ECIS 2009

THIRD EUROPEAN COMPETITIVE INTELLIGENCE SYMPOSIUM

COMPETITIVE INTELLIGENCE: COMPETING, CONSUMING AND COLLABORATING IN A FLAT WORLD

JUNE 11-12, 2009 STOCKHOLM, SWEDEN

PROCEEDINGS

COMPILED BY MAGNUS HOPPE, SVEN HAMREFORS AND KLAUS SOLBERG SØILEN

MÄLARDALEN UNIVERSITY COLLEGE IN COLLABORATION WITH ATELIS

ECIS 2009 ‐ II ‐ PROCEEDINGS

CONTENT

The convergence of Societal Intelligence and Territorial Intelligence to promote Sustainable Development of weakened territories in France 4 CHRISTIAN BOURRET

Can military education benefit from the study of competitive intelligence? 17 DIDIER DANET

Strategic Dependence of a Developing Country Vision from Patents 24 HENRI DOU JEAN MARIE DOU JR SRI DAMAYANTY MANULLANG

Causes of Competitive Analysis Failure: Understanding and Responding to Problems at the Individual Level 36 DR CRAIG S. FLEISHER SHEILA WRIGHT

Simon’s theorem reconsidered – towards a theoretical framework for competitive intelligence 51 PER FRANKELIUS

The Human Factor and Competitive Intelligence: Resource, lever and key for success 63 ANNE‐MARIE FRAY

Looking for Information: a New Approach to Consider Efficiency and Effectiveness 71 PASCAL FRION HENRI SAMIER

The generation of a rumour: from emergence to percolation 91 LAURENT GAILDRAUD HENRI SAMIER JEAN MAURICE BRUNEAU

Tracking business news on the World Wide Web for dynamic CI study of industries 104 BRIGITTE GAY

Intelligence ideals 117 MAGNUS HOPPE

Economic Intelligence in Small and Medium Businesses in France: a survey 128 SOPHIE LARIVET

Competitive Intelligence and Strategic Governance Issues for French Groups of Mutual Banks Facing the Financial Crisis 145 DR. DENIS MALHERBE ECIS 2009 ‐ III ‐ PROCEEDINGS

Writing cases as a knowledge capture process in a competitive intelligence program 180 MONICA M MALLOWAN CHRISTIAN MARCON

Knowing is action: from noticing to sense-making 188 NICOLAS MOINET PASCAL FRION

Methodology to integrate Competitive Intelligence with the Hoshin Kanri planning system: Application to a Commercial Strategy 202 FILIBERTO LUÉVANO NARVÁEZ MARISELA RODRÍGUEZ SALVADOR JOSÉ ROBERTO ANTONIO VEGA PINO

Marginalizing the periphery: enhancing competitive awareness by looking less hard 211 MICHAEL NEUGARTEN

Enterprise 2.0 as a way to facilitate, enhance, and coordinate intelligence work within large organizations: A Case Study at Toyota Material Handling Europe 220 JON‐ERIK OLSSON JIMMY SANDELL

Representing territory resources within a territorial intelligence system 230 MARYSE SALLES GABRIEL COLLETIS

Evaluating Business Intelligence Software - Testing the SSAV Model 241 YASMINA AMARA KLAUS SOLBERG SØILEN PER JENSTER DIRK VRIENS

How application integration, security issues and pricing strategies in business intelligence shape vendor differentiation 254 KLAUS SOLBERG SØILEN ANDERS HASSLINGER

Operational Business Intelligence: A Viable Concept 263 MATTHIJS VAN ROOSMALEN

ECIS 2009 ‐ 4 ‐ PROCEEDINGS

The convergence of Societal Intelligence and Territorial Intelligence to promote Sustainable Development of weakened territories in France

Christian Bourret Université Paris Est France [email protected]

Abstract The need of “Reliance” of our society is a great challenge. Economic Intelligence must help economic competitiveness to develop social cohesion. In a global approach of “intelligence of complexity” according to the positioning of “French style” Economic Intelligence, we propose to analyse the convergence of a “new territory” of Economic Intelligence (“Societal Intelligence”) with Territorial Intelligence to promote Sustainable Development of weakened territories in France leaning on the participation of populations. This approach also corresponds to the matching of two key notions of our post-industrial society: the Network and the Project. Keywords: Societal Intelligence, Territorial Intelligence, social cohesion, territories, Sustainable Development, Network, Project.

1 Introduction Delegation for Territory Planning or Délégation à l’Aménagement du Territoire In the developed countries, our post- et à l’Action Régionale (DATAR) became industrial society became a “fragmented Delegation for Planning and society”. Globalisation forces a Competitiveness of Territories or generalized competition, not only between Délégation Interministérielle à companies but also between individuals, l’Aménagement et à la Compétitivité des nations and territories. Living for their Territoires (DIACT). For us, in its social majority in big cities, the contemporary approach, Economic Intelligence meets individuals, especially the most weakened, necessarily Territorial Intelligence. have lost their landmarks and their In this paper, we examine how the identity. For Bernard Carayon (2003) convergence of Societal Intelligence ("new Economic Intelligence is at the same time territory" of “French-style” Economic a factor of competitiveness of companies Intelligence) is possible with Territorial and territories, this competitiveness Intelligence to promote Sustainable allowing to develop work possibilities Development of weakened territories. First (work being a factor of social integration) we will highlight the important need of and also helps to finance necessary "Reliance" of all our society, linked with a solidarity to develop social cohesion. new more global approach of the territory. ECIS 2009 ‐ 5 ‐ PROCEEDINGS

Then we will analyse perspectives opened search for meaning”. In his analysis of the by the meeting of Societal Intelligence and evolution of territories, Jacques Beauchard Territorial Intelligence and by the (2000) refers to Régis Debray for whom matching of Networks and Projects. At “the man exists only fit (inscrit) in a last, we will examine links (in a territory”. His identity is linked to a perspective of social cohesion and of territory, emotional, patrimonial. For their Sustainable Development of weakened part, Edgar Morin and Renaud Sainsaulieu territories) between economic activity and stressed the need of "Reliance" of all our social cohesion, both in economic terms society, underlining the role of the (insertion) and in health field, underlining intermediate organizations, especially the role of the intermediate associations associations. Renaud Sainsaulieu (2001) and of training as catalyst for building stressed the dynamics of the intermediary, collective identity. of "Reliance", intermediate organizations creating a “social link for transforming”. For him, it is possible to assert that “the 2 Need of "Reliance" and new change of society takes support necessarily approaches of the territory on intermediate structures” … “the 2.1 Uncertainties of the contemporary intermediary promotes the passage of the individual and the need of "Reliance" world accepted from past towards the For Philippe Breton (2004) our society is invention of the new world for future” (p. “strongly communicating but slightly 132-133). Having underlined the crisis of meeting” (fortement communicante mais democracy, Pierre Rosanvallon (2008) faiblement rencontrante). For him, the showed the importance of nearness and of contemporary individual became “phobic citizen's participation (participative in the physical presence of other people, democracy) to give it a new legitimacy. but at the same time closely depending on Some years ago, he had pointed out the their virtual presence … communication is necessity to re-found the Welfare State. also emptied of its substance: meeting with 2.2 New approaches of the territory other one” (p. 160-161). For his part, Patrice Flichy highlighted “connected The approach of the territory evolved. individualism” with the loneliness of the Bernard Pecqueur and Jean - Benoît contemporary individual even Zimmermann propose to consider territory interconnected in the immensity of the as “a construction, a result of practices and cyberspace. Alain Ehrenberg showed of representations of the actors” (Pecqueur “tiredness to be oneself” (la fatigue d’être and Zimmermann, 2004). The diversity of soi) and all the uncertainties of the territories is underlined. In 2006, this contemporary individual, exhausted by the evolution corresponds to the change of worship of performance and the name of DATAR, born in 1963 at the time "Bougisme" or change for change (Norbert of the voluntarism of the general de Alter). For Philippe Breton, "no society Gaulle’s government in DIACT, already can survive without imagining a future”. evoked. For his part, Jacques Beauchard For him, “true novelty, at the same time as (2000) considers that the territory is built true danger means that, with the by the meeting of two aspects: the bankruptcy of ideologies, the future in "patrimonial" territory (identities, terms of communication via new mentalities, perceptions) and the technologies seems the only one available "transactional" territory (mobility, on the market of ideas” … “we pretend to exchanges). In that case, we can, like in believe in it but the heart is not” (p. 166). the articulation between Economic According to Viktor E. Frankl (1985), Intelligence and Territorial Intelligence (or "man's primary motivational force is his between the individual and the collective, ECIS 2009 ‐ 6 ‐ PROCEEDINGS the local and the global, the order and the Duval, p. 83). This definition of Economic disorder, the static and the dynamic), talk Intelligence emphasized the notion of about "Dialogies" or double logic, at the cycle of information processing. This same time complementary and opposed, in report made concrete the challenge of a global perspective of’ “intelligence of promoting Economic Intelligence in complexity” (Morin – Le Moigne, 2003) France. and of Sustainable Development. In his preface to “The new territories of The territory is built and rebuilt by Economic Intelligence” (Duval, 2008), convergence and synergy of projects Alain Juillet, high official in charge of (Bourret, 2008), this synergy that can be Economic Intelligence in France, explains speeded up by new uses of ICT – "French-style" Economic Intelligence. For Information and Communication him, in the extension of the Carayon’s Technologies (Dumas-Gardère- report (2003), it helps, in a background of Bertacchini, Girardot). We give a generalized competition, to capitalize on particular importance to the territories strong points while reducing weak points. where social links are weakened. These To achieve this aim, we must be able to territories correspond to suburbs of big acquire necessary information. On a cities with their big buildings, their theoretical level, Economic Intelligence is insecurity, their high unemployment rate, “mastery and protection of useful strategic the lack of identity shared by populations information for all decision-makers”. On a in majority immigrated, cut from their practical level, it is “a state of mind, a roots, where the young people especially method and tools which allow to gather do not find meaning to their lives and to treat all data and necessary (Sarcelles, La Courneuve, Evry, Le Mirail, information for the decision-making and Vaux en Velin …). There are also areas in its implementation” (in Duval, 2008, p. 7). de-industrialization, that can be populated Thus, he differentiates "French-style" by immigrant population (Seraing in Economic Intelligence from Anglo-Saxon Belgium) or have still a strong economic approaches “too economic targeted”: and patrimonial local identity: Saint- American “Competitive Intelligence” Girons (Ariège) with the crisis of paper being too often reduced to benchmark and mills industry or La Ferté-sous-Jouarre British "Business Intelligence” more (Seine-et-Marne) and millstones industry. enlarged but nevertheless not focusing a There are also areas victims of the rural lot on external environment. So “French- exodus where the ageing of the population style” Economic Intelligence is closer to is conjugated with catastrophic decrease in Stevan Dedijer’s approach (university of doctors and medico-social people Lund, Sweden) than to Michaël Porter’s numbers. one (Harvard). The widening of the field of action of Economic Intelligence and the 3 The meeting of Societal involvement of other actors “is going to Intelligence as new territory of allow to the State to focus on Territorial "French-style" Economic Intelligence” (p. 10). Intelligence with Territorial The works dedicated by S. Dedijer Intelligence since 1972 to Social Intelligence as lever of development are situated in a 3.1 The specificity of "French-style" Economic Intelligence multidisciplinary prospect. He defines Social Intelligence as: "all the activities of The Martre’s report (1995) defined a society, connected with the intelligence, Economic Intelligence as “all the actions the capacity to adapt itself, to answer of research, processing and spreading changing circumstances, to realize decided (with the aim of its process) of useful information to the economic actors” (in ECIS 2009 ‐ 7 ‐ PROCEEDINGS goals of development " (in Clerc, 2004, p. things”). He recalls then the Greek mètis 34). or the tricks of intelligence and mind of Economic Intelligence spreads to "new alertness. This “capacity to survive” territories": Juridical Intelligence (with the recalled by Dedijer is shrewd intelligence, development of Anglo-Saxon "soft law", creativeness of Ulysses, for a long time often in opposition to Roman law, and overshadowed by too rational thought and now the development of Asian law), triumphant science (logos). It is necessary Financial Intelligence with the help of the to re-question the mètis: a form of chartered accountants, Cultural intelligence to think a changing world. It is Intelligence, with a notably stake for a question of being able to discern the France to offer a new model of strategic weak signals. reasoning in support of stakes of the For Stevan Dedijer (2003), French-speaking world or francophonie “development is identical to Cultural with the paper of the sector of tourism. He Evolution based on the evolution and underlines the importance of Humanitarian revolution of Intelligence”. He defines Intelligence and then especially of Social culture as “ everything man made in every Intelligence which “would possibly society: values, social structures, politics, become one of the pillars of Economic technology, norms, habits, personalities, Intelligence of tomorrow”. We can also etc”. For him, “the fundamental fact of our find Sports Intelligence. Alain Juillet time is: first, everyday things change concludes by underlining the articulation faster, second, every day people are more of Economic Intelligence with the stakes different from each other than they were of the Sustainable Development, giving a the day before”. In this same last paper “tremendous opportunity for a new (2003), he enhanced Sweden as “an positioning of France”. Therefore intelligent state”. Economist, S. Dedijer according to him, Economic Intelligence was also an historian. He focused on constitutes “first of all a state of mind mentalities and representations. He pointed leaning on a method and tools without out 15 national characters in Sweden, vocation to remain closed to the only among them: curiosity, all kinds of sector of economy”. He considers that creativity and inventiveness are stimulated Economic Intelligence is a “too limitative and rewarded, travelling abroad to develop conception and we progressively must go intelligence of the world”. towards a concept of Strategic Social Intelligence puts any strategy in Intelligence” (in Duval, p. 15). a richer context. “To understand other Philippe Clerc explains the specificity people is so important as to eliminate a of “French style” Economic Intelligence rival”. The matter is not any more by a match between Social Intelligence competition but “competitive (Swedish school) and Competitive cooperation”, promoting creativity and Intelligence (in the Anglo-Saxon world). information sharing. He underlines the concept of’ "Social Societal Intelligence is in the heart of Intelligence" (Dedijer) which he prefers to new strategies of Sustainable qualify as “Societal Intelligence”. He also Development, which tries to conciliate refers to the French historian Fernand antagonisms and tensions between the Braudel. logic of economy (return on investment) According to Philippe Clerc, Social and quality of life, between globalisation Intelligence or “intelligence of the world” and planetary solidarity and the specificity is very ancient. At all times, man wanted of different territories, with the societal to understand. He refers to J. Bottéro and responsibility of companies. to Mesopotamian’s legacy and notably Social intelligence, according to P. Sumerian’s legacy (“the curiosity of Clerc, constitutes a tremendous lever. It ECIS 2009 ‐ 8 ‐ PROCEEDINGS allows to reinvent the way of the perspective drawn by Pierre Rosanvallon transversality and of the transdisciplinarity (2008). Territorial Intelligence also rests to overcome our blindness. Nowadays, on ICT who give an additional synergy to when the requirement of cooperation the territory’s projects. According to Jean- becomes again vital, it is an opportunity to Jacques Girardot (2007, Caenti Website): develop a collective intelligence (in Duval, “Territorial Intelligence brings p. 117). technologies of the society of knowledge in service of Sustainable Development of 3.2 Matching Societal Intelligence with the territory”. Since its origin, this use of Territorial Intelligence ICT is completely fit in Economic For us, this evolution of Economic Intelligence, notably in its aspects of Intelligence towards a more global technological and competitive watching "strategic" approach, corresponds to the (for example tools developed by the team definition given by Edgar Morin and Jean- of the professor Henry Dou in Aix- Louis Le Moigne about “the intelligence Marseille III University). The process of of complexity”: an holistic (global) Territorial Intelligence developed in approach of a whole system or a specific societal field by actors-researchers to build field. In its societal dimension, we think contextualized collective knowledge often that Economic Intelligence must be begins, as in the case of the Catalyse matched with Territorial Intelligence, Method (J.-J. Girardot, University of always in the same perspective of holistic Franche-Comté) by a territorial diagnosis approach of the territory: Societal with a particular importance given to Intelligence must be fit in a territory and social diagnosis, as in the case of Seraing Territorial Intelligence includes inevitably (Belgium). a societal dimension as the works of European Network CAENTI 3.3 – An approach by Networks and (Coordination Action of the Territorial Projects for Innovative Organizations European Network of Intelligence) showed The convergence of Economic or it. Competitive Intelligence in its Societal During the last CAENTI’s conference approach with Territorial Intelligence also (Besançon, September, 2008), Horacio corresponds to the matching of two key Bassano (University of La Plata, notions of our post-industrial society: the Argentina), defined Territorial Intelligence Network and the Project. According to by the following equation: IT = UT + PAT Manuel Castells (1996), Networks become + SD or Territorial Intelligence = the basic units of our society. Key social Understanding of the Territory + organizations and activities are organized Participation of the Territorial Actors + around electronically processed Sustainable Development of the territory. information networks. Many searchers do The participation of the actors of the not go so far. For Jan Van Dijk (1999), the territory and the involvement of individuals, groups, organizations, though populations in a perspective of Sustainable they may increasingly be linked by Development constitute the mere technical networks, are still essential, with specificity of Territorial Intelligence with the specificity of Social Networks. A all the stakes of information sharing and special issue of Informations sociales building a collective intelligence. We Review (2008) underlined the importance believe that this participative dimension of of Social Networks with the key role of Territorial Intelligence represents a major interactions and relations between “social tool of refoundation of democracy, in its units”. dimensions of nearness and of Our Networked Society is also a Project involvement of the actors, in the Society. According to Jean-Pierre Boutinet, the Project is everywhere, ECIS 2009 ‐ 9 ‐ PROCEEDINGS particularly in France where it become a account in comparison with both fields of quasi legal obligation: project of society, experience (past) and of interaction of company, of department, of student, of (today); define the essential elements of a unemployed people, of holidays, of life, etc. For us, this complementarity of a situation; put the actor (using a device) and Networked Society in its Social Networks his project in the centre. It differentiates aspects with a Project Society constitutes a four elements: actors' community, cultural global framework for a conceptual space contexts, projects (intentions of approach of territories in a Sustainable actors), devices (technology). It is based Development perspective. In an on the analysis and the modeling of four operational point of view, it implies the processes in interactions: process of articulation of management of project methodologies with that of analysis of positioning (linking up actors and Social Networks such as in the Catalyse contexts), process of relational practices Method. linking up actors and devices, process of To create Social Intelligence, the possible forms of actions, linking up synergy of networks is essential. Philippe contexts and projects, process of logic of Clerc (2008) points out the stakes of action linking up project and offered developpement of “Social Capital”. He devices. defines four entries for evaluation of This method opens to two perspectives: networks’ social performance: the assets in evaluation or forecast. Corresponding to social networks actions and information the notion of “generalized developed or types of active networks communication” developed by Alex (weak or strong links), relational assets Mucchielli following works of the (map of networks of allies), the assets of “invisible college” of Palo Alto, it allows a participation (involvement of actors), the systematic analysis of the complexity of assets of trust (2008, pp. 110-111). Networked Organizations in their territorial dynamics. It also allows 3.4 - The importance of context articulation between approaches of For Philippe Clerc, Societal Intelligence Economic Intelligence in its societal “allows to replace any strategy in a richer dimension and approaches of Territorial context where cultural factors complete Intelligence. widely analyses” (in Duval, p. 112). With 4 Economic activity and social the notion of context, Economic cohesion Intelligence in its societal aspect, converges strongly with Territorial 4.1 A society weakened by unemployment Intelligence. Alex Mucchielli or Guy Le and exclusion with the crisis of suburbs Boterf highlighted the importance of as revealing context for action: organizations can be Our consumer society (also society of considered as a “pertinent context for wastage) is so unfortunately that of action” (Mucchielli, 2006). This pertinent poverty (which concerns 6 - 8 million context for action differentiates from the people in France) and of exclusion. more global context in which any Progressively, in our post industrial organization evolves. society, exclusion became the new face of Alex Mucchielli and Claire Noy poverty (Bourret, 2006). The report of the proposed a “method of contextualization National Observatory of the Poverty and by the fields of experience and of the Social Exclusion (2006), relieved by interactions” (2005, p. 191 - 218). This Martin Hirsch, then president of Emmaüs, method answers four goals: give a frame to had underlined that while the gap “constructionist” researches to organize increased between the rich and the poor data about ground level gathered from people in our developed societies, job qualitative surveys; take temporality into constitutes no more guarantee against ECIS 2009 ‐ 10 ‐ PROCEEDINGS poverty. While in the past poverty rebuild social links. This challenge can be concerned persons in situation of break, considered in a dynamics of project around isolated aged persons, or jobless adults, a holistic approach centred on the process from now on, it is possible to work and to of reconstruction of the person in difficulty be poor: partial time, precarious job … To with the help of social networks. Gérard try to find a solution in revalueing work, Lefebvre (2005) identified five steps of Emmanuel Hirsch become “high self-reconstruction: restoring confidence commissioner in active solidarities” (haut- and motivation, acquisition of commissaire aux solidarités actives) in competences, official recognition of know- 2007 worked for the creation of RSA how and of competences, setting up (income of active solidarity or revenu de individual projects of insertion, and, solidarité active) which is going to be finally, returning to job (pp. 135-139). Job operational in June, 2009. It deals with is the major vector of reconstruction of reconciling the solidarity and the return to identity by self-respect and social job. While the RMI (minimum income of integration. Job is a fundamental element insertion or revenu minimum d’insertion) of the social contract. For a lot of people set up since 1988 concerned about one its loss means exclusion irremediably. For million persons, RSA should concern 3.5 Hervé Azoulay, there exist possibilities of millions. jobs in the suburbs but differently. Hervé Azoulay (in Duval, 2008), Subsidies do not give convincing results, applied the Societal Intelligence to the the challenge is searching other ways. He case of suburbs. Suburbs constitute a makes analogy with cellular growth. There revealing of the crisis of all our society, as are many talents in the suburbs which riots of November, 2005 showed it. The should allow to develop economically young people rebel when they have no viable projects. It is a question of more hope and feel foreigners to the world multidimensional approach and developing where they have to live (p. 120). There is a a global knowledge of the system. Hervé major risk of social explosion when young Azoulay warns us against an only people have nothing more to lose, the Cartesian approach (p. 123). It is a oldest resigning themselves more. In spite question of building a training of 40 thousand millions euros invested in organization with a bottom-up and not a about fifteen years, the policy of the city top-down approach. (politique de la ville) is a failure. Balance Leaning on the report of the seems broken and conflicts are not any Montaigne’s Institute “Poverty, exclusion: more regulated. Nobody takes care of the what the firm can make” or Pauvreté, community. The rich people become richer exclusion : ce que l’entreprise peut faire but they especially do not want to mix any (2006), Hervé Azoulay stresses the more. The society risks being cut in two: importance of networks to answer the those who have everything and those who crisis of suburbs by the articulation of have nothing and, between the two, we three networks: firms, associations and find hate. The explosion approaches. To local authorities. The issue is transforming prevent it, for Hervé Azoulay, it is needs into concrete proposals, by necessary to find new responses. optimizing resources and interfaces of communication. Organizations in networks 4.2 The cooperation of Networks for are flexible at the same time, open, quick, Sustainable Development interactive. Hervé Azoulay highlights the For S. Dedijer, Intelligence is the main importance of creative disorder and of lever for development. Work implies risk-taking. The key of success is in the social integration. So giving job to dynamics of the partnership and therefore unemployed people is a major stake to in the interface of meeting to ECIS 2009 ‐ 11 ‐ PROCEEDINGS communicate. Respect for one another and national agency of services at home trust reinforce relations. Hervé Azoulay (services à la personne). stresses the importance of the notion of The building of trust is essential. Gilles social undertaker and collective training. Le Cardinal and alii offer an original In the extension of the report of the method to organize cooperation in Montaigne’s Institute, he proposes to complex problems: the FAcT-Mirror create referent's office in insertion in the Method. The method's originality lies in big firms or to combine with insertion describing all the interpersonal associations. He also highlights the correlations in a complex situation by importance of the regional level in making an inventory of the fears, economic development. In France, attractions, temptations (FAcTs) that the economic development and professional participants could feel in relation to one training are the main domain of another. With a new, common intervention of Regional Councils. He also representation of the problem, the stresses the importance of voluntary work stakeholders develop structured in firms, especially referring to newly recommendations, leading to processes of retired people. He outlines the importance empowerment and co-operative action of a federal network of the partners (an (2001). “ideas-actions network”) to choose projects according to societal needs and 4.4 The importance of training as vector of their economic potential. development Training constitutes an essential stake. 4.3 The territory as synergy of local Innovative Intermediate Organizations projects and area of building trust (often associations) constitute training We have recently proposed to consider the organizations: they form their members territory of nearness as a synergy of local but also are built by knowledge and projects (ISEG, Lisbon 2008 and Journal competences of all their members, of Projectics, 2008). This dynamics can be including patients (healthcare) and persons speeded up by information and in trouble. In Healthcare Networks, the communication technologies (ICT) constitution of groups for talking (groupes allowing to share information better to go de parole) or the implementation of towards a collective construction. The role "citizens-relays" is decisive. The stake is of global organizations of interface as particularly strong in the suburbs as Hervé catalysts of trust is essential (chambers of Azoulay underlined it. He was relieved by commerce and industry, chambers of crafts Mary Brigaud (2008) who, by studying the (guilds), chambers of agriculture, particular case of the department of the associations notably in IEA – Insertion by Essonne, showed interactions between Economic Activity...). This synergy can training of youth people in a precarious particularly be developed in proximity situation and one of the “new territories of networks. In this point of view, the Economic Intelligence”, that of “Sport communities of towns (according to a law Intelligence”, to make easier the social on 1992) and the new "pays" (1995 and integration of the young people by training 1999 laws) are interesting. Bernard for getting a job. Leurquin especially highlighted "the In this perspective, University Institutes service’s vocation" of "pays" (2003). In of Technology (IUT) of Melun-Sénart and this perspective, the development of of Marne-la-Vallée set up, with the support services at home is particularly promising. of the Regional Council of Ile-de-France, They created more than 100. 000 jobs a certificates of creators' activity in year for 3 years. In 2005 was organized a partnership with local missions (missions locales), associations of management ECIS 2009 ‐ 12 ‐ PROCEEDINGS

(boutiques de gestion) and various chamber of agriculture in Saint-Girons. associations of the sector of insertion. From this example of a local initiative, we Social insertion is connected to health, see how, in the sector of social and especially if health is considered across the solidarity economy, it is possible to global definition given by WHO (World articulate the reconstruction of the person Health Organization): “Health is a state of in difficulty, the citizen's participation, the complete physical, mental and social well- solidarity and logic of Sustainable being and not merely the lack of disease or Development of nearness territories. It is infirmity” (1946). from such experiments that the mere articulation of Economic Intelligence 5 Two examples: IAE (Insertion by (notably in its societal aspect) with Economic Activity) and territories Territorial Intelligence is built where of Health populations live. First of all, Sustainable Development consists in using in a better way all the 5.2 Health and nearness territories available resources in a territory. S. Health is a major stake of all our society, Dedijer underlined that “a highly especially in the weakened areas. In motivated people can and has to use any Seraing (Belgium), in old steel and mining means to promote the interests of the basin of Wallony, that of populations, community to which it belongs” (1987). often of immigrated origin, is particularly This point of view meets our approach of worrying. The asbl Optima (asbl: non helping to develop territory by a synergy profit-making association in Belgium) of projects. work in territorial animation resting on the participation of all actors in the service of 5.1 Insertion by Economic Activity (IAE) welfare (Cusumano and alii, 2008). This We have already highlighted (Bourret, action of social engineering began with a 2006) the importance of structures of territorial diagnosis resting on Catalysis insertion by economic activity (SIAE) Method developed by J.-J. Girardot. In a within social and solidarity economy. The very different way, health situation is also case of the Gardens (Jardins) of Cocagne worrying in rural zones, where the retiring Network, born about twenty years ago near doctors are seldom replaced from now on. Besançon, is particularly interesting. New solutions are tested as Healthcare Today, the Gardens of Cocagne, represent Networks or Pluriprofessions Healthcare a network of 100 structures. In the Homes. The case of Bletterans (Jura) was department of the Ariège, in the Central recently mediatized. It uses information Pyrenees, the municipality of Saint-Lizier and communication technologies. A supplied agricultural lands to the CIDEL visioconference tool allowing activities of (centre of initiatives for local telemedicine was set up. The development). It is the first site in Ariège Pluriprofessions Healthcare Home of approved as an activity of social utility Bletterans also uses the services platform about insertion by the economic. It joined of Franche-Comté Santé and notably its the network of Gardens of Cocagne. It is shared electronic medical record. In the both a question of reinserting by work in Hautes-Pyrénées, the network of palliative the field of the organic farming persons in care become Healthcare Network Arcade difficulty but also of developing the also uses the shared electronic medical solidarity with the local population by the record set up in Franche-Comté. weekly delivery (by membership The mutualization of these nearness subscription) of products of the organic structures is topical. Healthcare Networks farming. The office of the CIDEL’s gather together as in Alès (Gard) with the association is located in the building of the Reseda association or in houses of ECIS 2009 ‐ 13 ‐ PROCEEDINGS

Healthcare Networks in Saint-Denis or in Intelligence approaches in developing Savoy (Chambéry). Different interactions between all the stakeholders organizations can be regrouped in the and by the participation of the local same place. It is the case of the Healthcare populations. So it is a challenge for Network devoted to the elder persons matching Networks and Projects. (Echo-Santé), with the CLIC (Local Center for Information and Coordination) 5.4 Application in two cases studies for elder people, with the EHPAD We will apply our global approach about (Establishment of Hospitalisation for "Intelligence of complexity" by the Dependent Aged Persons) and associations convergence of Societal Intelligence and of home help (ACMAD and Ariège Territorial Intelligence and by that of Assistance) in the offices of the old Social Networks and Projects to two cases hospital of Saint-Girons (Ariège) and also studies by simultaneously using the tools the local service of Hospitalisation at of the Economic Intelligence pooled by the Home (HAD). Thus the actors learn to Resource Centre of the group of experts know each other, and begin to work about Economic Intelligence (CNRS / together. It is a first stage towards the Marne-la-Vallée) and the Catalysis share of information and the building of Method about Territorial Intelligence (J.-J. collective knowledge. There also is an Girardot, University of Franche-Comté). example about the convergence of Societal These two case studies are located within Intelligence with Territorial Intelligence. the department of Seine-et-Marne (Ile-de- France). The first concerns the territory of 5.3 Immaterial patrimony heritage and TIC the municipalities of La Ferté sous Jouarre, We highlighted the federal role of the area in economic and social crisis, with Internet portals (cf Franche-Comté Santé) stakes in the struggle against exclusion and and the use of the telemedicine by the precarious health of populations. Pluriprofessions Healthcare Home of To widen our visions, we will then look at Bletterans. E-health is one of the the case of SAN (Syndicat privileged fields of convergence of d'Agglomération Nouvelle) of Val Economic Intelligence and of Territorial d'Europe, an area in full economic Intelligence around ICT, in the perspective development around the TGV defined by J.-J. Girardot (2007). International station in Chessy, the most The ICT can constitute (Bertacchini, important commercial centre in Europe in Dumas) a lever of territorial development Serris and the key role of Disney Resort as which supports the construction of the space planner. territorial capital. This meeting of the In both cases, we will focus on territory of proximity and the ICT economic development issues and on concerns the economy of immaterial Social Networks in a context of (Levy-Jouyet, 2007). But in the weakened Sustainable Development Projects with the territories that we study, the interactions importance of building a collective identity and the collaborative exchanges are much both in an area in decline or in strong more limited in Couserans, Seraing’s economic development. So different district or La Ferté-sous-Jouarre’s situations should allow interesting community than, for example in the comparative analysis. French Pays Basque or in areas like 6 Conclusion Sophia-Antipolis, near Nice. In the weakened areas, the construction of the In this paper, we underlined the Territorial Immaterial Capital is only at its convergence of Economic Intelligence, in beginnings. It must be built by the its “new territory” of Societal Intelligence convergence of Societal and Territorial with the Territorial Intelligence, at the ECIS 2009 ‐ 14 ‐ PROCEEDINGS same time from a conceptual point of view of social cohesion and gives all their and also through the concrete experiments importance to the matching of the of projects of territories in a holistic Territorial Intelligence and of Economic approach of “intelligence of complexity”. Intelligence particularly in its societal These projects also materalize the aspect. convergence of the two key notions of our 7 References post-industrial society: the Network and the Project. ARNAUD (Emmanuel), BERGER Our society is at a crossroads. Viviane (Arnaud), DE PERTHUIS (Christian), Forrester has spoken about “economic Le développement durable, Paris, horror" but also outlined the ongoing Nathan, Repères pratiques, 2006, 160 p. changes: “when will we become aware AZOULAY (Hervé), “L’intelligence that there is not crisis, nor crises, but sociale. Le cas des banlieues : utiliser mutation? not that of a society, but that, les réseaux pour sortir de la crise”, in very drastic of a civilization?” (1996, p. DUVAL (Marc-Antoine), op. cit., 2008, 10). For his part, Pierre Musso criticized pp. 101 – 118. networks and cyberspace, showing their BASSANO (Horacio), “Compréhension et ambivalence: if they can favour a society développement du territoire / un of knowledge, they can also allow the nouveau réseau. Vrais problèmes, implementation of a society of the control critères et développement de projets. of the individuals at a never reached level Expériences en Amérique Latine”, (2003). For Philippe Breton “a society Conférence invitée, 6th International without future can only destroy itself” Conference of Territorial Intelligence (2004, p. 166). organised by CAENTI (Coordination The competitiveness of firms in the Action of the European Network of global world is necessary to be able to Territorial Intelligence), Université de finance policies of social cohesion Franche-Comté, Besançon, 16 octobre (Carayon, 2003). The convergence of 2008. Economic Intelligence in its societal aspect BEAUCHARD (Jacques), La bataille du with Territorial Intelligence can give us territoire. Mutation spatiale et tools of analysis (social engineering) and aménagement du territoire, Paris, for building networked partnerships as we Administration Aménagement du see in the case of suburbs. It also gives Territoire / L’Harmattan, 2000, 144 p. tools of social engineering and of societal BOURRET (Christian), “Eléments pour watching. Philippe Breton also stressed the une approche de l’intelligence risk of failure of a future only centred on territoriale comme synergie de projets new technologies. The questions of the locaux pour développer une identité understanding of a more and more collective”, International Journal of complex society and of the meaning for Projectics, Bruxelles, De Boeck, 2008, the humanity’s destiny meet. Man always pp. 79 – 92. searches a meaning to his life. He cannot BOURRET (Christian), “Insertion by live without it (Frankl). His vital need of Economic Activity in France : landmarks implies his fitting in the Innovating Socially Responsible proximity territory more than ever, as his Economic Services in a Networked citizen's participation to build a new Knowledge Society”, Proceedings nearness and participative democracy. XVIth RESER International The extension of the financial then Conference, Services Governance and economic crisis since September, 2008 Public Policies, Lisbon University, with the increase of the unemployed 2006 September 26th-28th, vol. 1, pp. people number makes essential the stakes 503-522. ECIS 2009 ‐ 15 ‐ PROCEEDINGS

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Journal of Operational Research, proximité, Paris, Editions du Seuil, Elsevier, n° 132, 2001, pp. 694-702. 2008, 368 p. LEFEBVRE (Gérard), Reconstruction SAINSAULIEU (Renaud), Des sociétés en identitaire et insertion, Paris, mouvement. La ressource des L’Harmattan, 2005, 161 p. institutions intermédiaires, Paris, 2001, LEMIEUX (Vincent), Les réseaux Desclée de Brouwer. d’acteurs sociaux, Paris, PUF, 1999, VAN DIJK (Jan), The Network Society: 146 p. Social Aspects of a New Media, LEURQUIN (Bernard), La vocation de London, Thousand Oaks, Delhi, Sage, services des pays. Guide – Repères 1999, 267 p. méthodologiques, Association pour la Fondation des Pays, 2003, 153 p. Websites LÉVY (Maurice), JOUYET (Jean-Pierre), Agence Nationale des Services d’Aide à la L’économie de l’immatériel. La Personne : croissance de demain, Rapport de la www.servicesalapersonne.gouv.fr commission sur l’économie de ASBL Optim@ : www.asbloptima.be l’immatériel, La Documentation CAENTI (Coordination Action of the française, 2006, 184 p. : European Network of Territorial www.finances.gouv.fr/directions_servic Intelligence) : http://www.intelligence- es/sircom/technologies_info/immateriel territoriale.eu/index.php/fre/ /immateriel.pdf DIACT (Délégation Interministérielle à MARTI (Yves-Michel), “Ce que j’ai l’Aménagement et à la Compétitivité appris de Stephan Dedijer”, Paris, Les des Territoires) : www.diact.gouv.fr/ cahiers de l’AFDIE, n° 5, septembre- Franche-Comté Santé :www.franche- octobre 2004, pp. 37-39. comte.sante.gouv.fr/ MORIN (Edgar), LE MOIGNE (Jean- Louis), 2003, L’intelligence de la complexité, Paris, L’Harmattan. MUCCHIELLI (Alex), NOY (Claire), Etude des communications : Approches constructivistes, Paris, Armand Colin, 2005, 239 p. MUSSO (Pierre), Critique des réseaux, Paris, PUF, 2003. Observatoire national de la pauvreté et de l’exclusion sociale, rapport 2005-2006, Paris, La Documentation française, 2006, 176 p. : http://www.ladocumentationfrancaise.fr /rapports- publics/064000163/index.shtml PECQUEUR (Bernard), ZIMMERMANN (Jean-Benoît), 2004, Economie de proximités, Paris, Hermes-Lavoisier, 264 p. “Réseaux sociaux : théories et pratiques”, Informations sociales, Paris, n° 147, 2008, 138 p. ROSANVALLON (Pierre), La légitimité démocratique. Impartialité, réflexivité, ECIS 2009 ‐ 17 ‐ PROCEEDINGS

Can military education benefit from the study of competitive intelligence?

