Business As War

What It Takes to Change

Companies compete on their ability to convert informed choice into timely action. Change means doing that more effectively. Learning how means borrowing lessons from the Pentagon to improve performance in three related areas:

* Gathering better information - that is, information that is dynamic, that cuts across organizational boundaries, and that exists "in real time"

* Establishing a framework for making decisions - that is, creating a business version of military "doctrine"

* Practicing the integration of the pieces - that is, learning to use competitive simulation or business "war games"

West Point was founded in 1802. Nearly two centuries later, only one course taught that first year remains part of the curriculum. The course is map reading. The reason is simple: information is at the heart of change, and maps are at the heart of information.

The military creates and uses a wide variety of maps: satellites photograph enemy weapons, low-flying planes monitor troop movements. From these multiple maps the military creates information that is accurate, that reflects how the battlefield changes over time, that exists as close as possible to real time. This kind of information yields informed choice.

Information is also a critical input to the most essential competitive attribute in business or war: intelligence. In modern warfare, intelligence is a full-time preoccupation. During the Gulf War, smart maps were as important as smart bombs.

Compare that to "maps" in companies today. Most of the time, senior executives receive information that gives them two mutually unacceptable courses of action. Confronted by a complex investment decision, they receive either reams of computer-generated data or a one-page memo that simply recommends yes or no. It is all or nothing, a data dump or a leap of faith.

And what about intelligence? Strategic plans that take two or three years to develop are useless before they're finished. Business competition is fluid and fast-changing; companies need to gather intelligence constantly - covering a wide set of considerations. They need to go beyond conventional approaches to mapping that consider only financial and physical assets. In an economy where human assets, knowledge, software, and technology are the critical weapons, companies must map them as well.

The typical American company has what it considers perfectly suitable maps. It has an organization chart, which the company would consider a map of its executives. It has an income statement and a balance sheet, which the company would consider a map of its financial resources. It may even have a map of its physical assets: factories, offices, labs.

But think about the maps companies don't have - the maps that would support informed choices. For example, most companies don't have a single useful map of their human resources. One company I know made a bold strategic decision to preempt the competition by dominating the market for its product in China. A timely decision. But did the company have any data - a map - that would determine how many of its managers had lived or worked in China? How many spoke Chinese? How many would be willing to relocate to China with their families for five years?

Unfortunately, no. Which meant that after the CEO had made his bold, timely decision, the company discovered it was short 2,000 people to implement it. Uninformed choice; no action. Companies without relevant maps - or companies that don't update their maps to keep them dynamic and accurate - are destined to repeat this sort of strategic blunder.

Now consider maps of a company's intellectual assets. Everyone agrees that we work in a knowledge economy. But most companies not only don't map their knowledge assets, they don't know how to map them. How many companies map their patent activity in a product category against the competition? Over years, patent maps can produce remarkable insights into the trajectory of new-product development by rivals. Virtually every "killer product" emerges from a point on the map where a company has concentrated its patents. A patent map can serve as an early warning system for competitors' new-product intentions.

The point is that informed choice starts with accurate, dynamic, and real-time information. When top executives get information that cuts across boundaries, they begin to see previously hidden interconnections between functions and divisions. Integrated information enables integrated decisions.