Who are we going scouting with?

          Before revealing one (however, widely known) secret about maximizing the effectiveness of intelligence, it is necessary to take a closer look at those who actually do or will do commercial intelligence in a company?

It is about the basic skills and knowledge that your future employees and specialists should have. You will have to create and organize the work of an almost complete intelligence unit. Moreover, your team will eventually master the knowledge of the intelligence specialty, except for those methods and techniques that are not used in commercial intelligence, based on its specifics.

From our practical guide, you already know that reasonable care and caution should be exercised when selecting a commercial intelligence team. (The principles of selecting and building an exploration team are covered in Part Two of our guide.)

Let's focus, however, on basic knowledge and skills! From the very beginning, it is very important to find a person who not only meets certain social criteria, but who also possesses the necessary knowledge, skills and practices at a basic level.

In reconnaissance ALWAYS and in ALL cases, the team is selected for specific reconnaissance tasks. It is in this order: first the TASK, then the selection of a person to SOLVE it.

What's it important to know?

Do not confuse the field of “Risk Management” and the field of “Crisis Management” these two fields are practically unrelated and deal with completely different things.

The field of “Risk Management” implies knowledge and mastery:

·         Probability theory;

·         Fundamental knowledge of decision science;

·         Neuroscience;

·         Math analysis;

·         Differential equations (what do you know about the Fokker-Planck-Kolmogorov equation?);

·         Financial math;

·         Stochastic processes;

·         Working with statistical information.

With this body of knowledge, “risk managers” are able, using:

in mathematics, the methods of Statistics:

·         Descriptive statistics;

·         Probability Theory;

·         Hypothesis testing;

·         Regression analysis.

in mathematics, the methods of Linear Algebra:

·         Vectors;

·         The Matrices;

·         The eigenvalues and eigenvectors.

Calculus methods in mathematics

·         Derivatives;

·         Integrals;

·         Optimization methods.

in mathematics, the methods of Discrete Mathematics:

·         Combinatorics;

·         Graph theory;

·         Logic.

And also using knowledge of the field:

Data Analysis:

·         Data Cleanup;

·         Transformation;

·         Merging datasets.

As well as some exploratory data analysis (EDA) techniques:

·         Descriptive statistics;

·         Visualization of distributions;

·         Correlation analysis,

draw certain conclusions. Knowing and using all of the above tools will allow you, as a “risk manager”, to formulate and present what is known as an “invaluable value gain”.

By linking risk management to management decision quality criteria, you are likely to gain evidence of effective of company performance and an understanding of the long-term viability of the business itself, enabling you to communicate the value of the organization to shareholders and ensure continued investment for growth.

Don't even ask for clarification or conclusions about the above! As a former military intelligence officer, I have never encountered anything like this. Therefore, I do not possess all of the above knowledge and skills. My personal skills are much more modest. That's why my field is commercial intelligence and crisis management, it's much easier and more accessible.

I would only add that at its core, so-called “risk management”, according to the version of “risk management” itself, relies on the analysis of quantitative data and methods of quantitative analysis: “Monte Carlo” analysis; “Bow Tie” analysis, etc.

In this regard, I am reminded of a very old anecdote:

 

A patient comes to the doctor, but the doctor takes one look at the patient and says to him,

- You look very tired and exhausted. Which is not surprising given your complaints. I'm not gonna torture you and take a blood test! Instead, I'll draw from ten random patients, then mix their blood in a separate flask and analyze it. It's the same blood, nothing unusual. And a larger and different sample of materials to analyze will only refine and improve the quality of the analysis itself. Come back in a week.

A week later, the patient comes to the doctor again. The doctor looks at him with a long, surprised look and says,

- I didn't expect to see you again! According to your blood test, you have end-stage liver cirrhosis, hepatitis, and a whole bunch of venereal diseases! How do you even stay on your feet?

 

Isn't that weird? Research and analysis of objects that have nothing to do with the patient are unacceptable in medicine! But, in “risk management”, such analysis of events not directly related to the object of study and even management is quite welcome.

And lastly. Try, personally, to find an answer to the question: What percentage of manufacturing and/or selling companies, out of the total number of companies, have shareholders? This information will come in handy when you are looking for an easier job.

Scope of knowledge and skills required in commercial intelligence and “Crisis Management”:

What should a commercial intelligence specialist know and be able to do? We will proceed from the scope of his/her duties and sphere of activity.

Following Albert Einstein's dictum:

“If you can't explain something to a 6-year-old, you don't understand it.” I'll try to explain it to six-year-olds, because I know a little bit about it. I've served and even taught.

What exactly does a member of the commercial intelligence team do?

We do not even forecast any risks ourselves! (A detailed description of forecasting can be found HERE.) The most probable and CONCRETE goals and objectives of the research are provided by the head of the company and managers leading key business areas. They also act as key customers of the research.

