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Welcome to The Gambit, a coffee chat series hosted by the leadership team at Cipher. Every month, we interview thought leaders in the competitive intelligence industry and share their tips, guidance, and thoughts on the future of the M/CI industry. 

This month, we spoke to Troy Pfeffer, VP of Partnerships and Strategy for the Americas at Howspace, as well as Mike Ratcliffe and Leonard Lane, co-authors of a new CI Book: Competitive Intelligence 2.0: Competing in a Digital World. The episode was hosted by Peter Grimm, President of Cipher.

Watch the video conversation here, or check out our summary of the key takeaways or the complete transcript, below:

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Navigating the White Water World

All our panelists have spent years in the CI industry and have witnessed the transformative impact of technological developments upon the industry. These technological currents are so disruptive that in their new book, Mike and Leonard coined the term, “White Water World” to describe the state of the CI industry today.


The organization of today is a white water kayaker, riding an unpredictable white water river, with raging currents pulling them in every direction. Successful CI requires effectively navigating these waters, understanding the patterns beneath the surface, and plotting a path for smooth sailing.


All too often, companies would see an event and respond to it without understanding the reasons for it: the invisible forces under the current moving things along. Businesses need a 360 degree view of the market, the resilience to deal with setbacks, and the deductive reasoning to make sense of what they see.


In order to navigate this new world, organizations need a new approach to gathering, analyzing, and taking action on the flood of data and information that’s out there today. Incorporating the right technology to do that is a key focus, as is setting up an organizational structure that focuses on building an intelligent company. 

Building an Intelligent Company

As he made his way in the CI world, Troy Pfeffer was tasked with building the CI function from scratch at a leading Fortune 500 company. He set up a world-class CI function, comprised of one person: himself. To do this, he focused on building an intelligent company, with intelligence at the heart of everything the company does.


Our guests and many in the CI community agree on the complexity of the external environment today. There’s no doubt that, in CI, we’re living in a white water world – one that’s messy, complicated, and unclear. But what we fail to agree on is the best approach to navigating these waters. 


All too often, CI functions are spun up in reaction to a problem: a company was surprised by a competitor or market movement and want to ensure that they’re not surprised twice. So, a company will hire a few analysts, buy some data sources, and start collecting and making sense of this data. But this takes time, and by the time the next budget cycle comes around, the CI function has produced little value, and inevitably gets cut. 


What Troy contends is that in order to succeed in this white water world, an organization should not set up an intelligence function - they should instead build an intelligent company. What that means is that every employee of the organization participates in the intelligence process. This approach harnesses every employee of the organization, and leverages what they know, what they can find out, and what they think is happening. 


The infrastructure of an intelligent organization consists of three things:


The Methodologies & Processes: These are crucial, but perhaps what’s even more important is that everyone understands their role and the overall goal of the collective intelligence effort.


The Platform: There needs to be a centralized intelligence platform that can be accessed by the entire organization. The platform should collect and make sense of all information, internal and external, contain universal dashboards, and act as the foundation of the entire intelligence effort.


The Network: for a company to be truly intelligent, there must be a network of individuals who represent every function, level, and geography that make up the wider organization. Only by fostering and promoting this network can companies ensure that there is buy-in across the organization.


Using CI to Create A Sustainable Competitive Advantage

Often, the key to leveraging intelligence to build a sustainable competitive advantage lies in showing value to your organization very quickly. Otherwise, as the panelists note, the CI function will be shuttered before it has a chance to add significant value. 


Often, the best place to start is in the sales function. By helping the sales organization win the next sale over a competitor, intelligence practitioners can immediately demonstrate their value to the organization and, from there, work towards moving intelligence upstream in the organization towards a more strategic role.


By demonstrating value early, CI efforts can establish the credibility required to break down organizational barriers. Commonly, the biggest barrier to becoming an intelligent company is a siloed organizational structure. There is no doubt that an organization collectively knows more than the best CI professional, but the trouble is that organizations struggle to put together all the puzzle pieces.


The move to the intelligent organization is a radical shift for the majority of companies, but it’s one that can build a lasting and significant competitive advantage across every area of a company. In their book, Leonard and Mike outline this, and explore the dawn of CI 2.0. In the future of CI, there will be less focus on the external market and variables like how many salespeople your competitor has, and more focus on how competitors work together internally to create and disseminate organizational intelligence.


