Tuesday, April 12, 2011

Is your Business Intelligent?

In business school they teach every successful business must master three disciplines:

Discipline One:    Operations
Discipline Two:    Finance
Discipline Three: Marketing

"Operations" means doing what your business does. Do you make cars? You'd better make good cars. If you serve meals, deliver good food and a good time. Wal-Mart sells the same items as other stores, but their mastery of operations, especially distribution logistics, allows them to profit at prices unmatched by their competitors.

Meanwhile, a business must be able to finance those operations. This means being able to pay one's employees and suppliers until the cash flow in exceeds the cash flow out. But like water management, cash flow management is never over. Accounting, tax laws, investments, loans, installment plans, and stock offerings are all money problems or blessings to help a company grow. Amazon survived for several years until they grew big enough to become profitable due to the financing genius of Jeff Bezos.

As if handling operations and finance simultaneously weren't enough, a business must market itself or it will die. Marketing can't be left until operations and finances are in place. Business is an 'all or none' activity. So the entrepreneur must also know advertising, marketing, and branding to launch and run his business.

Coca-Cola is surely the world champion of marketing. Having dominated the USA several years ago, Coke moved on to Europe, South America, Africa, and Asia. I have walked into a bar in the desert in Burkina Faso and there was a giant Coca-Cola sign in two languages on the wall.
The ability to juggle these three knives used to be enough to put one's business on the road to success. However, the world is changing and business is changing right along with it.

And so we see great businesses that have great operations, the best marketing programs, and almost unlimited financing shrink and fail as their smaller and weaker competitors gobble up their customers. An astute observer will ask:

Why does one business grow and the other one fail?

Because there is now a Fourth Discipline: Intelligence

In the new economy the businesses that grow and remain are the ones with superior intelligence. Yes, some have just the right product at the right time; chance plays a role in every part of life. But, if they were just lucky, they will soon be swallowed up or trampled down by other enterprises that understand this fourth discipline.

This fourth discipline, competitive intelligence, is hardly ever talked about. Business schools are just starting to include courses on intelligence. But the concept is not new.

In the fifteenth century, the House of Fugger Bank started an intelligence department and published an intelligence newsletter for its salesmen.

In 1898, John D. Rockefeller of Standard Oil was the first businessman to publicly use a coordinated, organized business intelligence unit. His clerks and analysts reportedly possessed a giant card file on competitors, customers, politicians, investors, bankers, and personnel, along with sensitive info on friends and enemies. ExxonMobil, the descendent of Standard Oil, keeps that tradition alive today with an intelligence unit larger than those of some European governments.

However, we have evidence to prove the existence of informal business intelligence activities since before the time of Christ.

  •  The Babylonians wrote about agents (spies) sent out with the caravans.
  •   In the first century BC, the Corinthians used informers to find out what the rich Roman collectors sought so that they could manufacture and "age" some of the finest antiques in the empire.

 It would take several volumes to study the Venetian traders, the Spanish, and the English. They were all masters at gathering business intelligence from kings, pirates, merchants, and foreigners.

But perhaps the best example from history is the Japanese. When they exploded onto the world stage in the 1880's, the Japanese knew from their long history of rice and silk trading how important it was to have relevant and timely intelligence about their competitors, suppliers, and consumers. They continue to lead the world in business intelligence today.

Having worked as a contractor for three successful corporate intelligence departments, I will walk you through the steps to set up an economical intel unit in your company. In the following series we'll look at the difference between information and intelligence, and how the business owner can use Open Source Intelligence, Human Intelligence, Imagery, and the US Government to legally get an edge on your competitors.

With a competitive Intel capability we will see how a small business can launch specific strategies and tactics to use that intelligence capability to gain customers, gobble up the best executives, protect one's own company from espionage, and, most importantly, gain An Early Warning.