Peak Intel: How So-Called Strategic Intelligence Actually Makes Us Dumber


An industry that once told hard truths to corporate and government clients now mostly just tells them what they want to hear, making it harder for us all to adapt to a changing world -- and that's why I'm leaving it.

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A lone worker looks out the window at an otherwise empty London office. Reuters

I recently quit my job as a "futurist" and "strategic intelligence analyst" after a successful 15-year career of writing books and consulting to corporations and governments around the world. I spent a decade and a half analyzing disruptive new technologies, predicting the effects of the Internet on the international construction industry, helping executives decide whether to spend billions in the nuclear power market, profiling the customer of the future -- and training thousands of executives to do likewise for their own companies. It was exciting and fulfilling, but this is the end of the road.  My employment status is interesting to nobody except my wife and I, but why I am leaving the business of intelligence is important to everybody, because it stems from the endemic corruption of how decisions are made in our most critical institutions.

I am not quitting this industry for lack of passion, as I still believe -- more than ever -- in using good information and sophisticated analytical techniques to decode the future and make decisions. The problem is, the market for intelligence is now largely about providing information that makes decision makers feel better, rather than bringing true insights about risk and opportunity. Our future is now being planned by people who seem to put their emotional comfort ahead of making decisions based on real -- and often uncomfortable -- information. Perhaps one day, the discipline of real intelligence will return triumphantly to the world's executive suites. Until then, high-priced providers of "strategic intelligence" are only making it harder for their clients -- for all of us -- to adapt by shielding them from painful truths.

Many people have not encountered the job title, "intelligence analyst." For the past 50 years, since the rise of the Central Intelligence Agency as a clearing house for information about the Soviet Union, this has been a job that involves researching trends, analyzing their potential impact, and reporting the possibilities to decision-makers. In the age of nuclear weapons, the world was changing too fast for leaders to make decisions based only on their own outdated assumptions. Organizations learned to critically assess their futures -- or literally lead humanity into possible mass extinction. The model mostly worked, and eventually the CIA was joined by other agencies, as well as for-profit consulting companies, which mimicked many of the techniques pioneered in the Cold War. Since the middle part of the 20th century, both corporations and governments have used strategic intelligence, forecasting, scenario planning, and other intelligence tools that keep decision-makers informed and ready to lead their institutions safely through tumultuous periods.

According to the private intelligence industry's view of itself, a phalanx of analysts collect data, assess the risks and opportunities inherent in trends, and provide a series of scenarios that help their clients make contingency plans, such that no matter what future arrives, people will thrive. But the reality of 2012 is quite different. A large number of people promise these services, from generalist mega-consultancies such as Booz Allen, Accenture, and McKinsey, to more boutique providers such as Global Business Network, the Institute for the Future, Frost & Sullivan, and countless individual practitioners. And many executives claim to practice state-of-the-art strategic management, dutifully using the insights of these providers in their day-to-day operations. Still, the culture of intelligence has been in free-fall since the financial crisis of 2008. While people may be pretending to follow intelligence, impostors in both the analyst and executive camps actually follow shallow, fake processes that justify their existing decisions and past investments.

The War Against Foresight

When the intelligence business works, it helps create organizational cultures where empirical evidence and concern for the long-range strategic impact of a decision trump internal politics and short-term expediency. And in the past, many such cultures have thrived in businesses and government agencies alike. But three trends are making this harder, or even leading these intelligence providers to have the opposite effect.

First, the explosion of cheap capital from Wall Street has led major industries to consolidate. Where a sector such as pharmaceuticals or telecommunications (and, of course, banking) might have had dozens of big players a couple of decades ago, now it has closer to five. When I began in the intelligence industry 15 years ago, I did projects for Compaq, Amoco, Wyeth Pharmaceuticals, and Cingular -- all of which have since been rolled into the conglomerates of Hewlett Packard, British Petroleum, Pfizer, and AT&T. There are fewer firms for an intelligence analyst to track, and their behavior has to be understood on totally different terms than when this discipline was created. Where once an automotive industry analyst might have based her predictions on the efficient marketplace theory or classical competitive analysis, now she has to use very different analytical tools. Most of these firms are considered Too Big to Fail by their respective nation-states, as evidenced by General Motors and Chrysler in 2009, and the markets are thus convoluted by subsidies, special regulations, and protectionism. One cannot predict the future of a marketplace by trend analysis alone, because oligopolies do not compete the same way as do firms in free markets. 

Second, industry consolidations have created gigantic bureaucracies. Hierarchical organizations have a very different logic than smaller firms. In less consolidated industries, success and failure are largely the result of the decisions you make, so intelligence about the reality of the marketplace is critical. Life is different in gigantic organizations, where success and failure are almost impossible to attribute to individual decisions. Though a given conglomerate might have hundreds or thousands of "executives," each is much more beholden to a complex culture of bosses. Even if people mean well, they're living and dying by a system where the incentives are to seek advancement by pushing responsibility downward and pulling credit upwards. In large, slow-moving bureaucracies, conventional thinking and risk avoidance become paramount, irrespective of how many times a day people at that organization use the word "strategy" or "innovation." It is far more preferable to fail conventionally than to make a daring but uncertain decision without the full backing of the entire organization. Because massive bureaucracies are so much more common than they were even a few years ago, decisions are simply not in vogue right now. 

Finally, and most importantly, the world's economy is today driven more by policy makers than at any time in recent history. At the behest of government officials, banks have been shielded from the consequences of their market decisions, and in many cases exempt from prosecution for their potential law-breaking. Nation-state policy-makers pick the winners in industries, such as automotive, and guarantee the smooth operations of others, such as Verizon and General Electric, both of which received zero-interest cash flow via the TARP program in 2008 and 2009. Eventually, states might do less of directing specific outcomes in the world markets, but for now, these policy-makers have suspended many critical free market principles, and at times the rule of law, on the notion that we are in a crisis, and keeping the system together comes first.

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Eric Garland, a futurist and strategic analyst, is the author of Future Inc: How Businesses Anticipate and Profit from What's Next and How to Predict the Future...and WIN!

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