The world of CI is rapidly changing, and the companies that are most successful tomorrow will be those that successfully build an intelligent organization that helps them navigate the white water of the world today.  

Full Episode Transcript

Peter Grimm

Welcome everybody. Thanks for joining us for another coffee chat. I'm Pete Grimm, President of Cipher. I'm very pleased today to have three luminaries from the CI space who have recently done some really interesting work. 


We have Mike Ratcliffe, Leonard Lane and Troy Pfeffer with us today. So gentlemen, I'd love for each of you to give a brief introduction and let folks know the kind of perspective we're bringing to the problem, and then we'll get into our chat. Maybe Troy, would you say hello first? 

Troy Pfeffer

Sure. I'd be happy to: hello everyone, so happy to be here. 


So as Pete mentioned, I'm Troy Pfeffer, I've been in the CI profession and the CI world for about 15 years now. The item or the topic that I'm going to discuss briefly today is something that I've discovered in my journey and have spoken at length about this at various conferences: creating the intelligent company. 


In quick summary, in my CI journey, I set up a world-class intelligence function with just one person. I didn't intend to do that, I was almost forced to, but then it became obvious that it was a wonderful way to do CI. I engaged every individual within the company. So that led to this concept of creating the intelligent company, which we now have a blueprint where any organization can do such. 

Leonard Lane

I'm Leonard Lane and thank you Pete for having us on today. A bit about my background. I’m a little late to the CI world. I'm a supply chain guy, but the interesting thing is I've spent most of my working career overseas, helping companies build their supply chains primarily in China and Southeast Asia. 


I'm a strategist along with my supply chain background. Because I've operated in a cross border environment for a significant period of time, I've taken a look at the world and discovered a lot. Particularly as we've gone into the digital era, that is a world that we used to call volatile, uncertain, complex, and ambiguous - it turns out that the world is even more disruptive than that. 


We've coined the term with John Seely Brown called ‘the white water world’. The white water world is a world just as you think of a white water kayaker, where you have to understand what is causing the ripples beneath the surface. That's what finally got me into the area of competitive intelligence: how do I begin to think about understanding and finding out what those are, and then learning how to navigate them. 


In the process we've discovered, by using a bit of complexity theory, that the world is what we call hyper-connected, radically contingent, and very fast-moving. In order to be able to navigate that world, be resilient to survive the ups and downs and the twists and turns of the whitewater, we needed to be able to have a much better way in the organization to gather, interpret, and take action on intelligence. 


That brought us to the point of understanding how to use technology to help that journey to tie into what Troy is talking about and to use that to help create the intelligent company. That was really one of the core areas of our book. 

Mike Ratcliffe

I've been in competitive intelligence for 15 to 20 years, and I've been a consultant for many more years than that. I started off in the UK in transport, and then I came over to the U.S. and I got involved in econometrics consulting in a whole load of different industries. 


I ran the back end of the global strategy practice for McKinsey and then ended up eventually doing competitive intelligence around the farmer market, which I found fascinating because of just how quickly it moves. 


I've known Leonard now for about 10 years and I've worked with him on some of his projects, and when he asked me to help him with the book, it was great. I would love to go and actually explain what I've been seeing around the trends going on in the information world. I was educated as a physicist, and then I became an economist at the London School of Economics, and I know those trends don't go away. 


If you understand the trends, then you have a different perspective on the future. That's what the book tries to do. It gives the historical context of what's happening. It talks about these trends and then it layers in how we're now collecting information and how we need to analyze it and think about it in the future. That leads on to what Mike has been talking about in terms of the white water world and what Troy's talking about in terms of the intelligent company. So it actually all fits together. 

Peter Grimm

Very happy to have you guys here. Here's the book for everybody - it's a fantastic book. I've been through it several times now: Competitive Intelligence 2.0, Competing in a Digital World


We'll talk about some of the key points there, but I thought we'd start off talking about the incredible complexity of the world today. I really liked the notion of radically contingent. I started off in the national security world. I was in the military, then I was in the government as a counter-terrorism analyst for a while, and then I became a strategy consultant, which is a whole other story in of itself. But I was educated as an engineer primarily.  I went to the Naval Academy, everybody's an engineer primarily there. I think of things in terms of systems theory and multivariate systems, and the complexity is really tough to wrap your head around. 


