In business and finance, statistics and quantitative comparisons are daily companions. Sometimes, however, key statistics can become too familiar, and reify, i.e. harden into “facts” that everybody knows. In so doing, they play a large part in strategic surprises.
In the late 1980s, for example, the US Intelligence Community “knew” that Soviet GDP was $2.5 trillion, i.e. about 52 percent of the US GDP of $4.8 trillion. How? Their computer models told them so. These models relied upon – among other things – assumptions about ruble-dollar Purchasing Power Parity (PPP).
Western academic Sovietologists also “knew” the USSR’s economy was about $2.5 trillion. How? Mostly, they relied on an authoritative source: the CIA.
Posted in Methodology & Tools, Theory
Tagged BRICs, Cassandras, China, CIA, Emerging markets, Geopolitics, Igor Birman, Intelligence Analysis, PPP, statistics, urbanization, USSR
To follow up on Philippe’s post about Thinking in Time: at IE I teach a course called “Geopolitics” to Masters in Advanced Finance students, and “The Multinational Firm and Geostrategy” to Masters in Management students. Students in those classes sometimes ask me to recommend books to help them “think like an intelligence analyst” and apply intelligence methods to analyzing business decisions.
I provide extensive bibliographies as part of my course syllabi, but often students want me to boil my recommendations down to a few key texts. Call it a “getting started in intelligence for businesspeople” reading list.
Posted in Methodology & Tools
Tagged CIA, Cuban Missile Crisis, Ernest R May, Geopolitics, Geostrategy, Graham T. Allison, Hedge funds, Integrated Strategy, intelligence, Intelligence Analysis, Morgan D. Jones, non-predictive strategy, Philip D. Zelikow, Richard E Neustadt, strategy, Timothy Walton
In their 2010 article in the MIT Sloan Management Review, “What Every CEO Needs to Know About Nonmarket Strategy”, David Bach and David Bruce Allen contend that sustained competitive advantage arises from engaging with “social, political and environmental issues” as part of corporate strategy.
I completely agree, but would make the case more strongly: much of what passes for corporate “strategy” is actually tactics. The same goes for much of the advice dispensed by illustrious “strategy” consulting firms. “Strategy” sounds more important than “tactics,” so everybody calls whatever they’re talking about strategy, and then moves on to dispensing advice. But what sounds like a linguistic quibble matters, because the distinction between these words bears directly on building a sustained competitive advantage in business.