Milo and I organize a workshop on Tuesday, May 29 on ACH (Analysis of Competing Hypotheses). ACH is a tool originally developed by Richards Heuer at the CIA to analyze complex and uncertain situations. It is widely used in intelligence and international politics, but Milo and I think it applies equally well to business for strategic decision making. ACH uses a deceptively simple framework to use ideas from the scientific method, cognitive psychology and decision analysis to overcome a common but immensely important bias: the fact that we tend to perceive what we expect to perceive rather than what actually exists.
Posted in Our work featured, Theory | Tagged analysis of competing hypotheses, intelligence, Intelligence Analysis | Leave a Comment »
Recently I had a discussion with a friend who is a colonel in the Army about the culture of risk among senior officers and, by extension, in management. The culture of risk is an important question for any organization.
To understand the culture of risk, we must first distinguish between two types of risks. Type One risk is where you do something that leads to an error or a bad result. It’s a reasonable assumption that the majority of our time in school and in higher education is designed to teach us how to reduce such risks.
Type Two risk is the opposite, it is the risk of not doing something that could be valuable. Of course, the two are linked: the more one reduces the risk of doing something, the more one increases the risk of not doing something valuable. The trick, unfortunately, is that we tend to focus more on the Type One than Type Two risks. On one level, this makes sense: after all, failure is very visible – a disaster, a lost war, a failed product launch, etc. In contrast, forfeited opportunity is invisible: we do not see what valuable things our caution has prevented us from doing, and no one is punished for not having invented something. Our education, liability laws and corporate governance structure push us towards a culture of Type One risk avoidance, i.e. to reduce the risk of failure (Sarbanes-Oxley anyone?). This obviously is a problem for innovation in the long term, but it doesn’t even reliably protect us. If it did nothing else, the financial crisis that began in 2008 has demonstrated that those institutions entrusted to manage risk failed to do so properly. In short, we focus on risk avoidance at the expense of opportunity creation, and we don’t avoid even risk very well!
Posted in Theory | Tagged black swan, education, Risk, uncertainty | 7 Comments »
I will be a host on the Financial Time’s “Ask the Expert: Entrepreneurship 2012″ today at 2:00PM GMT
I will be a host on the Financial Time’s “Ask the Expert: Entrepreneurship 2012″ today at 2:00PM GMT.
If you want to know what business can learn from entrepreneurs in the management of uncertainty, post your question now!
More info on the FT’s Web site here.
Posted in Event, Our work featured | Tagged entrepreneurship | Leave a Comment »
As I explain to my students at IE, the most any business school can hope to do is move you from unconscious ignorance to conscious ignorance of a subject. In other words, a course can lay a firm foundation in a subject, and then provide a jumping off point for future self-study. After my MIAF course “Geopolitics and Investing”, that usually prompts the question, “Where should I begin such self-study?”
As I said in an earlier post, there are certain key books that point you towards how to think like an intelligence analyst. Because the skills of an intelligence analyst and a geopolitical investor overlap so much, I would also say that investors interested in geopolitics start with those key books. In particular, if you haven’t mastered the critical thinking and the basic analytic techniques described in Thinking in Time, Essence of Decision and The Thinker’s Toolkit, you are still in kindergarten as far as intelligence analysis is concerned. Heuer’s Psychology of Intelligence Analysis (downloadable free from the CIA’s site here) is also immensely valuable. None of these books will teach you geopolitical analysis per se, but they will give you a solid foundation in non-quantitative analysis.
One Investor gets a grip on Geopolitics
Posted in Methodology & Tools, Theory | Tagged analysis, asset allocation, CIA, demography, economics, energy, event trading, forecasting, Geopolitics, Geostrategy, Graham T. Allison, Hedge funds, Intelligence Analysis, investing, Luttwak, Richard Neustadt, Use of history | 4 Comments »
Joseph Nye, an eminent political scientist at Harvard, wrote a book about “soft power” a few years ago. He followed that volume up by devoting a chapter to the concept in last year’s book The Future of Power. So what is “soft power”?
According to Nye, whereas “hard power” grows out of a country’s military or economic might, soft power, “Arises from the attractiveness of a country’s culture, political ideals, and policies.” In the Future of Power Nye examines what it means to be powerful in the twenty-first century, and how the US might set about retaining its place in the world. he thinks soft power will be an important part of the mix, and I tend to agree.
But while I’m generally optimistic about the future of America’s place in the international order , one historical parallel related to soft power disturbs me: the degree to which the threat of terrorism has led the US to create embassy buildings that appear to cower before contemporary threats.
Posted in Theory | Tagged embassy design, Geopolitics, grand strategy, historical analogies, Luttwak, Nye, Roman Empire, soft power, terrorism, Use of history | 5 Comments »
The difficulty of anticipating strategic surprises is often ascribed to a ‘signal-to-noise’ problem, i.e. to the inability to pick up so-called ‘weak signals’ that foretell such surprises. In fact, monitoring of weak signals has become a staple of competitive intelligence. This is all the more so since the development of information technology that allows the accumulation and quasi-automatic processing of massive amount of data. The idea is that the identification of weak signals will enable an organization to detect a problem (or an opportunity) early and, hence, to react more quickly and more appropriately. For instance, a firm can detect a change in attitude of consumer behavior by spending time with the most advanced of them, as Nokia did in the early 1990s, a move that enabled the firm to realize that the mobile phone was becoming a fashion item.
Posted in Theory | Tagged competitive intelligence, strategic surprise, Weak signals | 11 Comments »
Keywords
Follow us on Twitter
Error: Twitter did not respond. Please wait a few minutes and refresh this page.
Archives
Silberzahn Jones
