My closing keynote speech at the Business Forecasting 2013 conference in San Francisco, delivered Friday 18 October 2013.

1. Collaborative Analytics & Insights: Uniting Strategy
with Organizational Reconnaissance to Anticipate
Industry Change
Competitive Intelligence 2013
San Francisco California USA
Thursday 17 October 2013
Arik Johnson
Founder & Chairman, Aurora WDC
Managing Director, Center for Organizational Reconnaissance

3. Stochasm
The difference between what you think
you know and what you actually know.
3

4. THE BLACK SWAN
The Impact of the
Highly Improbable
The human mind suffers from three ailments as it comes into
contact with history, called the triplet of opacity:
the illusion of understanding, or how everyone thinks they
know what is going on in a world that is more complicated (or
random) than they realize;
1.
the retrospective distortion, or how we can assess matters
only after the fact, as if they were in a rearview mirror
(history seems clearer and more organized in history books
than in empirical reality); and,
2.
the overvaluation of factual information and the handicap of
authoritative or learned people, particularly when they create
categories – or "Platonify."
3.

5. U.S. Intelligence Community
Failed to Evolve
Unexpected new threats
from non-traditional enemies
like al Qaeda emerged on the
geopolitical stage in the
vacuum of America's return
to international economic,
political and cultural
hegemony after the end of
the Cold War.

6. THE STARFISH & THE SPIDER
The Unstoppable Power of Leaderless
Organizations
Although spiders and starfish may look alike, starfish have a
miraculous quality to them. Cut off the leg of a spider, and you have a
seven-legged creature on your hands; cut off its head and you have a
dead spider. But cut off the arm of a starfish and it will grow a new
one, and the severed arm can grow an entirely new body. Starfish can
achieve this feat because, unlike spiders, they are decentralized;
every major organ is replicated across each arm.
But starfish don’t just exist in the animal kingdom. Starfish
organizations are changing the rules of strategy and competition and
are organized on very different principles than we are used to seeing
in traditional organizations.
Spider organizations are centralized and built around org charts; on
the other hand, Starfish organizations tend to organize around a
shared worldview or ideology.
And the Internet has helped them flourish.

7. Unsound Strategy, Policy and Decisions are the Product of an Intelligence
Agenda Dictated from Above

8. Marshall McLuhan
“I don’t know who discovered water, but it wasn’t a fish.”
Strategy is concerned with what the corporation wants to
do in the world.
Intelligence is focused on what the world wants next.

9. Strategy should be a
Response to Intelligence
Not the other way around…

10. Three Key Business Trends Driving Intelligence Evolution
Human Capital & Enterprise Collaboration
Everyone in the Firm becomes a Virtual Member of the
Intelligence Apparatus, Better Engagement by Rank &
File, Shared Visibility of Issues & Actions
Corporate Governance & Risk Oversight
Board-level Priority Ensuring Reliability of Management’s
Earnings Forecast & Assessing Risks to Status Quo
Business Model Disruption & Value Innovation
Predicting the Outcome of Competitive Battles by
Anticipating Changes in Product/Strategy Dynamics

11. Intelligence 2.0
The Era of Asymmetric Interpretation
•
Intelligence 1.0 was about acquiring short-lived information advantages
(Competitive Advantage through Asymmetries of Information), though
fleeting and risky to the firm's reputation and ethics.
•
The transition is now complete to an open source world of "info-glut"
where assymetric information gaps are increasingly difficult to obtain and
maintain and interpretation becomes far more important as everyone
looks at the same corpus of data but sees something different.
•
Web 2.0 and Enterprise 2.0 pinpoint a shift in organizational culture – the
“Facebooking” of the workforce means everyone in the enterprise can
become a casually-engaged virtual member of the intelligence apparatus
and should be instructed how to help most productively.
•
Intelligence will extend into aspects of organizational culture and
workforce engagement – which I differentiate from full-time intelligence
staff as “reconnaissance” – but centralized, specialist intelligence staff will
persist and embed themselves into the domains of organizational
problem-solving.

12. Intelligence 2.0
Asymmetric Interpretation Depends on Both Decisive & Incisive Sensing
Decisive
Incisive
Frame of Reference is the
Decision
Scanning for Trends, there may be
no Decision made
Compares Options & Outcomes
Historical Patterns & Anomalies
Recommendations & Trust
Implications for the Reader
Top-Down Imposition
Bottom-Up Exposition
Driven by Issues
Driven by Trends
Product is Decision/Action
Product is Observation
Factual & Hypothetical
Emergent & Skeptical
Confidential & Proprietary
Open Source

16. Dr. Craig S. Fleisher
16

17. Key Intelligence Topics (KITs)
Process of Interactive Dialog with Decision-Makers
through KIT Interviews
Consists of 3 Protocols w/Subtle Differences:

Strategic Decisions/Issues

Key Marketplace Players

Early-Warning Topics

18. KITs – Strategic Issues
 Strategic Investment Decisions: Identify and assess changes in the
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competitive environment, possible future investments, including
alliances, acquisitions, etc.
Should we expand our current production capacity or build new
capacity with a more cost-effective manufacturing process?
What plans and actions must we take to maintain (our) technological
competitiveness as compared with competitive alternatives?
New Product Development and New Market Launch: Assessment of
leading competitors and the status of competing technologies. How
and when will the competitors respond and how could they affect our
plans?
Sales & Marketing Strategy as Positioning in the industry.
Protection of IP and proprietary information and technology:
Competitors efforts to acquire or undermine it, and are there others
interested in it?
Provide advice for developing the company’s ongoing strategic plan
by assessing the role of risks and opportunities in achieving our
business goals.
Globalization & Outsourcing in the Industry: How/with whom should
we proceed?
International Market Development: Assess the current competitive
situation and describe the most likely future situational scenarios.

19. KITs – Key Players
 Context-specific Company & Market Profile Assessments of our competitors,
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including strategic plans, competitive strategies, financial & market performance,
organization & key personnel, R&D, operations, sales & marketing, etc.
Identify Emerging Competitors, particularly those coming from different industries.
Describe & Assess Current & Future Competitive Environment, including:
customers and competitors; markets and suppliers; production and product
technologies; political and environmental; and the industry’s structure, including
changes and trends.
New Customers, their changing needs and future interests: What are they and
how are our competitors trying to satisfy them?
Identify and assess new industry/market players, including: suppliers, distributors,
customers and/or competitors, that are considering entry into our business.
New Technology Development: Who are they and what are their plans and
strategies for competing in our industry?
Marketshare and Historical Growth Data, including that of our competitors for
comparison.
Management support for regulatory and environmental activities for decision
making.
Industry, financial & customer community views, attitudes and perceptions
regarding the Positioning or Value of our brand, products and services.
Perceptions by Financial & Investment Community of our Business & Industry

20. KITs – Early Warning
 Potential Areas for Disruptive Technological Breakthrough that could
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dramatically affect our current and future competitiveness, positively or
negatively.
Technological Process Developments affecting either production
capabilities, costs or product development, and their uses by
competitors and others.
Performance of Key Suppliers - financial health, cost & quality issues,
potential acquisition or alliances.
Potential for Disruption in Supply Chain and Change in Industry
Procurement Practices.
Change in Customer & Competitors Perceptions of our company,
products and services.
Companies and/or Combinations of Companies, considering possible
entry into our business or markets.
Changes in international political, social, economic, environmental or
regulatory situations that could effect our competitiveness.
Regulatory Issues: near-term changes and deviations in long-term
trends; legislative changes that could impact current regulatory status
quo.
Intelligence on Alliances, Acquisitions, and Divestitures among our
Competitors, Customers and Suppliers: Understanding the forces
causing them and purposes of each deal.

21. Success Breeds Complacency
“It is a classic conundrum for business titans: How much
money and attention should be focused on a new, but
growing, operation that is far less profitable than the core
business?”
- Prof. Clayton Christensen, The Innovator's Dilemma

22. Disruptive Innovation Theory
Performance
Sustaining Innovations
Better Products Brought to
Established Markets
Difference
Performance
Measure
Low-End Disruptions
Target Overshot Customers with a
Lower Cost Business Model
New-Market Disruption
Compete Against Nonconsumption
Nonconsumers or Nonconsuming Contexts
Time

23. Customer Demand & Signals of Change
1.
2.
3.
4.
Non-Market Contexts: External Forces (Government, Economics,
etc.) Increasing or Decreasing Barriers to Innovation
Undershot Consumers: Opportunities for Up-Market Sustaining
Innovations
Overshot Consumers: Opportunities for Low-End Disruption, Shifting
Profits by Specialist Displacements (Modularity) and the Emergence
of Rules
Non-Consumers: Opportunities for New Market Disruptive Growth
Established Companies almost always
Lose to Disruptive Innovators

24. Signals
of
Change
Likely Outcome of
Strategic Choices
Competitive
Influencing
Battles
Success
Intelligence 2.0 Engages the Workforce in Collaborative Sensing to
Anticipate and Act on Industry Change

25. Competing head-to-head can be cutthroat
especially when markets are flat or growing
slowly.
Managers caught in this kind of competition almost
universally say they dislike it and wish they could find
a better alternative. They often know instinctively
that innovation is the only way they can break free
from the pack. But they simply don’t know where to
begin.
Chan Kim and Renee Mauborgne