Didier Danet Centre de recherche des écoles de Saint-Cyr Coëtquidan, Pôle Action globale et forces terrestres, 56380 Guer, France, [email protected]

Abstract Competitive intelligence is one of the optional courses French Cadets can attend while they are educated at Saint-Cyr. In the context of “New Wars” and “New Army”, it could be relevant to place a greater emphasis on competitive intelligence in the curriculums. Keywords: Competitive intelligence, French Cadets, New wars, All Volunteer Force.

In France, competitive intelligence is part relevant for cadets training than history, of curriculum in most of engineering and law or game theory? business schools. Many of them deliver In Saint-Cyr, the French military Bachelor or MBA degrees in which CI is academy, cadets can train in competitive considered as a core competency. Nice, intelligence since fifteen years. At the Toulouse or Tours-Poitiers are widely beginning, CI was clearly considered as a recognized as top places for students who non core course, a tool. The course was want to train in CI. designed to “create a bridge” between But, if CI is obviously a core military and business world. Cadets were competency for students who intend to encouraged to focus not only on military pursue a career in business world, is it the topics but also on civil topics such as same for civil servants, especially for those business administration.. Since that time, civil servants who are judges, policemen cadets pay a greater attention to CI even if or soldiers. One can easily imagine that it is not yet a core part of the academic policemen or judges who have to deal with training. intellectual property breaches, computer Competitive intelligence at saint- frauds or industrial espionage are more cyr: assessing a twenty years efficient and make better decisions if they understand what the CI problems consist training in, what the stakes are and which solutions CI: An optional part of the curriculum can be usefully provided. To some extent, Since the end of the 70s, the concern about judges and policemen take advantage from the standard of cadets education is a CI training. But, what about armed forces common matter of faculty and officers in officers? Can military education profit Saint-Cyr. Everyone agree on the fact that from the study of CI? Is CI more or less “new wars” (Munkler 2004) are very ECIS 2009 ‐ 18 ‐ PROCEEDINGS different from “Cold War”. Yet, do ten people among forty five enrol for this “officers of the 21st century” have to be course every year. Others specialize in different from the elder ones? Do they History, Management, Law, need to be trained in new skills and Communication or Sociology. They attend abilities? If yes, what skills and abilities a seminar (28 hours) and they can prepare are relevant? their master thesis in CI. In the past years, like other military academies, (Vandergriff 2006) Saint-Cyr CI: starting difficulties has been led to overhaul its curriculums ; If Economic department had a “Frequently the school has experienced two main Asked Questions” topic on the school reforms (1982, 2002). The reform of initial website, the most frequent one would training launched in 1982 has deeply certainly be: “Why do you teach such transformed standard of education. (Augé courses as competitive intelligence to 2008) The most obvious change relates to cadets? CI is a matter for business people, the duration of the trainings content. In the not for Army officers.” Those who are 80s, cadets were studying for one year in reluctant to teach CI in military academies Coëtquidan and they were graduated on a usually advance two reasons. BA or BSC basis. The typical curriculum is now three years long and the cadets get Make war, not economics a Master’s Degree. They now attend an Implementing the reforms of 1982 and interdisciplinary and global course in 2002 has not been a prone-problem which military culture and academic operation. Most of cadets and officers are knowledge are closely related in order to convinced of the advantages they will get educate cadets to the “art of leadership”. . out of them. This is why these reforms have been carried on with constancy and in the same general direction. But, everybody seems to have an idea of what cadets training should be and does not necessarily agree with the “new” education model. Some people think that a soldier or an officer must be on his guard not to become an “intellectual”. A cadet who spent two years in a “preparatory class” and passed the entrance examination of Saint-Cyr has Figure 1 – Training project in Saint-Cyr well enough academic knowledge to be a (Ecoles de Saint-Cyr Coëtquidan 2009) good officer. No need for him to go on Revamped courses are now opened up to with such esoteric and boring topics as the academic world, to Grandes Écoles military history, law of war, political and foster exchanges between the future science, public management, foreign civil and military managers. A wider range languages or macroeconomics. of courses and options has been This critical thinking embodies two implemented in the three masters (Science, different points of view. Arts, Management) even if a “common On the one hand, those who profess to trunk” is preserved in history, law, be “loudmouth” are harking back to the political science, international relations, old story. Now and again, they regret the foreign languages… Competitive good old days, when soldiers and officers intelligence is not part of the “common were “tough guys”. They subscribe to the trunk”. It is one of the courses that cadets saying: “Thinking is the beginning of attend during the fourth semester if they disobedience”. Still in december 2008, one specialize in Economics. About eight to of these “loudmouth” was writing a typical ECIS 2009 ‐ 19 ‐ PROCEEDINGS commentary on a famous military related curriculum is designed to train cadets how blog site : “Obviously, Saint-Maixent [non to be a good leader in the short-term commissioned officers academy] and (junior officer) and to fill executive Saint-Cyr do not anymore educate cadets positions later in their career (senior to give battle to the enemy… Head of offices). Training programs must combine Army wanted to change Saint-Cyr into a hands-on exercises (the “drill”) and “supercampus university” widely open to general knowledge and specific courses in enterprises… An army just needs leaders, managing men and structures. Academic “guys with b…”, not “demagos””. courses and military training are not in More seriously, shaping officers for the competition with each other. All of them 21st century raises a fundamental question play a part in shaping both exemplary regarding goals of education. Do military leaders and adaptive officers with broaden academies intend to train platoon leaders professional and cultural background. or commanders in chief? Such an education is very demanding for Training platoon leaders means that cadets and academy: busy schedules (twice training contents must be very hands-on. as many hours as other masters students), Many cadets are very fond of being taught obligation to improve physical strength, about professional skills and “leadership mental agility and interpersonal skills in recipes”. They are afraid to be in charge of the same time, “diversity management” to professional soldiers and NCOs who will tap civilian and military talents… More have more practical experience than they resources are needed to achieve this have. They want to leave the “high school ambitious goal. But this is a quite low universe” and fit in a military world they price to have at Army’s disposal a have dreamed of. So, improving their force “workforce” capable of facing un of personality is their most important predictable challenges of new wars. challenge: being the leader of a team, being self confident and charismatic, Officers are not the scouts of businessmen setting an example to be imitated, making Great efforts have been made in the 90s to the difficult decisions… Rightly or promote “business intelligence” in military wrongly (wrongly in our opinion), they world. But, the mainstream speech is both think that academic education is irrelevant simplistic and clumsy. to achieve this goal and find refuge in According to this mainstream speech, tasks or activities that look close to French forces are involved in many “peace supposed regiment life. Not surprisingly, keeping” or “peace enforcement” this attitude of mind is common to all operations all over the world (Africa, students who are just about to get their Balkans, Middle East…) and they have to first job and fear a lack of practical skills. fight in order to rebuild peace and security Concerning military education, this usual in those countries. But French companies demand of the students get the backing of do not take advantage from these senior officers who look for budgetary sacrifices; most of reconstruction bids are savings so that they advocate shorter won by foreign firms and they rarely come curriculums and place most of emphasis onto these new markets unlike American, on physical and elementary professional Chinese or German competitors. French skills. For the more, they think that cadets soldiers pay a lot to restore peace; they will learn on the job and only a few of often suffer losses and injuries. But French them (“high potential profiles”) will companies do not benefit from peace benefit from a thorough academic dividends. Such a gap is not normal and education the implementation of a “business The educational project of Saint-Cyr is intelligence” process, involving Army and quite the opposite of this first vision. The companies, may help to fill it. In this ECIS 2009 ‐ 20 ‐ PROCEEDINGS process, soldiers would have to gather decisive outcome, is an exception to the economic and technical data after which rule. Considering the last twenty years, business people would use information to when nations went at war, military prepare more appropriate and competitive operations quickly ended (Balkans, Iraq, tenders. Afghanistan, Georgia). In each case, the This kind of speech is simplistic and opposing armies were unequal and the clumsy for many reasons. First of all, strongest won within a few weeks. Apart mission and possible losses are devalued from these regular wars, conflicts are because they look like being nothing but increasingly asymmetric. Militias such as “return on blood investment” in a business Hezbollah of Hamas devise innovative environment. Yet, men do not risk their tactics to confront their adversaries (urban lives to fill order books. The speech also battle or swarming for example) (Goya gives the impression that French soldiers 2006). Rebels are compelled to adopt are at a few companies service and that strategies that impose indirect costs on the they are just operators in business state, typically by using violence against intelligence systems which are designed civilian populations, humanitarian without them. In a word, officers consider organizations or peacekeepers. New wars themselves as Nation’s servants; they do tend to last as long as warlords or terrorists not want to be the scouts of businessmen. leaders have access to enough funding, and Cadets are deeply reluctant to be part of they end not in a decisive battle but such a “business intelligence” process. gradually, fading due to exhaustion. This is the reason why the legitimacy of Insecurity slowly decreases and violence “competitive intelligence” must take roots can suddenly arise. (Krulak 1997) in a specific approach which involves the fundamentals of CI, needs of forces and military environment. CI course must provide cadets competencies that are focused on their own job and increase Army’s ability to confront with restricted human and budgetary resources. Competitive intelligence at Saint- cyr: changes to come

CI and new wars The structure of CI course (seminar + master thesis) has remained unchanged since it was implemented in the beginning Figure 2 - Stabilization process of the 90s. During this time, there were (Centre de Doctrine d'Emploi des Forces dramatic changes in how wars are to be (CDEF) 2007) fought. According to Münkler among Such conflicts blur the line between war others (Desportes 2001; Desportes 2008; and peace, between war and crime, so as to Smith 2007), it can be argued that it is now war no longer occupies a distinctive necessary to talk about “new wars”. The conceptual space. Armies have to make recurrent conflicts that plague the world war amongst population and they have to today are ranging from genocides and “win hearts and minds”. If need be, they “warlordism” to mass terrorism and have to face bomb attacks, ambushes, private military companies. Regular snipers so that they have to permanently warfare, in which war is waged between keep on theirs guard and use violence if states and their representatives, culminates necessary. But, most of the time, soldiers in a decisive battle, and produces a ECIS 2009 ‐ 21 ‐ PROCEEDINGS live in cities, have talks with people on unemployment… This gives poor light in markets and in the streets, restore the field. CI would bring further useful security… They are here to stay quite a information to undertake the process of long time and they need to understand at rebuilding local infrastructures and to least fundamentals of foreign languages cooperate with all existing stakeholders. and cultures, political imbroglio, different social and economic systems. In many CI and public management regions, civilian organizations can not be For a long time, French Armed forces have sent on their mission due to threats and been living by their own. Thanks to insecurity. NGO’s employees are regularly conscription, they had at their disposal an kidnapped or killed so that soldiers fight abundant supply of very cheap and asymmetric opponents and, in the same qualified workforce. Conscripts were time, distribute food, vaccinate people, completing various tasks, from rebuild roads, bridges or schools … maintenance to bakery, teaching to During this post-war period, with (or software design. Military institution was instead of) governmental and non quite focused on its own needs. governmental organizations, armed forces Since the beginning of the 21st century, are asked to restore a peaceful living conscription has been suspended and all environment, prepare implementation of volunteer force has been established. In political institutions and make economic this new model of organization, the first recovery easier.(Rathmell 2005) buzzwords coined in headquarters and regiments are “reengineering”, “rightsizing” (or in fact “downsizing”), “core competencies”, “outsourcing”, “public private partnership”… Experts’ surveys as well as everyday chit chats are full of references to “change”, “adaptability”, “savings”, “performance” or “audit”. By reference to Williamson’s transaction cost theory, Armed forces are quickly shifting from a hierarchical model of governance to a more market oriented one. According to the theory, bureaucratic costs should diminish but Armed forces will not ipso facto benefit from budgetary Figure 3 - Place of Armed forces in savings.(Danet 2002b) To achieve stabilization process significant savings, Armed forces have to (Centre de Doctrine d'Emploi des Forces improve their competencies in such (CDEF) 2007, p.81) functions as purchasing and procurement In this complex stabilization process, operations, contracts negotiation and competitive intelligence may help armed enforcement, networking management… forces to design reconstruction programs The army-like system relied on a clear in giving them frameworks and tools to chain of command in which officers were assess population needs, economic given a narrow span of management and situation, markets working, social formal authority to command and control networks… Such frameworks already subordinates; information were circulating exist. Yet they are essentially based on bottom up while orders were moving tom macroeconomics and are focused on such down. In an all volunteer force, army topics as monetary creation, inflation, moves away from the past vertical ECIS 2009 ‐ 22 ‐ PROCEEDINGS integration towards a nimbler organization, doubt that business intelligence can fitted into a complex network of provide them an efficient strategic commercial and industrial relationships planning tool. and relying on civil companies to achieve Conclusion its missions. (Danet 2002a) Organization is constantly under a double threat: first, Saint-Cyr is shaping Army’s officers for paying a lot for a poor or an ordinary the 21st Century. To do so, it is the duty of provision of a service; second, contracting military and academic staff to overhaul with a non reliable business partner. In the curriculums at regular intervals. Emphasis first case, Armed forces will benefit from must be placed on contemporary and no budgetary savings; in the second, the future military issues. “New wars”, “new mission will be compromised.(Camm & missions” and “new organizational Greenfield 2005; Congress of the United structure” demand new skills and States - Congressional Budget Office competencies. Business intelligence is not 2008; Singer 2007) the panacea to every ill of a turbulent Both threats can be reduced if a military environment. But, business business intelligence strategy is intelligence is probably one of the most implemented. Like every companies in the relevant strategic planning toolset in such world, Army has to improve its supply eventful situation. Taking courses in chain and production management in order business intelligence may become a to create networks and processes for “must” in French cadets education. matching its demand with external supply References at a lower cost, turning it into a value chain for every stakeholder and enforcing Augé, A., 2008. La formation initiale des reliability of the whole network. However, futures élites militaires à Saint-Cyr: un improving efficiency of the supply and dispositif institutionnel en évolution. production chain implies to overcome Education et sociétés, 21(1), 81 - 94. many obstacles. An open information and Camm, F. & Greenfield, V.A., 2005. How management system connects various Should the Army Use Contractors on partners so as to harmonize opposite the Battlefield? RAND Corporation. interests and to make a seamless network Centre de Doctrine d'Emploi des Forces in which security procedures protect (CDEF), 2007. Gagner la bataille, strategic data while enabling partners to conduire à la paix. Les forces terrestres exchange sensitive data required for price dans les conflits aujourd'hui et demain, and quality negotiation. Moving from a Armée de Terre. hierarchical producing organization Congress of the United States - towards a networking leadership also Congressional Budget Office, 2008. requires keeping expertise in contracted Contractors' Support of US Operations out operations.(Fréry & Law-Kheng 2007) in Iraq, A knowledge management system has to Danet, D., 2002a. L’Armée entre la be implemented.(Jermol et coll. 2003) It pyramide et le réseau. Sociétal, 4, 78- implies the setting up of a proper 82. infrastructure to facilitate capitalisation, Danet, D., 2002b. Réussir l'externalisation upgrade and exchange of knowledge and des fonctions stratégiques de la défense. ideas. Les Champs de Mars, (11), 259-273. In brief, moving from conscription to Desportes , V., 2008. La Guerre Probable, the all volunteer force questioned the 2e ed 2 éd., Economica. nature of prior management habits. It Desportes, V., 2001. Comprendre la reminds Armed forces of the fundamentals guerre 2 éd., Economica. of “ordinary” management. There is no ECIS 2009 ‐ 23 ‐ PROCEEDINGS

Ecoles de Saint-Cyr Coëtquidan, 2009. Projet éducatif - La formation. Available at: http://www.st- cyr.terre.defense.gouv.fr/index.php?ID =1013072 [Accédé Février 2, 2009]. Fréry, F. & Law-Kheng, F., 2007. La réinternalisation, chaînon manquant des théories de la firme. (French). Revue Française de Gestion, (177), 163-179. Goya, M., 2006. La guerre de juillet. Analyse à chaud de la guerre israelo- hezbollah (juilolet août 2006), Armée de Terre - Centre de Doctrine d'Emploi des Forces (CDEF). Jermol, M., Lavrac, N. & Urbancic, T., 2003. Managing business intelligence in a virtual enterprise: A case study and knowledge management lessons learned. Journal of Intelligent & Fuzzy Systems, 14(3), 121-136. Krulak, C.C., 1997. The Three Block War: Fighting in Urban Areas. Vital Speeches of the Day, 64, 139-139. Munkler, H., 2004. The New Wars, Polity Press. Rathmell, A., 2005. Planning Post Conflict Reconstruction in Iraq: What Can We Learn? International Affairs, 81(5), 1013 - 1038. Singer, P.W., 2007. Can't Win with 'EM, Can't Go to War without 'Em: Private MIlitary Contractors and Counterinsurgency. Brookings Institution, (Septembre). Smith, R., 2007. L'Utilité de la Force : L'Art de la Guerre Aujourd'hui, Economica. Vandergriff, D.E., 2006. From Swift to Swiss: Tactical decision games and their place in military education and performance improvement. Performance Improvement, 45(2), 30- 39. ECIS 2009 ‐ 24 ‐ PROCEEDINGS

Strategic Dependence of a Developing Country Vision from Patents

Henri Dou*, Jean Marie Dou Jr**, Sri Damayanty Manullang***

*ESCEM Atelis1, 1 rue Léo Delibes BP 0535, 37205 Cedex 3, France [email protected]

**CCIMP Chamber of Commerce and Industry of Marseille-Provence [email protected]

***Center for Competitive Intelligence. Regional network, North Sulawesi, Indonesia [email protected]

Abstract: Patents are a unique source of technical information and they make a bridge between science and technology. Most of the time they are used to protect an invention and to develop innovative thinking. But the analysis of large groups of patents (from a specific technology or from a specific country) may also be used to develop strategic indicators. In this paper we wish to show how the analysis of the priority patents and extended patents (to a specific country) may give rise to strategic dependence indicators. As an example the case of Indonesia is analyzed. It is show that in various areas, the ratio of extended patents from foreign countries to Indonesia is large and the patents with a priority in Indonesia and coming from Indonesian firms is small. From these results different indicators are built and various considerations on the information policy of the country are made. Keywords: competitive intelligence, patents, automatic patent analysis, strategic dependence, matheo-patent.

1 Atelis is the strategic workshop of the ESCEM (Business School Tours-Poitiers).

ECIS 2009 ‐ 25 ‐ PROCEEDINGS

In Competitive Intelligence the strategic IPC, the patents extended to Indonesia by dependence of a country in key firms other than the Indonesian firms. technological fields is of primary From the amount of extended patents importance [Dou 2008]. In this paper we compared to the patents with an Indonesian which to show how patents can be used as priority (from Indonesian firms or from an indicator of technological dependence. foreign firms) various strategic indicators The use of patents as industrial and were built. economical indicators as been presented in various studies [Wanise 2003] [Zoltan 2002]. We wish in this article to use the APA (Automatic Patent Analysis) to develop a more realistic Dependence Indicator[Ishtiaq 2003] that the simple usage of counting patents per million of inhabitants, etc. We choose as case study the Indonesia. This is a developing country which is ready to launch a national program of Competitive Intelligence. In such a program the control of the scientific, economic and industrial information is important but out of it simple and efficient indicators could be Figure 1 - General methodology build up. Various preliminary studies already made for this country will facilitate the integration of such indicators in its 1.1 - Patents with an Indonesian Priority industrial development [Dou 2003] and A certain number of Indonesian patents are also in the field of Competitive accessible via the worldwide database Intelligence [Dou 2004] education. Within Esp@cenet. These patents can be divided the framework of this article, we made a into two categories: those which have an study on the basis of patents available Indonesian priority and those which are through the Esp@cenet 2 worldwide extended to Indonesia (i.e. already granted database from the European Patent Office in other countries). (EPO). The search of the patents, their One can by querying the database builds downloading, their automatic analysis up a first group of patents having an were carried out via the software Matheo Indonesia priority (ID field (Indonesia) in Patent 3 .Various publications were carried the PR field (Priority)). The International out within this framework and can be Patent Classification (IPC) makes it consulted is more information is necessary possible to structure the patent areas in [Paoli 2003] [Dou 2004]. technological fields, applications and products. This research leads to the 1 - Methodology following result: The figure 1, will present the global At March 10th 2004 methodology that we followed. From the Priority Indonesia total 1655 patents Esp@cenet worldwide database we Total Applicants (Patent Assignees): 511 retrieved the Patents with an Indonesian Indonesia Applicants: 248 priority. An analysis of the IPC (4 digits) One can analyzes the IPC (International as well as the ratio of the total amount of Patent Classification) present in this whole patents from Indonesian firms in each IPC group of patents and for each class one can indicated the strategic areas. A second step highlight the number of patents with an was to extract from the Esp@cenet Indonesian priority. Figure 1 shows the worldwide database for each of the above analysis which can be carried. The following figures show the presentation of 2 For more information on the database Esp@cenet, the main IPC, with access to the definition consult the following Internet host: of the class, the patents of the class and http://ep.espacenet.com/search97cgi/s97_cgi.exe?Action their bibliographic information. =FormGen&Template=ep/EN/home.hts 3 Matheo Patent. To obtain the characteristics of this software, as well as a version of free demonstration, consult the site: http://www.imcsline.com ECIS 2009 ‐ 26 ‐ PROCEEDINGS

Figure 2 - Patent Analysis. Option with the IPC analysis

After selection of one class, the number of to deal with the problem is to consider the patents present in the class is determined. patent family (patents related to the same Then the Indonesian Applicants are invention and granted in different counted and compared with the total countries). There are 31 different families, number of Applicants for this class. which characterized 31 different Example: inventions. The families are made from 2 to 8 patents. But, working with families is PRESERVATION OF BODIES OF HUMANS ORrather ANIMALS specialized, OR PLANTS and to OR design PARTS indicators A 01 N THEREOF; BIOCIDES, e.g. AS DISINFECTANTS,understandable AS PESTICIDES, by everybody, AS HERBICIDES we preferred; PEST REPELLANTS OR ATTRACTANTS; PLANT GROWTH REGULATORS to take the global amount of patents. Patents with ID (Indonesia) priority: 28 2 - Selection of the strategic patents technologies and applications from Indonesian firms 4 patents ratio 14,3% Let us recall that we select these areas starting from the patents having an This methodology was applied to the 41 Indonesian priority and with a number of most significant IPC that we selected patents coming from significant Indonesian starting from the patents having an industries or Institutions. This selection Indonesian priority. can be worked out in two ways: important It is obvious also that the quality of the number of Indonesian Applicants, or invention is not taken into account and we important ratio of Indonesian Applicants make only a statistical study. Another way compared to all Applicants in this ECIS 2009 ‐ 27 ‐ PROCEEDINGS technology. We classified the strategic IPC Application number ID : 158 ratio 8,86% by decreasing order according to the total ______number of patents granted to Indonesian H 04 N PICTORIAL COMMUNICATION, e.g. Firms or Institutions and having a priority TELEVISION in Indonesia Patents with ID priority: 17 from One leads to the following classification: 4 Indonesian firms 8 ratio 47,05% Application number ID : 214 ratio 7,94% ______A 61 K PREPARATIONS FOR MEDICAL, DENTAL, OR TOILET PURPOSES CONTAINERS FOR STORAGE OR Patents with ID priority: 102 from TRANSPORT OF ARTICLES OR MATERIALS, e.g. Indonesian firms 14 ratio 13,72% BAGS, Application number ID : 1669 ratio BARRELS, BOTTLES, BOXES, CANS, 6,11% CARTONS, ______B 65 D CRATES, DRUMS, JARS, TANKS, TRANSMISSION OF DIGITAL HOPPERS, H 04 L INFORMATION, e.g. TELEGRAPHIC FORWARDING CONTAINERS; COMMUNICATION ACCESSORIES, Patents with ID priority: 23 from CLOSURES, OR FITTINGS THEREFOR; Indonesian firms 14 ratio 60,86% PACKAGING ELEMENTS; Application number ID : 154 ratio PACKAGES 14,93% Patents with ID priority: 36 from ______Indonesian firms 7 ratio 19,44% ORGANIC FERTILISERS NOT Application number ID : 249 ratio COVERED BY SUBCLASSES e.g. C 05 F FERTILISERS FROM WASTE OR 14,45% REFUSE ______Patents with ID priority: 15 from B 01 D SEPARATION Indonesian firms 13 ratio 86,66% Patents with ID priority: 32 from Application number ID : 11 ratio 136% Indonesian firms 6 ratio 18,75 ______Application number ID : 288 ratio 11,11% C 02 F TREATMENT OF WATER, WASTE WATER, SEWAGE, OR SLUDGE ______Patents with ID priority: 23 from SUPPLYING COMBUSTION Indonesian firms 12 ratio 52,17% ENGINES IN F 02 M GENERAL WITH COMBUSTIBLE Application number ID : 91 ratio 25,27% MIXTURES ______OR CONSTITUENTS THEREOF FOUNDATIONS; EXCAVATIONS; Patents with ID priority: 13 from E 02 D EMBANKMENTS; UNDERGROUND OR UNDERWATER STRUCTURES Indonesian firms 6 46,15% Patents with ID priority: 19 from Application number ID : 23 ratio Indonesian firms 10 ratio 52,63% 56,52% Application number ID : 33 ratio 57,57% ______TABLES; DESKS; OFFICE ______FURNITURE; GENERAL BUILDING A 47 B CABINETS; DRAWERS; GENERAL CONSTRUCTIONS; WALLS, e.g. DETAILS PARTITIONS; ROOFS; FLOORS; E 04 B OF FURNITURE CEILINGS; INSULATION OR OTHER PROTECTION OF Patents with ID priority: 10 from BUILDINGS Indonesian firms 5 ratio 50% Patents with ID priority: 19 from Application number ID : 11 ratio 90,90% Indonesian firms 10 ratio 52,63% ______Application number ID : 39 ratio 48,71% C 08 L COMPOSITIONS OF MACROMOLECULAR COMPOUNDS ______Patents with ID priority: 26 from H 04 Q SELECTING (switches, relays, selectors H01H; electronic switches H03K 17/00) Indonesian firms 5 ratio 0% Patents with ID priority: 14 from Application number ID : 265 ratio 9,81% Indonesian firms 9 ratio 64,28% ______FINISHING WORK ON BUILDINGS, E 04 F e.g. 4 For legibility, the definition of IPC classes was reduced STAIRS, FLOORS to the minimum. If the reader wants to know more Patents with ID priority: 11 from details, it may consult: Indonesian firms 5 ratio 45,45% http://l2.espacenet.com/espacenet/ecla/index/index.htm ECIS 2009 ‐ 28 ‐ PROCEEDINGS

Application number ID : 18 ratio 61,11% RELEVANT APPARATUS ______Patents with ID priority: 31 from ELECTRIC DIGITAL DATA Indonesian firms 3 ratio 9,67% G 06 F PROCESSING Application number ID : 401 ratio 7,73% Patents with ID priority: 17 from ______Indonesian firms 5 ratio 29,41% EARTH OR ROCK DRILLING; Application number ID : 157 ratio OBTAINING OIL, GAS, WATER, 10,82% E 21 B SOLUBLE OR MELTABLE MATERIALS OR A SLURRY OF ______MINERALS FROM WELLS INFORMATION STORAGE BASED ON Patents with ID priority: 12 from G 11 B RELATIVE MOVEMENT BETWEEN Indonesian firms 3 ratio 25% RECORD Application number ID : 164 ratio CARRIER AND TRANSDUCER 7,31% Patents with ID priority: 18 from ______Indonesian firms 4 ratio 22,22% LIME; MAGNESIA; SLAG; Application number ID : 312 ratio CEMENTS; COMPOSITIONS 5,76% THEREOF, e.g. MORTARS, C 04 B CONCRETE OR LIKE BUILDING ______MATERIALS; ARTIFICIAL STONE; PRESERVATION OF BODIES OF CERAMICS (devitrified glass-ceramics HUMANS OR C03C 10/00); REFRACTORIES; ANIMALS OR PLANTS OR PARTS TREATMENT OF NATURAL STONE A 01 N THEREOF; BIOCIDES, e.g. AS DISINFECTANTS, Patents with ID priority: 13 from AS Indonesian firms 3 ratio 23,07% PESTICIDES, AS HERBICIDES Application number ID : 91 ratio 14,28% Patents with ID priority: 28 from ______Indonesian firms 4 ratio 14,3% G 02 B OPTICAL ELEMENTS, SYSTEMS, OR Application number ID : 317 ratio 8,83% APPARATUS ______Patents with ID priority: 10 from PULP COMPOSITIONS; Indonesian firms 3 ratio 30% PREPARATION Application number ID : 105 ratio 9,52% THEREOF NOT COVERED BY ______SUBCLASSES C 07 C ACYCLIC OR CARBOCYCLIC D21C, D21D; IMPREGNATING OR COMPOUNDS COATING D 21 H Patents with ID priority: 48 from OF PAPER; TREATMENT OF FINISHED PAPER Indonesian firms 3 ratio 6,25% NOT COVERED BY CLASS B31 OR Application number ID : 837 ratio 5,73% SUBCLASS ______D21G; PAPER NOT OTHERWISE COATING COMPOSITIONS, e.g. PROVIDED FOR PAINTS, VARNISHES, LACQUERS; Patents with ID priority: 15 from FILLING PASTES; CHEMICAL Indonesian firms 4 ratio 26,66% C 09 D PAINT OR INK REMOVERS; INKS; CORRECTING FLUIDS; Application number ID : 136 ratio WOODSTAINS; PASTES OR SOLIDS 11,02% FOR COLOURING OR PRINTING; ______USE OF MATERIALS THEREFOR CHARACTERISTIC FEATURES OF Patents with ID priority: 15 from A 43 B FOOTWEAR; PARTS OF Indonesian firms 3 ratio 20% FOOTWEAR Application number ID : 122 ratio Patents with ID priority: 10 from 12,29% Indonesian firms 4 ratio 40% ______Application number ID : 33 ratio 30,30% MICRO-ORGANISMS OR ENZYMES; ______COMPOSITIONS THEREOF NON-METALLIC ELEMENTS; PROPAGATING, PRESERVING, OR C 01 B C 12 N COMPOUNDS THEREOF MAINTAINING MICRO; MUTATION Patents with ID priority: 22 from OR GENETIC ENGINEERING; Indonesian firms 4 ratio 18,18% CULTURE MEDIA Application number ID : 166 ratio Patents with ID priority: 24 from 13,25% Indonesian firms 2 ratio 8,33% ______Application number ID : 268 ratio 8,95% CHEMICAL OR PHYSICAL ______B 01 J PROCESSES, e.g. CATALYSIS, F 24 F AIR-CONDITIONING; AIR- COLLOID CHEMISTRY; THEIR HUMIDIFICATION; ECIS 2009 ‐ 29 ‐ PROCEEDINGS

VENTILATION; USE OF AIR PRODUCING OR ENDING SLEEP OR CURRENTS FOR STUPOR SCREENING Patents with ID priority: 11 from Patents with ID priority: 14 from Indonesian firms 1 ratio 9,09% Indonesian firms 2 ratio 14,28% Application number ID : 51 ratio 21,56 Application number ID : 71 ratio 19,71% ______WORKING-UP; GENERAL ELECTRIC SWITCHES; RELAYS; PROCESSES OF H 01 H SELECTORS; C 08 J COMPOUNDING; AFTER- EMERGENCY PROTECTIVE TREATMENT NOT DEVICES COVERED BY SUBCLASSES Patents with ID priority: 16 from Patents with ID priority: 13 from Indonesian firms 2 ratio 12,50% Indonesian firms 1 ratio 7,69% Application number ID : 94 ratio Application number ID : 148 ratio 8,78% 17,02% ______PRODUCTION OR REFINING OF PROCESSES OR MEANS, e.g. C 22 B METALS; BATTERIES, FOR PRETREATMENT OF RAW THE DIRECT CONVERSION OF MATERIALS H 01 M CHEMICAL Patents with ID priority: 10 from ENERGY INTO ELECTRICAL Indonesian firms 1 ratio 10% ENERGY Application number ID : 62 ratio 16,12% Patents with ID priority: 23 from ______Indonesian firms 2 ratio 8,69% FERMENTATION OR ENZYME- Application number ID : 105 ratio USING 21,90% PROCESSES TO SYNTHESISE A ______DESIRED H 04 B TRANSMISSION C 12 P CHEMICAL COMPOUND OR COMPOSITION Patents with ID priority: 10 from OR TO SEPARATE OPTICAL Indonesian firms 1 ratio 10% ISOMERS FROM Application number ID : 208 ratio A RACEMIC MIXTURE 4,80% Patents with ID priority: 10 from ______Indonesian firms 1 ratio 10% FILTERS IMPLANTABLE INTO Application number ID : 101 ratio 9,90% BLOOD VESSELS; ______PROSTHESES; ORTHOPAEDIC, C 07 D HETEROCYCLIC COMPOUNDS NURSING OR CONTRACEPTIVE DEVICES; Patents with ID priority: 51 from A 61 F FOMENTATION; Indonesian firms 0 ratio 0% TREATMENT OR PROTECTION OF Application number ID : 1158 ratio EYES OR 4,40% EARS; BANDAGES, DRESSINGS OR ______ABSORBENT C 07 K PEPTIDES PADS; FIRST-AID KITS Patents with ID priority: 10 from Patents with ID priority: 17 from Indonesian firms 0 ratio 0% Indonesian firms 1 ratio 5,88% Application number ID : 185 ratio 5,40% Application number ID : 326 ration ______5,21% MACROMOLECULAR COMPOUNDS ______C 08 F OBTAINED BY REACTIONS ONLY MACROMOLECULAR COMPOUNDS INVOLVING CARBON-TO-CARBON OBTAINED UNSATURATED BONDS OTHERWISE THAN BY REACTIONS C 08 G Patents with ID priority: 18 from ONLY INVOLVING CARBON-TO-CARBON Indonesian firms 0 ratio 0% UNSATURATED BONDS Application number ID : 363 ratio 4,95% Patents with ID priority: 18 from ______Indonesian firms 1 ratio 5,55% USE OF INORGANIC OR NON- MACROMOLECULAR ORGANIC C 08 K Application number ID : 267 ratio 6,74% SUBSTANCES AS COMPOUNDING ______INGREDIENTS DEVICES FOR INTRODUCING Patents with ID priority: 11 from MEDIA INTO, OR ONTO, THE A 61 M DEVICES FOR TRANSDUCING BODY Indonesian firms 0 ratio 0% MEDIA OR FOR TAKING MEDIA Application number ID : 119 ratio 9,24% FROM THE BODY; DEVICES FOR ______ECIS 2009 ‐ 30 ‐ PROCEEDINGS

From this list, various interpretations can be carried out, the classification by decreasing order of the number of patents of the Indonesian firms or Institutions, but also the ration of "genuine" Indonesian patents compared to the total number of patents having an Indonesian priority. It is noted, that except for the IPC A61K, the agreement between the number of "genuine" Indonesian patents and the preceding ratio is concordant. 3 - The strategic Dependence5 The dependence will be measured according to the number of patents extended to Indonesia for each of the preceding classes. The search of the worldwide database (Esp@cenet) is made in the following way: presence of the term ID (Indonesia) in the field Application Number, then association with the one selected IPC (4 digits) presents in IPC field. To avoid reformulating the same list, we will indicate in gray, the fields where the strategic dependence is the strongest. On a technical point of view, the extension on Indonesia works on the following way:

5 This is a very important point, specially with in view the development of a National Indonesian Institute of Competitive Intelligence. For more information see http://www.ciworldwide.org ECIS 2009 ‐ 31 ‐ PROCEEDINGS

Figure 3 - Selection of all the patents extended to Indonesia, for the IPC H04L Example of patent ID 28086

Figure 4 - This patent belongs to a family of patents the priority is French The extension to Indonesia is made through the World Patent W09956435

ECIS 2009 ‐ 32 ‐ PROCEEDINGS

The use of the families of patents conducts an internal production? 8It is thus to the same remarks than for the group of necessary, before going to a patent deposit patents with Indonesian priority. to make sure of course that the invention is new, but also it is necessary to think of Example of dependence: replacing it in the local context of the The second line of data is considered: patents extended to Indonesia. Do these (under the line in bold characters) extensions will menace the Indonesia by proposing alternative solutions? C 07 D HETEROCYCLIC COMPOUNDS Patents with ID priority: 51 patents, In addition, in the field of the general from Indonesian firms 0 ratio 0% policy of a National Competitive Application number ID : 1158 brevets Intelligence, it is necessary in our opinion ratio 4,40% to raise the following questions: Application number ID (Indonesia): 1158 • why in certain fields the extensions in patents, ratio of priority patents to Indonesia are so important? extended patents: 4,40%. Thus in this field • do these patents (not Indonesian) the strategic dependence is very strong threaten the technological independence of the Country? TRANSMISSION OF DIGITAL H 04 L INFORMATION, e.g. TELEGRAPHIC • if so, what could be done? COMMUNICATION • how while working under licensing one Patents with ID priority: 23 from can transfer as soon as possible the Indonesian firms 14 ratio 60,86% technology to make it evolves in an Application number ID : 154 ratio endogenous way for the country? 14,93% Application number ID (Indonesia): 166 4 - Institutions and firms with patents , ratio of priority patents6 to Indonesia priority or extension: 7 extended patents : It is easy with Matheo Patent to class the 13,85%. The degree of dependence is patents with an Indonesia priority by smaller than the former one. Applicants. The following figure shows how we can To made these comparison necessitated to browse through the list to detect the retrieve 9227 Patents extended to Indonesian Applicants. The same can be Indonesia. This makes with the 1655 made for the patents extended to patents with an Indonesian priority, 10.882 Indonesia. patents which have been retrieved. We saw that not all the years are present in this Esp@acenet worldwide database, but this sample is in our opinion representative enough to conduct the present study. How course, if a database from Indonesian Patents issue from Indonesia were available online a more detailed study could be done. But, in the present state of Indonesian’s information systems this is far away to be the case.