So I wonder if you would just say a couple of words about the complexity that you're seeing?

Mike Ratcliffe

Well what we've been seeing is first of all, information has just been exploding. In the book we go all the way back to Gutenberg in 1450. But the reality is that secondary information has just exploded, especially after the internet. Gradually, the information that was out there has changed so that it could be searched on the Internet. 


New information is also constantly being created through the internet, in terms of things like clicks and searches. So we've seen this trend of increasing secondary information. I remember when I started CI, really, you basically had to get on the phone and talk to people. Now I can do the most amazing things with different tools and databases to understand a particular competitor, right from the get-go, before I start my secondary research. 


You still need primary information, but there's just a huge amount of wonderful information that's out there. As I say, that trend is not going away, and that creates this complexity. It's different in different industries. So you find that you have different needs, different databases, different abilities to go and use computers to search for information. 


So that's another complexity, but having got all of that information, what you're also seeing is that disruption is happening at a level that wasn't happening before. It used to happen infrequently, now it's happening all the time. Disruption is coming because there's a huge amount of money out there to create new ventures. 


I'm involved in something called the Oxford Entrepreneurial Network where we've got a venture fund and entrepreneurs constantly looking for new ideas. Each one of those business models that they're creating has an exit strategy, which means they’re going to go and sell it to somebody. At the same time, when I'm researching a particular bit of the marketplace in CI, constantly, I'm finding that the competitors are getting bought or their products are getting bought. 


That's a huge disruption through that particular bit of the marketplace. So, disruption is coming from people like Amazon coming into the healthcare market and radically changing that, or Tesla coming in and totally radically changing the whole transport market. It's also happening here because companies are just buying up other novel ideas. That's creating this amazing change going on in the marketplace that is really difficult to monitor. 


And what it means is that CI has moved from being purely tactical to being much more strategic - a blend of tactics and strategy. You can then sit down and actually do the analysis, which is what you and I have to do, and the computers will help you do that. 

Leonard Lane

When you think about this issue of radically contingent, Mike talks about companies eating up other companies very quickly. You have to take a look outside the industry, and look at the external forces that are driving it. We have around the world right now, a significant amount of capital floating around, and we have something called a SPAC, and I’m beginning to take a look at that. When we think about the startups, I was in a conference call last night with seven of them, and the whole issue was which one of those would be ready to go into a SPAC and suddenly become a public highly valued company. 


When we think about the CI world, most people didn't really go outside and look at that. So you might have a competitor that has been in startup mode; maybe they've gotten a Series A round, or maybe they're not quite that far, but they have a great idea. And now they can do a SPAC and all of a sudden they can become public. That gives them a significant amount of money to be able to expand, and now they not only can expand, but they actually could leapfrog you, and you didn't even know they were coming. 


So when I think about this radical contingency, that's something that's outside the scope of what somebody normally looks at from a CI perspective. But it enables you to say, who are my competitors that are out there that could potentially go to that point in time and then go ahead and go by me. 


And that's one of the things that we call the whitewater world. In the book, we have a diagram showing the exponential increase in computing power. We give an example in there: it took, I forget how many years, for a telephone to reach 50 million users, and Angry Birds did it in 35 days. Some people don’t quite understand what that means. And I tell them to take out their smartphone, and ask their kids how many apps they've downloaded in the last 12 months. 


We're seeing these old S-curves that were 10, 15, 20 years in the making before reaching market saturation, now reaching market saturation every 12 to 18 months. That's a whole new way to look at the world. That really got us thinking about the technology platforms now that enable us to do what Mike has just described. 

Peter Grimm

This is one of the concepts we talk a lot about with our clients, we've seen this cycle over and over and over again, particularly in big companies where a company will get surprised. Something happens in the marketplace, they didn't anticipate it, and now, they want to make an investment in an intelligence capability. 


