportunities beyond their borders;

– overcapacity caused by improvements in productivity generates important inventory levels that must be disposed of at all costs;

– companies are forced to reinforce their competitive positions and to improve their international competitiveness;

– they can seize the opportunity to extend product lifecycles: a mature or declining product in original markets can be exported to countries where it can be launched as a new product or be in the growth phase of the product’s life;

– they can optimize the effects connected to size and benefit from economies of scale.

This inevitable movement toward globalization generates strong pressure from competition and complex economic problems. For example, liberalization was designed so that European companies could compete with foreign competition for services offered and economic performance. Liberalization first appeared in transportation, postal services, telecommunications and energy, resulting in the end of public service monopolies. In addition, other trading groups emerged. For example, the European Economic Community has become the largest domestic market in the world, with 340 million residents, and is the largest exporter. These economic zones resulted in a political union (European Union), an economic union (MERCOSUR) and free trade zones (NAFTA, ASEAN and MCCA). Moreover, the consumer has become more demanding and less loyal, forcing companies to become more aggressive toward their competitors in order to satisfy customers and make them more loyal. The increase in global production has led to significant overcapacity problems in all industrialized countries, resulting in severe social disruption. Finally, protection of the natural environment has become a major concern for many countries, imposing new norms and regulations on corporations.

The move toward globalization has considerably accelerated under the influence of New Information and Communication Technologies (NICTs). Flows between commercial blocs have accelerated. All sectors are involved and have undergone deep structural changes.

However, even NICTs, despite strong growth and the promise of exceeding all expectations, were unable to withstand environmental instability for long.

In fact, we have entered the era of the cyber-economy, information highways and the Internet. New players evolving in the world of new technology have become outstanding performers compared to the traditional economy heavyweights. According to a Boston Consulting Group study, at the end of the 1990s, 60 out of the 100 companies creating value for their shareholders were in the information technology field. This observation confirmed the outstanding vitality of this sector as the first names on the list b...

Table of contents

• Cover
• Title Page
• Copyright
• Introduction
• Chapter 1: Scanning the Environment: A Vital Necessity for Companies
• Chapter 2: Evolution of the General Concept of Surveillance
• Chapter 3: The Global Measurement Model of Strategic Intelligence
• Chapter 4: Objectives, Products, Use and Context of Strategic Intelligence
• Chapter 5: Evaluation of the Organizational Resources of SI
• Chapter 6: Evaluation of the SI Process
• Chapter 7: Evaluation of Human, Technical and Financial Resources of SI
• Chapter 8: SI Measurement Tools for SI Managers
• Chapter 9: Measurement Tools for SI Users
• Conclusion
• Bibliography
• Index