What Do We Do About “Peak Intelligence?”

CI colleague and friend Eric Garland wrote a very provocative editorial in the April 2012 edition of The Atlantic entitled “Peak Intel: How So-Called Strategic Intelligence Actually Makes Us Dumber.” This is effectively Eric’s resignation from the field of intelligence along with some very important questions about the value of the intelligence practice in business today. The article is worth a read, and I definitely felt it was worth some commentary. Whether you agree or disagree, it’s worth considering the value competitive and strategic intelligence are delivering in our current environment.

Eric begins his article by telling us that he has observed an “endemic corruption of how decisions are made in our most critical institutions.” He goes on to describe how business decision-makers have become focused on feel-good information that doesn’t challenge their underlying assumptions. Eric says that this preference– nay insistence– on feel-good news has increased since the financial crisis of 2008. An industry has sprung up that feeds in to the executive desire to feel good about the future, executive mastery of their industry and general CYA. These charlatans actually making it harder for those of us who are trying to deliver the real, often uncomfortable intelligence. “Strategic intelligence” firms and many consultancies have become the enablers of senior executives’ addiction to graphs that always move up and to the right.

A tripartite cause for the war on strategic intelligence and emperical insight come in for criticism:

  1. Industry consolidation enabled by cheap capital. It’s intuitive that most mature industries are more concentrated today than they have been in the past. I argue that most industries have a diverse second and third-tier of competitors, there is a tendency towards “too big to fail” market leaders that are given special treatment by central banks, regulators and politicians to maintain their incumbency against market dynamics, disruptive innovation and poor management.
  2. Consolidation has created huge bureaucracies out of once-thriving businesses. The problems of agency in business are well-known, where managers’ and owners’ interests diverge. Firms that have reached this stage do things very differently from smaller, entrepreneurial firms. In these institutions it is better to fail conventionally than to innovate and face risk. Internal politics become the criteria for how decisions are made.
  3. Today’s global economy is driven by policy decision-makers and not by competitive markets. In the wake of 2008 the nation-state has its hands in the economy more than at any time since World War II. I attended a recent session of senior competitive intelligence and strategy executives from diverse industries, and the unanimous top priority for all of the firms represented in that room was regulation. Literally every industry has a set of regulatory and policy priorities that will almost by themselves determine success or failure, or at the very least define the shape of success or failure. The state  of our economy is being decided in Washington, Brussels and Beijing rather than in a competitive market.

Eric finished the editorial with several examples of former clients became frustrated or even enraged when presented with the most basic strategic facts, such as the aging global population or how long it could take for housing prices to regain 2007 levels (if ever). I’ve been here as well, tasked with defending the blatantly obvious against a corporate orthodoxy, only to have decisions put off because “the verdict isn’t in yet” on clearly settled matters of technological disruption or demographic shift.

While I agree with almost everything Eric has to say in his article, he and I diverge  on our personal conclusions about what to do about it:

  • In the last year I’ve moved to a firm where strategic realities are given their day in court. Not all big firms are closed to the value or import of good strategic intelligence. Sometimes you do need to pick your battles.
  • There are smaller firms competing in truly dynamic markets that demand real insight instead of CYA feints at strategic analysis. I’m always happy when I see smaller firms advertising to fill CI positions.
  • Eventually we will see a dramatic scaling back of state intervention into the economy, either at the bond auction or the ballot box. This changeover won’t happen everywhere at the same time, and the transition will be extremely painful to the leading firms in industries that have come to depend on central bank largesse and government intervention, but it will open up a world of opportunity for those small and medium firms to make their marks on their respective industries.

So, what’s your take on “Peak Intelligence?” Do you disagree with the concept entirely? If you agree, where in your career do you see the bright spots? What companies or firms are doing strategic insight the right way to support quality decision making?

As a fun addendum, here is Eric being interviewed about his article on Russia Today. Stick around for the last few seconds because the look on Eric’s face when the anchor has clearly missed the premise of what Eric is trying to convey is really priceless.