They call it various things, but the guidance that team gets is basically to make sure we don’t get surprised again. And that team will then go buy some data. As you said, Mike, there's an immense amount of data available today, so they buy more and more data and they realize that they're spending all their time trying to make sense of this data, so they add headcount. But before they can really deliver any value to the business, the budget cycle comes around, they have nothing concrete to show, and the whole CI effort gets killed. 


We've seen that over and over again, which is why we've focused at Cipher on trying to automate as much as possible of that low value work that we talked about. Tasks like gathering that information together, making some sense of it, tagging the data - technologies that machines are good at. 


I'm a firm believer that you still need a trained, educated, experienced human to make sense of the information, but we're trying to free them from all of that grunt work before they can even get to that point. So I really love the concept of the radical contingency - we often use an analogy that we're not the only ones throwing rocks into the pond. There's a lot of other people. All of those reflections are the ripples getting muddier and muddier, and it's hard to see which came from what. 


So, the whitewater world, maybe we can talk a little bit more about that concept because I think it's really interesting. That's sort of what's below the surface, right?

Leonard Lane

The concept was actually derived out of the military and government intelligence agencies. Initially, we didn't use the term whitewater world, but as we began looking at the businesses that I've been involved in running and consulting with, we started looking at reaction time, where we would see an event and react to that event. Sometimes the reaction was a good one, and sometimes the reaction completely missed the point of what happened, and we found ourselves sitting on the sidelines while a competitor took away a piece of the market. 


That drove us to begin thinking about what is going on that is not visible, which is in fact causing the event that we reacted to. Going back into the intelligence world, we began to say, what can we begin doing to understand what’s impacting those events? 


Here's the conclusion we came to. We've been taking a look at what I'm going to call customer data, market data, and we were enlightened by that data. So we went ahead and reacted to it, but actually what we discovered when we began to apply complexity theory to it is that we had to move from a world of enlightenment to a world of entanglement. Now when I think about entanglement, I've got to start thinking about the whole issue of a wicked problem - I deal with one part of it and morphs into another. 


So, I had to begin to understand that what's going on underneath the surface is actually leading to what I'm seeing on the surface. I teach at UC Irvine in the MBA programs and we try to enlighten the students for two years at a time, but we don’t really give them a lot of help on the entanglement side. 


That's what led to the whitewater piece, because in this world of entanglement I'm twisting and turning and I'm tumbling all the time. And when you tumble over in a whitewater kayak, you'd come out with what they call an Eskimo roll. What we found is that you and the organization had to be really well centered and very authentic to be able to survive that roll. 


We began working backwards to look at what organizations need to be able to do to do that. They had to be able to have access to the right kinds of data. They had to have access to the people that could analyze that. And that led us to an interesting story that I've told to Mike, we said, you know, basically people like myself as a line manager, I needed to learn to dance with the data scientists. I had to figure out how to do that in a culture where the highest paid person was making all the decisions. 


That was a huge transformation, and that's where Troy's part came in. Troy said let me build you an organization where the data scientist doesn't have to be a PhD in math or economics, they have to be able to understand how to work with the data that comes out of the platforms, and how to ask the right questions. 


I know this is a complex answer, but that's the way we began to look at this. The key change for us was the move from enlightenment to entanglement. I'm big on diagrams and pictures, so what we came up with in the book is you have to be the whitewater kayaker, but then you have to combine that with the deductive reasoning of Sherlock Holmes.


When I began to put that together, and take what Mike and Troy were doing, we have a way to actually build that into an organization that handles the transformation and the disruption. 

Mike Ratcliffe

I want to just add, one of the other things that's really important is that you have to have the 360 degree world today, right? You need that context to understand what's happening all around you, as opposed to in your narrow bit of the world, because this disruption can come from any direction. It can come from anywhere geographically around the world. How many people are really not tracking what's happening in China? In their markets AI is just as big as over here. Or somewhere in Europe, or Israel, where there's a huge amount of innovation going on. 


You've got to have that 360 degree view of the world. I call that context. And if you can monitor marketplaces and create that context, you start to get the feel of what's really happening, understand the competitors. And then you can really start to understand what Leonard is talking about in terms of understanding all of that disruption. 

Peter Grimm

I think that's really important, and we've seen that in our work, working with clients and helping them wrap their heads around where disruption could come from. It's a huge wicked problem that as soon as you tackle one piece of it, as you said, Leonard, there's five other heads of the hydra that pop up on you. 