That result raises various questions in the field of industrial protection for a Developing country. What must be protected ? Is this protection significant for

6 Another way is to take into account only the Indonesian patents with an Indonesian priority. We did not take this possibility, thinking that if a firm take a patent with an Indonesian priority this firm will directly participate to the development of the country. 8 It is obvious that there can be a brilliant invention, 7 The extended patents are only foreign patents. The being able to be extended to the whole world. Here we Indonesia patents present have been cut off place ourselves on the statistical level only. ECIS 2009 ‐ 33 ‐ PROCEEDINGS

Figure 5 - Main Indonesian firms with priority patents in Indonesia

Figure 6 - Main Firms with extended patents in Indonesia For IPC A61

A 61 K PREPARATIONS FOR MEDICAL, Patents with ID priority: 102 from DENTAL, OR TOILET PURPOSES Indonesian firms 14 ratio 13,72% ECIS 2009 ‐ 34 ‐ PROCEEDINGS

Application number ID : 1669 ratio It is possible, with any groups of patents to 6,11% draw automatically symmetric and dissymmetric matrixes such as IN Inventors / IPC or IN/IN etc. In the same way networks can also be made automatically. In figure 7, we show the main network of Applicants versus IPC, for the patents with an Indonesian priority. 5 - Other correlations

Figure 7 - Network of main IPC and Firms (Frequenc y >= 8) with Indonesian priority

Three main networks are noticeable: one Even if the number of patents with only around IPC A61K, the other with IPC and Indonesian priority is of a limited B01D, and the last around G02B, this is access in the worldwide Esp@cenet the network of PT Telecomunikasi database, the patents with an extended Indonesia and ITB (the Bandung electronic priority to Indonesia are still currently valley). In this last case, PT available. From the trend of these patent Telekomunicasi was with and without ID deposits an interesting mapping of at the end. This was corrected in the graph. technologies and firms can still be made. The two adjacent square boxes are IPC and The Internet availability of the worldwide their frequencies, the figure in the circles Esp@cenet database on a free base, is a represent the frequencies of the links. strong argument to develop out of this resource a national policy of patent 6 Conclusion indicators. Even if the number of Patents with only an This is particularly significant, because one Indonesian priority is limited in the will associate to the concept of protection worldwide Esp@cenet database, the another concept: the use of the patents like number of available patents is large a "think tank" to stimulate the innovation enough to demonstrate the feasibility of the [Dugosh 2000]. One can thus sensitize the dependence indicators. The methodology decision makers and show to the used should prompt the developing researchers how to focus their work on countries to create a national patent strategic technologies useful for the database available online to allow the country development and finally to break various firms and decision makers to the barrier often met: "one cannot use develop their own indicators. information on line because it is too expensive". ECIS 2009 ‐ 35 ‐ PROCEEDINGS

These methods starting from real data psychology 2000, vol. 79, no5, pp. 722- allow to develop indicators, which can be 735, pp.1-4 used to avoid in certain countries the Ishtiaq P. Mahmood, Jasjit Singh, 9 internal or external exoduses specially Technological dynamism in Asia, Research when students are going abroad to make a Policy, 32 (2003) 1031 – PhD, or when they are back home and Clement Paoli, Henri Dou, Jean-Marie Dou Jr, develop research projects. In the same Bruno Maninna The constitution of patent frame of mind, a research project in R&D Indicator in technological fields, Cahiers de should be analyzed and test within the framework of the patents extended to la Documentation Belge, n°2, 2003 Indonesia. If the field of the proposal is Wanise B.G. Barroso, Luc Quoniam, José covered by a large number of foreign Angelo R. Gregolin, Leandro I.L. Faria patents the question of the usefulness of Analysis of the database of Brazilian the research should be asked. Patents of the public domain based on the The last remark, but one of the most IPC, World Patent Information, (2003) p.63 important, is that this type of study and set Zoltan J Acsa , Luc Anselin B, Attila Varga, of indicators underline how it is important Obvious and innovation counts have for a country to create one or several measures of regional production of new databases of national scientific and knowledge, Research Policy, 31 (2002) 1069 – technical production. The patent database 1085 is part of this policy but scientific and technical competencies of people10 as well as their scientific production are also very important. 7 References Henri Dou and Sri Manullang, Competitive Intelligence and Regional Development within the Framework of Provincial Indonesian Autonomy, Education for Information, n°22, June 2004 Henri Dou, Pierre Larrat, Strengthening the private and public partnership in actionable knowledge. The case of ATELIS (Strategic Intelligence Workshop of the ESCEM Business School)., Trans2tech, Munster 1-2 Octobre 2008, Germany (European Community Program) Henri Dou and Sri Manullang, Uses of scientific indicators within the framework of the development of Indonesian Provinces, ISDM (Information Science for Decision Making), April 2003, article n° 65. To reach the complete text of the article http://www.isdm.org Dugosh Karen Leggett, Paulus Paul B, Roland Evelyn J, Yang Huei-Chuan, Cognitive stimulation in brainstorming , Journal of personality and social

9 One calls internal exodus, the return of a researcher who imports in his country a research whose topic is not relevant for the development of his country. By external exodus, one qualifies a research made abroad and without relationship with the needs of the country of origin of the researcher. 10 See the Brazilian database of national scientific and technical competencies: Lattes http://lattes.cnpq.br/ ECIS 2009 ‐ 36 ‐ PROCEEDINGS

Causes of Competitive Analysis Failure: Understanding and Responding to Problems at the Individual Level

Dr Craig S. Fleisher Windsor Research Leadership Chair and Professor of Management Odette School of Business University of Windsor Canada E-mail: [email protected]

Sheila Wright Reader in Competitive Intelligence & Marketing Strategy Leicester Business School De Montfort University United Kingdom E-mail: [email protected]

Abstract It ought to be a fairly safe assumption that a CI analyst would want to perform the analysis task and execute their responsibilities successfully over time. Such competencies should come with added experience on the job, as should the ability to reduce the risk of failure by diagnosing potential pitfalls. This paper presents a) a unique four-level hierarchical model of analysis failure, b) ten key continua of competitive analysis skills which we believe an analyst has to master before they can consider themselves to be truly competent in their work, c) a discussion on the paucity of high quality teaching of these skills, and d) presents eight guiding principles which a firm should consider in an attempt to improve individual performance and reduce the potential for analysis failure. Our purpose in identifying the possibility and causes of analytical failure is that we believe much can be learned by managers and practitioners from studying failures. This learning can ultimately contribute towards creating a more successful analysis function which can only be beneficial to all concerned. Keywords: Competitive Analysis Failure, Hierarchical Model, Individual Insight, Analyst Skills.

ECIS 2009 ‐ 37 ‐ PROCEEDINGS

1 Introduction defined by Johnston (2005, p6) as “systemic organizational surprise It hardly needs to be said that resulting from incorrect, missing, organizations and managers can learn from discarded, or inadequate hypotheses.” failures (Brown 2007) but it requires These failures may be due, in part, to individuals to thoughtfully talk about and failed analysis, but they can also be caused examine them, something which is rarely by other factors that interact with the done except in cases of catastrophic, analysis process. Attempting to publicly visible failures (Edmonson & disentangle or disaggregate the analysis Cannon, 2005). Although analysis of portion of the process from other related failure is an accepted part of contemporary processes is never an easy or straight- manufacturing industry practice, its forward task. At a minimum, it is application to an enterprise’s intelligence, important that analysts and their decision- planning and decision-making functions is makers routinely carry out a post-mortem less common (Heuer 2005, Underwood on projects to try and determine any areas 2006). In identifying the possibility and for improvement. causes of analytical failure, we believe that Having suggested the need for post-task much can be learned by managers and assessment of the analysis process, we practitioners. The first task is to be aware recognize that there are a variety of of the location of failure. problems associated with the evaluation of 2 Failure Location intelligence analysis and reporting that We would regard the highest level of make this task more challenging. The failure to be that of business failure, range of cognitive biases impacting this whereby a business is no longer able to process is outlined in greater depth by continue as a viable commercial entity. If Heuer (1999). Briefly summarized, he failure is defined as “discontinuance of notes that: business,” then it is likely that Analysts normally overestimate the approximately two-thirds of all start-ups accuracy of their past judgments. will fail within their first ten years Intelligence clients or consumers (Watson & Everett, 1996) and at even normally underestimate how much they higher rates in some particularly difficult learned from analysis products such as sectors such as retailing and restaurants. reports or briefs. Most of these business failures are Overseers of intelligence production commonly attributed to a general lack of who conduct post-mortem analyses of an effective planning and management skills intelligence failure normally judge that exhibited by these firms’ executives. events were more readily foreseeable than Beneath the level of the firm, we was in fact the case encounter planning, decision-making and When analysis is ineffective, both the implementation failures and these are analyst and the decision-maker often don’t partly composed of intelligence failures. know in time and frequently cannot These can be further disaggregated into identify the root cause(s) of the errors, failures along the traditional intelligence problems or failure. They must consider cycle functions of planning, data the following questions underlying the collection, analysis, dissemination and potential errors. communication (Chao & Ishii, 2003).  Analysis problem definition Intelligence failures are distinguishable Was the analysis problem, the Key Intelligence from more task-oriented intelligence Topic (KIT)/Key Intelligence Question (KIQ), errors, which are viewed as factual properly specified at the outset? Did the analysis process allow for any subsequent redefinitions of inaccuracies in analysis resulting from the problem? poor or missing data. Intelligence failure is ECIS 2009 ‐ 38 ‐ PROCEEDINGS

 Analysis project planning aspect which we believe can be most Did the analyst develop a project management plan effectively influenced by the individual or statement of work to perform the analysis process? Did they actually implement the process analyst. Some of these factors may be according to their plan or veer away from it mid- present in other categories and we course? recognise that there may be secondary or tertiary impact at other levels.  Data gathering error Was the appropriate data available to the analyst? Level Nature of Problem If not, could the data have been efficiently • Different natural analytical acquired? Did the analyst properly account for data Individual abilities or information gaps? Was the analysis the cause of Analyst Level • Naturally limited mental the failure or was data collection the primary Failures capacities cause? • Natural motivation • Cognitive biases and  Tool and technique-related error perceptual distortion Did the analyst use the best available tools, • Insufficient understanding techniques and/or analysis methods? Were the right and application of analysis tools used, and in the right sequence? tools and techniques • Part of larger task  Synthesis error Analysis Task • Task discontinuity Level • Unsatisfactory data inputs Did the analyst arrive at the optimal conclusion or Failures insight? Did they “connect the dots” in a defensible • Disconnects from decision manner? Would other experienced and successful making analysts have connected them differently? • Imbalance among key task facets • Some decision makers don’t  Communication transmission or understand and appreciate channel error Internal analysis Did the analyst communicate their insights to their Organizational • Clients cannot specify their decision-maker throughout the project in an Level Failures critical intelligence needs or optimal fashion? Was the analysis failure really a questions communication failure? • Under-resourcing the analysis function  Communication reception error • Lack of analysis-specific IT support Did the decision-maker have a complete and • Lack of thinking time accurate understanding of the analyst’s conclusions Organizational culture and before the decision needed to be made? • politics • Time and trust  Unsystematic development error • Invisibility and mystery Did events arise during the course of the process • Misconception that everyone that derailed the analysis or analyst? What impact can do analysis did unexplained variance or random factors have • Growing range of on the outcome of the analysis task? External competitive factors Having located the source, or sources, of error, Environment • Complexity and turbulence only then is corrective action effective. Level Failures • Data overload • Globalization 3 Four-Level Hierarchical Model of • Educational deficiencies Analysis Failures Whatever the reasons experienced for Table 1 analysis failures, it is valuable to identify Four-Level Hierarchical Model why these happen and this is represented of Analysis Failures in a four-level model for identifying the 4 Causes of Failure at Individual barriers to generating effective competitive Analyst Level analysis. These four levels, and the primary factors associated with each, are The competitive analysis task is illustrated in Table 1. fundamentally performed by individuals, Whilst each of these sections warrants a although they will also cooperate and full discussion on its own, for the purposes collaborate with others to get their tasks of this paper, we will concentrate on the accomplished. From consulting and ECIS 2009 ‐ 39 ‐ PROCEEDINGS educational assignments, we have opt for the easier task. As we hope is observed the following hindrance factors already patently obvious by now, analysis as being primarily present at the level of is not an easy task and can require the use, the individual analyst. or expenditure of, significant levels of cognitive, intellectual, organizational, and 4.1 Different natural analytical abilities social resources to achieve optimum People rely on a limited set of mental performance. One reason it is so difficult models, have preconceptions on issues, is because we have far fewer published and exhibit a wide range of cognitive bias heuristics or “rules of thumb” to use in when reviewing information. People also performing analysis than we do in many think differently. Some, in a right-brained other fields of organizational endeavour linear fashion, others in a left-brained such as engineering, scientific research, lateral fashion. This is important when accounting, process management, sales viewed in light of analysis being a mixture and marketing. Some analysts think that of both scientific and non-scientific volume is the answer, not value. This techniques. form of sufficing behaviour is unlikely to meet the needs of today’s demanding 4.2 Naturally limited mental capacities decision-making clients. The content and context facing most analysts has become more complicated, 4.4 Cognitive biases and perceptual complex, and fast moving in recent years. distortion Having said that, our brain’s natural In spite of the presence of the broad range abilities to effectively process additional of analytical techniques, some information hasn’t evolved to match this. organizations still adopt poor strategies The popular view that we only use 10% of and their decision-making processes are our brain’s ability is a well-worn myth, vulnerable to individual cognitive biases or and one could argue with the figure, but “groupthink.” Researchers have identified we are confident that human beings still a variety of common cognitive biases that only use a limited percentage of their brain can enter into an individual's or groups' capacity, although scientific record still process of analysis (Bazerman, 2002; does not have a sense of what that Kahneman et al, 1982; Sawyer, 1999; percentage might be (Kalat, 1998). Tversky and Kahneman, 1986). These are In his influential article, Miller (1956) identified in Table 2. suggested that the magical number Elements Nature of Problem describing our natural information Estimation Bias Over or under estimation of processing capabilities is seven things at the magnitude of the effect of one time plus or minus two. This could be future events Escalating Continual commitment of a major problem for analysts who often Commitment time, effort and finance to have a far higher number of issues to keep support a failing project, even when there is evidence that it in their mental calculus at any one time. is a fruitless task Although we now have better information Group-think Lack of pertinent questioning technology systems to assist in the analysis of underlying assumptions and an unwillingness to challenge task, we still have to use our brains in entrenched leadership, exactly the same way as we have always engrained cultures and senior done. executives Illusion of An individual’s mis-placed Control confidence in their ability to 4.3 Natural motivation control and immunity to error. Illusion and group-think are Given a choice between a more difficult or common bed-fellows a less difficult task with identical Prior Individuals prone to this bias outcomes, the majority of people would Hypothesis Bias use data only when it confirms their beliefs, even when ECIS 2009 ‐ 40 ‐ PROCEEDINGS

presented with contradictory graduate whether they developed good analytical evidence Reasoning by Individuals use simple analytical skills in their programme and Analogy analogies to make sense of you will almost always get an affirmative challenging problems. answer, yet few recognize the differences Oversimplifying complex problems can lead to between the process of analysis and the detrimental judgment ability to think. Analysis requires a unique Representative- The error of extrapolating data ness from small samples to explain and differentiated form of pragmatic larger phenomena. thinking. Most individuals have neither Inexperienced analysts find it been formally trained, nor have the natural hard to distinguish between apparent and real facts ability, to perform this type of activity. Although there has been a natural and Table 2 Cognitive Bias Elements healthy evolution of offerings available to those wishing to receive formal analysis The existence of cognitive biases and instruction (Fleisher & Bensoussan 2003; groupthink raises issues of how to bring 2007), few educational developments in critical intelligence to bear on this area have been positive, due in part, to organizational decision-making the lack of experienced faculty staff and mechanisms so that the decisions made are ambiguity of scope. realistic. It is important to understand the 5 Developing Intelligence Insight range of motives behind it. Feldman and March (1981) pointed out that people in There is a long-standing debate about organizations often tend to collect more whether analysis is actually a craft, a disci- information than strictly necessary for pline, a field, or a profession (Johnston, decision making, partly to influence others 2005, Marrin & Clemente, 2005, Fleisher, and partly to be viewed as thorough in 2003, Davis, 2002). Much of this debate their work In other words, analysis is centres on how a competitive analyst has often used not just for objective decision- to balance the need to be creative with the making but also for political or symbolic need to employ documented methods in purposes. their effort to produce good output Studies on the use of analysis tools and (Pawelski, 2006, Fleisher & Bensoussan, techniques have consistently demonstrated 2007). Although these two “art” and that the individuals responsible will use “science” elements are not necessarily only a very limited set of tools and diametrically opposed, they are generally techniques, usually those they know the perceived as two ends of a single best and have previously applied with continuum (Johnston, 2005). some perceived success (Gib and Gooding, The potential for the teaching of critical 1998; Rigby, 2001, Rigby 2003, 2009). and intuitive analysis has been debated in This has also been identified as “tool rut” the arena of business ethics (Griseri, 2002, (Fleisher & Bensoussan, 2007). Even Locke, 2006, Burton et al, 2006), multi- when an analyst is willing to use an culturalism (El-Hani & Mortimer 2007, enlarged tool box and attempt tools and Kim, 2006), technology/science (Davies, techniques outside their ordinary fare, they 2003) and popular culture (Snævarr, often lack the knowledge, understanding 2007). A recent conceptual paper by Clark and experience to do it well. It is no et al, (2006) identified scope within the surprise therefore, that they will stick to marketing curriculum and Herrmann the safe but well worn path of familiarity (2005) spoke of the need for scholars and (Self, 2003, Marteniuk (2003, Morecroft, practitioners to conceive “new dominant 2006, Swanson, 2007). paradigms in strategic management that There is also a misconception that revolve around the concepts of knowledge, everyone can do analysis. Ask a business learning and innovation”. Miller & ECIS 2009 ‐ 41 ‐ PROCEEDINGS

Ireland (2005) agreed that “intuition has often unique processes in any firm's not been subjected to sufficient review”. decision making process (Clark, 2004). In the higher and executive education Experienced analysts develop the ability system there is little evidence that teaching over time to know how to achieve the the skill of pragmatism and realism is appropriate balance between the various taken seriously, albeit such a skill set is elements, and approaches to the analytical lauded as a distinct competitive advantage task (Davis, 2002). Although recent for an individual in their career (Fleisher, efforts have sought to document and 2004, Dacko 2006). In their review of replicate the approaches, methods and marketing curricula, Evans et al (2002) skills need to properly perform this concluded that "many marketing graduates analysis (Davis, 2002), most experienced are not being well equipped for the 'new analysts recognize that creativity that marketing'. Dacko (2006) and Lynch comes out of first-time connections or (2007) also observed that unless graduates techniques can also be a source of valuable are able to master the broader range of insight. If all competitive analysis is done "soft" skills (of which we would claim scientifically, then the development of critical analysis is one), then their ability artificial intelligence, computational to apply their subject knowledge will be algorithms, and solutions-generating severely limited. Lynch (2007) also software would already have become the reported on research with employers which norm, a situation that at least a few experts revealed that their requirements from suggest would be debilitating for analysis graduates went well beyond the appli- and decision making in most organizations cation of subject knowledge, and into the (Gilad, 1994, 2004; Fuld 2003). realms of intuition, creativity and common sense. In Figure 1 we outline ten continua 5.2 Deduction Abduction Induction which identify those skills which we This continuum examines the sequence of believe a competitive analyst has to master analysis arising between assumptions, before they can consider themselves to be facts, and conclusions. It is important truly competent in their work. because many analysts begin their tasks These continua have been developed with a plethora of data and facts to assist not only from our research and experience them, while others lack them. It is also of teaching competitive analysis, but important in cases where analogies or also from discussions with a variety of benchmarks are readily available and those practitioners of differing experience cases in which these items are lacking. around the globe. A few elements of the Deduction is the process of reasoning ten continua will inevitably overlap, but used by analysts whereby their conclusions the intention has been to establish those follow from the stated premises (Clark, with lower degrees of redundancy and 2004). In other words, analysts deduct repetition. In order to carry out their work inferences by reasoning from the general effectively, competitive analysts must be to the specific. Deductive reasoning works willing, able and competent at moving best in so-called closed systems, which across the continuum to suit the situation rarely exist in the competitive business to hand. arena. Nevertheless, as a critical mode of inquiry, it can be very useful in refuting 5.1 Creative Scientific specific hypotheses and helping the analyst Competitive analysts need to be skilled in arrive at more definitive estimates of the the application of both creative and likelihood of prospective outcomes. scientific techniques. Good analysts will Induction typically happens when an seek to combine differing intellectual analyst is able to postulate causality patterns, which are reflected in the wider, amongst related phenomena. It can also 1 Creative Scientific 2 Deduction Abduction Induction ECIS 2009 ‐ 42 ‐ PROCEEDINGS 3 Individual Group Enterprise 4 Intuition Intellect 5 Precision Perspective 6 Past Present Future 7 Qualitative Quantitative 8 Automation Human Process 9 Written/Spoken Visualisation 10 Objectivity Subjectivity

Figure 1 The 10 Key Continua of Competitive Analysis involve drawing out or analyzing within the enterprise will generate insights assumptions or premises used in forming that are utilized by decision makers. This conclusions (Clark, 2004). is the most complex process in an Abduction is the process of generating organization and as a consequence, it is an original hypothesis to explain evidence more difficult for the individual effort to that does not easily or readily offer a be identified. A large part of the analyst’s common explanation. Compared to role is to consider and integrate the firm’s inductive reasoning, abduction expands the context into their analytical process. There number and set of hypotheses available for is a paramount need for them to be scrutiny to the analyst (Schum, 1987). cognisant of, and factor in, the social, Some experts have referred to this as the political, historical, and cultural lenses “a-ha” type of reasoning whereby the through which their colleagues view the analyst generates responses in a sponta- world (Fleisher & Bensoussan, 2007). At neous fashion and probably cannot cons- the same time, it is important that they do ciously articulate the steps they used to not over-play the role of such corporate arrive at their outcome (Schmidlin, 1993). norms, otherwise they will become paralyzed and ineffective (Langley, 1995). 5.3 Individual Group Enterprise Analysts work on tasks across three 5.4 Intuition Intellect generic levels of their organizations, Similar but not the same as the creative- individual, group and enterprise. As in scientific continuum, this one suggests that many problem solving and decision analysts must employ their intuition, making endeavours, achieving success at sometimes referred to as ‘immediate all three levels involves more than just the cognition’ or the “Eureka effect” (Cutting additive burden of having to integrate & Kouzmin, 2004). Intuition is inevitably more people into one’s task. Much of the influenced by past experience coupled analyst’s work is done at the individual with a natural proclivity to come to a level whereby they alone are responsible judgment, often recognised as instinctive for the outputs. Analysts will commonly ways of knowing (Davis, 2002). Analysts work in collaboration with others, with the will have a hunch or sense of something final product being the result of a joint which they cannot readily express in effort. In these cases, the individual effort writing. What makes intuition so important is difficult to identify as it becomes in an analytical context is that not only entwined and develops as a result of the will the analyst use this to some degree in group process. processing data, but the decision-maker At the enterprise level, an analyst’s own will almost always use a similar skill in group collaborators, and other groups assessing the recommendations of the ECIS 2009 ‐ 43 ‐ PROCEEDINGS analyst. Intuition is a prevailing power and their recommendations, are pointing. within the process. Accounting data, competitor sales figures, The use of intellect is where the information from financial statements and competitive analyst is operating in a well balance sheets, market share figures, and thought out, calculated and rational the like, are the result of action which have manner. Intellect is driven by a data taken place in the past. This information is gathering plan and a strategy which is of value when operating in static and subject to time, social and other simple market conditions, where fore- performance pressures which can impair it. casting, trends analysis and chain ratios, Intellect and intuition may converge based on past events, are common place eventually, in an analyst’s recommen- (Hooley et al, 2008a, pp 177-190). In dation, but the intellectual portion of their dynamic and complex markets, concept recommendation can be more easily testing, scenarios, strategic planning, communicated to recipients in the form of cross-impact analysis and expert opinion rules, concepts and/or techniques. are required (Hooley et al, 2008b, 191- Intuition is less tangible, less easy to prove 198). The simple collection and assimila- and rationally, less easy to account for. tion of past data is insufficient to assess the future. 5.5 Precision Perspective Analysts also need to use leading It is suggested that the majority of analysts indicators of present and future activity will work in the broader context of the and factor these into their understanding of firm, rather than the more narrow and the evolving competitive environment. A specific facets of precision. This is often skilled analyst knows that looking ahead is analogized as the trade-off between seeing far more important than looking the “forest for the trees”. A decision- backwards. Reliance on past data alone maker will not usually need to know the only summarises what is already known, it fact that a competitor earned precisely does not necessarily predict the future. 34.5632 % of their total revenues from a Recommendations, propositions and product called “Shiny Hair To Go”, rather, judgements about the future are where the perspective view that they generated competitive analysts earn their money and approximately one third of their revenues reputation. It is only then that they are from one product line. In other words, earning their salary, providing value added answering the question, “thank you for the analytical output for use in their firm. figures, but what does that actually mean?” Whilst the perspective view can tend to 5.7 Qualitative Quantitative be more valuable, this does not mean to Qualitative analysis methods are those say that there is any room for a lack of which are typically associated with precision in coming to that view. It is all a interpretative approaches, rather than matter of what is reported and how it is measuring discrete, observable events. done. Competitive analysts should always Qualitative methods are most helpful in seek to attain a reasonable level of those areas that have been identified as precision without spending any more time potential weaknesses within the quantita- than is necessary to produce a tive approach. The use of interviews and recommendation with an agreed level of observations provide a deeper, rather than confidence. This will change by project, a broader, data about a particular pheno- by situation and by decision urgency. menon. These methods can be particularly valuable in helping to describe and explain 5.6 Past Present Future the longitudinal evolution of competition Analysts make trades-off between the and competitive behaviour (Johnston, direction of time in which both their data, 2005). ECIS 2009 ‐ 44 ‐ PROCEEDINGS

Quantitative methods are more productively automated (Vibert, 2001). commonly used to examine a context at a Unfortunately, software developed to single point in time, they seek support the analytical process has, to date, “distinguishing characteristics, elemental not been impressive in performing or properties and empirical boundaries and promoting effective analysis (Fuld, 2003). tend to examine ‘how much’ or ‘how No 'magic bullet' or 'plug-in' solution often’ certain phenomena occur” (Nau, exists that can replace the ability of the 1995). The weaknesses of quantitative human brain to understand, assimilate and analytical process lie mainly in their assess the type of data that analysts failure to ascertain deeper underlying regularly deal with, much less make sense meanings and explanations of marketplace of it. Whilst some automation may benefit competition, even when they produce the process, what automation can't yet results that are significant, reliable and carry out, and may never be able to do, is valid (Gilad, 2004). replicate the unique processes of strategic Recent surveys of tools used in thinking that human beings can achieve. assisting decision making show that the This is especially true when this thinking majority of managers and companies tend includes the application of creativity and to favour the use of quantitative methods intuition previously described. (Rigby & Bilodeau, 2007), principally because they tend to produce results which 5.9 Written/Spoken Visualisation can be replicated and are more easily The issue of clearly communicating disseminated. Quantitative analysis and analytical processes and outcomes is ever- results tend to be viewed as being more present. In volume terms, the written/ rigorous and free from interpretational bias spoken word is, arguably the most frequent (Davis, 2002), but it is also well under- form of delivery used. Unfortunately, not stood that statistics are not always as all spoken or written words are meaningful “squeaky clean” as purported (Best 2001, due to poor delivery, poor language skills Best 2004). and/or overuse of codes or acronyms Effective analysts need to be able to which do not translate or travel across apply and use both qualitative and divisions or SBUs and, at times, an quantitative methods and to be able to inappropriate context. communicate both the results and the Visualisation on the other hand, allows processes underlying their analysis. analysts to share their ideas in graphic, Without understanding from where, and illustrative, pictorial formats. Being able to how, their results were derived, as well as ‘draw a picture’ of a situation, visually the trade-offs made in achieving them, describe competitors or their likely they leave themselves open to criticism. behaviours and use metaphors to aid understanding is far more powerful, and 5.8 Automation Human Process memorable, to busy decision makers then a One aspect that every analyst must assess 35 page report of closely typed text and is the desire to automate their processes. figures. The onus is on the MCS to make Many business processes have benefited the story ‘live’, interpret their findings and greatly from the 'systems' approach and it provide a recommendation, rather than certainly has its place. Even a number of simply presenting the bare facts. Analysts data gathering tasks that form the larger also need to be aware of the preferences of process of competitive intelligence, such their differing audiences and be able to as setting up targeted RSS feeds, develop the skills required to deliver to automated “pushing” of competitors’ those needs. website changes, or media about competitors’ activities, have been ECIS 2009 ‐ 45 ‐ PROCEEDINGS

5.10 Objectivity Subjectivity carry out their work. One in which they Nearly all tenets of analysis suggest that can learn their craft, experiment, develop analysts must be objective, detached, and hone their skills. It is the analyst who dispassionate and unbiased in their work. provided the intellectual input but it is the This does not mean that individuals can, or analysis process which determines success should, surrender their personal views but or otherwise. No matter how skilled the the analysis process is often more akin to analyst, the decision making process, into the social sciences than to pure science. which analytical output should inevitably Consequently, there will always be some be fed, will be significantly enhanced if degree of error present. Individuality by the firm pays heed to these eight guiding an analyst is highly desirable in the principles. appropriate circumstances. Competitive analysts need to recognise when they are 6.1 Provide Empowerment being objective and when they are not A common utterance in the intelligence (Clark & Montgomery, 1996). This community is that without intelligence, a balance is difficult to achieve because few decision-maker cannot take responsibility. analysts are trained or coached to With it, he or she cannot avoid taking recognise their own biases and responsibility. Clearly, the more that subjectivity. decision makers are equipped with insight, Subjectivity in analysis requires the the better they will perform. This is why same justification as any other form of the importance of intelligence analysis objective measure. It must be properly needs to be recognized in its own right. clarified so that decision makers can make Both analysts and executives need to their own judgement on the quality of the promote the reality that analysis is critical analysis and recommendations presented. to an organisation’s competitive success. The analyst should always enter an Analysts and their internal customers assignment with an open mind, try to see should be comfortable with, and publicise things through the perspective of their data to others, the real benefit which emanates gatherers and decision-makers as well as from analysis. It is an evolving discipline market competitors in order to be in its own right and competitive analysts empathetic to better understanding their are skilled professionals, operating no own preconceived notions. differently than others in the firm.

6 Responding to Analysis Failure: 6.2 Realize the Value of Analysis Eight Guiding Principles for the Even if the benefits and value of the Firm process cannot be easily quantified by Effective analysts must know how to existing performance measurement properly position their efforts and focus systems, executives need to realize that across the continuum over time. That is effective analysis cannot be achieved not to say that analysts always need to find through “quick fixes” or by the the middle ground on each continuum. In introduction of new software or hardware fact, the middle ground may be exactly the applications. The value of analysis comes wrong place to be. Rather, the analyst from the insight it provides decision- needs to determine where they should be makers, which ultimately benefits their on a project along each of the continua, enterprise. and be able to adapt along each, as the project and its evolution demands. 6.3 Value the Link between Analysis and Success There is however, a responsibility on the part of the firm to provide a suitable Providing managers with case studies and environment within which the analyst can examples of good and bad analytical ECIS 2009 ‐ 46 ‐ PROCEEDINGS outputs can help powerfully demonstrate needed by decision makers, the quicker this relationship between analysis quality they will move up the learning curve in and decision-making effectiveness. Using terms of producing quality outputs. analysis insights will significantly lower As even the most effective analysts can the number of uncontrollable or perceived provide inaccurate insight at times, risks associated with decisions. decision-making clients need to give their analysts opportunities to fail and to 6.4 Ask the Right Questions demonstrate that they have learned from Consumers of analysis products should those experiences. This leads to the know what to ask for from analysts and be development of shared trust between an realistic in what they expect to receive. analyst and their decision-maker. With Executives and departmental managers, security and the trust of their clients, like many other employees within the analysts are at their most effective. organization, often misunderstand the true functions and proper operations of analysts 6.7 Provision of the Right Tools or intelligence specialists. Decision As with any other skilled worker, the makers often ask for the wrong analyst needs to have access to all the information and will then have difficulty proper tools of their craft. Analytic in making sense of the analytical products applications, reliable data inputs, access to they receive. For the analyst, it is sources, time to think, advanced infor- important that executives communicate mation and communication infrastructure, just what is that will make a difference to and so on. Analysts cannot be expected to their agenda, priorities, and needs as they provide insight without having access to perceive them. Only then will the analyst rich sources of data, enabling technology, be able to provide products that are the open door of their organisational tailored not only to decision-makers’ colleagues and clearly articulated specific information requirements but also KITs/KIQs. The outputs will then be presented in their language. focused to capture the client’s imagination and provide assistance on complex issues 6.5 Measure Performance Appropriately both quickly and comprehensively. The The competencies, skills and capabilities analyst’s job must not be to intimidate of an analyst can be measured, therefore, it clients with information, but rather to can be both managed and improved. The entice them with it. development of capability measurement tools and metrics to demonstrate improve- 6.8 Differentiate the Task ment should be strongly encouraged. Last, but certainly not least, competitive There is also a need to measure analysis analysts must differentiate the nature of products and processes against bench- the analysis they perform from other forms marks. Best practices in the analytic field of analysis concurrently being done within should be studied, adapted and emulated. their enterprises. Analysts and their decision makers should be careful not to 6.6 Position the Analyst Correctly overrate. Overemphasise or try and It is vital that a competitive analyst is duplicate the analysis of organizations, positioned where they can make a industries, and markets that is typically difference. Analysts need to be actively provided by economists, financial analysts, involved in the networks of information sector analysts and/or market researchers. collectors and their clients, but also be These individuals are primarily concerned given the time needed to properly do their with short-term financial gains, customer work. Also, the longer that an analyst can satisfaction, product placement, and focus their efforts on particular specialties related concerns, not necessarily with ECIS 2009 ‐ 47 ‐ PROCEEDINGS long-term competitiveness and strategic which continues to evade educators, not development. Executives who understand least because of their lack of experience of the reasons these functions vary, and the actually doing this sort of work in a respective benefits each generates, will be commercial environment, their lack of far better served by their analyst and their experience at having to defend the findings potential contribution to decision making. of analysis when critical decisions will be taken on the basis of their work, and their 7 Conclusion almost inevitable lack of understanding of Gilad (1994) notes that intelligence is an what is needed by employers. insight about externally motivated change, The problems inherent in analysis future developments and their implications failure can be fixed and we present eight to the organisation. Done well, analysis guiding principle for the firm which will and the intelligence developed from it, assist in helping to prevent analysis failure helps the organisation to reduce its risk and improve the potential for the delivery level in dealing with both threats and of high quality output. When the full opportunities in its competitive environ- realisation of the impact that skilled ment. Paradoxically, the analysis function analysts can have on a firm’s success is tends to suffer during recessionary periods, understood, it makes sense that this would when organizations reduce their be one way of promoting best practice. commitment to what they deem as less- The ultimate ambition would be the essential functions. Those working in development of a validated education path analysis know that this is precisely the which leads to a recognised qualification time when investment in such activity with standards of practice and Chartered should increase, in order to better prepare status. Such a development would only be the firm for the challenges ahead. good news in the dynamic, globalised We have identified five key causes of markets within which most organisations failure at the individual level and would now conduct their business and which seek draw special attention to the issue of to recruit employees able to show the cognitive bias, a factor which both analysts attainment of a ‘gold’ standard of and educators should be acutely aware. It expertise. is noted that the teaching of analysis receives superficial attention amongst 8 Future Work educators and at best, is haphazard. This paper is the fore-runner to a funded Analysis is a critical component in aiding research project which aims to better executives in their decision making and as understand the precise personal qualities such, effective analysts must know how to which employers seek when hiring properly position their efforts and focus, analysts and the expertise which they over time, across the 10 key continua expect their new employees to bring to the presented in this paper. That is not to say firm. This will then be the subject of a that analysts always need to find the large scale, survey of professionals in middle ground on each continuum. In fact, higher education to discover whether, and the middle ground may be exactly the how, these highly valued ‘hard’ and ‘soft’ wrong place to be. Rather, the analyst skills are being taught in the classroom. It needs to determine where they should be is anticipated that the findings from this on a project along each of the continua, research will inform and guide future and be able to adapt along each, as the curriculum developments for post graduate project and its evolution demands. educational offerings. Unfortunately, teaching the art of 9 References pragmatism, intuition and "gut feel" is less evident and is an element of learning ECIS 2009 ‐ 48 ‐ PROCEEDINGS

