Over two and half thousand years ago a Chinese General named Sun Tzu wrote a book call the "Art of War" (edited and with a foreword by James Clavell, Delta books, ISBM 0-385-29985-0). It starts, "The art of war is of vital importance to the state. It is a matter of life and death, a road either to safety or to ruin. Hence under no circumstances can it be neglected." And it ends, "Hence it is the only the enlightened ruler and the wise general who will use the highest intelligence of the army for purposes of spying, and thereby they achieve great results. Spies are a most important element in war, because upon them depends an army's ability to move."

Over the past decades Sun Tzu's book has transcended military application and gained a following in the business world. In fact, many of the business schools have it as required reading, sometimes devoting significant time discussing Sun Tzu's thirteen chapters as they would apply to modern-day business principles and strategies. I have probably read various translations and interpretations of the "Art of War" over dozens of times, and with each reading I discover something new. It is that type of work.

For this article I want to focus on Sun Tzu's last chapter, "The Use of Spies." Not that I'm advocating industrial spying, but rather how an organization incorporates a meaningful or even decisive intelligence strategy into its overall business activities. In today's fast-paced world, overtaken by the Internet, CNN, data bases and hundreds of thousand of articles, it seems like never before have we had so much information. Just click on a good search engine and intelligence is at your finger tips! Or is it?

Maybe the old days of the scouts perched on a hilltop with a pair of binoculars counting stands of drill pipe is a thing of the past. Maybe the need to go to conferences and hear the author, hear how he or she responds to questions, hear the side conversations of the participants at the luncheons and dinners is no longer necessary. Maybe the various golf outings, fishing trips, and other business entertainment were never important. Or maybe they were.

Armies

Organizations are like armies; managers and vice presidents are the officers and generals. How they lead their armies to victory or defeat, like Sun Tzu said, relies heavily on the understanding the enemy, i.e. competition; the terrain, i.e. business environment; and the key factors for engagement, i.e. various strategies and tactics, etc. The more an army knows about these critical factors, the better chance it has for winning battles, and finally the war. Critical is the importance given to intelligence and its use. Quoting the General: "One who acts thus is no leader of men, no present help to his sovereign, no master of victory. What enables the wise sovereign and the good general to strike and conquer, and achieve things beyond the reach of ordinary men is foreknowledge." And he goes on to say this foreknowledge is only gained from men. Could that still be true in these modern times?

Various industries treat intelligence with different priorities. The high-tech world of information technology software and hardware, for example, as well as pharmaceuticals, treat intelligence with the highest level of corporate commitment. Other industries facing rapid changes in their product lines, like automotive toys, video games, clothing and similar products also place a high priority on how they treat intelligence from both an offensive and defensive perspective.

Offensive intelligence from a broad perspective includes gathering, processing and proactively analyzing intelligence. Some government agencies spend hundreds of millions of dollars and millions of man hours gathering intelligence, whereas some major corporations invest the minimum. In the exploration and production (E&P) industry, without naming names, most people knowledgeable in the industry could identify three or four companies that have maintained a strong offensive intelligence strategy over the years. They want to learn everything they can to beat the competition and to be ready to seize future opportunities. What about the others?

Let's look at today's E&P environment where most new opportunities are technologically and economically challenged. If you would ask most companies what their strategies are pertaining to technology and operations, the majority would answer "to be a fast follower." Yet to be a successful fast follower, it would seem reasonable that the intelligence strategy should have a very high priority. Would it also seem logical if a company that has chosen a fast follower strategy would develop initiatives and provide resources to support the strategy?