There's not much left for us, the intelligence team:

·         Tracking (monitoring) of previously identified risks;

We look for “traces” of these events. We deploy our intelligence collection network in such a way that it covers different areas of the company's business activities. The point is that information and “traces” of the events under investigation appear in different areas at different times. Somewhere earlier, somewhere later. And, at the same time, the appearance of information in different spheres is an indirect source of confirmation of the realization of the event under study.

·         Determining the likelihood of the risk being realized (actually materializing) in real time;

Since we are talking about information uncertainty, a future risk may or may not occur and materialize. Determining the probability of realization of the predicted risk is perhaps one of the most difficult tasks of commercial intelligence and crisis management!

To understand this, we study the directly predicted risk and the surrounding circumstances. Here, for the first time, the possibilities of math come into play. What exactly is the math we use? The simplest of operations! Addition; subtraction; multiplication; division (can be done in columns). “The theory of intelligence indicators” stands us in good stead. (Our guide will tell you.)

·         Informing about what happened and the development of the situation, in case the risk is realized;

Round-the-clock informing of the main customer (business owner/director and leading managers) about the state of affairs at three levels of the company's business activity: Tactical (daily activities); Strategic (planned activities); Operational (random events not predicted earlier).

·         Risk follow-up (observation) to better understand communicate the real-life scenario and notification of this;

If a risk is realized, intelligence accompanies it in information and analytical terms. A predicted risk quite rarely develops according to the scenario that was considered when it was predicted.

·         Accompaniment (monitoring) of risk until the risk loses its significance or conditions for its realization disappear;

Sooner or later, even an unrealized but threatening risk becomes irrelevant and you should know about it!

All of the above are subject to real-time tracking (monitoring). You are studying a specific risk(s). Prepare yourself for the fact that you will not have ready-made statistical information directly related to the object of research. NOT at all! You will work out everything you need using qualitative, analytical research methods.

If we talk about statistics, then in the best case, the information found will not relate to this particular case, but to some past events, at best very similar. Nevertheless, such information is not in intelligence - reliable! A meaningful forecast, in our way “evaluation of the event intelligence”, can be made only on the basis of the most recent information directly related to the current event being studied.

The specific end goal of all five aspects of intelligence activities is to maximize the minimization of predicted, but particular risks and their consequences for the company's business activities. Informing management about the occurrence of unpredictable events (operational intelligence) and their likely impact on the company's business. (What to expect, what to prepare for, what measures are available to minimize risk).

Your company, in most cases, is able to do this proactively and not through so-called “risk management”, but primarily through competent management of its own resources and capabilities in a crisis situation.

So what are the key qualities, knowledge and skills that a potential commercial intelligence agent should possess?

·         Good knowledge of the business its conditions and the surrounding business environment;

This is perhaps the most important quality of a commercial scout. Understanding where and at the expense of where the profit comes from, to whom (who the customer is) and how exactly we sell. The relevant processes of the external market environment.

·         Basic (elementary) knowledge of arithmetic and math;

I'm ashamed to admit, but I still don't know what an integral is (I'm too lazy to read Google, and forget it quickly), where it comes from, why it needs to be extracted, and what to do with it next? I can see myself at a meeting saying the phrase “Let's extract the integral?” (I suppose I would learn a lot of new and interesting things about myself from my coworkers.) In my more than 20 years of intelligence practice this has never come in handy.

·         Basic knowledge of methods of analyzing and analytical processing of information;

Analysis, synthesis, induction, deduction - it is necessary to have an idea about it. The most general knowledge is enough. All this is acquired very quickly with practical experience.

That's probably all! Compare this with the amount of knowledge and skills required by an average “risk manager”, and most importantly, with the end results, and you will see for yourself that “crisis management” is much simpler in content and production than “risk management”.

Benchmarking remains a separate topic of intelligence interest, but it is written about in some detail in our“Practical Guide”.

Lastly, I can't resist telling another entertaining story. Many people think it's funny, but I can't figure out what's so funny about it.

 

A blonde going for a promenade is asked,

- What are the odds that you'll meet a live mammoth on your walk?

The blonde replies,

- Well, either I will or I won't. It's about 50/50!

 

It is customary to laugh at this point. I admit that I do not find anything funny in this answer. I would even say that it is an absolutely accurate answer of an intelligence officer and specialist. When we accept an “order” for research from our “customer”, we will either discover what we are looking for or we will not! A mammoth, after all, could be specially bred genetically from a test tube!

 

Next time, I'll talk about the technology that allows commercial intelligence to work as effectively and proactively as possible in the area of “crisis management”. Yes! The technology is completely borrowed from the military. What to do? Sun Tzu wrote his work over 2'400 years ago. And we, until now, only draw wisdom...