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Fuld, L.M. (2003) Intelligence Software Kim, K.I. (2006) “A Cultural Artefact Report 2003: Leveraging the Web, ‘Show and Tell’: A Pedagogic Tool for Private report by Fuld & Company, Teaching Cross-Cultural Management", Boston, MA Journal of Business Innovation and Gib, A. and Gooding, R. (1998) “CI Tool Research, 1(1/2) 144-148 Time: What’s Missing From Your Langley, A. (1995) “Between Paralysis by Toolbag?” Proceedings of the 1998 Analysis and Extinction by Instinct,” international conference of the Society Sloan Management Review, 36(3) 63- of Competitive Intelligence 76 Professionals, pp 25-39, Chicago, IL Locke, E.A. (2006) “Business Ethics: A Gilad, B. (1994) Business Blindspots: Way Out of the Morass”, The Academy Replacing Your Company’s Entrenched of Management Learning and and Outdated Myths, Beliefs, and Education, 5(3) 324-332 Assumptions with the Realities of Lynch, J. (2007) “The Creation of the New Today’s Markets. Chicago: Probus Marketer – Are We Getting It Right?”, Gilad, B. (2004) Early Warning. New Proceeding of the Academy of York, NY: Amacom Marketing Conference, Royal Griseri, P. (2002) “Emotion and Cognition Holloway, London, UK in Business Ethics Teaching”, Teaching Marrin, S. and Clemente, J. (2005) Business Ethics, 6(2) 371-391 “Improving Intelligence Analysis by Heuer Jr., J.R. (1999) The Psychology of Looking to the Medical Profession” Intelligence Analysis. Center for the International Journal of Intelligence Study of Intelligence, Washington, DC and Counterintelligence, 18(4) 707-729 Heuer Jr., J.R. (2005) “Limits Of Marteniuk, J. (2003) “How do Companies Intelligence Analysis”, Orbis, 49(1) 75- find the Best Balance between the 94 Technical and Personal in Effective Herrmann, P. (2005) “Evolution of Competitive Intelligence Systems?” pp. Strategic Management: The Need for 176-189 in Fleisher, C.S. and D.L. New Dominant Designs”, International Blenkhorn [Eds], Controversies in Journal of Management Reviews, 7(2) Competitive Intelligence: The Enduring 111-130 Issues, Westport, CT: Praeger Hooley, G., Piercy, N.F. and Nicouloud, Publishers B. (2008a) Marketing Strategy and Miller, G.A. (1956) “The Magical Number Competitive Positioning, Fourth Seven, Plus or Minus Two: Some Edition, Harlow, UK: Prentice Hall Limits on our Capacity for Processing Hooley, G., Piercy, N.F. and Nicouloud, Information,” Psychological Review, B. (2008b) Marketing Strategy and 63(2) 81-97 Competitive Positioning, Fourth Miller, C.C. and Ireland, R.D. (2005) Edition, Harlow, UK: Prentice Hall “Intuition in Strategic Decision Johnston, R. (2005) Analytic Culture in the Making: Friend or Foe in the Fast U.S. Intelligence Community. The Paced 21st Century”, Academy of Center for the Study of Intelligence, Management, 19(1) 19-30 Washington, DC Morecroft, J.D. (2006) “The Feedback Kahneman, D., Slovic, P. and A. Tversky View of Business Policy and Strategy”, (1982) Judgment Under Uncertainty: Systems Dynamics Review, 1(1) 4-19 Heuristics and Biases. Cambridge, UK: Nau, D. (1995) “Mixing Methodologies: Cambridge University Press Can Bimodal Research be a Viable Kalat, J.W. (1998) Biological Psychology, Post-Positivist Tool?” The Qualitative 6/E, Pacific Grove: Brooks/Cole Report, 2(3) retrieved from Publishing Co htttp://www.nova.edu/ssss/QR/QR2- ECIS 2009 ‐ 50 ‐ PROCEEDINGS

3/nau.html, accessed 14th December 190-202 in Fleisher, C.S. and D.L. 2008 Blenkhorn [Eds], Controversies in Pawelski, J.O. (2006) “Teaching Competitive Intelligence: The Enduring Pragmatism Pragmatically: A Issues, Westport, CT: Praeger Promising Approach to the Cultivation Publishers of Character”, Contemporary Snævarr, S. (2007) “Pragmatism and Pragmatism, 3(1) 127-143 Popular Culture: Shusterman, Popular Rigby, D.K. (2001) “Putting the Tools to Art, and the Challenge of Visuality”, the Test: Senior Executives Rate 25 top Journal of Aesthetic Education, 41(4) Management Tools,” Strategy & 1-11 Leadership, 29(3), 4-12 Swanson, R.A. (2007) Analysis for Rigby, D.K. (2003) Management Tools Improving Performance: Tools for 2003, White Paper. Boston, MA: Bain Diagnosing Organizations and & Company, Inc Documenting Workplace Expertise, San Rigby, D.K. (2009) Management Tools Francisco, CA: Berrett-Koehler 2009: An Executive’s Guide, White Publishers Paper, Boston, MA: Bain & Company, Tversky, A. and Kahneman, D. (1986) Inc “Rational Choice and the Framing of Rigby, D. and Biodeau, B. (2007) “Bain's Decisions,” Journal of Business, 59(4) Global 2007 Management Tools and 251-294 Trends Survey”, Strategy & Underwood, J. (2006) “Making the Break: Leadership, 3(5) 9-16 From Competitive Analysis to Strategic Sawyer, D.C. (1999) Getting It Right - Intelligence”, Competitive Intelligence Avoiding the High Cost of Wrong Review, 6(1), 15-21 Decision, Boca Raton, FL: St. Lucie Vibert, C. (2001) “Leveraging Press Technology: CI in an Electronic Schmidlin, W.G. (1993) Zen and the Art of Classroom Teaching Environment,” Intelligence Analysis, MSSI thesis, Competitive Intelligence Review, 12(1) Washington, DC: Joint Military 48-58 Intelligence College Watson, J. and J. Everett (1996) “Do Schum, D.A. (1988) Evidence and Small Businesses Have High Failure Inference for the Intelligence Analyst, Rates?” Journal of Small Business Lanham, MD: Rowman & Littlefield Management, 34(4), 45-62 Self, K. (2003) “Why Do So Many Firms

Fail at Competitive Intelligence?” pp

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Simonʼs theorem reconsidered – towards a theoretical framework for competitive intelligence

Per Frankelius Swedish Business School, Örebro University, Sweden, [email protected]

Abstract The departure of this article is what I call Simon’s theorem. In Administrative Behaviour from 1945, Herbert Simon presented a dilemma that later paved the way to a theory that gave him the Nobel Prize. The core of his theorem is that economic agents are not rational due to lack of information and lack of interpretation capability. The theorem is powerful, but in this article I put forward critique. The essence of this critique is that Simon’s theorem can be interpreted as a perspective in which lack of information is taken as a given fact. In reality information could be added by means of active searching or as a result of external information push that reach the entrepreneurial agents. One question that remains is what kind of information is important for entrepreneurs. Paradigms on that will be discussed. Besides the theoretical discussion this article includes a case study: The Arn case. Keywords: Herbert Simon, Economic theories, Information searching, X factors, Cave model.

1 Introduction that. At the same time I have a critical perspective also regarding Simon’s The discipline competitive intelligence theorem and want to suggest some needs a theoretical base. It also needs a complements. definition of scope, which is a distinctive In sum I will suggest Simon’s theorem as characteristic in relation to for example an interesting theoretical frame for the traditional economic theories. If one is discipline competitive intelligence. I will interested in business intelligence from a also suggest that a more wide definition (in scientific point of view, Herbert Simon relation to mainstream economic theory) should be an important reference. During of the business environment could be the his life, he wrote around 1000 essence of the discipline competitive publications. He is one of the most cited intelligence. Moreover I will integrate the social scientists in the world. However, information-search-aspect into the Simon for some reason has not been synthesis. discovered by the main-stream business intelligence literature. I want to change

ECIS 2009 ‐ 52 ‐ PROCEEDINGS

Figure 1. An interpretation of Simonʼs theorem.

The consequence of the reasoning 2 Simonʼs theorem above, Simon concluded, is that people are In 1945 Herbert Simon’s book irrational. That was a chocking message Administrative Behaviour, was published – for traditional economists, who had at the same time his doctoral dissertation. assumed that people on the market act in a The departure of his analysis was people’s rational way. Part of this assumption is the dedication to make rational decisions. To assumption of perfect information. But do that, one has to choose from many Simon added that people try to be rational alternatives and relate each of them to inside the frame of limited information and one’s goals. One must also understand the limited understanding of causality. He consequence of each choice in relation to coined a term for this kind of rationality: the goal. In Simon’s word, one has to bounded rationality. In figure 1, I have “calculate consequences” tried to summarize Simon’s theorem. But in the real world, Simon recognized, no one has full knowledge on 3 How did Simonʼs theorem every thinkable alternatives that affect emerge? different outcomes. Therefore, reality is From where did Simon get his inspiration characterized as uncertainty. This for his theorem? He mentions two uncertainty is caused by two factors: partly inspiration sources in his Nobel Speech. limited information, partly limited capacity The first one was Chester Barnard’s The to understand and interpret the Functions of the Executive published in information people has. I call the last 1938. Barnard had based his book on his aspect “limited thinking capability” own practical experience as CEO at New (compare Hamrefors, 1999 and Jersey Bell Telephone Company, and as Wahlström, 2004). manager of other private, idealistic and Limited information is partly referring public organizations. Let me cite Simon: to how things connect to each other in the ”Barnard proposed original theories, which complex world. That means also have stood up well under empirical complexity inside the organization one scrutiny, of the nature of the authority work in. But another kind of limited mechanism in organizations, and of the information is about information of the motivational bases for employee world outside. The first kind is about acceptance of organizational goals (the so- causality of the world, and the second is called ’inducements-contributions’ about “fact shortage” regarding the theory); and he provided a realistic components that constitute the complex description of organizational decision world. making, which he characterized as ’opportunistic.’ The numerous references ECIS 2009 ‐ 53 ‐ PROCEEDINGS to Bernard’s work in Administrative 4 Forerunners of Simon and a note Behaviour attest, though inadequately, to on Simonʼs originality the impact he had on my own thinking Simon was not the first to come up with about organizations.” (Simon, 1978, p. ideas on mental information processing. 352). The old Greeks of course discussed the This citation is interesting. First, it shows theme. An important milestone in more that Simon credits Chester Barnard, for modern times was John Locke and his bringing new scientific theories to the Essay Concerning Human Understanding world. Second, he verifies that these (Locke, 1689). In this masterpiece he put theories have proved to resist critique and forward one of the first theories on empirical tests. Third, it shows that it was knowledge processes. When we are born in fact a book written by a practitioner that our soul is a tabula rasa, according to became the building block of the Locke. We know nothing. Every person’s revolutionary theory. I call companies knowledge is a result of information ”Site B” of high-level knowledge search and interpretation processes over production (Frankelius, 2009) and consider time. Our senses send different this phenomenon as an example of ”perceptions of things” to our brain and knowledge production Mode 2 (Gibbons, the brain in turn creates ideas about the Limoges, Nowotny, Schwartsman, Scott world by means of these perceptions. and Trow, 1994). We often hear the Locke used the term “sensation” for this argument that “business should not affect process. His central question was: From academic research” because of the where does our knowledge come from? importance of ”academic freedom”. His answer was: From experience! He However, if the goal is original research argued that our observation was either results, one maybe has to reconsider what about external sensible objects, or about we mean by ”freedom”. In the Simon case, the internal operations of our minds. These the interaction with Barnard (business two sources of thinking substance were – world) was the very core of the theoretical according to Locke’s own metaphor – the progress. fountains of knowledge, from where all the The second inspiration source, ideas we have, or can naturally have, do Simon mentions, was an empirical study of spring. public recreation organizations in Another pioneering field of research Milwaukee. He conducted this study foregoing Simon was marketing. In fact 1934–5. These facilities were managed by information shortage was the very starting two different actors, partly the school point for a lot of marketing scientists since board, partly the city public works the beginning of the 20th Century. For department. Both had the same view on example advertising was seen as a mean the goals, and there was no competition for bringing more information to among them. Despite this fact – and that customers, so that they could make better was strange Simon thought – the two had decisions (Kleppner, 1925). not the same opinion on how to use the The notion of limited thinking financial resources they had. He capacity was the core of the theory concluded, that intellectually they could developed by Ludwik Fleck in 1935 not understand what was right (Simon, (Fleck, 1935). That was about 30 years 1978). They had limited information about before Thomas Kuhn’s theory on causal relationships between different paradigms. If turning to organizational factors. In this case the problem was not theory the Garbage can theory (GCT) lack of external information, but lack of shopuld be mentioned. This theory was information about causalities in the proposed by Cohen, March, and Olsen complex real world. (1972) in a seminal article. Each time a ECIS 2009 ‐ 54 ‐ PROCEEDINGS new problem arises, past solutions are the 6 Theoretical perspectives on the thing decision makers turn to. The problem external world from economic is that they don’t know the right solution, actors point of view so they have to use the trial-and-error- method. In other words they have not full In classical economic theory the external information about solutions. This theory is environment, from a company’s point of very wide spread, but notice it is a frame view, is assumed to consist of primarily for problem-solving. It is not a frame that customers and suppliers (other buyers and in a explicit way consider the surrounding sellers). world and external information. In the wake of Adam Smith, both Another reference on this theme is economics and business economics have the more modern Gilad (1994). A more come to focus on the market as the central comprehensive literature discussion is factor in the environment. The linchpin of outside the scope of this article (see economic theorists became what is known Solberg Sølien, 2005). as neoclassical theory. This school is Despite some theoretical usually said to have begun in the 1870s, forerunners with similar ideas, Herbert and its hallmarks are concepts such as Simon’s theory was very coherent and marginal utility, marginal cost and marginal income. Its pioneers are Stanley logic. The originality of Simon is that he brought together decision processes, W. Jevons (1835–82), Carl Menger (1840– information shortages and economic 1921) and Léon Walras (1834–1910). theory into a coherent and logical Basically, these scholars attempted wholeness. His brilliant work gave him the to refine the ideas presented by Adam Nobel Prize in 1978. Smith in 1776. For the neo-classicists, companies and the environment consisted 5 Connecting Simonʼs theorem with of actors who bought and sold goods: the notion of information search demand and supply. The buyers My vision is an improved and more concentrated on product values and prices voluntaristic model of intelligence-based before they make their actions. business development, based on Simon’s This model is advantageous theorem but complemented with new because the market – comprising potential parts. There are many interesting angels or existing buyers – is normally quite that could take us one step forward to a important for company development. better theory. One such angel is There are an abundance of special models information search theories or models, for which, in different ways, describe the example the one found in Aguilar’s book market or the customers in more or less on environmental scanning methods detail. Examples are segmentation models (Aguilar, 1967). These kind of theories are and relational models, which should be so well-known to business intelligence borne in mind. Another advantage is that it researchers that I just mention the makes exchange the focus of analysis. In connection here. For more on this the long run, exchange of values is one of literature, see Solberg Sølien (2005). See the most fundamental things in economic also Hoppe (2009). contexts, besides innovation and creative I will come back to the implication energy. of connecting Simon’s theory with A drawback of the classical model information search theories. Before that, in is that it defines in advance what is the next section, I discuss theories on how important in a company’s environment. to construct the external environment The idea is that buyers (as such) and other theoretically. sellers (competitors) should be in focus rather than, for instance, newspapers ECIS 2009 ‐ 55 ‐ PROCEEDINGS which help to change people’s values or economic theory. It is striking that the time universities which produce new research dimension is not obvious in the models – results. Further, the model defines the neither in this modern book, nor in roles that are assumed to be most traditional economic books. important: the company as a buying and Most economists do not understand selling actor. There are, however, also that the world consists of more kinds of roles of developing technology, acquiring factors than economic exchange players. inspiration, and many others. In addition, Consider, for example, what The Nobel numerous exchanges in the real world go Foundation wrote about Paul Krugman 13 on that do not involve payment. October 2008: Collaboration and diverse forms of “no debited services” may have far greater “Krugman's approach is based on the significance in business life than what the premise that many goods and services can traditional theory prescribes. Moreover, be produced more cheaply in long series, a the classical model is static and culminates concept generally known as economies of in discussions of equilibrium between scale. Meanwhile, consumers demand a demand and supply. Where is the time varied supply of goods. As a result, small- dimension? scale production for a local market is A developed economic model is replaced by large-scale production for the the network model. But still focus is on world market, where firms with similar actors that one company has business products compete with one another.” relationships with. In practice that means buyers and sellers (see Hammarkvist, Like most other economists Krugman’s Håkansson & Mattsson, 1982). frame of reference seems to be limited to One of the most used modern traditional economic factors, buyers and models in economic science is Michael sellers in the external context as seen from Porter’s five forces model (Porter, 1980). one company’s point of view. The same is He maintains that: true also for odd economists such as Joseph Schumpeter. He wrote: ”Although the relevant environment is very broad, encompassing social as well as “The economic system [is] a system in the economic forces, the key aspect of the scientific sense ... consisting of quantities firm’s environment is the industry or of commodities, rates of commodities and industries in which it competes.” (p. 3) prices.” (1928, s. 364).

The building blocks of this model are Among the more open-minded models in competitors, buyers, substitutes, suppliers the classical literature I have to mention and potential entrants. That means buyers Igor Ansoff. He has written more than 60 and sellers in different roles, and the books and articles in the field of business model thus is quite traditional. strategy. Perhaps his best-known work is Also most of the modern economic Corporate Strategy, published in 1965. and business models build on the old ones, This book – one of the world’s most read at least regarding the view of the external management texts – introduced strategic world. On example is the book The New planning as an alternative to long-range Venture Adventure from McKinsey & planning which was then topical and Company (Looser & Schldpfer, 2001). In widespread. Through his practical this influencing book, used in Venture experience as a business leader, he realized Cup, the world around a company is the need for developing methods to defined as the industry and the market – identify opportunities and threats in the precisely according to the tradition of environment. He maintained that company ECIS 2009 ‐ 56 ‐ PROCEEDINGS management must direct attention towards should take place in West Götaland near weak signals. the town of Skara. He noted, for instance, Ansoff later refined his ideas in that the old fortress of Aranäs had yielded Strategic Management (Ansoff, 1978). A finds which indicated that it had been great pervasive theme of the book is that all and powerful, probably with royal organizations are different and have connections. There were many such clues. different environmental situations. One Anja Praesto at the Västergötland should therefore be careful when Museum began an innovative process in generalizing. Ansoff also distinguish June 1999 by contacting Jan Guillou about between levels of turbulence in the an idea for “a tourist ploy”. Her initiative environment. An information perspective and continued work enabled the Museum, is permeated the book in many respects. several municipalities, the Swedish Church Ansoff notices the difference between and numerous businessmen to profit from experienced and factual environments Guillou’s undertaking. (compare Simon); but he also emphasizes Among the many measures taken the importance of information, and the to meet the sudden interest in the region, filters that prevent leaders from special Arn-guides were trained to help recognizing the environment’s parts or those who wanted to “travel in the interpreting its significance. footsteps of Arn”, the Crusader hero of Guillou’s trilogy. A custom-made Arn- 7 That was the map, what about package was launched for tourists visiting reality? places to feel the wing-beats of history. An Customers are important external factors expensive brochure – In Arn’s Footsteps – for most companies. On this point was printed with an introduction by traditional theories matches reality. But Guillou to describe such sites. Everything customers are affected by factors in their was combined with quotations from his environment and many of these factors are books. In addition, the brochure presented not their “buyers or sellers”. We have just a selection of the companies that tourists to mention deceases, terrorist attacks, could visit. The Västergötland Museum in climate change and the media. I will here Skara also arranged a special exhibition summarize one of the cases I have studied about Arn. A logotype was registered, and the last 20 years as a try to understand the became part of the connection between all nature of external world factors (from these activities and communication companies and organizations point of view channels. but interpreted from a researcher). The A total of 13 places were included case I have chosen is about a regional in the package “In Arn’s Footsteps”, which actor: The museum of the city Skara in was financed by a number of Sweden. I call this story “The Arn case”. municipalities, the Diocese of Skara, the The proficient Swedish author Jan insurance company Länsförsäkringar Guillou, famous for his spy novels set in Skaraborg, the Society of Ancient the present, suddenly surprised readers Monuments and others. with a trilogy of historical novels. It began Mass media played an important with The Road to Jerusalem, which role in spreading information, getting appeared in 1998. He had thought of the people involved, and cultivating the myths. book’s theme in 1996. The trilogy depicts At a local level, media began to call life in the twelfth century and deals with attention to the phenomenon on 13 the processes that led to the formation of October 1999. The first article in the Sweden as a national state. After careful national press about the interest in Arn was investigation for the project in 1997, published 30 March 2000 by Göteborgs Guillou had concluded that the action Posten, followed by Aftonbladet 23 July ECIS 2009 ‐ 57 ‐ PROCEEDINGS that year, Arbetet 23 July and Dagens According to Guillou’s books, Forsvik in Nyheter 4 August. the twelfth century was an industrial centre It was not long before the effects as well as a place for military training of emerged, and some examples are worth Islamic type, based for example on noting. In the town of Forshem, which has Arabian horses (which were much faster a church probably built by a Templar than Swedish breeds in that period). knight, the Forshem Inn received a great A large number of businesses were boost. During the years it had normally stimulated significantly by the interest in attracted dinner guests at an average of Arn. Besides the tourist industry, more about 16 busses annually. Since the Arn assignments came to musicians, artists, bus phenomenon, this has grown to some 300 companies, souvenir makers and busses. The company’s staff quickly advertising agencies. The educational expanded from two to five or six, and associations have also offered special Arn created a special Arn menu as part of the courses. It is not easy to trace all the rings process. After Guillou’s books, a film was spread on the waters through Guillou’s also made about the Forshem Inn which pen. strengthened its appeal further. Broadcast However, a second wave of by television on the Whitsun holiday in development can be identified. One 2001, the film was seen by around one instance was the launching of the Arn million viewers. For the 2002 season, the Plays, which had their premiere in the inn extended its premises, employed more summer of 2002 at Läckö Castle. The personnel, and even produced an Arn cake twelve performances were sold out and for dessert. earned enthusiastic reviews. In turn, the Arn Plays helped to increase interest in the region still further. The spring of 2004 witnessed the premiere of a film about Arn, understandably another important means of promotion. We can see that a dynamic has been generated in the region that just keeps on going. A particularly interesting outcome was the activation of research. In the summer of 2001, a blast-furnace was discovered near Forsvik that could be dated to the twelfth century. This supports the theory that Forsvik was industrially prominent during the middle Ages. Moreover, a film team has explored the

archives of the Vatican and found related Anja Praesto (second from left) acted on a “X material that was previously unknown to factor” in the outside world, and created an historians. innovative concept that had many consequences on the region. Photo: Västergötland Museum, Skara. 8 What can we learn from this story? In the village of Forsvik, a monument of industrial history stands in the shape of the The Arn case showed how an odd factor Forsvik Factory, which set up an (in relation to traditional economic theory) exhibition entitled “In Arn’s time”. The affected the mindset and interest of people Forsvik Café designed a special medieval who became customers to companies and menu including Pauper’s Soup, and has organization as a result from the odd acquired many guests for meals. factor. ECIS 2009 ‐ 58 ‐ PROCEEDINGS

According to the case odd factors I define X factors as “factors that include “writers of historic books” that are important for a business, but at the affect people directly and also via the mass same time not common or central in media. traditional economic models”. What is The Arn case also shows how an significant in the real world (as well as in entrepreneur (Anja Praesto) observes the the X factor paradigm) can be the last odd factor in the outside world and thing one would expect (if this person is understands the potential to act on the educated according to the traditional factor. theory). It may be a governmental This case was to a large extent decision, as when the EU stopped about how odd factors stimulate potential Chiquita’s bananas. It may be a rapid buyers of products and services from some animal disease, as when mad-cow disease businesses (consider the effect on Forshem turned the entire meat industry upside Inn). But the odd factor also affected the down and paved the way for more central acting agent directly (not via vegetarian restaurants. It may be a customers or others) in the way that the technological leap, as when VHS video factor was the impulse that made Praesto was knocked out by DVD. It can be a new develop her idea. Se 1 and 2 in figure 2. public road, redirecting the traffic so that There are many other cases that Stafsjö Inn got bankrupt. Or it might be a show how odd factors affect companies catastrophe, as when terrorists attacked and organizations directly and not via their the World Trade Center, whose aftermath customers or potential customers. Consider paralyzed the aviation industry and many for example media that affect legislation more. Yes, it can be just about anything. process on pharmaceuticals. I have not space to show empirical cases on this, but Table 1. Categorization of external the notion of this will be considered factors. below.

Not so Important important

Slow Traditional 1 2 moving X factors 3 4

Fast Traditional 5 6 moving X factors 7 8

Figure 2. The X factor affecting the central agent via two different ways. The challenge is to prepare for the 9 New paradigms on business unexpected in the pulsating world out surroundings there. That challenge calls for a free mindset. One way to categorize external In my research I have slowly become more world factors is presented in table 1. and more convinced that time has come for Notice the cells 3 and 7. a new perspective that takes into account

“X factors” (one of my first publication on this was Frankelius, 1992a). You can’t find these X factors in the traditional theories, and therefore these old, but still alive, theories are not effective tools but probably mind blockings. ECIS 2009 ‐ 59 ‐ PROCEEDINGS

potential donors, potential customers, 10 Reconsideration of Simonʼs opinion leaders that affect other people, theory: Towards the cave model. and X factors that affect or could affect the In the light of modern tools such as process. The interesting part is how to external databases and the Internet one make the hole in the rock bigger, so that could reconsider Simons’s theorem, and more relevant factors in the outside world that is what I try to do in this article. can be identified. Another way to say it is that Simon’s The good news is that the hole can theorem tends to be deterministic, but it be expanded, so that one sees more can be transformed to a more voluntaristic relevant factors in the outside world. How theorem. then can one expand the hole? There are To sum up: I have tried to put two methods. The first is simply to search forward two theoretical angels for more (relevant) information. Some complementing Simon’s theorem. The first companies are very professional in doing was the notion of the possibility for this information search. One example is individuals to search for information, and the Swedish biotech company Biovitrum, thus solve parts of the problem caused by pending millions on sophisticated limited information. The other angel was information search. The second is to train the possibility to replace old economic the brain to think about things from new models representing the environment with angles. The theoretical discussion the X factor mindset. regarding traditional models vs. the X From the conclusions above I will factor model can help to make the mind- now suggest a pedagogical framing of the shift needed. By means of this shift the modified model that is derived from actors start seeing new things because of Simon’s theorem. It is always a challenge new interpretation schemes. There are to make people understand that there are many possibilities to train and boost the things they are not aware of. People tend way of putting things into the right to create their worldview on their existing perspective (Hamrefors, 1999). The cave information, and it is hard for some to model is presented in figure 3. admit drawbacks. Large parts of the Simon did not expand his model is American car industry, making heavy and this way. In fact he focused on the petrol thirsty cars despite the environment limitations and so obviously on “bounded trend recent years, is probably an example rationality”. He did some attempts towards reflecting this phenomenon. I will suggest a more volontaristic direction. In a few a cave metaphor (or more precise, a cave- publications he treated information and-drill-metaphor) for managing the handling. However that was most often mentioned problems. about things like “artificial intelligence”. In this metaphor, we all are standing in He and his doctoral students focused on a cave. The rock around us consists of two psychological processes, and on computer things: lack of information and lack of tools that could boost these processes. thinking capability (that is Simon’s main They did not focus on methods for idea). Through the small opening (hole) searching new information from the the manager or entrepreneur observes outside world. The only exception from present buyers and suppliers as well as this I have observed is an article where he competitors. But he or she also notices tried to integrate information search some “X factors”. Outside the sight seen behaviour in economic theory (Simon, through the hole there are many more 1956). The big picture is that Simon in a external factors that affect or could affect brilliant way put light on the problem, but the focal enterprise. These factors can be did not work out so many solutions to the people that can contribute with ideas, problem. The piece of the puzzle in form ECIS 2009 ‐ 60 ‐ PROCEEDINGS

Figure 3. The cave model or cave-and-drill-metaphor. of information search is very important in problem (Frankelius & Rosén, 1993). The my try to develop Simon’s frame of methods on the practical level to “expand reference. the hole in the cave” will I leave outside Moreover, Simon did not discuss this article. models or methods that help manager on 12 Conclusions how to view the business environment. This is the piece number two I have tried In this paper, I have mentioned some to integrate in the alternative model. aspects on the need for new models, and I connected the discussion to Aguilar’s ideas 11 The wealth of information on information search possibilities. The In earlier publications I have suggested main result of this article is twofold: First, an equation for the analysis of information a critique on traditional economic thinking value (see Frankelius, 1992a, 1992b, regarding definition of the external 1998). The equation postulates the environment has been presented. Second, I following: as long as the marginal made a try to create a new theoretical revenues (r) derived from specific frame for the competitive intelligence information (i) is higher than the marginal discipline. cost of the information (ci) in itself plus The proposed model builds on the cost of acting upon the information Simon’s theorem. His theorem, I argued, is (ca), then the information is worth to quite deterministic. Instead, the new model collect and care about. – the cave and drill metaphor – is more According to this equation the voluntaristic. I agree with Simon that “effects” caused by information are two people are seldom fully rational because of kinds: one that cause costs, and one that limitations of information and cause revenue. All information (also interpretation capacity. But I argue that the information that leads to a lot of revenue) situation “in the cave” is not static. It is not has cost consequences, because it always impossible to affect. is needed energy to collect information. By means of sophisticated The problem in practice, however, information search methods one can is to understand on beforehand which discover more factors in the outer world, information is relevant and worthwhile to and in many cases that means one can act upon. I have suggested the World consider more decision alternatives. The mapping method, for managing this ECIS 2009 ‐ 61 ‐ PROCEEDINGS consequence is that the person will Informationsstrategiskt tänkande i en become more rational (less bounded) . turbulent omvärld – med en metod för Moreover, there are possibilities to att bestämma behovet av omvärldsin- improve how one looks at the world that is formation (Better profitability with the how one look upon the information one right information – Information- has. By means of displacing old economic strategic thinking in a turbulent world, theories (including models from Michael with a method to investigate the need Porter and McKinsey) with new and more for external information). Örebro: DM- free-minded models, there are reasons to Centre, Örebro University. believe that we improve our intelligence Frankelius, P. (1992b) Så förbättrar du din capacity. omvärldsinformation: Räkna med att The cave-and-drill-metaphor can din information kostar. Corporate be an interesting tool for companies and Computing, June, s 127. public actors in order to consider strategic Frankelius, P. (1998) Om informationens issues regarding three things: the relevant nytta. Tidskrift för Dokumentation, Vol. external factors, the existing information 53, No. 2, pp. 47–53. in the organisations and the strategic Gilad, B (1994) Business Blindspots. information needs. Chicago: Probus Publishing Company. Acknowledgements Hoppe, M (2009) Intelligence ideals. Paper presented at the Third European I want to thank Per Jenster, Magnus Hoppe, Göran Pagels-Fick and Sven Hamrefors for giving me valuable Competitive Intelligence Symposium: feedback on draft version presented at the Third Competitive Intelligence: Competing, European Competitive Intelligence Symposium: Competitive Intelligence: Competing, Consuming and Consuming and Collaborating in a Flat Collaborating in a Flat World, Stockholm, Sweden, June 1–12, 2009. World, Stockholm, Sweden, June 1–12. Hammarkvist, K-O, Håkansson, H & Mattsson, L-G (1982) Marknadsföring 13 References för konkurrenskraft, Malmö: Liber, pp. Aguilar F J (1967) Scanning the Business 21–22. Environment. New York: Macmillan. Hamrefors, S (1999) How to put "put into Cohen, M D, March, J G, and Olsen, J P perspective" into perspective (Diss.). (1972) A garbage-can model or Stockholm: Stockholm School of organizational choice. Administrative Economics. Science Quaterly, Vol. 17, pp. 1–25. Kleppner, O (1925) Advertising Gibbons, M; Limoges, C; Nowotny, H; Procedure. New York: Prentice-Hall. Schwartsman, S; Scott, P and Trow, M Locke, J (1689) Essay Concerning Human (1994) The New Production of Understanding. London: Printed by Knowledge. The dynamics of science Eliz. Holt, for Thomas Basset, at the and research in contemporary societies. George in Fleetstreet, near St. Dunstan's London: SAGE. church. Frankelius, P (2009) Questioning two Looser, U & Schldpfer, B (2001) The New myths in innovation literature. The Venture Adventure Succeed with Journal of High Technology Professional Business Planning. New Management Research, Vol. 20, No 1, York: McKinsey/Texere. pp. 40–51. Simon, H (1945) Administrative Behavior. Frankelius, P. & Rosén, C-G. (1993) New York: Macmillan. Företaget & Omvärlden (The Company Simon, H (1945) Administrative and the Surrounding World) Malmö: Behaviour. New York: Macmillan. Liber. Simon, H (1956) Rational choce and the Frankelius, P. (1992a) Ökad lönsamhet structure of the environment. med rätt information – ECIS 2009 ‐ 62 ‐ PROCEEDINGS

Psychological Review, Vol. 63, pp. 129–138. Simon, H (1978) Rational Decision- Making in Business Organizations (Nobel Lecture, 8 December): Stockholm: Nobel Foundation. Solberg Sølien, K (2005) Introduction to private and public intelligence. The Swedish school of competetive intelligence. Lund: Studentlit-teratur. Wahlström, B (2004) Ordning & Oreda – omvärldsanalys för beslutsfattare. Malmö: Liber Ekonomi. ECIS 2009 ‐ 63 ‐ PROCEEDINGS

The Human Factor and Competitive Intelligence: Resource, lever and key for success.

Anne-Marie Fray *Professor of Human Resources Management ESCEM, Tours-Poitiers, Business School [email protected]

Abstract The question of human resources as a lever for CI is a performance factor since it is based on competences, by means of a dynamic approach to CI, associated with proactive forms of strategy. The real concern of corporate leaders is, in fact, to implement a strategy and increase the performance of their company, and subsequently its chances of perpetuation. This position requires the development of CI players. Keywords: Competitive Intelligence, Strategy, Player

Why do we talk about human resource This is why explaining the link between levers in CI? First of all, because this a proactive strategy that uses competitive question is based on a view of resources intelligence requires developing the human already developed in previous work, factor: the human factor serving CI for the combining a proactive strategy based on performance of this strategy. To sharpen the human factor, by means of up our demonstration, we will firstly competences, with a dynamic approach to present a theoretical reflection on the two CI. In second place, because time has strategic approaches that require a come for competitive intelligence to leave mobilisation of human competences and behind its conceptual framework and begin environmental intelligence provided by CI, to respond to the true concerns of decision and then secondly explain the conditions makers: to operationalise, to make required to expand the factual link between procedures more pragmatic and to combine human resources and competitive facilitating tools with strategic objectives. intelligence. The best competitive intelligence system 1 Strategic approaches requiring which can be implemented is one that strong involvement of the human meets the real concerns of the corporate leaders. And yet, the real concern of factor corporate leaders is, in fact, to implement a Beyond a more conventional approach strategy and increase the performance of (Porter model), based on environmental their company, and thus its chances of forces, the resource-based approach perpetuation. mobilises existing competences and projects the organisation in its strategic

ECIS 2009 ‐ 64 ‐ PROCEEDINGS universe. We can ask two questions: what the resources and competences [Black and resources does CI mobilise and what is the Boal, 1994]: role of the individual. And in what - criterion of resource relevance resulting from a universe should the organisation be double concordance: resources with strategy and strategy with the environment. projected to optimise the link between CI - criterion of scarcity: the more scarce a resource is, and the human factor? the more strategic it will be considered to be. - criterion of durability: can resources be easily 1.1 The resource-based approach: lever for imitated or not; knowledge action - criterion of reproduction: the more tacit (not The resource-based approach, mostly standardised) the competences are, the less imitable they will become. In addition, certain competences developed by Hamel and Prahalad [1990], take a long time to be developed and can not be focuses on specific resources that make a easily imitated. company unique. In this approach, the - criterion of transferability or specificity: a roots of competitive advantage are to be competence simply mobilised by the company sought within the organisation, and the (individual competences), but not truly owned, is exposed to a higher degree of transferability. corporate leader commits the company to a - criterion of irreplaceable resources: a competitor process that allows it to maintain its capital cannot use a substitute competence. of resources and competences and to acquire those required for its future The main aim of this assessment is to development. This development is highlight the major resources of the controlled according to knowledge of the organisation. However, it is not always environment, and relies on the know-how easy to highlight these resources, insofar as of the organisation. conventional information systems offer a Resources can be defined as tangible or fragmented, incomplete image of them. intangible assets associated with the This approach provides a new conception company. They can be classified using the of the company, no longer assessing it by typology of Hofer and Schendel [1978], its product/market activities, but rather by which makes a distinction between five its internal resources. In this context, a categories: financial (available cash flow, strategy is no longer considered to be a etc.), human (number of employees, level rational exercise in adaptation, but rather of qualification, etc.), physical (production an architecture that guides the development sites, available machines, stock, etc.), of resources. From this point of view, it is organisational (information system, quality up to the company to identify its own control system, procedures, etc.), resources and key competences, to assess technological (know-how, patents, etc.). them in the context of their competitive Grant [1991] adds reputation to this list as environment, and then to define a strategy a sixth category, thereby emphasising the that mobilises them as often as possible. role of the intangible resources, or invisible The human aspect is therefore one of the assets, which are essential for the main factors for supporting this approach. company. The company therefore has true assets that allow us to view it as a portfolio 1.2 The blue ocean approach, or fully of resources: these resources must be mobilised human intelligence assessed according to the environment and However, entering into competition and the capacity for growth of the organisation. searching internally for resources that will This assessment phase is a difficult create a competitive advantage, forces exercise, since it is subject to the organisations to enter into a competitive perceptions of the corporate leaders. These model that has the potential to harm the can be based on five criteria that make it business sector. This is what Kim and possible to appreciate the strategic value of Mauborgne call the red ocean, a battlefield that exhausts organisations [2004].