One fast follower tactic includes partnering with companies that know what they are doing, taking advantage of their expertise and learning from them. Sun Tzu said, "Surviving spies, finally, are those who bring back news from the enemy's camp...Your surviving spy must be a man of keen intellect." How much learning takes place depends on the arrangement for partnering. Some companies, processing the knowledge, purposely limit the amount of engagement to reduce the learning from the partnership - no use helping the competition. This is one of the key defensive intelligence tactics. Other companies relish the joint venture relationship and easily share the knowledge transfer and assist in the learning. The old adage, the more men on the oars, the faster the boat goes, kind of makes sense, especially in a constrained manpower market.
Once given an opportunity to learn, what company would take one of its best and brightest out of an external leadership role and assign him or her to learn from the knowledgeable partner? Over my career I have seen this happen on a few occurrences and watched the learning company make a technological or an operational jump based on the person's involvement. But I've also witnessed just the opposite, where there was a great opportunity to learn and there was no effort to optimize the opportunity.

Consortium participation is another obvious way to leverage intelligence. Where better a place to meet people with the same interest than to join a consortium? Joining is one thing; getting intelligence value is something else. I have witnessed companies that have a very deliberate consortium strategy, and others that just show up. However, what differentiates the companies that hold intelligence as a high priority from the others is how they use the intelligence inside the company - how effectively and timely they move the intelligence to the decision makers.

There are many other offensive intelligence tactics tied to going to conferences; workshops; forums; participating in societies; even fishing and hunting trips, lunches, dinners, and personal relationships. Some companies encourage these types of activities, some are ambivalent and some actually discourage such involvements. In fact, one of the fallouts of our shrinking industry and the emphasis on bottom line is to get more work out of less people, which limits the time to actually pursue an intelligence strategy. This leads to the other question: what happens if one company has an offensive and defensive intelligence strategy and others do not? It is reasonable to believe the one would take advantage of the other.
A good example of a company that valued an intelligence strategy and one that didn't was told to me by one of my colleagues. It is also a good example of a company that understood defensive intelligence and one that didn't. The story goes:

At a major conference lunch it just happened that a couple of company experts were sitting at a table with others, enjoying the casual chit chat of such a gathering. At a table next to them a group had purposely gathered together, obviously to use the lunch as a meeting venue, and started talking about an intra-company project without any concern that someone might be listening or remotely interested. The two experts couldn't help hearing the discussion and, after multiple refills of coffee, learned intelligence they had been seeking for months. The one company never understood how their competitor rapidly caught up with them in such a short period of time.

Defensive strategies purposely would instruct such lunch time venues are inappropriate for company discussions. Companies that have an intelligence strategy know both offensive and defensive tactics. I'm sure everyone has been at a meeting where a company representative asks numerous questions, and then when asked for some of his or her company knowledge he or she declines, sometimes with some resulting boos. The point is these employees were coached in a company strategy for intelligence, and responded accordingly. Any company has an advantage that recognizes the importance of good intelligence and appreciates how to get it, and how to protect others from getting theirs. An expert who wants to learn some intelligence and who knows the questions to ask pitted against individuals who are not exposed to a company defensive intelligence strategy will, most of the time, succeed.

Sun Tzu also said, "Knowledge of the enemy's dispositions can only be obtained from other men...information in natural science may be sought by inductive reasoning; the laws of the universe can be verified by mathematical calculations; but the dispositions of the enemy are ascertainable through spies and spies alone." At the end of the day the decision makers are faced with making risky decisions based on some type of intelligence. This intelligence, ultimately, comes from people. Internally, how well an organization derives and uses its intelligence can impact the decision-making policies. How many times over my career have I heard employees say, "Why didn't they ask me?" or, "I could get this information", or "I wish there was some way for me to tell what I know." I remember a situation, some time ago, where a major E&P company made a major acquisition which later was proven to be a poor investment, only later to find out within the company engineers and geoscientists who had worked the area before and knew it was a dog. They were never asked for their input, even though they had tried to make their knowledge available to the decision-makers.

How important is an intelligence strategy for a company's success in today's fast-paced world? If one believes Sun Tzu's "Art of War" has a place in the modern business world, his last statement, even more than 2,000 years ago, has modern day significance: "Spies are a most important element in war, because upon them depends an army's ability to move." Maybe this also means intelligence is the most important element in business decisions, because upon it depends a company's ability to consistently succeed.

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