26. Collaborative Insights Team

27. Why Wargames?
Decision / Selection Map is used to identify:
•Customer needs/wants
•Which competitor represents the most serious threats now and potentially in
the future
•Which strengths should be emphasized
•Which of our weaknesses will competitors exploit
•What new needs/wants should we try to create
Probability / Impact Grid is used to:
•Ensure goals are aligned to those of key stakeholders
•Highlight those competitor moves that the company should take action to
counter and monitor
•Create group consensus on the potential contribution that this planning effort
would have, and the likelihood that we could make it happen
27

28. Wargame Example - Strategic
Industry
Company size
Planning level
Wargame Purpose
Wargame Outcome
Consumer Products
Fortune 500
Strategic
Company was looking to increase throughput from their R&D unit, which was not keeping pace with competitors
on launching products.
The wargame showed that it wasn’t just one problem that was slowing things down. As expected, the company’s
risk profile played a part. What also became apparent was that R&D had no clear reporting format and ended up
working on many projects that were either not likely to go to market, or were pet projects with little or no market
opportunities. Understanding who their true stakeholders were, the BUs, was a key learning that lead to change.
Deliverables
Purpose
Determined our risk profile was
substantially more
conservative than our
competitors, and that this was
unexploitable.
Improve ROI of our R&D
Consolidated R&D under the
corporate umbrella, ending
internal conflict for resources
and reducing inefficiencies.
Ch23.
28
Group consensus on using
consistent measures to track
market opportunities and

29. Wargame Example - Tactical
Industry
Company size
Planning level
Wargame Purpose
Wargame Outcome
Pharma/Biotech
Fortune 500
Tactical
Company was launching a product with new MOA into a crowded market. They were looking for ways to counter
messaging from existing competitors before they launched. They also wanted projections on how long it would
take to capture significant share.
What the game showed was that it was unlikely that their new product was going to displace any of the existing
products, given the safety profile and demonstrated efficacy. They were unwilling to play with price too much, and
decided to delay launch. The competitor that “won” the game had production issues in the real world, and this lead
to the company purchasing the “winning” product at a bargain.
Deliverables
Purpose
Determined customer was
more price sensitive than
previously thought.
Prepare for launch
Wargame “opened eyes” about
home team being significantly
behind competitors in terms of
safety and efficacy.
Ch23.
29
EWI tracking set up because of
the game allowed them to
respond quickly when chief

30. After Action Sample: Using a
Decision / Selection Map
This critical tool helps the competitor teams clarify the most
This critical tool helps the competitor teams clarify the most
important needs and wants of their various customers groups.
important needs and wants of their various customers groups.
Unsatisf’d
Need or Want
Cost
Portfolio Profile
Ease of Client Uptake /
Application
Convenience
Marketing
Services / Support
Customer
Groups
Comp
Home
Institutional
R1
Corporate
R2
Post-secondary R3
Home
Finance heads
R1
Actuaries
R2
R3
Benefit Admins Home
Processors
Regulators
Service Agents
Plan Members
Service Agents
Plan members
Retire admins
Beneficiaries
Service agents
R1
R2
R3
Home
R1
R2
R3
Home
R1
R2
R3
Home
R1
R2
R3
1 2
3
Satisfied
4 5
6
7
8
The Market Team took
The Market Team took
assessment of their more
assessment of their more
significant needs, by
significant needs, by
Customer group, and decided
Customer group, and decided
which were Drivers (more is
which were Drivers (more is
better), and which were
better), and which were
Satisifers.
Satisifers.
The critical point here is that
The critical point here is that
when you over-deliver on a
when you over-deliver on a
particular need or want, you
particular need or want, you
face diminishing returns and
face diminishing returns and
you don’t have the resources
you don’t have the resources
to address those issues that
to address those issues that
the customer has validated as
the customer has validated as
Drivers.
Drivers.
They then ranked each of the
They then ranked each of the
Competitors on how well they
Competitors on how well they
meet these needs today, from
meet these needs today, from
the Customer’s perspective.
the Customer’s perspective.
The Competitor’s job was to
The Competitor’s job was to
move the needle on these
move the needle on these
performance metrics.
performance metrics.
9 10 11 12
Happy
30
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31. After Action Sample:
Key Issues and Outcomes
The issues highlighted below were derived from our Contribution // Feasibility Grid exercise.
The issues highlighted below were derived from our Contribution Feasibility Grid exercise.
Key Issue
Competitor Will…
Our Response
Defend lack of
customer
service data
Competitors message this issue to
mitigate launch
• We will set up feedback loop for representatives and customer
account team to gauge impact of lack of time-series data at
launch; share best practices on how to handle
• Develop rep response indicating that several other recent product
launches did not have time-series data at launch
Messaging
• Tout their longevity in the product
class.
• Claim our product is “too radical,”
untested, barely passing
regulatory review
•
•
•
•
Competitor
Increase in Ad
Spend
We expect that the incumbents will
increase their spend in an effort to
lock up key institutional clients
• Leverage consumer demand for new retirement options
• Maximize the impact of the news event around the availability of a
new class of product
Feet on the
Ground and
Selling
We expect at approval that there
may be some financial options
data that we won’t be permissible
in promotion.
• Right-size the new prods team to a competitive size
• Via the Blue Guide can we share product data that is still under
review
• Ability to communicate regularly with speakers via intel network
wiki on relevant product data
5 successful beta clients
Rivals products have had negative returns for 5 years cumulative
Educate on what is required and how to manage
Can utilize heavier social media communication, particularly via
our large FaceBook and Twitter presence
31