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On the other hand, the blue ocean becomes a luxury for the company: the strategy consists of taking into concept of hyper-competition shows, for consideration companies and/or activities example that, paradoxically, companies that do not currently exist, pushing back must destroy their competitive advantages the frontiers into unexplored areas, on the to create others, all in a context of hyper- creation of a new demand: the competition information and international competition, therefore loses its importance, and the rules in which the spheres of influence are of the game need to be defined. The essential [D’Aveni, 1995, 2002]. following diagram shows the difference The change in these representations between red ocean (focussing on therefore compels the company in four resources) and blue ocean (focussing on domains: internal intelligence, observation of the - The first brings up the actual idea of environment and capacity for innovating change with the employees: why change a red ocean strategy which seems to be thought): working fine for the time being…. - The second relates to resources, Red Ocean Strategy Blue Ocean Strategy particularly intelligence, prior redundancy To act within the To create an existing or a lack of ongoing training that can existing strategic space strategic space undermine their potential…. To apply it to the To leave the - The third relates to motivation: motivation competition competition out of the of the key players, including the detection game of their potential and competences, their To make use of To create and conquer interest in taking this path, etc. existing demand new demand - The fourth covers shifts in internal To accept arbitration To avoid arbitration influence and player strategies, changing between value and between value and areas of uncertainty [Crozier, Friedberg, domination by costs domination by costs 1977] To ensure all the To ensure all the activities of the activities of the The human aspect factor is therefore fully company comply with company comply with used to operationalise this strategy. its strategic choice of its strategic choice of However, to link internal intelligence and differentiation or differentiation and domination by costs domination by costs projection into the environment, the organisation needs a competitive intelligence approach that feeds this Table 1: Red ocean and blue ocean strategic approach and helps it to make strategies, Kim and Mauborgne, 200811 decisions regarding the various paths to innovation.

1.3 A CI approach strategy based on the The blue ocean strategy is therefore human factor directly linked to innovation and, more The reality of competitive intelligence particularly, to innovation-value. In this gives preference to the perception of the approach, the authors insist particularly on environment and processes that make it the importance of integrating the execution possible to acquire a good understanding and development of strategies: not only is of the context, at the same time local, it necessary to mobilise intelligence from worldwide, while considering weak signals the start, its appropriation by all employees with anticipation value. The search for is also a key factor for the success of its information if therefore inducing, since the operationalisation. organisation does not know exactly what it The blue ocean strategy is therefore not too will find, the stress being placed on different from an approach in which information analysis, structuring it and seeking to preserve competitive advantages breaking it down into a strategy. In this approach, the implementation of actions is 11 Kim, Mauborgne, 2008, Stratégie Océan Bleu, Pearson, more elaborate and distributed among the p. 23.

ECIS 2009 ‐ 66 ‐ PROCEEDINGS resources of the organisation. It takes place between the various resources owned by according to the following process: search the company. The complexity of this for and collection of key information and network will result in quality and knowledge, treatment and interpretation of perpetuation of the competences in the collected data, formulation of strategic question and, thus, the performance of the reasoning, implementation of actions and organisation. organisation of networks, assessment of Four fields of action therefore appear as effects and mutualisation of practices. inevitable fields for performance. These This dynamic approach therefore four fields are each based on the human stresses the strategic aspect and the factor: control of know-how, analysis of mobilisation of external and, above all, threats and opportunities, coordination of internal resources in the organisation: strategies, implementation of influence “Collective intelligence is a strategic practices [Levet, Paturel, 2000]. corporate strategy which aims to improve a) control of know-how its competitiveness by collecting and Organisations are perpetuated thanks to the processing information….; this process… know-how owned by individuals, mobilises employees and relies on the knowledge which is acquired, identified organisation of internal and external and developed. The added value of this networks” [Bournois, Romani, 2000]12. know-how consists of the ability to This definition promotes organisation of combine specific competences and know- the approach, strategic management and, how, emerging for the players involved in above all, the mobilisation of employees in the various layers of the business: a shift a transversal organisational approach, in from pure performance logic to a logic of the context of network organisation. competence and learning is therefore In this approach, the result is guaranteed necessary to achieve performance. The by formalisation which guarantees the first step in any competitive intelligence transformation of tacit knowledge into process is the protection, control and explicit knowledge. Competitive enhancement of the know-how owned by intelligence is not merely limited to a the individuals. Beyond tools and disorganised accumulation of all kinds of processes, the human factor then becomes information, it is a matter of producing the main lever effect. structured knowledge for operational purposes, ahead of the computerised b) detection of threats and opportunities processing of data: CI therefore requires The expressed know-how is sometimes interpretation and analysis competences, subject to threats and opportunities for which are the prerogative of the human development. Internal threats if know-how “factor”. This implies protecting the is obsolete, external threats associated with information assets and not simply applying information control, regulations, etc., but business intelligence actions: its strategic which also with the risk of laying off the management for decision-making purposes best elements. The opportunities are linked requires the protection of the immaterial to new markets, but also and above all to capital it forms. And yet, the immaterial new partners and, therefore, to new know- capital is a major element in the how and competences. organisational resource approach. c) coordination of strategies Nevertheless, a single individual alone cannot possess this essential competence, The coordination of internal and external insofar as, as specified by Black and Boal strategies requires a collective approach [1994], a competence is more often than initially making use of distributed not part of a network of relationships knowledge, and then to the players’ ability to create new know-how. 12 Bournois, Romani, 2003, p.19.

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d) influence practices the position of the company in its competitive environment. Influence practices simultaneously rely on - Stage 3: operationalisation of the goals of the articulated knowledge provided by the business intelligence process, setting competitive intelligence methods and on up coordinated actions for research, treatment and distribution of useful the capacity of the players to engage in information to the decision makers. paradoxical political games: the best - Stage 4: identification of organisational known actions include entering a difficult issues, obtaining useful information at various levels of the company in order to market and financing a competing draw up and implement the strategies organisation to discover its strategy. required to reach the corporate goals. These four domains combine the competitive intelligence practices of Generally speaking, the organisation connecting with knowledge-management previously has to perform work to open up, approaches and persons, in order to ensure exchange and share information. This is that the processes complement each other, why the business intelligence officer offering the company a plurality of (individual and/or collective) is important, strategic options. This connection between for his/her management of the information, competitive intelligence and management creation of value, quest for objectiveness, turns the player into a necessary key factor attitude towards dissonance, need to for competitive intelligence in the service belong and possible risk of exclusion. This of a proactive strategy. is all the attention the organisation must pay to the process. 2 The human factor as a A second lever resides in the transversal performance lever for CI nature of business intelligence within the The proactive strategies of the organisation: the behaviour of all the organisations show that now, companies players must be behind the support of the are more in need of intelligence than general management. These players must information. This approach highlights a share the following roles: dynamic vision of CI, a link with its - Support taken over by the department directors. resources and an opening towards the - Collegial management of the CI project importance of grey matter [Achard, 2005]. /process - Creation of a CI coordinating function, 2.1 At organisational level with distributed responsibilities: coordinating surveillance (research, The first lever resides in strategic collection, distribution), analysts/experts, implementation of CI including all players, the decision-making level, etc. and a consistent internal approach. This All of the above is therefore subject to the cannot be done without the clear will of the apparent paradox of coordination versus corporate leaders and a firm commitment decentralisation, avoiding a hierarchical, from the business intelligence officers, centralised system and giving priority to which is to say, those who make the the coordination of decentralised, company come to life: intelligence in this independent actions. For this reason, the case is comparable with a creating function organisation must lighten its structures and which brings together individuals who are give priority to networked operation in involved and interdependent. order to distribute the practice of CI within Four stages are required to reach this the company. goal: A third level can be found in the - Stage 1: commitment of the general management. This commitment results in a organisation of the business intelligence programme of changes backed by the network: this business intelligence is the general management, which includes the activity of business intelligence. result of crossed views, and yet, if the - Stage 2: formalisation of the business organisation is complex and intelligence goal with a view to improving compartmentalised, this multiple outlook

ECIS 2009 ‐ 68 ‐ PROCEEDINGS becomes a key issue. In this network, the executives in their professional and players can be classified into three groups, personal networks. However, two main working in iterative mode: conditions motivate the transfer and - The decision makers, who ask the sharing of knowledge: questions, guide the work and validate the results. - - Middle management must know the The specialists, who work full time with strategy in order to use the collective business intelligence, use technical information, protect the information and resources, analyse information and intellectual assets, and acquire information distribute it. on the markets, products and clients. It - The information collectors, who are in therefore needs visibility of the CI policy contact with internal or external agents, in place. represented by accountants, engineers, salespersons, executives, etc. - Middle management will only participate in the CI process if it is also given a social Three structuring dimensions can be set up, vision of its own situation and measures in order to encourage the support of the the issues in terms of positioning. persons involved in this business intelligence network: the consideration of When these conditions are met, managers environmental conditions, the choice of an must be encouraged in their roles as organisation chart (operating modes, corporate leaders, observers and information management practices, analysts/experts. All employees must have internal issues) even before implementing access to training seminars on this topic. transversality, all aimed at achieving the The aim is to create and maintain the production of contents with added value. motivation of managers, group organisers and experts who specialise in the field. 2.2 At management level Preventing the attitude of "after all, this The sharing of information first requires isn't my job" therefore becomes a major the sharing of knowledge, if the concern for the management…. organisation wants to put it to relevant use. Middle management is obviously The concept of transversal exchange and responsible for considering the tools to be sharing of information is therefore the means and not the goal, and for essential. It is based, first of all, on integrating exchange and sharing networks of players: behaviour as part of the process of opening up: sharing information, but only when - On a formal network they know what purpose it will fulfil. Set up by the organisation, controlled by complex, The second step is interpretation. This is secure process, bringing communication policy and the most important phase, since it contains power games into play, where we can also find formal but parallel networks (Committee for knowledge. It is also the most sensitive Health, Safety and Working Conditions (CHSCT), phase of the human factor aspect, in the trade unions, etc). following three stages: - On an informal network. Based on personal and/or virtual networks - Stage 1 or stage of specifying the needs for (Facebook, Viadeo, etc.) and using all the places information, of selecting the method used and elements of the communicators: this network or the tools required. This phase can only also crosses the mentioned parallel instances and, in be carried out with the support of human general terms, is very easy on the budget resources resources: adaptation of competences, or investments. choice of the persons involved in the process, use of each person’s informal However, in order to be efficient in the resources (networks), ability to group together all the signals to create sense we understand it (linked with the knowledge. strategy), this notion of exchange relies above all on the role of middle management. Evidently, this also requires - Stage 2 or stage of the meaning given to the information and to each person's the motivation and involvement of schemes: human interpretation, analysis,

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assimilation of signals, etc. This phase of incompatible with the company, HR and sharing the perception is the result of an interpretation of the organisation enhanced CI must work together in the following by the contribution of each competence. areas: aligning CI strategy with company strategy; giving priority to small

breakthrough projects, working in the same - Stage 3 or knowledge-creation stage. The wealth of human resources in the direction as the strategy; starting with organisation leads to a variety of small groups of highly motivated, interpretations. This stage of creating supports on a human factor which replaces enthusiastic people; developing HR policy information in context establishes links according to CI requirements; reorganising between the signals and generates the structure of the company, opening up knowledge with added value functions and reducing hierarchical levels; 2.3 CI and Human Resources: a link to be dedicating time, means and budget strengthened resources to CI; training in new practices CI is above all associated with strategy, and new tools. and strategic processes cannot be In general terms, implementing CI in automated. CI and strategy complement companies increases the value of the each other and must maintain an integrated duties, positions and tasks. The HR relationship, the success of which resides department indirectly brings about this in a subtle combination of human increase in value insofar as it manages resources and tools [Ihadjadene, Favier and knowledge, guarantees a social climate that Chaudron, 2003]. encourages the circulation of information, In this sense, CI is partially in the service and creates the working conditions. The of HR. For example, an understanding of link can only be strengthened by the environment makes it possible to controlling the generalisation of CI guarantee that employees will support the practices according to the hierarchical values of the company or to encourage levels, economic sectors, the size of the comparison with the competition to companies and the security and protection understand differences in terms of of know-how, developing innovation, management of organisations and know- conquering markets or taking decisions. how. 3 Conclusion However, HR is also in the service of CI. For example, by promoting the The aim of this article was to explain the acquisition of maximum information from conditions for creating a connection applications, by means of job interviews or between the competitive intelligence by encouraging employees to support approach and the competences of the business intelligence needs (team organisation, held by the players, in the motivation) conceptual framework of proactive The link is therefore strengthened by strategies. In this sense, our ambition was, these aspects and also by the processes to within the limits set out in this theoretical be shared: searching for information by article, to show how these strategic legal means (ethical); lightening and approaches increasingly use business developing information transfer procedures intelligence and how human analysis of the (relieving workstations); ongoing training latter plays an essential role in the success of employees with information (creating of this strategy. We also stress that automations, understanding that certain theoretical lines of force and questions that types of information are valuable, emerge will only find their scientific basis preventing certain types of information through methodical testing of facts in the from getting out, etc.). context of scenarios that contain the In other words, to prevent the CI proposed research channels. process from appearing as a graft which is

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Considered as a whole, the main issue Bournois F, Romani PJ, (2000), of this reading is to recover CI in the L’intelligence économique et context of an analysis focussing on human stratégique dans les entreprises intelligence. This approach therefore françaises, Economica. shows the positioning and the role of an Bouyahiaoui N., Hamadache K., (2008), intelligence approach, from the point of L'intelligence Economique en Algérie view of its strategic orientation as well as au-delà des définitions, Janvier, El from the point of view of the managerial Watan Economie, Alger. orientations foreseeable by and for a Crozier M, Friedberg E. , (1977), L’acteur company. A company cannot save the cost et le système, Seuil, Paris. of a prior reflection relating to the D’Aveni R., [2002], Strategic supremacy, hierarchical position of a competitive Free Press, New York. intelligence cell. Should it be centralised D’Aveni R., (1995), Hyper compétition, or, on the contrary, decentralised between Vuibert, Paris. several departments? Should it be Grant R.M. (1991), The Resource-Based subjected to the organisation or, on the Theory of Competitive Advantage : contrary, be positioned to break with Implications for Strategy Formulation , environmental corporatism, reduce California Management Review, 33 :3, hierarchical distance as a blocking factor, 114-135. shake up routines and play with Hofer, Schendel (1978), Strategy uncertainty? The hierarchical position of formulation : analytical concepts, St the competitive intelligence players and Paul Minn west. their decision-making competences should Ihadjadene M, Favier L., Chaudron S., therefore be subject to analysis (Salvetat (2003), L'intelligence économique sur 2007). internet: évaluation des pratiques en Finally, the interpretation of France , Actes de la Conférence sur competitive intelligence we have chosen l’Intelligence Economique: Recherches allows us to identify the type of paradigm et Applications, Avril, Paris enabling this connection which it includes, Levet JL, Paturel D, (1996), L’intégration to outstrip a priori contrary elements which de la démarche d’intelligence are nonetheless complementary and to set économique dans le management the bases for systemic interrogation of the stratégique, 5ème Conférence organisation. It leads us to question its Internationale de Management limits in terms of organisational Stratégique, Lille. prescription, which is to say, of the Kim, Mauborgne, 2008, Stratégie Océan capacity to open up to all kinds of Bleu, Pearson management of internal and external Prahalad C.K., HameL G. (1990), The core information and to all kinds of treatment, competence of the corporation, Harvard analysis and distribution by the players. Business Review, Vol. 68, N°3, 1990, pp. 79-91. 4 References Salvetat D., Le Roy F., (2007), Coopétition Achard P. (2005), La dimension humaine et intelligence économique, Revue de l’intelligence économique, Hermès Française de Gestion, n°176, vol.33, Science, Paris. pp.147-162, Aout-Sept. Black J.,Boal K. (1994), Strategic resources : traits, configurations and paths to sustainable competitive advantage, Strategic Management Journal, Vol. 15, pp. 131- 148.

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Looking for Information: a New Approach to Consider Efficiency and Effectiveness

Pascal FRION*, Henri SAMIER**, * Phd Student in Competitive Intelligence at the Cerege Laboratory, Institut of Administration of Enterprises, University of Poitiers. 12 years experience in Competitive Intelligence within Acrie International Network, he is also the author of two books on information needs seeking and use, Aéroport Nantes-Atlantique, rue Nungesser et Coli, 44860 Saint-Aignan-de-Grand- Lieu, France, phone : +33 [0] 614 637 855 [email protected]

**graduated from the Ecole Normale Supérieur de Cachan, with a PhD in “technological watch in new products design”. Associate Professor, Director of Innovation department, ISTIA [Institute of the Science and Technology for Engineers], University of Angers. Head of master “technological innovation”, he is searcher in LAMPA Laboratory, « Arts et Métiers ParisTech Angers », Angers, France, phone : +33 [0] 241 226 549. [email protected]

Abstract This paper is an exploratory review of the literature with particular reference to business organizations. Today, we observe in university research and in enterprises practices that looking for information, often converges with the use of internet. We intend to show in this paper historical influences and scientific foundations over which authors build modern looking for information. Both in companies and in scholar situations, we notice a lack of methodology in how to handle the problem of looking for information, an internetization of the looking for, and a Googlelization, mostly based on the paradigm of information acceptance. How can we define an efficient and effective looking for information? We present a new approach to consider efficiency and effectiveness in looking for information. Keywords: looking for information, efficiency, effectiveness, competitive intelligence, information acceptance paradigm.

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1 Introduction To finish with, we will discuss and conclude temporarily on this exploratory Looking for information, has been often research. covered in different sciences such as: information sciences, computing sciences, 2 What is looking for information. business studies, social sciences and Information is a concept that takes humanities. Analyzing the literature shows different forms at different integrative the diversity of points of view on this levels [Wilson, 2002]. issue. Both in companies and in scholarly As far as this article is concerned, situations, we notice a lack of methodology various terms - in alphabetical order with in looking for information. Today, we examples of citation - are used to : observe in university research and in access information [Rice, 2001, enterprise practices that looking for Guilhon, 2004], information, often converges with Internet acquire information [Aguilar, 1967], search. How can we evaluate efficiency brows information [Bates, 1989 et 2007, and effectiveness in looking for Choo, 2001], information? In this article, we present fill a gap [Loewenstein, 1994], historical influences and scientific environmental scanning [Aguilar, 1967; foundations that support the different and Aaker, 1983, Correia & Wilson 1997; various ways of looking for information. Choo, 2001, Lesca H, 2003], We consider a new approach covering look for information [Porter, 1980, p information needs, seekings and use [Frion 368; Kahaner, 1997, p 75; Bates, 1989, 2009b]. Case 2008], In our information age, digital sources retrieve information [Bates, 1989; should complement rather than replace the Kahaner, 1997, p 94; Vakkari, 1999; print sources and the people sources. What Wilson, 1999; Kuhlthau, 2005; Belkin, we observe is in effect, the diminishing use 2008], of print sources and human sources search information [Kahaner, 1997, p towards more digital sources. For this 69; Salmon, 1999, p 125; Patton, 1999; reason, we limit our review of literature Wilson, 1999; Choo, 2001], here mainly to the period 1990-2008. seek information [Salmon, 1999, p 45; We mainly focused on explicit looking Wilson, 1999; Dervin, 1999; Vakkari, for information literature and in the 1999; Choo, Deltor, Turnbull, 2000, following fields: information sciences, Kuhlthau, 2005; Choo, 2007], etc. computing sciences, business studies, social sciences and humanities. We also We will see further down (figure 1) put forward our own enterprise experiences different appearances in the competitive from over 15 years in the field. intelligence literature (legal ways to First, we will show different points of acquire information are reviewed here). view, in the domain of looking for Many authors alternatively use different information. We will present the terms, especially in countries like France availability of a considerable variety of where writing style tries to avoid terminologies in this field. Second, we will repetitions. consider historical influences and scientific foundations which lead to efficiency and effectiveness in looking for information. Third, we will analyze the typologies of looking for information according to their approach related to information.

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Figure 1 : Semantic cell of looking for information [tags in the inner disk and authors in the outer disk]

We right away notice some degree of confusion. For instance, in French 2.1 Ways to look for information in the language, there is no such thing as a literature difference between searching [in digital Here is a diversity and variety of resources] and seeking [in less specific selected suggestions from the literature resources]. In English language over looking for information (although information search behavior is nested in many authors use different terms): information-seeking behavior, which is Berrypicking [Bates, 1989] the nested in information behavior [Wilson, informations are scattered and they have to 1999]. Environmental scanning includes be picked up one at time, with the both looking at information (viewing) and possibility to modify the picking at each looking for information (searching) [Choo, step (analogy with the fruit picking in the 2001]. forest); The Information Search Process (ISP) presents a holistic view of information seeking from the user’s perspective in six stages: task initiation, selection, exploration,

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Figure 2 : The Classic Information Retrieval Model, in Bates, 1989

focus formulation, collection and 1996] or encountering [Erdelez presentation [Kuhlthau, 1991]; 1999]; The classic information retrieval model System-oriented, users-oriented (see figure 2), with identical [Vakkari, 1999], and behaviours- searching and approximate searching oriented [Wilson, 1999] or actor- with keywords; oriented [Polity, 2000]; Probabilistic: based on occurrence and The black swan approach: thinking the co- co-occurrence of keywords; highly improbable [Taleb, 2007]; Chaining: starting with one book or Collective questionning plans and aticle, then chaining backwards to inductive seeking plans [Frion, find its references, chaining forwards 2009a]; in order to find the literature that Creativity and mind mapping [Buzan & uses this first document as a referens, Buzan, 1996]; or lateral chaining in order to identify Socrates' maieutics: interpersonal skill co-authors. to give birth to information; Scanning, watching, screening: Not seeking, rather retreating as an monitoring, updating information on hermit: forget and hope for the best; a regular basis [Aguilar, 1967; Lesca, Democracy according to Google: credit 2003; Choo 2001]; the documents the most seen, as Puzzle [Fuld, 1995; Lesca, 2003]; more relevant; Scenarization: hypotheses formulation Quantitative Methods, qualitative that have to be confirmed or methods or Mixed methods [Plano denied [Conan Doyles with Sherlock Clarck & Creswell, 2008]; Holmes]; etc. Proximity searching [Fuld, 1995]; Databases consultation, retrieval: All these models, technics, methods, accessing an available resource approaches, etc. have a common element. [Rice, 2001]; The review of the literature on looking for Interviews, elicitation [Naylor, 2008], information, seems to tacitly adopt the subterfuge, open or covert questions hypothesis of the philosophical statement: [Baumard, 1999]; information is in the progress paradigm. Ripple effect: one keyword suggests People feel that information is necessary another keyword from the center and more information is better. Therefore it towards the periphery [Fuld, 1995, p. is not a surprise that we notice an 207]; internetization of information seeking, and Serendipity: finding something we a Googlelization of information searching. where not looking for [Baumard, Efficiency and effectiveness will depend-

ECIS 2009 ‐ 75 ‐ PROCEEDINGS amongather things-on the paradigm the Kuhlthau, 2005; Bates, 1999]. It is rarer to user follows. meet seeking and questioning [Frion, 2009a]. 2.2 Historical influences and scientific Many authors on looking for foundations to efficiency and information literature concentrate on effectiveness in looking for information technical subjects and on the organization. A theme stressed in the literature is the Information behaviour literature is paradoxical situation that, although there is surprisingly often ignored by authors who an abundance of information available, it is focus on technical subjects and the often difficult to obtain useful, relevant organization. Therefore, the literature on information when it is needed [Edmunds & looking for information seems to be Morris, 2000]. Even though we read about separated in two distinct categories: one information overload, a review of the includes the human side of the question literature suggests that the results of past with Achard in France [Achard, 2005] and research in information acquisition have the information behaviour school more not always been clear-cut [Creese, generally with Wilson for instance 2007;Abram, 2008; Wiseman, Jawaheer, [Wilson, 1999]. Another one focuses less Kostkova & Madle, 2008]. Some authors on human traits and focuses on argue the overload of information is solely organizations and tools. Most of the time, an information retrieval problem looking for information literature is limited [Montebello, 1995] or a technology to one or to a few aspects of looking for opportunity to help us [Porter, 1985]. information. How are we going to evaluate Other authors argue this problem not only effectiveness and efficiency? Only looking concerns the system but also the human at one specific topic as Descartes would who is seeing and noticing [Neugarten, suggest? Are we going to avoid separating 2008]. things as Ockham would suggest? Clearly the thinking on looking for Efficiency and effectiveness will also information has inherited from the depend on this choice- implicit or explicit agriculture age and from the industrial age. choice. Agricultural age attributes are, among A cornerstone question arises here: other things, a logic of “ways and means”. what is the use of looking for information The literature on looking for information, and how shall we organise it? Does very often starts from given data (not looking for information include sense clearly from needs) and easiness. Industrial making? Many authors suggest looking for age attributes are, among other things, a information is not separated from using logic of “results”. As for the industrial age, information, like Choo, and Lesca, or the various elements like controlling, Dervin and Weick (with different standardization, lowering the risks, or approaches). scientific organization are often the In many articles, particularly in French basement of modern looking for CI literature, looking for information is information. described separately from other tasks. The Information is sometimes considered as English and American information a given object, sometimes as a process behavior literature is clearly in the [Guilhon, 2005]. Where does looking for information needs seeking and use (insu). information starts and where does it stops? When integrated to another task, looking Looking for information is sometimes for information is rather associated with presented as a separate task, overlapping the treating side. For instance, with another distinct task or inextricably organizations seek and use information in combined with another task. It is very order to understand and enact their worlds common to meet the seeking and use [Choo, 2007]. There are stages in combination [Choo, 2001 ou 2007;

ECIS 2009 ‐ 76 ‐ PROCEEDINGS information seeking [Kuhlthau, 2008], spread in 4 or 5 steps (see a detailed 4 step therefore, in order to be effective or presentation in figure 4). efficient, it means that all the stages have to be respectively effective and efficient? According to the Competitive Intelligence approach with the integration of five main competencies, we have: questioning (problem formulation); acquiring (retrieving, seeking,); treating (use, analysis); distributing (sharing, stocking); and protecting (controlling, limiting accesses); There will be “competitive intelligence” in a firm when coordination of theses skills and actions will be achieved ahead of the Figure 3: 5 step cycle [MILLER, 2007] project. So is the Information Literacy approach with the integration of key skills. Still, they remain separated. Sometimes Therefore, does it make sense to assess different teams of people dispatch the effectiveness and efficiency for one task questioning task for managers from the only? collection of information devoted to Seeking and use are sometimes together operating people. There is also another [Choo, Wilson, etc.] in information specific step in the information cycle, sciences, and in business studies, theses which catches the attention of most two tasks are often distinguished. competitive intelligence authors: Looking for information, information information treating, analysis, validation, searching, information seeking, etc. As far as the information cycle is information retrieval, and other terms are concerned, competitive intelligence often studied with no precise spectrum of authors and professionals set up the task. Where does looking for information starting point of looking for information start and where does it finish? with a strategic intent and a strategic questioning [Frion, 2009a]. Sometimes the The information Cycle In the most used method in Competitive Intelligence across the world, in the information cycle, there is a clear distinction between the needs assessment, or questioning, and the task of collecting, or seeking information. See figure 3 for a simple representation of a 5 step cycle, according to Miller [McGonagle, 2007]. Bulinge offers a very thorough presentation of the information cycle and puts forwards its limits [Bulinge, 2006]. Clark (Clark, 2003 and 2004) and McGonagle (McGonagle, 2007) also point out the limits of the information cycle. Even though the information cycle comes in different flavours, there is a close relation between these different steps, Figure 4: 4 step cycle [GUSTAVE, 1999]

ECIS 2009 ‐ 77 ‐ PROCEEDINGS information need will end up to a highly There are so many ways to present the engineered and unique information seek in activities of looking for information that a short period of time [Frion, 2002]. More efficiency and effectiveness will have to be often on the contrary, there will be an specified for each situation. It is time now ongoing watching structure organised to to turn to the presentation of efficiency and watch and monitor information in the effectiveness. short, medium and long run with authors 3 Efficiency and effectiveness like Dou [Desvals & Dou, 1992; Dou, 2008], Lesca, and Fuld for instance. What is an efficient looking for It is therefore a choice to decide when information? What is an effective looking looking for information starts and when it for information? finishes. For instance, can we say that the In figure 1, the classic information maïeutics of Socrates is looking for retrieval model [Bates, 1989] tells us that information? an effective search occurs when keywords Further, when data is already there on match. Today with the increasing use of the desk, on the screen, or in the office, the digital searching, the keyword matching is effectiveness and efficiency is more in increasingly becoming a big issue in manipulating data or information than looking for information. The good looking for it? As soon as the information keywords show us the access to the is present there is no clear distinction in the existing information we wish. Nevertheless vocabulary used between managing what is the relevance of matching present information and acquiring absent keywords if keywords are not precise? Is it information. Managing skills are different efficient? Is it effective? from and complement the exploring skills. Efficiency and effectiveness depends on In the literature, looking for absent various considerations. information is often seen as not separated from treating present information. Many 3.1 Effectiveness examples can be read in Aguilar, Bulinge, Literature tells us what is an effective Choo, Dou [Desvals & Dou, 1992; Dou, looking for information, throught some 2008], Lesca, etc. topics and throught selected citations: There seem to be an implicit agreement Relevance. Random search, Adaptavive among authors of this subjects to integrate Random Search, are presumably not looking for information in a larger system efficient, nor effective, but than just picking data on the Internet for sometimes rather relevant; instance. Completely rational decision Evaluation of the looking for making requires information gathering and information, not information quality; information processing beyond the Utility; capabilities of any organization. In Opportunity cost; practice, organizational decision making Reliable [Fuld 1995, p373]; departs from the rational ideal [Epstein, Performance; 2007] in important ways depending on Knowledge productivity; [Choo, 2001]: connect metatheory to method [Dervin, [1] the ambiguity or conflict of goals in 1999]; the decision situation [goal ambiguity or physical, affective, and cognitive conflict], and [Kuhlthau, 1991]; [2] the uncertainty about the methods creativity [Fuld, 35]; and processes by which the goals are to be context in which competitive strategy is attained [technical or procedural formulated [Porter, 1985]; uncertainty].

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simultaneously information-seeking and looking for information must not be get belief-forming social systems [Choo, started before philosophy, aproaches, 2007]; models, methods, technics, context, the user's needs; ressources, cognitive styles, etc. are user's satisfaction; investigated. collective sense-making [Lesca, 2003]; Looking for information should not be learning curve and information literacy; settled once and for all. It should be the credibility of the information sources choice of a succession of convergent and [digital, print, people sources]; divergent approaches in a multi-stage cultural perspectives, beauty of the act working session over time. This general for french people, pragmatism in concern would firmly root into behaviors. anglo-saxon world, etc. The terminological inventory of the looking for information literature 3.2 Efficiency vocabulary would have to be corelated Literature tells us what is an efficient with the competitive intelligence classical looking for information, throught some process. Indeed, this study is not restricted topics and throught selected citations: to the first two steps of the process. It also no waste, principle of least effort; stread over the treatment step and the time saving on collecting information to distribution step. The reason why is in concentrate human ressources on analysis these last two steps, final users are not the [Porter, 1980]; ones who have collected or looked for the time available and if it time informaiton. Figure 5 shows us an example consumming; of the terminology that can be used in a too much attention to them [market classical full process in competitive signals] can be counterproductive intelligence. [Porter, 1980, p. 86]; In his 423 page long book on looking consulting information deserves for information (Case, 2008), Case do not meticulousness, rigour, will; select the words effectiveness nor the available ressources, sources of field efficiency in the subject index. He is data [Porter, 1980, p. 278]; presenting a 9 page list of words like: the quality requirements in a repetitive motivation (18 references), utility of decision making; information (14 references), avoidance (10 business survival or business references), encoutering information (9 development, etc. treferences), content analysis and Most specifications so far belong to the metatheory (5 references), noise in acceptance pardigm. If we select another information theory (3 references)etc. He is paradigm, efficiency/effectiveness will see also using unique reference words like: another point of view. blind persons, grazing, infotainment, Each science bears its own criteria for taboo, zapping, etc. Are these two subjects- effectiveness and efficiency. For instance, effeciveness and efficiency-not important in business studies, looking for information in looking for information? should lead to a result-oriented We believe these two subjects are performance: the good information to the important and suggest a new approch to right person at the right time [Porter 1985]; consider them. in behavioral sciences nature of the human communication is at the heart of the 3.3 Behond efficiency and effectiveness process [Dervin, 1999]. Figure 1 shows us the clasic search model without reference to effectiveness nor Efficiency and effectiveness will be efficiency. Indeed this model implicitely subjective. We suggest that strategic suggest tu use the maximum variety

ECIS 2009 ‐ 79 ‐ PROCEEDINGS theory. As a social fact, maximum variety information on the spot for a one shot is used in radio and tv programs to allow a situation. As long as looking for large variety of points of views to information will stay in the information comment the news. With the maximun acceptance situation, the problem of variety theory, are we in the field of looking for information might remain commentary, redundancy or information? unchanged. Looking for information can be efficient Efficiency and effectiveness are usually and effective. However, what is the point considered for the result of the information of accessing information? From seeking and the methods used to look for effectiveness and efficiency we have to information. There was no literature on turn to relevance, accuracy, profundity, competitive intelligence found that coverd availability, reprensativeness, performance, the philosophy of looking for information. objectivity, etc. Now it is time to turn into meta Efficiency and effectiveness will consideration about looking for depend beforehand on the type of ground information and identify various points of they are used and also depend on the viex concerning information. Efficiency purpose to be achieved. and effectiveness will be specific for each No more naîve searching, no more case. naîve seeking. 4 From information acceptance Information existence towards information refusal ? Implicitely, most authors consider that A familiar saying states that ''Wealth information exists. does no harm''. It is clear that some authors In information sciences, the information seem to implicitely diverge from this idea. is a raw material and use ”information Information wealth can harm and it is recorded” [Bates, 1999; Metzger, 2002]. sometimes claimed that the quantity of Daft and Weick, use the term ”discovery” information is not necessarily positively for looking for information [Choo, 2001] related to quality. which implicitely accepts the pre existence A four-level spectrum is suggested: of information. Information acceptance; When we consult existing information, information tolerance; there is a consencus on suggesting to information avoidance; covert a large spectrum of available and information refusal. information. As in a bayensian context, more information provides us with a better Going through these four levels will understanding. provide us with some specific criteria. If information does not exist yet, Efficient / effective looking for looking for information will turn to people information, will therefore be able to be sources [Fuld, 37 and 418] and weak evaluated with regards to the point of view signals [Aguilar, 1967; Lesca, 2003] with we act. prior engeneering rather than posterior treatment. Sources will not be as numerous Information acceptance in this situation of lack of available Information acceptance is a information. philosophical statement which leads to a Information skills put forwards in the implicite range of tasks. It is an enjoyable looking for information are mainly behavior for which information appears as concerned with managing information, being fully considered as a necessary [raw] treating and manipulating information, material. There is a liking for information. reiteratedly. There is no mainstream The risk aversion suggests to access and to literature on skills to create tailored-made

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scan available information to lower the data-mining, environmental scanning risks. [Choo, 2001], technical watching [Desvals Information exists by itself as a starting & Dou, 1992; Dou, 2008; Rodriguez, point and is available. Information is a 2000] etc. mainly belong to the given, it is « already there » (as Le Moigne information acceptance. Pre-conceived usually puts it), seperated from the ideas are considered as non professional. question. Quantitative approach: more This is a system-oriented approach information is better. Information will be [Vakkari, 1999]. The information filtered and refined. Command acceptance moto could be: ''Information formulations are sometimes of this kind: first''. ”Give me all you have on this topic”, ”I With an information acceptance want a full statement”, ”I want to know approach, efficiency will mostly depend on everything”, ”Every little bit of the theory of maximum variety in information counts”, ”Let me know as accessing channels and people sources. soon as you can”, ”I want a real-time With an information acceptance update on this”. All theses sentences reveal approach, effectiveness will mostly depend that information is taken as a raw material, on the feeling of not forgetting any point of which has to be refined throught a separate view. process that just collecting it. Information acceptance is an open door Information tolerance to scanning and watching structures, rather Information tolerance is a ehavior for than projects-based appoaches . which information is welcome for want of Information searching, internet anything better. Most information inquiring, data bases quering, text-mining, acceptance caracteristics are present except

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the liking for information. Information & Allard, 2005]. Information is not blind seeking, serendipity, information filtering, trusted. Information strategic looking for technical watch browsing, collective 'multi-stage methods' (Dervin Sense- intelligence [Lesca], Sense-Making making), Kuhlthau's Information Search [Dervin, Weick for different approaches] Process [Kuhlthau, 1991], Ellis [Ellis, mainly belong to the information tolerance. 1989]), inductive approaches, seem to The regret aversion [Van Dick and belong to the information avoidance. There Zeelenberg, 2007] is not as strong as with is no regret not to know some information information acceptance. as much as the satisfaction to concentrate This is a user-oriented approch on some aspects of our curiosity. This is [Vakkari, 1999]: there is no need to give a not so much a risk aversion rather than a lot of information to his boss because he risk taking belief. will not read it. Factual information are Relation to information delivery with be considered as neutral question [Just-give- concerned with sentences like: ”only give me-the-facts attitude]. Common me the Key Intelligence Topics”. ”Give me discussions are sometimes of this king : the saliant points”. ”What is new”. ”Give ”We never know”, ”Who knows”, ”In case me a one page memo on this”. It is a it might help”, ”For my information”, ”To qualitative approache. whom it may concern”, etc. Information Information avoidance is naturally push is prefered to information pull, in a reluctant to structure a heavy organization concern not to miss anything important. to scan and watch information on the long With an information tolerance run, and rather suggests projects-based approach, efficiency will mostly depend on appoaches. the feeling of selecting the useful With an information avoidance approach, efficiency will mostly depend on the subjective feeling of being in charge of the information selection. With an information avoidance approach, effectiveness will mostly depend on confort for the person in charge of looking for and using information.

