Monday, November 1, 2010

Be more precise about uncertainty

Note: The following is the latest in the current blog series about analysis and CI. It is excerpted from my new book, Competitive Intelligence: Improving Law Firm Strategy and Decision Making. You can learn more about the book and purchase it here.

The CI discipline has spawned some pithy maxims, one of which says intelligence does not predict the future. Another one tells us that intelligence need not survey every tree in the competitive forest to understand how the forces within that forest may affect our ability to perform there.

Heeding the spirit of these two maxims, intelligence analysts develop high tolerance for ambiguity and uncertainty. Consequently, intelligence reports tend to reflect these ambiguous environments by the inclusion of qualifier terms like certainly, almost certainly, highly likely, good chance, probable, likely, improbable, unlikely, highly unlikely, may, maybe, most, few, some, we doubt, we are confident, we believe, etc.

Although these qualifiers reflect analysts' inability to make crystal ball predictions, unnecessary confusion develops when analysts and decision makers fail to agree -- sometimes without realizing they disagree -- over the meaning of terms like "probable." One often-cited study about the interpretation of intelligence revealed that 23 decision makers interpreted the likelihood of a "probable" event's occurrence ranging from 25% to 91% (by Sherman Kent, "Words of Estimated Probability," in Donald P. Steury, ed., Sherman Kent and the Board of National Estimates: Collected Essays, published by the CIA, Center for the Study of Intelligence, 1994).

Other common qualifiers found in intelligence reports are phrases having to do with time, e.g., soon, often, usually, seldom, infrequent, at this time. An analyst who knows what she or he means by these phrases should replace them with more specific judgments, e.g., during 2011, before the economy turns around, by 2Q 2012. More specific opinions like these improve the intelligence and its usefulness.

Analysts must offer conclusions that are as precise as but no more precise than their analyses will permit. Therefore, a good way to further reduce uncertainty is to highlight all the qualifiers in a nearly final intelligence report. Then ask your colleagues with fresh eyes (those who did not work on the report) to tell you what these terms mean to them in more specific terms. If you learn from this exercise that the intelligence they received was not the intelligence you thought you had provided, edit your report accordingly.

Another opportunity to reduce uncertainty in intelligence reports appears as you prepare your findings to decision makers. Anticipate their most likely questions, but do not wait for the questions to be asked. Include the questions and your best answers in the report itself. By such simple means, intelligence reports can become more meaningful and useful to law firm CI clients.