Introduction
So, what’s in a name?
After all, “A rose by any other name would smell as sweet“
Competitive Intelligence, Strategic Intelligence, Market Intelligence, Business Intelligence, Strategic Knowledge, Market Research, Competitor Monitoring, Market Monitoring, Scenario Planning, War Gaming are all terms that are used interchangeably and cause confusion among casual purveyors.
However, these disciplines or tools are unique and serve different purposes.
Their utilization is dependent on the nature of intelligence required to facilitate a strategic decision.
One of the most famous quotes of Donald Rumsfeld, former United States Secretary of Defense, during the 2002 Gulf War was –
As we know, there are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns – the ones we don’t know we don’t know.
This quote provides valuable guidance about the nature of intelligence that can be deployed in strategic decision making.
Let’s analyze the four variables that emerge from this quote, although Rumsfeld only mentioned three (unknown-knowns were not included).
1) Known-Knowns
These are facts that are common knowledge and form the foundation of the majority of strategic decisions. These facts are accumulated over an extensive period of time and may be implicit in the tacit knowledge possessed by decision makers gathered through their professional experience.
This knowledge may also be explicit, having being gathered through secondary sources such as industry reports, competitive briefings and benchmarking. Primary sources such as marketing research and competitor monitoring also contribute to this type of knowledge.
2) Known-Unknowns
Strategic decisions have critical elements that have levels of uncertainty associated with them. These uncertainties or unknowns are known to the organization and the strategic decision makers and they should employ competitive intelligence programs in the form of primary intelligence gathering targeted at competitors, suppliers, competitors and other external stakeholders to fill the knowledge gaps.
While, it may not be possible to completely eliminate all known-unknowns, these uncertainties can be mitigated to a large extent depending on the effectiveness of primary intelligence gathering and the subsequent analysis and conversion to “actionable intelligence”.
3) Unknown-Knowns
This variable was not mentioned by Donald Rumsfeld but it can refer to implicit knowledge that is possessed by decision makers that they do not bring to the fore or deploy in the strategic decision making process. The most common reason for this behavior are the “blind-spots” that are part of the mental-makeup of most decision makers. The downfall of Kodak and Polaroid due to their unwillingness to acknowledge the rise of digital photography is a glaring illustration of this fallacy.
One way that strategic decision makers can overcome blind spots is via participation in business war games. When strategic decision makers take part in role-play, they take simulated decisions from the perspective of a direct competitor and are able to acknowledge weaknesses and gaps in their own strategy. War gaming brings forth knowledge that would have been unknowingly suppressed due to the cognitive biases of decision makers.
4) Unknown-Unknowns
Strategic decisions that are long-term future oriented and forward looking operate in the realm of the unknown-unknown. This category of intelligence is the most difficult to obtain as both the uncertainties, as well as the knowledge needed to mitigate these uncertainties are unknown.
The manifestation of unknown-unknowns at the macroeconomic level could be “Black Swan” events such as the 2008 global financial crisis. At the business organizational level, scenario analysis and planning can be utilized to fill the gaps that could be manifested in the unknown-unknowns situation. Scenarios depict alternative future environments that are 5-10 years forward looking. Scenarios range between the extremities of positive or negative variables with probabilities associated with each scenario. Scenarios enable strategic decision makers to be prepared to deploy different strategies depending on the scenario that would be manifested.
Action Points
- Strategic decision makers should classify knowledge or intelligence available for decision making under four categories – known-knowns, known-unknowns, unknown-knowns and unknown-unknowns.
- Specific strategic and competitive analysis tools and techniques can be applied to each category to fill the knowledge gaps as follows –
- Known-knowns – Secondary data, marketing research, competitive monitoring and benchmarking
- Known-unknowns -Primary intelligence gathering and analysis
- Unknown-knowns– Business war gaming
- Unknown-unknowns – Scenario analysis and planning