But we've found that there are some frameworks that are really helpful to at least break that down into more manageable chunks. And I wonder, Troy, with the concept of the intelligent company, to what extent do you see frameworks or methodologies that can help people wrap their heads around this complexity? 

Troy Pfeffer

That's a great question. And yes, frameworks and methodologies are important, but it's important that it's kept simple so that anyone, and quite frankly everyone can participate. Let me explain. 


So this idea of the intelligent company came out of necessity. When I met Leonard and Mike they accurately described the external environment that we're in today, and it's getting even more complicated. Everybody agrees with that. Everybody agrees with the complexity of this whitewater world, these entanglements, these wicked problems. Everybody agrees with that. 


Well, what everybody does not agree on is what do we do about it? And Pete, this goes back to one of your early points, where a company sees this complexity and they say, we need an intelligence department. They go out and hire somebody. They might hire some additional analysts. Like you said, they go out and buy data. They start collecting data. They try to make sense of it. A little bit of value is produced. And then when budget cutting comes, it's wiped out and inevitably it has to start all over again. 


I've seen that cycle time and time again. What I contend, and what we can show is that to succeed in the white water world, an organization should not set up an intelligence department. They should set up the intelligent company. Basically what that means is that every employee of the organization can participate in the intelligence process. Their roles may vary based upon the needs, but if we think about it, I don't care how many PhDs an individual may have. You might hire the most brilliant person out there. You may hire two or three of them. They will still not be as intelligent as the collective wisdom of the entire organization. 


At its very foundation, that is the intelligent company, harnessing every employee with what they know, what they can find, what they think is happening. Imagine engaging everyone in that intelligence process. So that's the methodology, if you will, of the intelligent company and that's involving everyone. 

Leonard Lane

I would add one more thing to that. There's some wonderful work written by Michael Arena called Adaptive Space. Adaptive space basically says how do I set up the opportunity inside the organization for that to work, where I can have these new entrepreneurial ideas and I can also have the operational infrastructure. In between those two, how do I set up the adaptive space for people to think freely, move ideas, do design thinking––everything Troy’s talking about––and then be able to feed that into the operational side of the company in a systematic way.


We're going to add one more piece to our thinking around this, which is not in the book, but how do I create these adaptive spaces in the organization? That thinking gives me the tools to be able to take what Troy is talking about and transform organizations into more of an intelligent company. It also speaks to Mike's point of view, where the entrepreneurial, innovative ideas are put together and moved to the operational side of the business. 


All of these things are starting to flow together. The book gave us a way to finally think much more broadly than just the research, the complexity, and the mechanics, and to plot an integrated process to build an intelligent company that is fit for purpose for a whitewater world. 

Troy Pfeffer 

One more thing to add to that, that idea of adaptive space is very important. What I refer to it as is an intelligence infrastructure. Developing an infrastructure is one of the six steps in the blueprint, and it's actually the most important. 


That infrastructure consists of three things. The methodologies and processes are important, but it's more important that everybody understands what it includes. Intelligence is happening all across the organization, but they may not be calling it intelligence, and it’s important you’re able to communicate the process in a very simple manner. 


The second element is the platform - it’s critical. It must be accessible by just about everyone, and it must be centralized in that it collects and makes sense of all information, internal and external. The platform is important - it’s the foundation for everything. 


Third, and most importantly is what I refer to as the network. Within the intelligent company, there needs to be a network of individuals who represent every functionality, every level, every geography, that can participate in this infrastructure. That's the network. 

Peter Grimm

We talk a lot about the platform side of that equation in our business day to day, but I think the network is a real challenge. In a lot of these organizations, it requires a culture change. I was very privileged to have worked for General McChrystal and his thinking around the team of teams, and that it takes a network to defeat a network. 


I'm a big proponent of that approach, but in an organization, particularly an organization that tends to be a little bit more traditionally hierarchical, with a firm rank structure, that network can be really tricky to implement. I wonder if you've seen companies that are from that sort of traditional mode do this successfully?