Information refusal Methodological statement in reaction to information overload and to call the Figure 6 : Convergent and divergent approaches progress paragidm into question. to look for information Information availabity is not the point. Information push is not accepted as an information. information ideology. Constructivist With an information tolerance behavior for which the information is not approach, effectiveness will mostly depend the cornerstone of the task. Actual context on the use of the information in the general and expectations formulate questions and thinking process of the person. test the environment, using information to fill information gaps. Problem formulation Information avoidance is refined along the way, as well as Protective belief. Information Searching information lacks and needs. Risk taking is In Context [Isic] prevents a person to look assumed and information is tailor-made, for some available information fearing to sometimes largely invented. It is a dislike what could be found. In medical cognitive process within which less science there is a tendency to avoid disconforting information [Case, Johnson

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steps Description Actors (1) Definition of the objectives, Information watchers, Identification information needs, identification of the Information officer, formal and informal informaton sources librarian, formelles et informelles (publications, Users congress, databases, trade shows, experts) (2) Collection Collect all the possible information Information watchers, with a variety criteria (internet and Information officer, databases downloads, reference librarian, repports, summuries and articles) Users (3) Treatment Going through available information, Information watchers, homogenization, and presentation of Information officer, the informations (local databases librarian creation by subject, hierarchy and organization of the information) (4) Distribution to the experts of the field, Information watchers, Distribution to evaluate, analyse, validate the Information officer, informations librarian (5) Evaluation and analysis of the Information watchers, Evaluation, informations in order to prepare and Information officer, Analysis, present syntheses librarian, Users (6) Checking, consolidation, assessing the Users Validation reliability of the informations (7) Use Decision making and action plan Utilisateurs (technology acquisition, product development) (8) Storing and archiving information Information watchers, Conservation (sources, result, decisions) Information officer, librarian, Users (9) Update Updating synthesis Information watchers, Information officer, librarian Figure 7 : 9 classical steps to look for information in Competitive Intelligence

information is better. Priority is given to scientific literature so far. Blue Ocean visions, wants, bounded rationality, etc. Strategy [Chan & Mauborgne, 2005], Cognitve bias and emotions are taken Black Swan Strategy [Taleb, 2007], Mixed into account and must be investigated and Methods Search [Plano & Creswell, 2008], ”tamed” a little bit, before letting the artificial sciences [Simon, Le Moigne] is information getting into the arena. No related to the problem of information explicit methodological information refusal refusal. has been published in international

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Sentences we can hear with this attitude Each person, looking for information are such: ”Hang on a minute”, ”I need to could select the most appropriate approach, take a step back”, ”I need a break”, ”I need select the acording models, methodologies, to defocus”, [Neugarten, 2008]. People techniques, and therefore would benefit value more the strategic aspects of their from straitforward efficiency and projects rather than the available effectiveness specifications. information. Information is of no use in One aspect of information has not been itself. The information refusal motto could found in the literature dedicated to be: ''purpose first''. competitive intelligence so far: the With an information (methodological) difference between information, and being refusal approach, efficiency will mostly informed. The former is rather external to a depend on the strategic questioning from person but not exclusively. The latter is needs to projects formulation. largely internal to a person but not With an information (methodological) exclusively. refusal approach, effectiveness will mostly In a previous study, the authors of this depend on the time that has been saved, not article noticed an internetization of the reviewing available information. looking for information, and also a Googlelization of the internetization 5. Discussion over a suggested [Frion, Moinet & Samier, 2007]. We notice typology and limits the increase of a single approach in looking With this exploratory study, we noticed for information, often limited to the in the literature that the various ways to internet. If a unique methods may be look for information where supported by efficiently done, we can not subscribe different approaches of information. favorably to this lack of methodology. Efficiency and effectiveness, must In this article, we only skimed over a therefore be respectfully different. couple of subjects related to the problem of In Annex 1 (table 1), we tried to looking for information. We did’nt intend compute different existing typologies, to develop the subjects like risk reduction presenting three main categories: and risk taking. Is it more risky to treat consulting existing information; non-chosen existing and available provoquing information; information (information acceptance) or to and inventing information. spend more time on selecting specifications to pick up or invent This first attempt has been done without absolutely necessary information (in a a great succes and needs to be impoved. methodological refusal of information ”Are emotions the antithesis of information aproach)? seeking and use, as has been traditionally In term of vocabulary, the issue of assumed?” [Dervin, 1999]. In a post information has been globalized, when it industrial world, will people keep away could have been distinguised in many ways from their emotions relatively to (signs, signals, data, knowledge, information? intelligence, and the french word We suggest a behavioural typology that ”renseignement”, etc). For the purpose of will help us in assessing effectiveness and this article the term of information has efficiency in looking for information: been chosen as a given, and the action of information acceptance; getting informed has been rather left aside. information tolerance; Getting informed is not limited to getting information avoidance; information from the environment. This information refusal. last point has been underestimated in the competitive intelligence literature so far.

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One more field of investigation on this For sure, efficiency and effectiveness in subject would be the decision topic: looking for information is still to be decision formulation, decision helping, investigated further, in order to suggest decision taking and decision making. behaviours, approches, models, methods It would also be instructive to expend and technics for firms. more literature exploration to information 6 Conclusion sciences, culture [Koch Parente Verville, 2008], psychology, philosophy, Looking for information has been information management and to investigated with so many original points management at large. Indeed, there is a of views that all these contributions give us question that the authors do not want to a vague picture. We could say ”vagueness develop here. That is how a person who is by the abondance of information”. Are we missing information can formulate a still looking for information when we can precise enough question or a precise consult it at hand? Is this effeciency? Is enough need ? this effectiveness? Is this still looking for This paper is presenting four points of formation? view of information, that have been Getting to know, understanding and artificialy separated in order to be using more appropriate approaches, presented. In the real word, they methods and techniques in looking for complement each other. Nevertheless, information, will provide the firm with a some further research will have to be higher degree of liberty and will give launched to investigate the human capacity people with better skills. to switch and to compose with different For sure there are plenty of different mindsets about information. Can we accept ways to look for information. Effectiveness information, tolerate, avoid and refuse in and efficiency must be analysed as a others? What kind of effectiveness and consequence of former choices. Different efficiency can we achieve with a large levels of effectiveness and efficiency will variety of ways and means to approach hopefully be obtained accordingly to prior information in a company? selection of information acceptance, Finally, why should we look for information tolerance, information information? Efficiency and effectiveness avoidance and information refusal. will also depend on the purpose of our actions. Many reasons can be listed, to 7 References look for information among which: Abram Stephen [2008], Is There Such answering a precise need such as Thing As Information Overload? solving a problem; Information Outlook, vol. 12, n°2, pp. getting unstuck, finding ideas (getting 25-27 out of an unconfortable situation); Achard Pierre [2005], La dimension answering a vague need such as humaine de l'intelligence économique, learning, being cultivated, self-actualizing Hermes-Sciences Lavoisier his knowledge; Aguilar F. [1967], Scanning the business to keep oneself informed, to make environment, Macmillan, New York inquiries about something; Bartoli J.A. et Le Moigne J.L. [1996], complying with social behaviours organisation intelligente et système (knowing as much as others know); d’information, Paris, Ed Economica filling an emotional lack of information Baeza-Yates Ricardo & Ribeiro-Neto [fearing to miss important informations]; Berthier [1999], Modern Information following a ”have to” ideology (we Retrieval, Acm Press Books Addison have to stay tune) etc. Wesley

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Annex 1 - Table 1 – First attempt to compute existing typologies and specifications in looking for information

Looking for sub-categories comments InformatInformat Quanti Ingenee reproduct Number Necessity of Work on Kuhlthau: Pility main ion ion is Quali ring ibility of needs the the side of affective (system categories exists white, Mix (y/n) automatiqformulati availability 'informati (feelings), oriented, (y/n) grey, (qt/ql/m uely (y/n) on(s) of on, task or cognitive user- black m) information need (thoughts) oriented , (w/g/b) (y/n) (i, t, n) physical actor- (action). oriented (a, t, p) (s, u, a) Consultation - existing Access to a y w qt n y several y i p s document known well of information - berrypicking Collection of y w, g qt n n 1 + y i p s what is available

- watching, Update of what y w qt y y 1 + y i T et p s scanning is available - maximum Sample with a y w qt n y 1 y i p s variety theory lot of chance - vectorial, Presentation of y w qt n y several y i p s boolean, what is available probabilist

Provocation - Socrates People source n g ql y n several n n t u maieutics - personal thinking imagination, Y, n g ql y y several n n A, t U, a memory - integration, « Asian » y W, g, b ql y y several y t t S, u association approach - Acrie Inventive n g ql y n 1 + n T, n T et f a questioning plan modelling - expert co-production n g ql n n several n T, n A, t U, a - puzzle Collective y W, g qt /mm y n several y T, n p S, u Intelligence

Creativity - brainstorming Collective Y, n G, b ql n n 1 + n T, n T, p U, a Intelligence/ imagination - black swan Looking forthe Y, n G, b ql y n permane y n t a higly nt improbable - Acrie seeking Inventive n g ql y n 1 + n T, n T et f a plans situations - concertation Creative Y, n W, g ql y n 1 + y T, n t U, a governance rather than administravive - expert Co-production, Y, n g ql / mm n y 1 + n T, n A, T U, a need modification , tailored made information transfert - scenarii Sherlock y G, b ql / mm y y 1 + y n A, T a Holmes

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The generation of a rumour: from emergence to percolation

Laurent GAILDRAUD*, Henri SAMIER**, Jean Maurice BRUNEAU*** * Economic Intelligence Consultant, Marseille, France [email protected] ** ISTIA, University of Angers LAMPA Laboratory, « Arts et Métiers ParisTech Angers », Angers, France [email protected] *** Associate Professor, PhD, Institut Telecom Telecom SudParis Evry, France [email protected]

Abstract In the context of informational war, rumours are more than ever lethal weapons. They have been widely explored from two points of view. First, how to build a rumour from the social sciences and psychological point of view and second from the way it propagates through mathematical patterns. Various studies are mainly about retrospective analysis about facts, which are trying to deduce effects about strategic, sociological, anthropological, historical or economical aspects of companies or other kind of organisations. Some studies show some analogous propagation patterns between rumours and epidemics. Those patterns are based on viruses, various diseases or bush fire spread. The point of our work is to answer the question “Is it possible to control propagation and, if so, how can we do so?” Our paper is about the emergence phase and the triggering of a rumour. This stage has not been thoroughly studied as it seems delicate and controversial. We suggest revealing how to orchestrate rumours. Is it scientifically possible to foresee rumours? Which pattern is applicable to triggering a rumour? At the beginning of our paper, we will show how are built the rumours and what the basic rules we have to follow are to make them work. In the second part of our paper, we will identify external and internal factors of the emergence of a rumour. The point is to gather all the ingredients to make a successful rumour. The analysis of external factors shows the influence of an anxious environment mixed with other factors like moon phases, amount of sun, rain and electromagnetic storms for examples are favourable to the spread of rumours. The internal factors are about people (and investors) emotional states of mind and others less conventional. In the third part of our paper, we will demonstrate that new patterns of percolation by links, by sites and networks are relevantly applicable and rely on the nature of the rumour. It is a new understanding of the emergence of a rumour we suggest. Through the knowledge and the analysis of the percolation of rumours we have elaborated a watchdog solution of media surveillance, which has aims to detect a rumour, warn management, to protect and counter-attack against risks of rumour. We broaden the advantages and limitations of our solution to new orientations of research. Keywords: rumour, emergence, percolation, triggerin

1. Introduction always stay in the news? The existence and the propagation of rumours are widely Why is it that the phenomenon of rumour based on people’s needs to be loved (love, has always existed and will probably

ECIS 2009 ‐ 92 ‐ PROCEEDINGS friendship, tenderness), the need for social link than it embodies. As an eminent security (money, fear), the need to be form of delousing which one finds with acknowledged (identity, feeling of primates. In addition, the “control” of the belongings, comprehension, pride) and propagation of the rumour seems to self-esteem (ideology, arrogance). The correspond to an illusory form of power need to communicate is often present to taken by some managers as we can see in satisfy the four major needs. politics and top-end management in Rumours are all around us and take companies. It is why appeared relevant to different shapes and sizes with various us to explore the process of emergence of names. A rumour is generally associated rumour in order to unveil the triggering with the concept of false information. It is factors on one hand and on the other hand not that easy, if all rumours meant false to propose a model for the release of information, we all knew what to think rumour. This initial phase requires a about them. We just have to discard them. precise focused analysis to orchestrate a The point is rumours can be true and that rumour. precisely is what is disturbing. A rumour At first, how does one identify or can be assimilated to a hoax regarding the recognize a rumour? It exists three levels fact that it has very low impact on real of recognition of a rumour, the explicit economy and the life of whose which are level, the implicit level and the propagating or suffering from the rumour. anthropological level. The Internet becomes an accelerating First, the explicit level and announce factor creating value as well as an call upon the primary feelings with accelerating factor of crisis. negative connotations, which are revolt, In an information networking age, hatred or dislike. Primary feelings with information becomes a social point of positive connotation such as love or recognition. Therefore, the “mouth to ear” pleasure (except if you are laughing about or “buzz” on the Internet became important someone) are less favourable for the enough to see companies offering to their rumour. In rumour history, we notice that clients has become their e-reputation. As the statistical distribution of the type of any perishable product, rumour have a life rumour is the following o expectancy and a sell-by-date. 66% of the rumours call upon hatred 2. Rumour and the phenomenon of and make opposition to corporatism. They emergence. are against-something (anti-nuclear power, There are two majors phases in the life anti-owner, anti-religion) cycle of a rumour: the principle of 25% of the rumours call upon the fear emergence and the impact of propagation. catastrophies or diseases, We will notice that the rate propagation 7% of the rumours are unclassified, has been widely studied more specifically 2% of the rumours call upon positive in the area of the mathematics of social elements (statistically negligible). sciences. Generally those many studies have for postulate that rumours spread on Let’s notice that hatred and fear alone the same mathematical pattern than account for 91% of the rumour base, which epidemic outbreak. Rumours spreading shows the nature of identification of would be based on propagation of disease. rumour on this explicit level. In a word short, rumour means disease. Secondly, the implicit level and This is a point on which we do not fully psychological sides messages that will agree. For us, rumour is seen as a superior have a social aspect, moralizer and which social bound. The rumour appears to us to often concern popular sayings, a proverb. be a higher mode of expression of the

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Thirdly, the anthropological level calls preparation to the construction of a upon the primary fears. The explicit level rumour. The “rumorocrats” will be intervenes obviously in the percolation of attentive and patient to orchestrate their rumour, thus we will take care of the rumour. Being rare, these unforeseeable immediate designation of a culprit at the events, will be coupled with events known explicit level (politician, cell phone and by everyone. The annual report periods are brain cancers, toys containing lead-based for example a take-over of company, a paint etc). change in the management, elections, a change in the government or the year-end 2.1. Initial conditions of rumour financial report. All these events are to be The retrospective and historical analysis of watched carefully, it is easy to anticipate the rumours shows the existence of the on them. From a political point of view, initial conditions favourable with the any form of election, and particularly the release of rumours and their propagation. presidential elections are a rare, Its initial conditions are : foreseeable event and do generally made of anxious surroundings, generate anxiety. The effect for a nation is distance from the cause of anxiety, to be plunged temporarily in paralysed emergency, during weeks before the final vote. the evocation of the daily object, racism, 2.3. The distance from anxiety the abuse of good feelings, Sereval works of LEYENS [LEYENS, surroundings coming from different 2000] showed it was possible to evaluate contexts as the financial context, which we the quantity of anxiety generated by events will develop further. and particularly according to the places I am not sure what you want to say here - where they appear. This principle named CS. “phenomenon of kilometric death”, expresses “the degree of anxiety” 2.2. Anxiety and surroundings according to the distance in kilometres to The first condition for the emergence of which a catastrophe proceeds. The authour rumour is the anxious character in the expresses a scenario of fire in Belgium and environment of the context in which it will analyzes the reactions in Belgium and be able to be propagated. Rosnow England. The scenario begins with the (ROSNOW, 1991) was one of the first to reading from a press article which show that anxious environment as well as described a terrible fire, in Belgium, uncertainty was a factor of emergence of a having resulted in many deaths under rumours and not necessarily a factor of particularly unbearable conditions. The their propagation. Thus, many anonymous reactions of the citizen readers were related works on the area show that a rumour has a to feelings of pain, sadness, anger, fear, stronger probability of being triggered in sorrow, culpability, regret and despair. The an anxious context. Therefore, there are reactions of the English readers were two classes of events for generating related to sadness, anger and fear. These anxiety: the unforeseeable and the four emotions, considered as primary foreseeable events. There is a strong link feelings, are shared by humans and by between to stress, thus the orchestration of certain animals. Whereas sorrow, a rumour cannot be based on this culpability, regret and despair are randomness. Events of September 11, exclusively human emotions. Thus 2001, attacks on London, on Madrid, a LEYENS showed that the proximity of a tsunami, or flight flew are perfect the disaster increased the anxious character examples. Nevertheless, waiting does not of the event if it happens near the exempt of the necessary meticulous population. One of the conclusions of the

ECIS 2009 ‐ 94 ‐ PROCEEDINGS study shows that the human being does not the rumours according to which Mc distribute its empathy in a uniform way. Donald puts worms in hamburgers or that For example an ethnic massacre in Africa the Kentucky Fried Chicken’s chain makes will have a stronger impact near African us eat rat are well known rumours. Thus nations than near European ones. But as the proximity supports the dramatic aspect for the case of the people who died from of the rumour message and will be kept in the tsunami on the beaches of Thailand, mind thanks to percolation. Europeans felt concerned because some compatriots were killed as they were on 2.5.2. Racism vacation over there. The choice of This historical component is present in proximity of the anxious event seems many rumours and appears as being a determining or the monitoring of the triggering and percolating factor in threshold of percolation. rumours. The propagation of the rumour is a way of speaking about oneself, its values 2.4. Urgency of the rumour without revealing itself and of saying what The character of emergency of a rumour the individual thinks in a hidden way. By has to freeze the judgement. The urgency propagating a rumour, the individual is often the consequence of a crisis that propagates his paradigms and his requires an informational need. This need prototypes of thought. increases, on one hand, the speculation, on For example, “la rumeur d’Orléans” has the other hand, is favourable to “the this racist character because the owner of informational intoxication”. The principle store was Jewish. According to this of “urgency” used in the rumours follows rumour, this store of fine underwear would the approach of the type “the house is on be the place of kidnapping of women to fire”. It will rather call upon the immediate feed a network of prostitution. Of course, action (or reaction) than call upon the this rumour was spread throughout all the reflexion. Indeed, the rumour must call cities in France. It even appeared in Korea upon a form of echo anchored in its past, (and the Jew became Japanese over there). its beliefs, and the myths even possibly in We find also this factor in the rumour on an collective unconsciousness . This disappearances of the dead people in the explains the fact that the more Chinese area of the 13th district of Paris. A traditional/conventional one rumour similar one was the rumour of the remains, the more it will be likely to work. evacuation of the Jews of the World Trade On the contrary a too innovative rumour Center just before September 11, 2001. and without roots in the unconscious Thus the fear of the other, racism is always collective will have little chance to work. a sure thing and we will keep that in mind Thus a rumour having worked 10 times to orchestrate our rumour. will be likely much more to work one more time compared to a rumour too “far away” 2.5.3. The abuse of good feelings from the unconscious collective of a group. A percolating factor seems the abuse of good feelings because the propagation is 2.5. The rumour rules performed better if accompanied by a humanist feeling. It is up to you, by 2.5.1. The evocation of the daily object propagating such a rumour; you will help The evocation of the daily object is a orphans from Darfur, bashed women, phenomenon comparable with “kilometric anonymous alcoholics, AIDS sick people death”. In fact, a “dangerous” object near etc. Well, by propagating this rumour you one will have a dangerous perception are going to contribute to make the world stronger than a distant object. This better. explains the big hit of some families of rumour such as health alerts. For example,

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For example, the rumour in 1995 of an value that breaks up it by the estimate 8 year’s old little girl named Amy values , use and exchange. BRUCE. Touched by a very rare orphan The estimate value can be regarded as disease in England, people were to donate being the subjective value granted by the some money to cure her. Almost 15 years individual to the rumour or the information later Amy is still 8 years old. It looks like if it does not know that it is a rumour. rumours can confer an eternal youth. The use value can be regarded as the Finally, in the development of the expectation of the individual covered by factors which intervene under the initial the rumour and its impact. conditions of a rumour the financial The exchange value can be regarded as context deserves some development. being the possibility of exchanging the rumour against another rumour. 2.5.4. Financial context But which model could we apply to the How is it possible that a company such as evaluation of the intangible asset of a Apple could lose 4 billion dollars in rumour? We find answers in the works of market cap in one hour on May 16, 2007 PORTNOFF [PORTNOFF 2005] and F. because of a rumour appeared on Internet DRUEL [DRUEL 2007] (((yes as FD on the Endgadget site (endgadget.com) says))) an answer which seems to adapt to Even if a flat denial is made a few hours rumour problems. later, the process is engaged. The rumours Indeed, the authors propose an in the financial context are of significant evaluation according to two axes of interest as it developed studies of attractiveness and perenniality check that “behavioural finance”. For example, will have each qualitative and quantitative regarding the mergers & acquisition, the criteria. But as in our problems of rumour, initiator will be confronted with the the quantitative criteria are reduced to a increase in share value of the company few number , we will adapt the model with they wants to buy and is likely to induce a the criteria oriented to the rumour and the phenomenon which will be extremely criteria specific to the target (the costly for him. This same initiator will in company). parallel see the value of his own title The rumour criteria correspond to the regarding the cash flow he needs to pull initial conditions seen previously as well as out sounds fine, but is the meaning. In the characteristics of construction of a France, the duration cycle of a shared offer rumour such as the anxious environment, is around one month as is the average life the distance from anxiety, the emergency expectancy of a rumour. Synchronizing character of the message, the compliance both events would increase the efficiency with the rules of the rumour, the credibility of the rumor. of the rumour, the non-verifiable character of the rumour, the probable effect of the 3. Rumourʼs evaluation model. rumour, number influential sites and 3.1. The intangible value. finally the existence of equivalent rumours Can one evaluate the value of the on sites specialised in denials of rumour. intangible capital of a rumour? The The criteria of the target correspond to consequences of a rumour are appraisable the external and internal characteristics of a posteriori which means “the action is the latter which are the notoriety of the over”. Several examples show the company, the profit warning of the significant impact a rumour can have on company, the competing promptness of the the value of a company. sector, its competitive position, the crisis But to sounds fine its value a priori, we management of the attacked target. will borrow the decomposition of the value The first axis of attractiveness of a within the meaning of the analysis of the rumour is in direct link with its singular

ECIS 2009 ‐ 96 ‐ PROCEEDINGS construction and allows us to propose the collective organization (network social, following criteria of attractiveness : communities, buzz, etc). Thus we define the following criteria of perenniality : Criteria of Rumour Attractivitness (CRA): Criteria of Rumour Perenniality (CRP): CRA1 Environment anxious, CRP1 Credibility of the rumour, CRA2 The distance from anxiety, CRP2 Authority of the initiator, CRA3 Urgency of the message, CRP3 Non verifiable character of CRA4 Compliance with the the rumour, rumour rules1 (racism, evocation of the daily object, abuse of good feelings). Criteria of Perenniality of Target (CPT): CPT1 The crisis management of the

Criteria of Rumour

CRA1 Environment CRP1 : Credibility of the rumour anxious CRA2 : The distance of anxiety CRP2 : Authority of the initiator

CRA 3 : Existence of equivalent rumour CRP3 : Non verifiable character of the CRA4 : Compliance with the rumour rumour

Perennialit Attractivenes y s CPT1 : Crisis CAC1 : Notoriety of the management company

CPT2 : Competitive position CAC2 : Profit Warning

CPT3 : Nature of the activity CAC3 : Competing promptness of the company of the sector

Criteria of target

figure 1 : Evaluation model of value of rumor

Criteria of Attractiveness of Target attacked target, (CAC): CPT2 Competitive Position of the CAC1 Notoriety of the company, company CAC2 Profit warning, CPT3 Nature of the activity of the CAC3 Competing Promptness of company. the sector. We can thus make a chart of the 12 The axis of perenniality of a rumour is criteria according to the axis X-coordinate connected with its diffusion and of its of attractiveness and perenniality and the propagation and has a character of

ECIS 2009 ‐ 97 ‐ PROCEEDINGS y-axis with the rumour criteria and the To define the percolation we will criteria of the target. (figure n°2). consider: an informational network multi The time sector 0:00 - 3h (in top on the sources, named RIM, left) gathers the rumour criteria according a distant couple of information sources to perenniality. CSI, The time sector 3:00 - 6h (in bottom on a parameter Pr ranging between 0 and 1, the right) gathers the criteria of the target a measurement obtained of the CSI according to perenniality. named Pp. The time sector 6:00 - 9h (in bottom on the left) gathers the criteria of the targets The two properties of a couple of according to the attractiveness. information sources CSI will be open or The time sector 9:00 - 12h (in top on the closed according to the probability Pr. left) gathers the rumour criteria according Thus the CSI has the communicating to the attractiveness. property (open) with probability Pr and the By the evaluation of each criterion no communicating property (closed) with according to a scale from 1 to 10, we probability (1 − Pr). connect the whole of the point to represent The communicating denomination a surface corresponding to the intangible (open) means that CSI exchanges asset of the rumour. Thus, we can evaluate information whereas if it is no a priori and a posteriori several storyline or communicating (closed) that means that it construction of rumour in order to optimize does not intervene and thus logically is not its impact or any other factor. considered. The probability of percolation takes the 3.2. Probabilistic Value form of the following function: As we have just seen , the rumour is F (Pr) = p (of 0 ad infinitum). multifactor and multi level. Thus the initial Critical point PC will be such as F (Pr) conditions that are identified make it is null if Pr < PC. possible to understand the phenomenon of Thus with this simple model, there will rumour emergence but do not show the be release of the rumour when Pr > PC. existence of a model that would make (T0, T1, T2). possible the understanding of the If the initial conditions of a rumour are phenomenon of release of a rumour. met, i.e. that we have in the principal circle If the randomness of a rumour is the anxious environment, the distance from recognized, the many statistical models of anxiety, the emergency character, the rumour tested relate to the propagation. For evocation of the daily object, the racism or our part, we make the assumption that the the abuse of good feelings then we have a model of release of rumour can also follow critical point. The model of percolation a model of probability. Among the many well describes the phenomenon of release existing statistical models, it appeared to of rumour under its initial conditions, as us that the model of percolation was shown in the figure T0, T1, T2 but the mostly appropriated to the release of the model introduces the concept of rumour. Indeed, before being propagated a probability of percolation that transforms rumour must be triggered and this the randomness of the release into a phenomenon has not been studied so phenomenon of probability. much. We chose the model of percolation Thus the model seems adapted to the because in one hand it is used in the phenomenon of rumour, because it random surroundings and particularly in explains how the release is carried out, but the field of materials and in the other hand, does not explain why. Of course, we could it is transposable in a relevant way to the refine the type of model of percolation in initial phase of rumour. order to specify if the percolation of

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Bernoulli on the networks is more relevant July the 6th 2005, an article in Challenge than the percolation of site, but we will magazine is going to reveal that Danone orientate our work towards the could face a takeover from PepsiCo. determination of the influential elements PepsiCo would already have taken 3% of on the probability of percolation in order to Danone shares would be ready to spend propose in the future a predictive model of between 25 et 30 Billions Euro. detection of rumour. July the 7th, Danone’s shares increase The companies try to protect themselves by 5% at the opening of the stock against from possible informational attacks exchange. such as hacking and rumours. For a July the 19th, Danone’s shares increase company to be protected from this type of 10%. danger, they must initially watch all that it July the 20th, Danone’s shares have is said about her. By organizing an increased 27% since the 7th of July. This efficient watchdog with the means such as stage, the increase on the shares represents human, organisational, methodological and 4,3 Billions Euros. software, it will know in real-time her Danone announced a downfall of its environment. For example the SNCF has benefits for the semester as much as 36%. set up for several years an effective system 22nd of July, PepsiCo’s meeting of the of Business Intelligence at the corporate board doesn’t mention a word on Danone level in order to keep an eye on their E- case. reputation and to protect themselves 25th of July, PepsiCo declare no against rumour as well. intention about a takeover on Danone. But on the internet the noneconomic August the 2nd, the International Herald human factor has a natural tendency to be Tribune reveals the name of a columnist at structured in community of all forms (blog, Challenge Magazine: Christine Mital. C. instant messaging, mash up, etc). Indeed, Mital is Franck Riboud’s sister. F. Riboud such as tribes, the Community Net surfers is Danone’s CEO. and other social networks trigger rumours End of the rumour. Normal life and propagate them. In our view, the expectancy of one month. rumour follows January 2006, C.Mital died from a A model of fractal propagation such as stroke. it corresponds to its deep nature End of the story. [BERNERS-LEE, 1997]. The warning sites such as Hoax buster, snoope, For the Danone/PepsiCo case the snoope2, the encyclopaedia of the rumours, criteria of Criteria are : (Ian Harold Brunvand), are quite revealing. CRA1 a) July the 6th. A reason for On the Internet, the mode of diffusion of disappointment: Paris is dejected to host rumors remains traditional such as the the Olympic games. London was chosen. email, the Web sites, the blogs, the sites b) July the 7th, anxious Community and the social networks. environment, London bombings at 8:50 am, killing 57 commuters and making 700

injured. 4. Case studies In July 2005, a rumour came about CRA2 The geographical distance concerning the takeover of Danone by the from anxiety, London to Paris is a 40 giant of food & beverages PepsiCo. As it minutes flight. normally does the rumour is going to last CRA3 Urgency of the message, approximately one month. Here are the One of the first criteria for a information facts: from a trader point of view is urgency.

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CRA4 Compliance with the CRP2 Autority of initiator, rumour rules see notice i Challenge magazine is a respected source CRP3 Non verifiable character of CAC1 Notoriety of the company, the rumour, Price of the target C° Danone is one the largets company in skyrocket France. It belongs to the CAC 40. For Danone takeover, it would have CAC2 Quoted Value of the been easy to check on PepsiCo intentions. company, Critisis profil warning By law, in France, the initiator of the CAC3 Competing promptness of the takeover has to declare his willing to sector, Price competition proceed to the AMF (Autorité des marchés CRP1 Credibility of the rumour, financiers) before it takes action. The Danone/PepsciCo rumour of In any takeover, Increase on the takeover is quite old in fact and quite value of the shares of the target company. credible. CPT3 Nature of the activity of the

Criteria of Rumour T0 CRA1 London bombings CRP1 : The Danone/PepsiCo takeover is a old story quite believable CRA2 : London-Paris is a 40 minutes flight CRP2 : The source : Challenge magazine is well respected in CRA 3 : Existence of equivalent France rumour CRP3 CRA4 : Moon effect, sun Price of the effect, holiday effect etc target C° skyrocket Perennialit Attractivenes y s CPT1 : Crisis CAC1 : Danone belongs management to 40 biggest C° in France

CPT2 : Competitive position CAC2 : Profit Warning

CPT3 : Nature of the activity CAC3 : Competing promptness of the company of the sector

Criteria of target Figure T0

company, CPT1 The crisis management of The weakest company against the attacked target Crisis team rumour are the one which have their CPT2 Competitive Position of the products close the their clients. Products company, for the day to day life. Company with a secret of manufacturing.

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Criteria of Rumour T1 CRA1 London bombings CRP1 : The Danone/PepsiCo takeover is a old story quite believable CRA2 : London-Paris is a 40 minutes flight CRP2 : The source : Challenge magazine is well respected in CRA 3 : Existence of equivalent France rumour CRP3 CRA4 : Moon effect, sun Price of the effect, holiday effect etc target C° skyrocket Perennialit Attractivenes y s CPT1 : Crisis CAC1 : Danone belongs management to 40 biggest C° in France

CPT2 : Competitive position CAC2 : Profit Warning

CPT3 : Nature of the activity CAC3 : Competing promptness of the company of the sector

Criteria of target Figure T1

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Criteria of Rumour T2 CRA1 London bombings CRP1 : The Danone/PepsiCo takeover is a old story quite believable CRA2 : London-Paris is a 40 minutes flight CRP2 : The source : Challenge magazine is well respected in CRA 3 : Existence of equivalent France rumour CRP3 CRA4 : Moon effect, sun Price of the effect, holiday effect etc target C° skyrocket Perennialit Attractivenes y s CPT1 : Crisis CAC1 : Danone belongs management to 40 biggest C° in France

CPT2 : Competitive position CAC2 : Profit Warning

CPT3 : Nature of the activity CAC3 : Competing promptness of the company of the sector

Criteria of target Schéma T2

CRA3 Existence of equivalent 5 Discussion rumour : Rumour about Danone’s takeover List sorted by importance of the criteria are recurrent. in the Danone’s case : CPT1 The crisis management of the attacked target : What is the size of the CRA1 Anxious environment : team regarding risk and crisis London bombings (58 death and more than management. 700 injured) CPT2 Competitive Position of the CRA4 Compliance with the company rumour rules CAC3 Competing Promptness of CRP3 Price of the target rumour : the sector : The best spreaders of a rumour Monitoring the name of the target against a company are the competitors. company on the internet CRP1 Credibility of the rumour : CAC1 Notoriety of the company : Pepsico is a giant compare to Danone. Danone belongs to 40 biggest C° in France CPT3 Nature of the activity of the CAC2 Profit warning : just before company : Food product the rumour Franck RIBOUD, the Danone Manager was on the edge to announce a Nb : CRPT3 criteria is to evaluate if the massive downturn. rumour is working. CRP2 The rumour as to come from some kind of authority, CRA2 London / Paris proximity

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The Danone’s case pepsico reveals at even the information as been contradicted 1 We mean by compliance with rumour rules, the by Pepsico the rumour works anyway. rules that do not trigger the rumours but increase and amplify them. If we apply all we know about In own model the number of criteria are behavioral finance to our cycle of rumour we 13 with 8 of them minimum to obtain increase substantially the consequences of the percolation which mean the surveillance as rumour on the stock value of the company involved to bee on those 8 criteria in priority (CRA by the rumour. 1 to 4 and CAC 1 to 3). Example 1: the moon effect. The stock return is twice higher close to the new moon compare to the When the rumour is spreading those full moon (Dichev & Janes, 2003). The 6th of July criteria of perenity are going to amplify or was a precisely on a new moon. Start your rumour reduce the impact of the rumour. Our about takeover on a new moon… empirical model seem to be validate on the Example 2 : the sun effect : the yearly stock return Danone/Pepsico’s rumor. Odiously the is 24% higher on sunny days compare to cloudy model as to be tested and/or optimized on days (Hirshleifer et Shumway, 2003). Start your other cases. rumour in summer…

6 Conclusion Example 3 : the week-end effect. The influence on The case Danone/PepsiCo is a “cas stock return depends of the day of the week (Gibbons & Hess, 1981). Monday being the worst d’école” as it gathered a large amount of day and Friday the best). The 7th of July was a ingredients to trigger a rumour. Some of Thursday. Start your rumour after Wednesdays… them have been setup others rely more on pure circumstances and/or straight luck. Example 4 : the holiday effect. The closer from the Trough this example, we suggest that if vacation, the better is the stock return (Fields 1934, Lakonishok & Simdt, 1984, Keim 2000). July is the the ingredients cumulate to a certain beginning of summer vacation in France. threshold, the rumour does start. The Etc… difficulty is to quantify the ingredients constituting the threshold. In this article, we saw the initial 7 References conditions of the release of a rumour that was based on anxiety, distance, urgency, ANDRIESSEN D., Making sense of etc. We tested the model of percolation of intellectual capital, Elseiver rumour in order to explain it’s functioning Butterworth-Heinemann, Burlington, without to correlate the probability of USA, 2004. percolation to one of the influential factors. ALLPORT G., POSTMAN L.J., The It leaves to us to continue this work in Psychology of Rumor, New York, order to look further into the Russel & Russel, (1947) 1965. comprehension of this mechanism. Our BERNERS-LEE T., The fractal nature of objective is in the long term to find a the web. Design Issues, 2007. URL model predictive of detection of rumours http://www.w3.org/DesignIssues/Fractal in order to anticipate them in the attacks .html. and crisis management. Finally by the CAMPION-VINCENT V., RENARD J-B., proposal of the model of evaluation of a De source sûre : nouvelles rumeurs rumour we are able to improve the d’aujourd’hui, Editions Payot, Paris, strategies of rumour attack and to help the 2002. targets to protect it against rumours. This CAMPION-VINCENT V., Des fauves work is for us encouraging because from dans nos campagnes. Légendes, immemorial time and whatever the rumeurs et apparitions. Paris : Imago, cultures, the rumour always had a 1992. promising future. DEBRAY R., Les enjeux et les moyens de la transmission, collection Version

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originale, Editions Pleinfeux, Paris, LEMAIRE P., Danone, une rumeur peut en 1998. cacher une autre, site ACRIMED DRUEL F., Innovation Engineering : The http://www.acrimed.org/article2127.htm Power of Intangible Networks, chapitre LOINTIER P., ROSE P., Le web de crise, 18, Innovation on the Web. ISTE Les éditions demos, Paris, 2004. Publishing Company, London, 2007. METCALFE R.. Metcalfe’s law : A DRUEL F., Évaluation de la valeur à l’ère network becomes more valuable as it du web : modèle de valorisation des reaches more users. Infoworld, (17), projets non marchands, , PhD, 1995. University of Angers, 14/11/2007. MORIN E., PAILLARD B., BURGUIERE EAGLY, A.H., CHAIKEN, S., The E., CAPULIER C., FISCHLER C., DE Psychology of Attitudes, Fort Worth, LUSIGNAN S., VERONE J., La TX : Harcourt Brace Jovanovich, 1993. rumeur d'Orléans, Editions du Seuil, FROISSART P., La rumeur : histoire et Paris, 1969. fantasmes, Débats Belin, Paris, 2002. MOSCOVICI Serge, L’age des foules, GRYSPEERDT et KLEIN, La galaxie des 1985. rumeurs, EVO Éditions, Bruxelles, PORTNOFF A-Y., Le pari de 1995. l’intelligence. Perspectives. Futuribles, HAGEL J-III., ARMSTRONG A-G., Paris, juin 2004. NetGain, expanding markets trought PORTNOFF A-Y., Les valeurs priment sur virtual communities. Harvard Business les savoirs. Futuribles, janvier 2005. Press, Boston, USA, 1st édition, 1997. ROUQUETTE Michel Louis, Les rumeurs, HEIDERICH D., Rumeur sur Internet : Paris, Puf, 1975. Comprendre, anticiper et gérer les SOTTO E., Entreprise et Rumeur : cybercrises, Village Mondial, Paris, Comprendre et agir, collection 2004. [www.communication-crise.com] renseignement économique, Les GICQUEL Y., Le buzz marketing. Le éditions esprit du livre, Paris, 2005. Génie des Glaciers, 2006. ZANETTE, DAMIAN H. (2001). HUSSHERR F-X., HUSSHERR C., ‘Dynamics of rumor propagation on CARRASCO M-E. Le nouveau small-world networks’. Available: pouvoir, des internautes. Timée- http://arxiv.org/PS_cache/cond- Editions, Boulogne, 1ère édition, 2006. mat/pdf/0110/0110324.pdf KAPFERER J-N., Rumeurs : Le plus vieux média du monde, Editions du Seuil, Paris, 1987.