32. Contribution / Feasibility Grid Example
•
•
•
The following 2 slides show an example of how we begin
the Planning Round, the most important component of a
wargame.
Everyone is brought back to the main room, where as a
plenary group, we discuss the various competitor moves,
and more importantly, the actions that you should take to
proactively disrupt them.
Once the group has reached consensus on what these
scenarios are, the Sponsors meet to select those that
they feel are most impactful and the teams head back out
to the break-out rooms to develop Action or Contingency
Plans to deal with them.

33. Contribution / Feasibility Grid
Scenario #
Scenario Title
Feasibility Contribution
1
Disruptive low cost systems for WHO become a catalyst
75
2
2
Chief competitor drops price significantly ahead of schedule
25
3
3
Development of non-invasive solution
50
2
4
ABC seeks additional indication
25
4
5
FDA certification lost for plant in Ireland
75
1
6
50
2
7
Black box warning issued for competitor’s product in this therapy
The Street expects us to gain additional indication within 3 yrs and we
deliver
25
6
8
We convince customers that we are a front-line therapy
10
3
9
50
3
10
ABCs looses litigation to XYZ
Healthcare reform makes price more important than function
impacting our products
80
5
11
ABC acquires XYZ
10
3
12
ABC partners with DEF for worldwide distribution
20
2
13
Competitor locks in large healthcare network essentially freezing us out
50
?
14
DEF acquires local India company
70
1
The above table has been truncated and sanitized to
provide an example of what the exercise might look
like. Those that are highlighted were selected for
planning activities.

34. The Grid
12
6
9
8
?
4a
3
13
32
5
10a
6
14a
33a
16
15
4
17
3
5
33b
31
21
11
2
10b
29
28
1
23
26
19
34
25%
2
24
25
7
18
1
14b
27
20
45
30
50%
Feasibility
0
22
100%
Contribution
Code

35. Related Techniques

36. RECON
Intelligence Should Concentrate on
Five Domains of Business Problem Solving

RISK

EFFICIENCY

CUSTOMERS

OUTLOOK

NOVELTY

37. RISK
Ensuring against risk to the core business is critical to making
sure there is time for investments in new growth to start
paying off. Maintaining a positive status quo by protecting the
core is the chief role for managers in every business, with one
caveat: good businesses can often be the foremost enemy of
great businesses.
Cannibalization of a company’s current market share should
not exclude innovative ideas that might be foreign to the
corporate immune system.

38. EFFICIENCY
The ruthless cutting away of unnecessary costs in the value
chain is essential for a new market innovation strategy to work.
Create or build up that which is not yet good enough and
diminish or destroy that which is unnecessary.
Most of the unnecessary elements in the incumbent value
chain have long-since outlived their usefulness or were never
very important to customers in the first place.

39. CUSTOMERS
Companies become too dependent on their best customers’
input for signals about how they should innovate, but new
forms of competition usually present themselves at the current
consumption market.
The day your customers begin complaining about how
complicated or expensive or difficult your product is, you
should ask, “why was it good enough for them yesterday” and
who has offered an alternative?

40. OUTLOOK
Traditional market segmentation based on demographic,
geographic or sociographic data are fleeting at best and illusory
at worst and many decisions have been based on flawed
definitions of the fastest growing markets.
Defining the market by the “jobs” customers wish to
accomplish is more helpful in defining fast growing target
markets. Focus groups are often the worst mechanism of
market testing.

41. NOVELTY
Differentiation is mandatory for all organizations to master and
new market or “novel” solutions to customer problems are often
ecosystems of providers working together to produce soughtafter value.
Companies must build a business model designed to test
breakthroughs in the market more regularly but kill off those
that do not work early on, so support and development
resources can be allocated to those that do.

42. What’s Next?
Leadership to Act is
Based on Confidence
Intelligence Combats the Paralysis that
Accompanies Uncertainty
Feel free to ask for help:
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Email: Arik.Johnson@AuroraWDC.com
Phone: +1 (608) 630-4242
Twitter: @ArikJohnson
LinkedIn: http://linkedin.com/in/ArikJohnson
Skype: ArikJohnson
Web: http://IntelCollab.com & http://AuroraWDC.com