Troy Pfeffer

I can answer that firsthand. When I began this journey, I was a part of an organization like that, a highly successful Fortune 500 company: very structured, very defined roles, very operationally focused. The key in setting up a network successfully is starting small and starting in an area where you can show value quickly. I call it getting a quick win and in my case, and in many cases, that's oftentimes in sales. 


If we think about it, intelligence just doesn't usually begin in sales. It tends to gravitate towards strategy, but the value of intelligence and strategy happens over time. Pete, to your point earlier about what does intelligence do - if you're focused on strategy, it might take a number of years. Instead, if you focus on where you can show value quickly, such as in sales, then you get attention, you get resources and you get participation. So it's important that you begin in a place that allows you to build that network organically. 

Leonard Lane

We've watched this literally in the last year. I can't mention the name of the company, but it's a major technology company, and one of its major subsidiaries has done exactly what Troy is talking about. They started literally with how do I win the next sale? It's very tactical, they have a lot of good data, and they build a tool called a battlecard that they can work with. Then it starts to move upstream, and they can start building it into their product development process. And from there, into the product development cycle, and then into looking at the industry maturity cycle and what developments are driving it. Finally, they get to strategy and they can make that cycle work all the way back down. 


But the key thing that Troy says is now that begins to involve the people with their hands on the customers. Andy Grove had a great comment, which we put in the book, that basically says, I make strategy with my hands. I've got all these other parts, but if I make it with my hands then I've got to have people on the ground that are getting the wins at the customer interface, and then move that knowledge-creating process further up the line. 


The other thing that you mentioned, the fact that you work with General McChrystal - I've not worked with him, but I've had the opportunity to study a lot about what he did. And I’ve spent a lot of time in the last couple of years with a couple of people I work with, one of which is a lady that does work with him now, to begin to understand how he created that entire process over there. What fascinated me was the live information. I’m short-handing it here, but you're all in the same room, you're all looking at the same screens, you're all listening to everybody's phone calls. And there’s all this live information. I'm untangling things as we go. 


When I saw that for the first time the light bulb went off for me. It’s one of the things that brought the three of us together to begin figuring out how to take this process and bring it into the corporate world. How do we recreate what you did with General McChrystal in an organization moving at speed through the whitewater?

Peter Grimm

I played a minuscule role in that, and I was privileged to play a very small part, but just to witness what that approach accomplished in that timeframe was something I'll take with me for a long, long time. 

Mike Ratcliffe 

I think it's interesting to stand back and actually look at what this means. Often, when I've done workshops internally in companies, you find that the people that come into the workshop all live in little silos, they don't necessarily even know what their neighbor looks like or what they do. I've run workshops where people have come in and said, “Oh, so you’re Joe” - that's a problem. 


For organizations, this siloing effect makes it really difficult to move towards becoming the intelligent company. But when you do have, for instance, senior salespeople, coming into workshops, you realize the amount of knowledge they've got on the marketplace is amazing, and if you can capture that and bring it together, then that's extremely valuable. 


I constantly say to my teams, the client always knows more than us. The trouble is that they haven't put it all together. What we're talking about is a radical shift in terms of the structure of companies and how they operate. When companies can do that, and if they do do that, that means they've got a major competitive advantage over their competitors. 


Generally in CI, we look at the external market. We don't look inside the company. And what we're talking about now is that in the future of CI, you don't just look at the external market and how many salespeople does your competitor have, what is their messaging, but actually what systems they've got internally and how good they are and how they work together. That's a radical change in terms of looking at the marketplace. 

Peter Grimm

Well, that's probably a good place for us to wrap it up for today. I can't tell you how much I appreciate the three of you joining me today. I'm sure that folks who see this are going to get a lot of value out of it. Again, don't forget to check out the book, Competitive Intelligence 2.0, Competing in a Digital World. Troy, where can folks learn more about the concept and the blueprint for the intelligent company? 

Troy Pfeffer

Good question - they can contact me directly. I can certainly share my contact information with you, or they can connect with me on LinkedIn. In fact, on my LinkedIn page, I shared a very high level overview of that blueprint.

Peter Grimm  

Awesome. Well, gentlemen, thank you very much. Again, it's been a pleasure catching up with you, and learning more about the great thinking in the book and the intelligent company concept. 


So thank you again for joining us, and until next time, I'm Peter Grimm. Thank you very much. 

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