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Tracking business news on the World Wide Web for dynamic CI study of industries

Brigitte Gay* *Group ESC Business School Toulouse France [email protected]

Abstract In this study, we show that mining the World Wide Web for business transactions together with the use of network analysis can give us a clear understanding of global transactional activities but also of corporate managers’ individual strategies. Using this analysis, we offer managers insights into the best ways to dynamically evaluate their local and global environment as well as their own position and its strategic relevance. Keywords: Competitive Intelligence, Market Intelligence, Business Intelligence, Software production

1 Introduction master their position in complex, networked, and very global industries. he globalization of markets for Executives will need to address the technology as well as fast innovation following: diffusion through complex networks of Treat information overload and its business relationships (including automatic feed to the decision-making innovation rapid off shoring to Asia in process recent years) have created a competitive Understand global industry dynamics challenge of major proportion to corporate and anticipate sectors evolution and leaders. Companies are experimenting competitors or partners moves with new approaches to the management Understand how corporate managers of business relationships. Corporate need to chose their organizational strategies involving mergers, acquisitions, boundaries to implement their strategies in spin-offs, and a plethora of alliances are growth and constant restructuring as well creating decentralized operational units as fit in the complex networked world into within and across the boundary of the firm. which they are embedded How a boundary between the core This implies that information is (inside the firm) and the periphery (outside processed and structured in accordance the firm) is drawn reflects a company’s with many types of industry watch ability to invest in innovation and will (competitive; technology; economic and affect its business performance. Networks financial; spatial) and that navigable rather than firms have thus become the network maps and tables, displaying organizing level at which firms compete extracted entities and semantic with each other. One role of competitive intelligence is to help firms understand and

ECIS 2009 ‐ 105 ‐ PROCEEDINGS relationships are derived dynamically from collaborative advantage through strategic this information. alliances13 [Das and Teng, 2000]. Technologies that perform semantic Importantly, as written by [Dunning J. analysis of unstructured documents H., 1995], “An asset-seeking alliance (coming from open-source such as press response does have implications for releases or ‘professional’ sources such as governance structures” … “the term proprietary databases), including syntactic alliance capitalism might be a more and semantic parsing of sentences, are appropriate description of the features of therefore crucial. Moreover, the innovation-led capitalism now spreading development of sophisticated techniques through the globalizing economy, than the for Social Network Analysis and Mining term hierarchical capitalism”. (SNAM) for analysis of social and Therefore, contrary to long-established business communities has recently views, contemporary organizations are increased. In this study, we show that increasingly built out of emergent mining the World Wide Web for business linkages, linkages that are transient in that transactions together with the use of they are formed, maintained, broken, and network analysis can give us explicitly reformed with considerable facility insights into global transactional activities [Palmer, Friedland and Singh, 1986] but also on managers’ individual [Monge and Contractor, 2003]. The firm strategies. Using this analysis, we offer has, within the network, the opportunity to managers insights into the best ways to pursue its idiosyncratic competencies and dynamically evaluate their local and global to complement others. Firms entering environment as well as their own position alliances become close in the network, and its strategic relevance. affect their own specific governance structure but also the overall network 2 Background data structure and therefore other firms’ The following section gives an overview embeddedness and governance structure. on alliances and how networked Networks, rather than firms, become the organizations are enmeshed into unstable, organizing level at which firms compete complex, alliance networks that represent with each other [Gomes-Casseres, 1994]. the market. This section is followed by the The broader network level structure description of the methodology used to establishes the extended resource track and process open source data on endowments, whereas, at egonet14- and alliances in business news for use in firm- levels, resource idiosyncrasy can be competitive intelligence. achieved. Firms are connected to each others in multiple networks of resources 2.1 Alliances as elaborate strategic and influence or are influenced by constructions information/knowledge flows derived from The proliferation of alliances marks a the structure to which they belong [Gulati, shift in the conception of the intrinsic Nohria, and Zaheer, 2000]. nature of competition, which is Anand and Khanna [2000] provide increasingly characterized by sustained compelling evidence for the existence of multi-purpose technological change, the demands of innovation-led production, and fast entry in new and global markets. This 13 An alliance is a formal agreement establishing an has led to the notion that the key to success association or alliance between nations or other groups to achieve a particular aim. in coming years lies in the creation of 14 In network analysis, a network is a set of actors connected by a set of ties. A single focal actor is called an “ego”. The set of actors ego has ties with are called “alters”. The ensemble of ego, his alters, and all ties among these (including those to ego) is called an ego network or egonet (Borgatti and Foster, 2003).

ECIS 2009 ‐ 106 ‐ PROCEEDINGS positive outcomes in managing many Historically, strategy and structure have alliances. Firms forming many alliances evolved together. They need now to extract more of the value created relative address the networking dimensions to their partners and are perceived by between organizations. financial markets as more value creating. A firm position in the industry as well as 2.2 Processing business news from the its ego network will thus have a profound WWW influence on its overall performance; We chose the global biopharmaceutical hence the importance of networking industry for our analysis. capabilities. A database of interfirm deals was The network as a whole, therefore, assembled by querying specialized internet permits elaborate constructions borne from sites (leading sources for business news complementary skills, that allow the releases, company press releases, company handling of complex situations a firm can’t web pages and annual reports, as well as follow on its own as well as rapid regulatory filings; see figure 1 as an adjustment to sustained change in highly example) for alliances (or legal binding competitive industries. Individual firm agreements between two or more firms) performance can be conceived only if the made in this industry in the years 2000 to firm ‘fits into the network’ i.e. performs 2007, and employing Perl scripts to collect capably a missing, complementary, and parse data. function. For Miles and Snow [1986], there is “symmetry between the We have extracted from these business characteristics and operations of the news the different transactions between dynamic network and the features and companies, their type and modalities, and behaviour of the firms within an industry the different phases these transactions are (or major industry segment)”. Therefore, to the widespread agreement that most industries can contemporaneously support companies with different competitive strategies, is added another role firms have to play: that of implicit interdependence among competitors. Interdependence is needed not only for the firm to meet the dual objectives of innovation and performance, but also for the whole industry. As the industry, or major industry segment, evolves, so must the elaborated complementary constructions. Understanding the network dynamics that influence the formation of new alliances may help managers design alliances portfolio and therefore deal Figure 1 An example of business structures that do not constrain firms’ news as available on a company future action. Managers that fathom out website firm optimal positioning in a network may also derive possible control and going through. information benefits. Who controls the Other steps concern the ability to bigger network and why, and possible extract information about technological or limits and constraints of networks, are product or process innovations to help relevant issues. understand how they diffuse throughout

ECIS 2009 ‐ 107 ‐ PROCEEDINGS the industry global deal network. In binding legal agreements between firms, particular, we need to distinguish between innovation has been termed “open in-licensing and out-licensing deals innovation”. In the pharmaceutical (direction of funds, technology, or product industry for example, our database reveals flows) and between the different steps in that there were about 6000 contracts the value chain. We can also define deal signed between firms in 2004 and 2005. terms (royalty, milestones payments, etc) These transactions form complex “webs” to try for example valuing a company that of interactions or networks. These depends on its licensing revenues or when networks describe technological benchmarking deals (Villiger and Bogdan, /products/financial flows, etc in the 2009). We can also track chains of events various sectors of an industry and their related to a given operation to see how dynamics. much time it takes and, if it succeeds, what Network analysis must be done at could be the ensuing steps: multiple levels (Figure 2) and thus – Types of innovations and ways they describe networks of contracts: are specified. – Types of relationships between - At industry level companies via the way news are organized - In each market segment of the and termed. industry; market segments and their Network maps with actual nodes and growth dynamics are analyzed separately. links were drawn to address primary The sum of these analyses will help questions about network structure and reconstitute the whole picture or industry dynamics by using TETRALOGIE level. network display program (IRIT) for large - In a company “neighbourhood”: network visualization and analysis. A whom with are a firm’s partners weighted spring embedder was employed interacting? to assign node locations, using an - At firm level; we look here at the algorithm developed following the work of transaction choices of any individual firm Fruchterman Reingold [1991], and and their evolution Dousset [2003]. From these data, over several years, it is then possible to analyze Some examples are given at industry, quite in depth the industry dynamics and market segment, and firm levels in the companies’ strategies, health and potential following sections to illustrate the points as their deal-making activities evolve. discussed above.

3 The networked global pharmaceutical industry Because it is exchanged extremely quickly worldwide through contracts, or

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illustrated in figure 3 which depicts the alliance network of a major biopharmaceutical sector and compares its network structure to that of a random network. The two network structures are obviously very different. The biopharmaceutical sector shows that three firms accrue all links. These firms are mostly licensing out technologies of high value to the industry (database analysis). These results show the danger of averaging data. A proper analysis also means that we treat data dynamically and not in a static way. Snapshots of the alliance network at two .Figure 2 A multi-level analysis different periods (Figures 4 and 5) illustrate this point simply. While the three

Figure 3 The alliance network of a major biopharmaceutical sector (right). A random network containing the same amount of nodes/firms and links/contracts as the real network is depicted on the left

3.1 Analysis at Industry and sector level firms indeed dominate the network, figure 5 (period 2002-2003) clearly shows the The pharmaceutical industry network arrival of competitors as well as a decrease for period 2004-2005 is shown in figure 2 in the number of alliances of the three (Industry level). Though this network firms. With a more thorough examination appears as an intricate mesh of of the database, we can look at the interactions, it is not random. The point is different technological cycles within this

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Figure 4. Alliances in the biotech sector for period 1. This industry segment is dominated by three ʻhubsʼ, firms A, B, et C. To help visualization, nodes are replaced on the graph by bars, the size of which being proportional, for each node, to its alliance score or degree.

Figure 5. Alliances in the biotech sector for period 2. The graph shows that the number of alliances diminishes for firms A, B, and C compared to Figure 2. Concurrently, the graph shows the emergence of new competing firms (delimited by a ring on the graph). Nodes position is kept constant in Figures 4 and 5 to help track changes in alliance activity.

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sector, understand which firms are partnering and the type of partners it licensing in or out choose technologies/products/processes and their value as perceived by the market (defined 3.2 Analysis at firm-level by the number of contracts and amount of Starting again from the network money involved in the deals). Thus, when obtained in figure 2 by mining the web, we looking for a partner firm, it becomes can quickly draw, for all the firms in the possible to see whether this firm is network, their individual contractual innovative or not, whether its innovation activities. Figure 6 shows that, by are mature or not, and whether the firm comparing the transacting activities of two can be innovative throughout the firms in a major biopharmaceutical sector, innovation life cycle of a sector as well as we can infer firms’ strategy. The number during all the innovation cycles the and turn-over of new partners is high for industry sector is experimenting. It is also one firm (left of figure 6) while the other feasible to assess with whom the firm is (right of figure 6) has fewer and more

Figure 6 New contract agreements and network evolution for two competing biopharmaceutical companies (arrows). Four temporal markers representing 4 discrete time periods (years 2003 to 2006) in a major market segment of the pharmaceutical industry are disposed in a clockwise manner on a “dial”. Nodes or firms involved in only one period are placed on the periphery and close to the fixed numbered marker (or year) of the “dial”. As nodes/firms are involved in more periods, and therefore transacting on a more sustained basis, they get closer to the center of the dial. These nodes represent more permanent actors.

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stable partners. This shows that, in a high transactions is very crowded in the vicinity tech market segment prone to instability, of this firm. Many of its competitors are in while one firm takes risks easily and relies fact interacting with its partners or on an ‘open’ business model, the other partners’ partners. prefers stability. Acquiring knowledge Using the same tools and dataset, the about one firm’s own partners is also global reach of firms and of the industry or important. A specific example is given in industry sector can be assessed. Some figure 7. The temporal analysis of examples will be given in the next section. transactions in a firm’s “neighborhood”

shows that in 2005, the network of

Figure 7 The neighborhood of a firm alliance network for period 2003-2006. The position of the firm is denoted by a black arrow. The nodes/firms are replaced by a series of bars that indicate the yearly number of transactions for any given node. The transactions are oriented on the graph in a clockwise manner, transactions made in 2003 being in the upper right of the graph, those in 2004 and 2005 in the bottom right and left respectively, while transactions made in 2006 are on the upper left. The graph depicts first as well as second-order transactions (ie transactions made by the firm itself and by its partners respectively). The network of interfirm linkages reveals that a profusion of second-order interactions involving many competitors (identified from the dataset) occurs mostly in 2005 revealing a high competitive activity in the firm neighborhood.

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4 Worldwide information from respectively), reveals that in 2004 China is Open Source Data essentially connected to western countries Though we have presented mostly and Japan while in 2005 a network is network maps to describe the data, starting to take form in Asia with China at histograms, maps, tec., can also be drawn. its center. Thus, the lack of autonomy of A histogram of the number of new Asia in 2004 and its dependency on transactions made on a yearly basis by Western countries seems to be countries present in our dataset is progressively replaced by an altogether presented in figure 8. The first five different picture depicting the rise of a countries in terms of alliance number are, more autonomous Asian continent led by as expected in this industry, the United China. Therefore, while in terms of States, Canada, Germany, the United number of contracts, the position of China Kingdom, and Japan. The growth is not threatening, the mapping of network dynamics are not very good in the sense dynamics gives added value of use to that from 2004 to 2005 few countries competitive intelligence. increase their alliance number. China, This analysis naturally can be done at industry and sector level.

Figure 8 Differences in alliance numbers across countries in 2004 and 2005 though clearly outranked by the US, is the The global reach of a firm (partner or only country that almost doubles its competitor) can also be assessed rapidly alliance number thus jumping from rank and dynamically. A static example is given 11 to rank 6. A network analysis of the in figure 11. There, the global reach of two links between countries reveals much Japanese firms, Eisai and Takeda is more. Taking China again as an example, examined. Though Takeda is older than and comparing the global alliance network Eisai, Eisai is more global. in 2004 to that in 2005 (figure 9 and 10

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Figure 9 Linkages between countries in 2004; the position of China is highlighted by a black arrow.

Figure 10 Linkages between countries in 2005; the position of China is highlighted by a black arrow.

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Figure 12 Worldwide alliance network between continents; period 2006-2007.

Figure 11 Worldwide alliance network of the Japanese pharmaceutical companies Eisai (left) and Takeda (right) in the whole industry, period 2004-2005.

57 %

58 % 58 % 31 Europ 9 % e 13% 32 Asi US % % a A 8 % 2 % 30 % 8 2 % %

42 Australi % a

50 %

Figure 12 Worldwide alliance network between continents; period 2006-2007.

Finally, geographic maps can be drawn showing exchanges between continents, When negotiating, recouping this data countries, metro regions, or cities. While with data such as that in figure 6 can be simple, the map in figure 12 reveals the used to appraise partners and competitors. extent and relevance of intra- and inter-

ECIS 2009 ‐ 115 ‐ PROCEEDINGS continent exchanges in a major dominant countries and their policies of biophamaceutical market sector from 2006 expansion; did they invest in key sectors? to 2007. There, the level of Figure 12 How are countries connected to other Worldwide alliance network between countries? Deficiencies in the strategies of continents; period 2006-2007. There, the countries can be assessed. Temporal level of exchanges between Europe and the analysis of the linkages between countries US is extensive and equivalent on both can be made as well as the timely sides. evaluation of the number and type of firms Additionally, while Asia imports more that have invested in a country thus giving from the US than it exports, this is not true evidence about the country ability to attract for Europe. The exchanges between industrials. Europe and Asia are equally scarce though Financial deal mechanisms Europe, and more precisely Germany and 6 Conclusion the United Kingdom, have assets in this secto6 Discussion Network approaches have appeared as new tools for use in industrial economics 5 Discussion and strategic management. We stress the The goal of the paper was to provide importance for managers of tracking clear examples of the contribution of the closely the evolving topologies at macro analysis of alliance network dynamics for level (sector and industry) as well as at use in competitive intelligence. Networks firm level. Today alliance dynamics analysis can give us an understanding of respond to unrelenting technological shifts. the following: How firms are situated within different Industry or industry sector dynamics technological cycles, ever shorter, that may including the identification of flows overlap is therefore an important question. (technical/products/processes/financial). In particular, obsolescence of technologies A continuous benchmarking of occurs quickly and competing technologies competitors but also partners; their alliance are very often disruptive. strategies and how these evolve (including Multilevel network mapping provides the analysis of the turn-over of their the context for the analysis of the ability of contracts), their level of risk taking and the firms to position themselves in unbalanced adequacy of their strategy compared to the sectors of the economy and control their industry/innovative sector dynamics; in business environment. The continuous use which market segments firms have of visualization techniques and network invested (compared to competitors’ metrics could help proactive alliance investment; size and growth dynamics of management of firms under rapidly segment?)? Whether a firm position in an changing conditions as well as fast industry or sector is adequate, including at adjustment and counter moves to respond a global level. to constraint exercised by thousands of At which stages of the value chain or other players in an industry. Moreover, the pipeline these flows are processed, by use of global and local network metrics can whom? Which firms dominate a sector or permit tracking not only of competitors but industry (for how long?), which companies also the qualitative evaluation of evolving are emerging and can threaten a firm’s positions of firm partners (old, current, or position or even a whole market segment? to-be) in all industrial sectors of interest. What is the life cycle of a sector Are they well positioned, strategically, (emergent, growth and growth rate, technically, sector- or industry-wise, etc? maturity, obsolescence?) In a global environment where relying An analysis country by country (city by dynamically on alliances is a major city) of the world trade; identification of strategic issue, the tracking of partners, in

ECIS 2009 ‐ 116 ‐ PROCEEDINGS addition to that of competitors, becomes an of the biotechnology industry, Research essential aspect of strategy. Policy, 34(10), 1457-1475 The global dynamics of complex Gomes-Casseres B (1994) Group Versus alliance networks do not occur randomly. Group: How Alliance Networks Tools and software for the analysis of Compete, Harvard Business Review, open-source information are developed and Jul-Aug, 62-74 constantly optimized worldwide and more Gulati R and Zajack E J (2000) Reflections particularly in the United States and in on the study of strategic alliances, Asia. They are critical for a company to Cooperative Strategy: Economic, understand and constantly control its Business, and Organizational Issues, global position and possibly that of other David Faulkner & Mare De Rond Eds, firms. This is all the more important when 365-374, Oxford Press: England to adapt becomes today as difficult as to Gulati R, Nohria N and Zaheer A (2000) anticipate. Strategic networks, Strategic These tools can also be used to observe Management Journal, Special Issue, actors of the financial sphere and the 213, 203-215 interplay between the financial and the Hagedoorn J (1993) Understanding the economic spheres. rationale of strategic technology The use in competitive intelligence of partnering: Interorganizational modes of multilevel complex network analysis of cooperation and sectoral differences, our global and unstable environment Strategic Management Journal, 14, (dynamics at `macro' and ‘micro’ levels) is 371-385 hence essential. Miles RE and Snow CC (1986) Network Organisations, New Concepts for New 7 References Forms, California Management Review, Anand BN and Khanna T (2000) Do firms 28, 62-73 learn to create value? The case of Monge PR and Contractor NS (2003) alliances, Strategic Management Theories of communication networks, Journal, 213, 295-315 New York: Oxford University Press Das TK and Teng BS (2000) A resource- Newman M E J (2003) The structure and based theory of strategic alliances, function of complex networks, Society Journal of Management, 26(1), 31-61 for Industrial and Applied Mathematics Dousset B (2003) Intégration de méthodes SIAM Review, 45, 167-256 interactives de découverte de Palmer D, Friedland R and Singh J (1986) connaissances pour la veille stratégique, The Ties that Bind: Organizational and Habilitation à diriger des recherches, Class Bases of Stability in a Corporate Université Paul Sabatier, Toulouse, Interlock Network, American France Sociological Review, 51, 781-796 Dunning JH (1995) Reappraising the Powell WW, White DR, Koput KW and Eclectic Paradigm in an age of Alliance Owen-Smith J (2005) Network Capitalism, Journal of International Dynamics and Field Evolution: The Business Studies, 26(3), 461-491 Growth of Inter-Organizational Fruchterman T and Reingold E (1991) Collaboration In the Life Sciences, Graph Drawing by Force-Directed American Journal of Sociology, 110(4), Placement, Software Practice and 1132-1205 Experience, 1129-1164 Gay B and Dousset B (2005) Innovation and network structural dynamics: Study of the alliance network of a major sector

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Intelligence ideals

Magnus Hoppe School of Innovation, Design and Engineering Mälardalen University Sweden

Hanken Business School Åbo Akademi University Finland [email protected]

Abstract This paper is a call for a new research agenda for the topic of intelligence counterbalancing the present domination of research in the art and function of intelligence. Pursuing this path will help the intelligence academics connect to theoretical developments gained elsewhere and move towards establishing an intelligence science. Keywords: Ideal informative flow, Ideal organizational thinking, Intelligence science, Intelligence scholars, Intelligence academics, Organized intelligence.

1 Introduction fit leaves us with an array of intelligence aspects unaccounted for. In this paper I’m discussing two different The continuous use of the intelligence perspectives on intelligence research: cycle might therefore seem puzzling, but it intelligence as a topic respectively can be explained by its conceptual values intelligence as an art and a function, where (It's easy to use and understand) and that it I argue that both are in need but that the works as a rational symbol bringing research on the topic so far is legitimacy both to those organizations underdeveloped. Unfortunately the current implementing formal intelligence activities focus on the art and the function has and to the intelligence professionals who created a strong inside perspective that manages this idealized informative flow. unnecessarily limit our understanding of Taking this stance I argue that there what intelligence contains, does and mean will never be a true science of intelligence to organizations. until the field opens up to other research In accordance with this reasoning I also questions and traditions than those suggest a more critical stance towards the currently in favor. Several initiatives can intelligence cycle, the most used model for support this development, where I explaining intelligence. The cycle has especially hope for the development of severe deficits as it's created within a arenas that will allow dialogues on the functional perspective on organizations topic of intelligence to prosper. To find and in conjunction with theories of formal and agree upon a term depicting the unit of decision-making. It supports a false belief study, free from those currently in use, will that an ideal informative flow not only can also enable this development. My own be created but also is of utmost importance suggestion for this term is organized to organizations. Alas the poor empirical

ECIS 2009 ‐ 118 ‐ PROCEEDINGS intelligence work. Researchers adhering to limited itself to the art and function of this call will also strengthen their positions competitive intelligence and therefore is as intelligence academics, counter- constructed too close to the practice. balancing the present domination of The effect is a prevailing emphasis on intelligence scholars. practice theories - how to do and organize In addition I argue that we must accept intelligence - and insufficient creation of different and complimentary perspectives organizational theories - what intelligence on the function of organized intelligence mean and do to organizations. Not to work. Instead of just supporting formal mention societal effects due to the decision making through an informative continuous expansion of organized flow apparent in the intelligence cycle, it's intelligence activities. The current research also possible to view organized intelligen- tradition will therefore create results with ce as for example a function for supporting only limited value to those researchers and an ideal organizational thinking and thus laymen who are not familiar with the the competiveness of the organization. subject of intelligence. Viewing intelligence in different ways we Regardless of this, one might argue that will be able to explore several other we at least over the years have developed a aspects of intelligence that the cycle fail to deep understanding of how we ought to do disclose. intelligence, but I'm not that sure. Even though current research is focused on how- 2 Research as we know it to-do-intelligence, too often presented Discussing intelligence research one often studies fall back on definitions of the art or come to the conclusion that the present the function that are not solidly grounded. status is everything but satisfying. Solberg The abyss of the problem becomes Søilen [2005:16] writes, "The study of apparent when Jonathan Calof [2006:11- private and public intelligence has barely 12], summarizing an academic track on a started as a positive area of a research, 'a SCIP conference, states that there is a need science' probably being too big a word." to investigate what intelligence managers Several researcher claims there's lot to be exactly does and that "it's been suggested done. There are arguments for more that the [intelligence] model may be systematic research [e.g. Ganesh, Miree prescriptive, not descriptive." To me this is and Prescott 2003; Svensson Kling 1998], not barely a suggestion but a fact, and in more quantitative studies [e.g. Calof that perspective Calofs statement can be 2006], or just better research [e.g. Fleisher, read that more or less all research up to Wright and Tindale 2007]. 2006 (at least) is based on a questionable Some research areas also seem to have prescriptive model together with other been neglected. In the Call for papers to ungrounded assumptions of what intelli- this conference one could read "there has gence managers does. It is not built on also been a tendency to focus on the larger unprejudiced empirical studies of what is enterprise such as multinationals, with less actually being done. The thought is breath attention being paid to business taking. development and business creation, or entrepreneurship." And I'd like to add non- profit organizations and NGO:s. According to just these few examples, it seems apparent that there's a need for more (and better) research. But to me, this 3 What support and what picture of an immature field of research is decisions? not at all enough. The most prominent But, as some might argue, there are problem is, to my judgment, that it has theories about what intelligence does to

ECIS 2009 ‐ 119 ‐ PROCEEDINGS organizations; it supports the decision- intelligence, the value of formal decision- making processes inside the organization. making has long been discussed and Even though I agree to some extent questioned since the upspring of empiri- with this description, I'd like to pose two cally based decision making theories in the important questions: Is this all that late 1950's. Lindbloms [1959] article The intelligence do to organizations, and does science of muddling through and March it really support all kinds of decisions? and Olsens [1979] garbage can theory are These questions are of course rhetoric, but just the starting points of a discussion of still important as they question the normal how organizational decisions really are way of defining intelligence. Intelligence made. We could also add Simons [1945, and those creating it does a whole lot of 1982, 1991] extensive work on bounded other things in and with organizations, but rationality leaving all humans with just current descriptions of intelligence as one option: to seek satisfying decisions decision support tend to limit the instead of ideal decisions. What these intelligence subject to more formal theories are saying is that rational decision-making, leaving all other kinds of decisions can't be made. They are ideals activities unaccounted for. resting on obsolete perspectives on organi- Already from this brief overview we zations that surfaced about 100 years ago can derive a possible explanation why with Weber, Fayol and Taylor. The only intelligence appears to be prescriptive places where we will find them nowadays instead of descriptive, and why this creates are in our dreams; and in textbooks on problems for researchers. As long as we strategy Mintzberg, Ahlstrand and Lampel chose to describe intelligence in the [1998] would add. context of formal decision-making, intelli- To resolve this troublesome situation gence will be nothing less than the logic we'd better accept the limitations of formal and deductive result derived from an idea decision-making [see e.g. Brunsson 2002; that organizations are controlled by formal Mintzberg 1973; Mintzberg et al. 1998], decision. Intelligence will in this perspec- but also accept that most decisions inside tive be explained as the process that makes organizations are of other types, as Lord formal decision possible, feeding correct and Maher [1991] argues. Besides this, information to the decision-makers so that focusing on decisions we will not fully rational choices can be made. understand what other organizational Theories come before empirical data, activities are in need of intelligence, and which in consequence will allow a poor fit how they are related to one another. with reality. In consequence we will only Of course there are still formal deci- be able to study those aspects that theory sions, and they do count. But, according to permit us to study, at the same time we my research (interviewing different intelli- will be blind to aspects that are not gence professionals and their clients) the accounted for in the theories guiding our big formal and strategic decisions are understanding. This deductive way of exceptions to the rule, not the rule itself. reasoning will favor those aspects that are What my research has brought into light apparent in the intelligence cycle, the is that the art of intelligence, just like the model that comes with the favored art of management, is the art (not science) theories. It will not give a viable account of muddling through. It's much more of reality, which is where most research is focused on the everyday troubles of the conducted, why it will also give intelligence clients where the intelligence researchers problems in handling data that staff struggles to make their clients take do not comply with guiding theories. more contextual aspects into account in Unfortunately for those who still like to their work, instead of relying on their limit the field to this restricted view on present limited understanding of things.

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It's also a much more symbiotic clients aware of their shortcomings, to relationship where information not only is never be satisfied with their present retrieved, analyzed and disseminated. understanding of things, and acting to do Instead, information is much more shared something about it. in a two way game, and analysis is created The products, the artifacts of within conversations expanding beyond intelligence, are just tools to accomplish the formal intelligence function. As an this changed reasoning. Just because example, one of my informants let the intelligence artifacts exist doesn't mean analysis evolve through letting it pass that they have a real value as ends in through different discussions where each themselves. They are means not ends. discussion added different perspectives to Regretfully we are likely to view them as the analysis but also helped to decide what ends if we rely on the intelligence cycle as the next step would be and who else to the main model for describing intelligence involve. At the same time those involved (as many tend to do, according to Ganesh shared their information and ideas (aka et al. [2003] and Treverton [2004]). knowledge) of the subject at hand, and in Relying on the intelligence cycle, it's this manner created a common and quite easy to argue that the effectiveness of actionable understanding of things. intelligence can be found in its material output, as the cycle defines intelligence as 4 An ideal way of organizational a production process. It's a seductive stan- thinking ce that invites us to think intelligence can Judging by my empirical data a be easily described, controlled and mea- complimentary view of what intelligence sured. As this view rests on an assumption professionals actually do is to say that they of functional rationality one might also are supporting an ideal organizational way claim that the intelligence professionals set of thinking. That is a thinking that will to work in this process are neutral, putting contribute to the wellbeing of the together objective intelligence for the organization, which can be defined in outspoken need of others. But once again, three dimensions: these are just ungrounded ideas that Think beyond what’s happening right crumble in contact with reality. All people now. Expand your reasoning into who deal with information are limited to possible future developments. their own bounded abilities to search, Think beyond those aspects closest at value and analyze information [Simon hand and the actors and 1945, 1982, 1991]. But that's not all, organizations that are directly where Jeffrey Pfeffer [1992] writes: affected by each issue. Expand your "Our belief that there is a right answer reasoning to aspects, actors and to most situations and that this answer can organizations that are indirectly be uncovered by analysis and illuminated affected. with more information means that those in Think beyond your own and your control of the facts and the analysis can organizations' interests. Judge the exercise substantial influence. And facts situation from several perspectives are seldom so clear cut, so unambiguous, and chose the path that's the best for as we might think. The manipulation and your organization, not for you. presentation of facts and analysis are often Through their actions, products and tools critical elements of a strategy to exercise intelligence professionals aim at making power effectively. [247-248]" people expand their reasoning in these This is a most troublesome statement three dimensions: beyond their own for those who like to believe that bounded position in time, room and intelligence professionals serve decision- interests. But it's also about making their makers with non-biased information and

ECIS 2009 ‐ 121 ‐ PROCEEDINGS analysis [e.g. Furustig and Sjöstedt 2000; Unfortunately these important studies Murphy 2005]. But if we instead chose to are more or less neglected by other see intelligence professionals as organiza- researchers. What this research tells us is tional agents for an ideal organizational that intelligence is created everywhere. "It thinking this problem dissolves. In this bubbles", as one of my informants put it, perspective intelligence professionals are continuing to explain that it was her job to supposed to influence and exercise power. support this bubbling intelligence. And They are supposed to manipulate the this is not a small remark at the side of the information to make their clients change page. What this tells us is that we can't their thinking, reaching beyond their restrict the intelligence subject just to present understanding of things. those who have it in their job descriptions. That my informants engage themselves Furthermore it also tells us that at least in war games and workshops is in this some intelligence professionals right now perspective nothing strange. Instead these strive to support the creation of useful two examples can be viewed as most intelligence wherever it might surface. effective tools to reach the main objectives Stating this, it becomes apparent that we of intelligence: to help people think and no longer can't limit the creation of act better. This is the true mission of intelligence to some specific formal unit intelligence work, not the production of and the use of intelligence to some other intelligence artifacts. formal place. Because if we do, we're in Viewing intelligence as something that the business of adjusting empirical data so goes beyond the material output and the it will fit with our favored theories. clear-cut boundaries of the intelligence To raise the stake I'll argue that for function will open up several unexplored most organizations the informally dimensions of intelligence. Dimensions constructed intelligence is much more that will add to our understanding of what important than the formal intelligence [see intelligence managers exactly do (to com- also Gibbons and Prescott 1996]. This is ment on Calofs statement above) and what mainly because the informally constructed intelligence does to organizations. These intelligence is created closer to the user, dimensions have no definite end, and those who are supposed to act on it. Acting intelligence will accordingly never be fully is much more dependent on what we feel explored, not to say easily defined and and think and not on so-called impartial measured. information, especially if it comes in writing [Brunsson 2002]. 5 Intelligence is bubbling With reference to Hamrefors [1999] it This calls for another note of caution as can also be argued that informal intel- most writers in the field of intelligence ligence activities always precede formal indirectly suppose that the art of intelli- intelligence. Therefore it's not surprising gence is restricted to those who have it in that most of my informants actively seek their job descriptions. This is not at all to involve their clients in the analytical true, as I argue above. But I'm far from processes of intelligence. Remember, the first. John Prescott noticed this 20 years intelligence processes and artifacts are just ago [Prescott and Smith 1989] but has also tools to support a strive for an ideal touched upon in later studies [e.g. Gibbons organizational thinking. To make the and Prescott 1996]. Even more explicit is organizations members do intelligence, Sven Hamrefors [1999] who forcefully and do it better, is inside the normal argues that all people inside an organi- definition of the job. zation seek the meaning in their specific The intelligence I'm describing is the situation creating their own intelligence if intelligence carried out in live organiza- no one else helps them with it. tions, not theoretically restricted organiza-

ECIS 2009 ‐ 122 ‐ PROCEEDINGS tions. The live situation is also what real formal decisions at the top levels of intelligence professionals adapt to. They organizations. do not adapt to artificially prescriptive To carry it further, Gilads works can be ideas of how intelligence is supposed to viewed as important contributions in a work according to some dominating writing tradition that focus on practical theories on intelligence (unless they're advice and analytical aspects of intelligen- formally or mentally circumscribed). ce, according to Solberg Søilen [2005]. Furthermore, intelligence is in its With this I agree, but I must disagree when adaption a much more emergent task than Solberg Søilen asserts that we should stick planned. My informants are pretty much to this tradition in building an intelligence left to themselves to create results that science, especially as Solberg Søilen states make a difference [see also Treverton "It should be a positive science in the 2004, 106]. To view them as simply sense that it should not mix science with answering to the commands and whims of too much philosophy."[Ibid:14] formal decision makers is not to make On the contrary, I must dispute, if we them or their profession justice. This is want a true science to emerge we need to actually also one of Benjamin Gilads accept different philosophical foundations [2008] main points when he spurs the new for its knowledge constructs. But that's not intelligence professionals to go for the fun. all. There will never be a true science of intelligence as long as researchers fail to 6 The importance of water recognize the existence of different know- But how does this agree with the normal ledge interests, and/or just keep research- way of describing intelligence? Can intel- ing the art and function of intelligence. ligence still be regarded as restricted to The problem with this path is that it most intelligence managers preparing analytical likely will hinder those pursuing it to support for formal decision-making? create a fertile distance between them- With this question comes a choice. It's selves and the subject their researching. quite possible to answer "yes", but with As a lot of intelligence research is this yes comes an obligation to clearly constructed today it lacks in independence state that the knowledge searched and from the practice and in consequence will gained is only viable within a restricted never gain the trust of academia. The how- part of a wider field of research. Those to-do-intelligence tradition of the field has who pursue this path cannot at the same created an inside perspective that works time state that they cover the whole like a paradigm for how to think and do intelligence field. Those who make this research on intelligence. Of course people choice will also be of little help building on the inside might call this a science, but an intelligence science, covering other this doesn't mean that those on the outside aspects and perspective on intelligence that will agree. their outspoken position will hinder them The media theorist Marshall McLuhan to acknowledge. [1995:35] once said that ”we don't know As I've argued a more becoming answer who discovered water, but we are pretty is "no", as this will allow us to explore sure it wasn't a fish.” Building on this intelligence more candidly. Unfortunately metaphor it can be argued that as long as there are many writers and researchers most researchers are swimming in the who don't agree with me, where the most same water as the practitioners, they will outspoken seem to be Benjamin Gilad [e.g. never be able to discover how much the 1988, 1996, 2003]. Even though Gilad water's influencing both their perception often takes a pragmatic stand, his writing and their chances to give a viable account usually revolves around formal structures of what intelligence is really about. for the creation of formal intelligence for