5 responses to “What Do We Do About “Peak Intelligence?”

  1. gregorylent

    systems fall away as they become unintelligent in relationship to the collective consciousness … but calling that “peak intelligence” is like looking at the one leg on the ground of a walking man and saying he is not going anywhere.

    huge new surge of consciousness is entering the planet now … the rest of our lives will be spent in watching old systems fail to comprehend what to do with it, make efforts to stymie it, all the while the route-around new-paradigm thinkers will be creating the next chapter of human endeavor.

    lucky to be alive now. enjoy.

  2. I’m not sure most leaders have ever really wanted the truth. History is littered with examples (climate change being a blatant one). I think Erics point about corporations becoming “too big to fail” however is important. Ideally, those that don’t heed honest and accurate intelligence simply die as a result – law of the jungle. However, what’s happening is just the opposite; Companies snub solid intelligence, make arrogant mistakes, fail horribly, get bailed out, lay a bunch of innocent employees off, get a pat on the back from Wall St. and give the CEO a raise and full bonus. And the tax payer foots the bill for all of it. It’s almost reverse Darwinism.

  3. Eric’s article is a great piece of intelligence for other than “Too big to fail” corporations. Indeed, Eric’s main argument relates to the fact “strategic Intelligence” no longer applies for large organizations as they no longer operate in free markets. I may not completely agree with that statement (several large corporations do still consider themselves as a aggregate of smaller businesses) that paradoxically emphasizes the importance of strategic intelligence for smaller companies: an opportunity to seize.

    In my current tenure at an intelligence firm, I do serve many clients operating in niche markets with highly specialized products. Those companies are very sensitive to regulations, do watch the “Too big to fail” corporations (their clients), and can actually execute “real” intelligence as Eric states it.

    I second Eric’s analysis we may be at a intel peak for large corporations however we are at the first step of the intelligence ladder for SMB and I do predict an unprecedented growth of intelligence practices at those companies in the near future.

  4. Miguel D Ferreira

    My two cents.

    1) The challenges Eric refers too are not new and are not going away. In fact they have been here all the time. Eventually, for him, they just got to be too evident. Still, I do have a different view and take based where I am, with whom I work with and the sort of challenges I am exposed too, so I respect his individual experience and of course decision but disagree.

    2) His too focused on ‘too big to fail’ companies and those are not the whole reality, meaning, in almost every economy SME’s (Small and Medium) represent over 90% of all companies and represent over 50% of all workers (in a given economy). So, yes, I take for granted that he is very correct on what he refers are his experiences with very large corporations and even governmental organizations. Still, most of the companies and therefore decision makers leaves and breathes on a daily reality very much different from those large companies, and these need and request Intelligence – strategic or not – to help them survive and hopefully succeed.

    Copied from my reply on LikedIn ‘Competitive/Market Intelligence Professionals’ Group discussion – applies perfectly here.

  5. I’m somewhat surprised by the conclusions in Eric’s article. That ”uncomfortable” truths concerning the business environment are scary for executives is hardly new. Delivering intelligence successfully is and always has been about communication, about understanding the reciever of the intelligence and being smart in how you deliver your conclusions. In many cases, I find it possible to stay true to your conclusions about the future and still manage to get through and, equally important, be able to facilitate successful action in the organization.

    I agree that the playing field has changed, and that political factors have increased in importance relative to the classical market theories. So, when the playing field for the intelligence business itself changes, I suggest we do what we tell our clients to do: adapt.

    I might also agree (somewhat on the fence here) that successful intelligence relatively has become even more difficult in larger companies. But my conclusion would be that in the long run, the smaller companies will benefit from this. This is not the least incompatible with classical market theory.

    In my opinion, the intelligence field has been and often is pragmatic in its use of models to understand a changing business environment. So we need to learn more about driving forces based on politics? By all means, let’s do so. For those of us who believe that intelligence still is useful, giving up the work we love is not an option I would choose.

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