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Of course there is a lot of good things their curriculum, and after a while to be known about the swimming habits of independent periodicals emerged. These fish, but it will not tell us anything useful periodicals were very important as they about the water or how seagulls regard fish allowed the researchers to develop their (except that fish better stay clear of the ideas independent from more practical surface). What we need is a reflective demands from the marketing professionals. division between the practice and the Today a situation has developed where science, where we once again can use the business schools, according to Vironmäki idea to divide between the topic respec- [2007], incorporate both "marketing tively the art and the function. academics" (focusing on marketing as a To find ideas how to make this division topic), and "marketing scholars" (focusing we can learn from others who already have on marketing as a function). Both are in done it. My suggestion is that we turn to need as they serve different knowledge the subject of marketing. interests, Vironmäki concludes. 7 Learning from the emergence of 8 Intelligence academics and marketing intelligence scholars Ingmar Tufvesson [2005] describes how I believe there are some important things marketing over a hundred years became that the field of intelligence can learn from both a practice and a science. The the development of marketing. marketing subject was formed in the First, we must accept that the process of 1950's but it was not until the 1980's a creating a science will take time. more independent and critical research Second, there is most likely a need of tradition formed [see also Vironmäki both intelligence academics and intelli- 2007; Svensson 2007]. gence scholars, and that both have a One of the problems slowing down the rightful place in the business school process was that both practitioners and environment not to mention creating researchers shared the same theories, knowledge about intelligence. Although a models and concepts but due to different clear division between scholars and knowledge interests put different meanings academics is to be regarded as a theoretical to the symbols and words used. Tufvesson simplification for the sake of argument. illustrates this clash of contexts in figure 1. Nevertheless, this also poses a question Due to this conflict a lot of time and how these two groups balances today? energy got wasted in disputes over how Judging by my research, most of marketing was to be approached and contemporary writing focuses on the art understood. A conflict that in retrospect and the function of intelligence, not the could have been resolved sooner if those topic, and therefore can be classified as involved would have shown a more benign knowledge constructs for the intelligence attitude towards one another. scholars. The writings and knowledge for Over the years more and more the intelligence academics are thus in researchers took an interest in marketing, wanting. The situation is maintained more business schools put marketing on through a limited amount of intelligence

! Theories/ Actor Marketing Marketing Research models/ context as a function as a topic context concepts

Figure 1 Tufvessons model describing the clash of contexts in the development of the marketing subject (Tufvesson 2005: figure 1.1, my translation)

ECIS 2009 ‐ 124 ‐ PROCEEDINGS academics, but also through the lack of attract attention to themselves, and in due independent periodicals and conferences time an avant-garde of intelligence where the topic of intelligence can be academics will form. discussed without the influence of more 9 Coming to terms with organized practical aspects. intelligence work Fleisher, Wright and Tindale [2007] touches upon the problem with present Returning to the example of marketing, intelligence writing when they encourage intelligence is not a field that has come researchers to produce better articles: together over one single denominating "The field would be better served in term. Numerous are the discussions if the both the short and medium term [...], by intelligence field should be labeled compe- articles appearing in well established titive intelligence, business intelligence or disciplinary and cross-disciplinary outlets. something equivalent. It could be argued that until, and unless, I suggest that we leave all the existing high level research is carried out and labels of the art or function to the published through well-accepted or well- practitioners. Instead we, the intelligence read outlets, CI will never achieve its place researchers, have the opportunity to find a at the board table or in the curriculum of term of our own. A term that separates the degree-based programs at top business academic field from the intelligence schools. [44]" practice, but also allows us to embrace all Although the authors solution is to intelligence activities that are carried out make intelligence studies fit into already regardless of the label. Let us focus on existing outlets, they indirectly argue that what's actually being done instead, and most intelligence research today haven't find a term that describes what we study. got the right qualities for getting published My own suggestion is that we should elsewhere than SCIP:s periodicals. use the term organized intelligence work. Another way of putting it is that most of Today this term is unaccounted for and present research isn't interesting enough relates to one of the first (and still viable) for other academics. It fails to connect. academic works on intelligence: Harold SCIP:s ongoing project of redesigning Wilenskys book Organizational Intelli- the Journal of Intelligence and Manage- gence - Knowledge and Policy in Govern- ment, so that it will become more accepted ment and Industry [1967]. Unfortunately in academia, is a most welcome initiative. Wilenskys term organizational intelligen- But, I must regretfully admit that I do not ce is used in a discussion about organiza- think this will do at all. As long as SCIP is tions displaying human like intelligence mainly a practitioners' organization, there (smartness), constraining the direct will always be restrictions for its perio- adoption of this particular term. dicals to become the main arenas for Picking up the term organized discussions on the topic of intelligence. intelligence work we will also free I also like to stress that I don't suggest ourselves from unnecessary restrictions that neither SCIP nor its periodicals should that epithets as "business" or "competitive" change. The point is instead that those of brings to mind. Hence giving us a chance us who are interested in the topic of to research the field without being forced intelligence can't expect someone else to to accept, or worse adapt to, current do the job for us. Instead we have to form definitions set by practitioners. our own forums but also start to question 10 Out of the water existing and limiting ideas of the field, the normality that is maintained by the Taking this necessary step out of the prominent inside perspective. Those who water, addressing questions about the adhere to this call will at the same time meaning of organized intelligence, I've

ECIS 2009 ‐ 125 ‐ PROCEEDINGS conducted extensive reading of current CI- interest holders that the organization is run literature and literature on organization, in a rational way and that the management decision-making and leadership. is in control [Brunsson 2002; Meyer and In addition I've collected empirical data Rowan 1983; Powell and DiMaggio 1991; of intelligence from four different Swedish Røvik 2000; Sjöstrand 1997]. To multinational companies. These studies implement intelligence describing it in were carried out in 2003 and 2006; accordance with the intelligence cycle - as encompassing twenty semi structured a function for formal decision-making - is interviews. The final results are to be just the type of easily used symbols of presented in my thesis The myth of the rationality organizations crave for. That rational flow [Hoppe, Myten om det the true organization and true intelligence rationella flödet, 2009] October 2nd. Some doesn't live up to this ideal is of less of the arguments I've put forward in this importance to an organization in need of paper are based on this research and legitimacy. writing, but there is more to be extracted. To the intelligence professional the I've already discussed the idea of an intelligence cycle also come in handy to ideal organizational thinking and touched describe what intelligence conceptually is upon the idea of an ideal informative flow. about and why intelligence professionals, I will now expand a bit on the latter as it like themselves, are important to the can help us understand why many organization. organizations use the intelligence cycle to According to my research these are the explain why they chose to implement most important aspects (besides un- organized intelligence activities. In this reflected tradition) explaining the conti- discussion I'm distancing myself from the nuous use of the intelligence cycle. In this intelligence function, getting closer to the respect the cycle follows a political logic, topic of intelligence. not the logic of empirical description. As the intelligence cycle, the idea of an ideal 11 The idea of an ideal informative informative flow, has a political value it flow will most likely live on for a long time. Supposing decisions makers knew what What we, the intelligence researchers, they needed to know, that sufficient should do is to simply accept this, but also intelligence could be collected to fulfill recognize that we need other complimen- these needs, that all organizational tary models and descriptions of intelligen- interests could be satisfied in each de- ce: models and descriptions that will give cision, that decision makers could agree on us the freedom to develop an empirically the meaning of the collected intelligence grounded intelligence science. and gain a common understanding of 12 Summery things, and that the rest of the organization easily would adhere to the decisions taken In this paper I've compressed a vast and - only then would the intelligence cycles difficult discussion that revolves around give an exhaustive description of how some mayor problems with contemporary intelligence is created and used. intelligence research but also the possi- As both practitioners and academics bility of forming an intelligence science. know, these occasions are rare. Still, many With inspiration from the emergence of organizations use the intelligence cycle for marketing I've suggested that our under- explaining the adoption of intelligence, standing of intelligence can become better and one might ask oneself why? if we'd work together exploring the topic New institutional theory will provide us of intelligence, hence building a founda- with an appealing answer. All organiza- tion for intelligence academics. tions are in need of symbols that tell their

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Doing this, the first step would be to Gibbons P T and Prescott J E (1996) acknowledge the existence of different, but Parallel competitive intelligence still, legitimate knowledge interests and processes in organisations, In the second to find a term that depicts the International Journal of Technology unit of study for those interested in Management, Special Issue on Informal researching intelligence. For this second Information Flow, 11(1/2), 162-178 purpose I promote the term organized Gilad B (1988) The business intelligence intelligence work. system : a new tool for competitive We also need to find other models and advantage, New York, NY: American perspectives on intelligence that will allow Management Association us to view this most important organizatio- Gilad B (1996) Business Blindspots : nal phenomenon in new ways. The prevai- replacing myths, beliefs and ling reliance on the intelligence cycle is assumptions with market realities, most unfortunate as it rests on theoretical Calne: Infonortics ideas that exhibit severe drawbacks Gilad B (2003) Early Warning : Using confronted with empirically grounded Competitive Intelligence to Anticipate data. To solve this situation I suggest we'll Market Shifts, Control Risk, and Create pay less attention to the material output of Powerful Strategies, Saranac Lake, NY, intelligence and instead focus on USA: AMACOM intelligence as a tool for supporting an Gilad B (2008) No, we don't know what ideal organizational thinking. makes intelligence functions effective. So what now?, In K Sawka and B 13 References Hohhof (ed) (2008) Starting a Brunsson N (2002) The organization of Competitive Intelligence Function, hypocrisy : talk, decisions and actions Topics in CI 3, Alexandria, Virginia: in organizations, Malmö: Liber Competitive Intelligence Foundation. Call for Papers (2009) ECIS 2009, The Hoppe M (2009) Myten om det rationella Third European Competitive flödet, Diss, Åbo: Åbo Akademi Intelligence Symposium, Stockholm, Hamrefors S (2002) Den uppmärksamma Sweden, June 11-12, 2009 organisationen : från business Calof J (2006) The SCIP06 Academic intelligence till intelligent business, Program – Reporting on the State of the Lund: Studentlitteratur Art, Journal of Competitive Intelligence Lindblom C E, (1959) The Science of and Management, 3(4), 5-13 “Muddling Through”, Public Fleisher C S, Wright S and Tindale R Administration Review, 19(1), 79-88 (2007) Bibliography and Assessment of Lord R G and Maher K J (1991) Key Competitive Intelligence Leadership and Information Processing Scholarship : Part 4, (2003-2006) : Linking Perceptions and Performance, Journal of Competitive Intelligence and People and Organizations, Volume 1, management, 4(1), 34-107 Boston, Unwin Hyman Furustig Hand Sjöstedt G (2000) March J G and Olsen J P (1979) Ambiguity Strategisk omvärldsanalys, Lund: and Choice in Organizations (2 ed), Studentlitteratur. Bergen, Oslo, Tromsö: Ganesh U, Miree C E and Prescott J Universitetsforlaget (2003) Competitive intelligence field McLuhan M (1995) Essential McLuhan, research : moving the field forward by New York, NY: BasicBooks setting a research agenda, Journal of Meyer J W and Scott W R (1983) Competitive Intelligence and Organizational Environments Ritual Management, 1(1), 1-12 and Rationality, Beverly Hills, California: Sage

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Mintzberg H, Ahlstrand B and Lampel J Svensson P (2007) Marknadsföringsarbete, (1998) Strategy safari : the complete in Alvesson M and Sveningsson S (ed) guide through the wilds of strategic (2007) Organisationer, ledning och management, Harlow: Financial processer (chapter 14), Lund: Times/Prentice Hall Studentlitteratur Mintzberg H (1973) The nature of Treverton G F (2004) Reshaping National managerial work, N.Y.: Harper & Row Intelligence for an Age of Information, Murphy C (2005) Competitive Intelligence Cambridge University Press : Gathering, Analysing and Putting it to Tufvesson I (2005) Hundra år av Work, London: Gower marknadsföring, Lund: Studentlitteratur Publishing/Ashgate Publishing Wilensky H L (1967) Organizational Pfeffer J (1992) Managing with Power : Intelligence, Knowledge and Policy in Politics and Influence in Organizations, Government and Industry, New Boston, Mass.: HBS Press York/London: Basic Books Powell W W and DiMaggio P J (1991) Vironmäki E (2007) Academic marketing The New Institutionalism in in Finland: living up to conflicting Organizational Analysis, Chicago: The expectations, Diss, Åbo: Åbo Akademi University of Chicago Press Prescott, J E and Smith D C (1989) The largest survey of “leading edge” competitor intelligence managers, Planning Review, 17(3), 6-13 Røvik K A (2000) Moderna organisationer : Trender inom organisationstänkandet vid millennieskiftet, Malmö: Liber Simon H A (1945) Administrative Behavior : A study of decision-making processes in administrative organizations, New York: The Free Press Simon H A (1982) Models of Bounded Rationality (Vol 2), Behavioural Economics and Business Organization, Cambridge, Mass.: The MIT Press Simon H A (1991) Bounded rationality and organizational learning, Organization Science, 2(1), 125-134 Sjöstrand S-E (1997) The two faces of management : the Janus factor, London: International Thomson Business Press Solberg Søilen K (2005) Introduction to Private and Public Intelligence, The Swedish School of Competitive Intelligence, Lund: Studentlitteratur Svensson Kling K (1999) Credit Intelligence in banks : managing credit relationships with small firms, Lund: Lund Business Press

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Economic Intelligence in Small and Medium Businesses in France: a survey

Sophie Larivet Ecole Supérieure du Commerce Extérieur Centre de Recherche en Sciences de Gestion France [email protected]

Abstract: The appropriation of the concept of Competitive Intelligence is somewhat specific in France. French authors and French authorities usually talk about “Economic Intelligence” instead of using the concept of Competitive Intelligence (CI). Officially defined as “the control and protection of strategic information relevant to all economic actors”, Economic Intelligence is the combination of CI, information protection, and influence practices. Using this specific approach, a quantitative survey was conducted among 103 French companies hiring from 10 to 200 employees. The results show that a small percentage of French SMBs practice “Economic Intelligence”. These results are presented and discussed in this paper. Keywords: Competitive Intelligence, Economic Intelligence, Small businesses, Quantitative Survey, France

1 Introduction [Fuld 1985, Sammon et al. 1984, Tyson 1986, Fuld 1995]. “Competitive Intelligence is a systematic In contrast, the appropriation of the and ethical program for gathering, concept of Competitive Intelligence is analyzing, and managing any combination somewhat specific in Europe, compared to of data, information, and knowledge North America [West 1999]. For instance, concerning the business environment in Dedidjer has developed the concept of which a company operates that, when Social Intelligence [Dedijer 2003]. It is acted upon, will confer a significant even more specific in France: French competitive advantage or enable sound authors and French authorities usually talk decisions to be made. Its primary role is about Economic Intelligence instead of strategic early warning” [Prior nd]. using the concept of Competitive Readers who have an interest in Intelligence. Competitive Intelligence will have The phrase “Economic Intelligence” recognized North American SCIP’s [CGP 1994] was adopted by French official definition. Of course, there are authorities in a concern about the numerous explanations of what is differentiation between the intelligence Competitive Intelligence, but those of process of political and military most academic North American organizations on one side, and the one of researchers are not radically different economic organizations on the other side.

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Then the phrase spread into the French- practices Economic Intelligence. Therefore speaking community, where Competitive the focus of this paper is to investigate if Intelligence was not well known. Economic Intelligence can be found in The problem is that Intelligence SMBs, and if so, in what form. Economique is, in French, an expression To that purpose, Part 2 explains and that is ambiguous and confusing (the develops the concept of Economic French word Intelligence mainly means Intelligence using a functional approach. cleverness). Someone who has not been Then Part 3 describes the methodology of taught what Intelligence Economique the survey, carried out on businesses with means can’t guess that is has something to fewer than 200 employees. Part 4 do with information and competition. describes presents the results. Part 5 is a Moreover, most of the journalists use it as description of additional results. A a synonym for economic espionage. So it discussion follows in Part 6 and a short is still very important to explain what conclusion ends the paper. Economic Intelligence is, for French 2 A functional approach to speakers, but also to point out this Economic Intelligence specificity and spark a debate in a broader community. Economic Intelligence has been officially This French uniqueness also raises the defined twice in France. Firstly by former issue of the way empirical studies have French Planning Commission been conducted in France. In fact, most of (Commissariat Général du Plan), for them have been concentrating on which Economic Intelligence was “defined Competitive Intelligence (called “veille as the group of coordinated actions made stratégique”). Some have claimed being up of the research, treatment, distribution studies about Economic Intelligence but and protection of information useful to were only observing practices of those who operate in the economy and Competitive Intelligence [Colletis-Salles which is gained legally”[CGP 1994, 2001, CRCI Midi-Pyrénées 2002, author’s translation]. Secondly, and more DARPMI 2000, Hassid et al. 1997, recently, by the Senior Director in charge Phanuel and Levy 2002]. of Economic Intelligence (HRIE: Haut The problem is that the French Responsable chargé de l’Intelligence government is promoting Economic Economique) as “the control and Intelligence (which is broader than protection of strategic information relevant Competitive Intelligence, as demonstrated to all economic actors” [HRIE nd, author’s in part 2). The national policy and most translation]. training programs are about Economic Apart from those, about thirty to forty Intelligence. France has a Senior Director in definitions of Economic Intelligence were charge of Economic Intelligence, a National proposed by French authors. Some of them Economic Intelligence Framework, a professional chose an ontological approach (Economic federation (FEPIE: FEdération des Professionnels Intelligence as an attitude, as a state of de l’Intelligence Economique, Economic Intelligence Professionals Federation), etc. mind, as a culture, as a method of Empirical studies are needed to understand management) [Attaman 2000 quoted by if Economic Intelligence exists in French Tarondeau and Huttin 2001, Baumard firms and how. Bournois and Romani 1991, Besson and Possin 1996, Bloch [2000] did remarkable work within French 1996, CGP 1994, Colletis 1997, Dou 1995, big companies. The same kind of work Hassid et al. 1997, Jakobiak 1998, HRIE was needed in small and medium sized nd, Levet 2001, Lointier 2000, Martinet et businesses (SMBs). Marti 2001, Paturel 2002, Rouach 1996]. Bournois and Romani [2000] showed Some others focused also on that the smaller a company is, the less it organizational dimensions (Information

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Technologies, employees) of Economic answers i.e. three functions of Economic Intelligence [Bournois and Romani 2000, Intelligence were identified. This De Vasconcelos 1999, Jakobiak 2001] or establishes a distinction between on the results of an Economic Intelligence Competitive Intelligence and Economic process (deciding, acting, etc.) [Colletis Intelligence. 1997, DARPMI 2000, Harbulot 1995, Levet and Paturel 1996, Paturel 2002]. 2.1 The Intelligence Function Another approach, a functional The function of Economic Intelligence that approach, was first used by Clerc [1995] to all authors agree on is that of Intelligence define the concept of Economic [Baud 1998, Baumard 1991, Besson and Intelligence. Clerc took up the definition Possin 1996, Bloch 1996, Bournois and of the Commissariat Général du Plan, and Romani 2000, CGP 1994, Clerc 1995, then specified that Economic Intelligence DARPMI 2000, De Vasconcelos 1999, “extends the different actions related to Dou 1995, Hassid et al. 1997, Harbulot Competitive Intelligence and the 1995, HRIE nd, Jakobiak 1998, Levet protection of assets, by including influence 2001, Levet and Paturel 1996, Lointier strategies and the cultural factors linked to 2000, Martinet and Marti 2001, Paturel each business and each region. Three main 2002, Rouach 1996]. In French this functions characterise it: developing and function is referred to, most often, by the perfecting scientific and technological term veille (meaning something difficult to property, detecting opportunities and translate, between environmental scanning, threats, elaborating influence strategies in information monitoring and intelligence) the interests of the nation or of the to which different adjectives are added business” [Clerc 1995, author’s (stratégique i.e. strategic, concurrentielle translation]. i.e. competitive, etc.). The concept of This functional approach was also taken veille stratégique [Lesca 1994] is very and developed by Harbulot [1995] or close to that of Competitive Intelligence. Levet et Paturel [1996]1, but had never, as Of course, the reason why this function far as known by the author, been the object is useful to companies is not different of of an empirical work. However, it is worth what can be found in Competitive to seriously consider it, given that beyond Intelligence researches. It is obvious that its theoretical interest it has real companies have not free access to all the educational and pragmatical value: [Massé necessary information3, and that and Thibaut 2001]. Furthermore, for some information is partial and not evenly methodological reasons, as will be balanced, or asymmetrical, between the explained in Part 3, there was a need to different parties [Raimbourg 1997]. operationalize the concept of Economic Uncertainty is, therefore, inevitable, but Intelligence. The functional approach fit organisations seek to minimise it, notably perfectly with this intention. by using the intelligence function. Therefore, a decision was made to Reducing incertitude comes down to follow the path chosen by Clerc and to anticipating the changes in the approach the literature by asking: “What environment, as far as possible, in order does Economic Intelligence do or what not to be met by “strategic surprises”, in does one want to do when implementing other words, unexpected, unfamiliar and Economic Intelligence?” (i.e. “what are the possibly harmful events [Ansoff 1975]. functions of Economic Intelligence?”). To This means eliminating these harmful, answer this question the method followed unexpected and unfamiliar characteristics was to study the definitions and regarding future events, to anticipate approaches of around forty authors2, threats or to be ready to make the most of mainly French. Three main categories of opportunities.

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Competitive Intelligence4 is, therefore, Information Risk Management is fundamental to decision making. That is applied both to intentional and accidental why authors on the subject make of threats. The first relate to security and Competitive Intelligence the key point of counter-intelligence, while the others, Economic Intelligence. It can be a source according to the dual notions proposed by of competitive advantage, by changing the Geiben and Nasset [1998] relate to safety – balance of information to the profit of the putting preventative and reactionary firm gathering information [Grandval measures in place to counter accidental 2000]. exposure to risk. The process is cyclical and includes Overall, Information Risk Management four stages: direction, collection, aims to maintain or even increase the interpretation and dissemination [Baud asymmetry of information to the advantage 1998]. of the business using it. It is also carried out in four stages: an analysis of the 2.2 The Information Risk Management information risk (identifying vulnerable Function areas of the business and of external A second function is attributed to threats, evaluating their probability Economic Intelligence by French authors relating to competition, and the potential [Baumard 1991, Besson and Possin 1996, impact on the business), dealing with Bloch 1996, Bournois and Romani 2000, information risk (elimination or reduction Bulinge 2002, CGP 1994, Clerc 1995, of the risk), administration of the DARPMI 2000, Hassid et al. 1997, information risk (transferring risk, Harbulot 1995, HRIE nd, Jakobiak 2001, voluntary retention, forced retention), and Levet 2001, Massé and Thibault 2001, monitoring (updating recuperation plans). Manoir de Juaye 2000, Martinet and Marti 1995, Oberson 1997]. Economic 2.3 The Influence Function Intelligence protects the company. In this The third function of Economic paper, this function will be referred to as Intelligence is Influence [Attaman 2000, Information Risk Management. quoted by Tarondeau and Huttin 2001, Information Risk Management protects a Baumard 1991, Besson and Possin 1998, business notably from the Economic Bloch 1996, Bournois and Romani 2000, Intelligence of the competitors, ensuring Clerc 1995, Grandval 2000, Hassid et al. the security of its informational assets. 1997, Harbulot 1995, HRIE nd, Jakobiak This function marks a difference 1998, Levet and Paturel 1996, Massé and between Economic Intelligence and Thibault 2001, Martinet and Marti 1995, Competitive Intelligence. Effectively, Paturel 2002]. It is the most “active” and Competitive Intelligence is an informative demonstrates another difference with process that includes gathering and Competitive Intelligence. Contrary to analyzing information in an offensive Economic Intelligence, Competitive manner, but does not play a defensive role. Intelligence is not supposed to act on the Massé and Thibaut [2001] define four business environment. types of protection: Mechanical Influence is characterised by its (monitoring access to the firm or parts of indirectness, that is, by the exclusive use the firm), logical (IT security), human of information as a means to cause (internal and external: protecting against someone to act in a certain way, whether “fake” interns, increasing employees’ or not they are aware of the process. awareness of information value), and legal Thus for Baumard [2000], influence (confidentiality, intellectual property, strategies consist in implementing a series patents, non-competition agreements). of indirect pressures on the influential individuals/businesses in the market, most

ECIS 2009 ‐ 132 ‐ PROCEEDINGS of the time its regulators, in order to In conclusion to this section dedicated maintain or gain a competitive advantage. to the definition of Economic Intelligence, In a way, Influence and Competitive let’s not forget it consists in three Intelligence are symmetric processes. informational functions: Competitive Competitive Intelligence handles Intelligence, Information Risk information concerning the business Management and Influence. They allow a environment which is injected into the company to manage the balance of decision making process of the business. information, aiming to modify this balance Equally, Influence consists in injecting to the advantage of the business that information into the decision making practices it. Thus they give a competitive process of organisations belonging to the advantage – more so than Competitive business environment. Intelligence does, which only aims to Influencing practices can be understood gather, interpret and disseminate as a refusal to accept the environment as a information. constraint, and its rules and laws as final. 3 Methodology Furthermore, a company that uses influence has “nonmarket strategies” 3.1 The field of the study [Baron 1995], meaning it acts within its The choice of SMBs as a research field social, political and legal environment. corresponds to a strong trend in business Lobbying is a particular example of studies. SMBs are multiple. In this study, influence. It acts to influence the process small businesses are defined in terms of of drawing up, applying and interpreting number of employees (10 to 250) but not legislative measures, standards, regulations from the point of view of share ownership. and, more generally, decisions taken by 5 The choice to take into account “false government [Farnel 1994] . SMBs”, i.e. those of which most of the In the competitive field, Baumard shares are owned by another company, is [2000] proposes a conceptual framework based on a simple idea: Their exclusion of managing competitive signals. Signals would lead to ignore a large number of sent deliberately enable businesses to businesses that help make up the economic influence competitors, persuading them to fabric [Goy 2000]. change their position, and misdirecting or Furthermore, considering the initial discouraging them. Once again, this means doubt expressed in this study regarding the maintaining informational asymmetry to existence of Economic Intelligence in the advantage of the business: the greater SMBs, this variable was retained in order the imbalance of information, the more to determine if it is discriminatory. inactive the competitor [Baumard 2000]. Concerning the size of the businesses, The aim of influential strategies in the area this research followed the European of competition is to exploit the imbalance standard that defines the upper limit of a of information in a discrete manor: the small to medium sized company as 250 more indirect the method, the more employees and does not include businesses effective the strategy given that this does with less than 10 employees [Marchesnay not create resentment and preserves the 1997]. legitimacy of the company [Baumard However, within the framework of this 2000]. work, only a part of the group of Influence is, itself, a cyclical process businesses considered as SMBs was made up of three stages: determining the studied. Bournois and Romani [2000] were needs of the business, shaping or effectively taken at their word in deciding packaging the information and circulating to complement their study which looks at it. companies having more than 200 employees. The SMBs in this study have a

ECIS 2009 ‐ 133 ‐ PROCEEDINGS workforce of between 10 and 200 SMBs of less than 200 employees in the employees. They are located in the Rhône- Rhone-Alpes region. 125 questionnaires Alpes area in France. They belong to the were returned, 103 of which could be industry and the services sectors, analysed. excluding the commercial sector. The questions related to the three functional dimensions described above as 3.2 Expressing concepts well as a number of additional questions Establishing a link between concepts and on what aids Economic Intelligence data constitutes one of the most important (network, organisation, technology) and on and difficult stages in research [Thietart the characteristics and strategies of the 1999]. It has been necessary to explore businesses. which type of data needed to be collated in 4 Main results order to apprehend the concept of Economic Intelligence. 4.1 The empirical structure of information It was believed that simply asking functions SMBs’ directors about Economic The Economic Intelligence measuring Intelligence would pose too many risks scale was refined and validated by a regarding people’s understanding. The Principal Component Analysis (PCA), concept is still very ambiguous, as said in followed by a Confirmatory Factor Part 2, and the phrase Economic Analysis (CFA). Intelligence is not widely known, From an empirical point of view, the particularly among smaller companies. PCA summarises the information by This fact will be demonstrated by the replacing initial variables with a smaller results of the survey, which show that 56% number of composite variables, called of managing directors asked, couldn’t say factors, that are exact linear combinations whether they practiced Economic of the initial variables. The CFA assesses Intelligence or not. empirical data against hypotheses on the The choice was made to operationalize structure of relationships between the the concept and measure it without the observed variables and the latent variables respondent knowing. To this end, 6 or factors. It analyzes constructs validity Lazarsfeld’s method [1967] of measuring The evaluation of the PCA results was concepts in social sciences was mimicked. carried out using indicators of the quality This method consists in dissecting a of adjustment between the empirical data concept into its component parts (here, the and the six models tested (AGFI, GFI and three functions of Economic Intelligence), RMSEA). The reliability of the model called facets or dimensions, before retained was evaluated using the Cronbach defining the indicators. These indicators Alpha statistic. The variables kept are are, in other words, variables that make presented in table 1. possible the evaluation of the different parts of the concept. Thus, an Economic Intelligence measuring scale was developed.

3.3 Using a quantitative methodology One of the objectives of the study was to evaluate SMBs’ possible practices of Economic Intelligence. A quantitative approach was chosen, basing the evaluation on statistical data drawn from a questionnaire. This was sent out to 1000

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Table 1 Refined Economic Intelligence measuring scale variables A comparison of the tested models (tab. Code Variable Question 2) showed that model no. 3 satisfied the You keep yourself Competitive up-to-date with condition RMSEA<0.05 (good fit) and Intelligence what happens in GFI and AGFI close to or greater than 0.9 VSECT of the specific your sector (good fit). It was also the only model environment (suppliers, clients, which satisfied the condition RMSEA competitors etc) <0.05, and for which each indication was Competitive You monitor the Intelligence strengths and the best. of the weaknesses of VINT strengths and your company Table 2 Change indices for the models weaknesses (scale of evaluated of the frequency) Model RMSEA GFI AGFI company 1 .103 .872 .793 2 .114 .875 .784 Your company is 3 .047 .929 .878 sensitive to the 4 .099 .879 .805 SENS Awareness issue of the 5 .092 .880 .807 security of 6 .099 .879 .805 information Your company Therefore, model no. 3 was chosen as anticipates Anticipating ANTECH changes and the empirical model for the information technology innovations in functions (fig.1). technology Your company Anticipating anticipates ANTSECT the specific changes in your environment sector Your company anticipates Anticipating changes in the ANTGLOB the overall overall environment environment (give a timescale) Your company anticipates Anticipating changes in the strengths and ANTINT strengths and weaknesses in weaknesses of the company your business (give a timescale) Your company attempts to Influencing influence IIINF institutional decisions made by bodies institutional bodies. Your company Influencing attempts to

CLINF local influence NB: for reasons of visual clarity, error terms are not authorities decisions made by included. local authorities. Your company Figure 1 Empirical Structure of the attempts to Influencing informational functions influence OIINF international decisions made by organisations international The percentage of variance explained organisations by the three factors model of Economic

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Intelligence that was used is 65.4%. The the theoretical dimensions of Competitive reliability of the scale is good: Cronbach Intelligence and of Information Risk Management. Alpha= 0.78 (tab. 3). The empirical structure is not too far Table 3 Reliability of the measuring scales Concept Standardised from the theoretical structure. Indeed, even measured Cronbach Alpha if the Information Risk Management Anticipation .90 function is reduced to its most simple idea, Influence .63 Vigilance .65 the functional dimensions of Economic Economic Intelligence .78 Intelligence remain. Anticipation diminishes incertitude regarding future The model used shows that the events, and is comparable to Competitive empirical structuring of the information Intelligence. Influence retains its “non- functions is slightly different from the market strategies” function and Vigilance theoretical approach developed in Part 2. promotes awareness of the existing, The statistical analysis brings out three immediate environment and of the notion empirical functions (factors): vigilance, of information risk. anticipation and influence. The importance Above all, examining these components of the initial variables in forming these highlights an additional dimension that factors is demonstrated by the correlation distinguishes them from each other: the coefficients (loadings) between the level of activity on the environment. variables and the retained factors (tab. 4). Looking at Ackoff’s typology [1974], there are four ways an organisation can Table 4 Structure matrix / loadings Anticipation Influence Vigilance relate to its environment: ANTGLOB .918 Inactivity: an unawareness of changes in the ANTSECT .912 environment ANTINT .847 Reactivity: the knowledge of an event leads to a ANTECH .823 .368 reaction CLINF .789 Pro-activity: anticipates changes and makes OIINF .737 decisions before an event occurs IIINF .734 Interactivity which is goes further than pro-activity VINT .307 .819 by not only anticipating change, but also by VSECT .800 SENS .693 putting pressure on the environment with a view to transforming it.

Anticipation corresponds to an anticipatory Influence clearly corresponds to knowledge of the environment. It requires an Ackoff’s fourth level, interactivity, while active attitude toward gathering information and anticipation corresponds to pro-activity, can be related to the notion of Competitive and vigilance corresponds most closely to Intelligence (veille stratégique) as according to reactivity (there is no complete Lesca [1994]. Influence brings together variables that measure unawareness of changes in the influence on international organisations, environment). This result also recalls Miles institutional bodies and local authorities. This and Snow’s famous typology of four function corresponds to the interactive strategic types. Prospectors, analyzers, dimension of Economic Intelligence described defenders, and reactors are classified from in Part 2. One of its roles is to use information to direct the actions of the different stakeholders very aggressive to totally passive towards of the firm. the environment [Miles and Snow 1978]. The Vigilance factor brings together variables A grading, therefore, exists for the measuring the knowledge of the specific empirical information functions detected in environment and of the strengths and SMBs. This grading depends on the weaknesses of the business, as well as a variable that measures the level of awareness of the attitude of the company towards its problems linked with the security of environment, and also carries an idea of information. Variables highly loading on inclusion. Vigilance factor are the most passive items of

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Indeed, to influence an organisation, it’s environment and the security of necessary to have anticipated any threat it information (vigilance). may present, and have decided not only to Nevertheless, these are centred scores, take action ahead of a potential threat, but and a positive “mark” doesn’t mean that also to have changed the environment to the practice is definite, but rather that it is avoid the threat emerging, or to reduce the above average for the SMBs investigated. potential threat. Therefore, influence Therefore, the total scores must be assumes anticipation. examined in order to decide if the term In the same way, a business could not Economic Intelligence can be used. anticipate changes in its environment if it For the four anticipation variables, had no knowledge of its current state. group 1 has an average of 3.5. The score 3 The empirical analysis of Economic corresponds to anticipation over a period Intelligence functions, therefore, highlights of one year and 4 corresponds to three the fact that information functions are years. Therefore, it is estimated that distinguished by their level of activity in businesses in Group 1 have a medium term relation to the surrounding environment. view of their environment. Consequently, This conclusion doesn’t bring into it can be concluded that this is a group that question the idea that Economic anticipates change in its environment, Intelligence serves to protect, to gather whether technological, specific, general or information or to influence the internal. environment, but the data collected shows For the variables relating to the that the structuring of informational scanning of the existing environment, these functions is somewhat more complex. businesses scores an average of 4.5, and slightly more for technological intelligence 4.2 Types of SMBs according to their at 5. This confirms that the directors gather informational practices information on their business environment Starting from previous results, a either several times per year, or even classification (typology) was build and several times per month, and that they keep validated by a discriminatory analysis, in themselves up-to-date with changes in order to determine groups of businesses technology several times per month. that use the same informational practices. Finally, for the variable related to Three groups of SMBs were formed, awareness of information security, this each being represented graphically as a group has a score of 4.7, which shows that cluster of points in the space formed by the the companies in this group believe three axes, Anticipation, Influence and themselves to be sensitive to this issue. Vigilance, and whose centroids give For the influence variables, group 1 has position relative to these axes (table 5). scores averaging between 3 and 4 for influence on local authorities, professional Table 5 Groupsʼ centroids organisations and institutional bodies. This Group 1 Group 2 Group 3 Axes centroid centroid centroid indicates that these businesses attempt to Anticipation .56 .50 -.73 put pressure on outside organisations at Influence 1.55 -.52 -.34 least once per year. They also try to affect Vigilance .36 .63 -.74 the decisions of international organisations

Group 1 has a positive centroid at least once per year, or even once a coordinate on all axes. These coordinates month. values are particularly strong on Influence Their directors also believe that their and Vigilance. The results indicate business has the ability to influence the influence practices, anticipation to the surrounding environment. However, in environment, and awareness of the existing response to the proposition “Does your business have the means to affect the

ECIS 2009 ‐ 137 ‐ PROCEEDINGS decisions of government?” most do not infringement. There is no theoretical agree. reason why these businesses are attacked Therefore it is concluded that the more than others, which leaves to assume businesses in Group 1 do, indeed, take that the gap between scores is explained by actions to influence their environment, a higher awareness of their vulnerability. even if their sphere of influence is only Finally, analysis confirms that the local (which is not surprising for SMBs). businesses in Group 1 manage information In order to be able to qualify the risk. policies of these businesses, the fact that Therefore, Group 1 puts together they manage their information risk has to businesses that combine Vigilance, be verified. For this, scores obtained for Anticipation and Influence, and that, variables other than those that evaluate moreover, manage risks linked to awareness of this problem were used: information. Frequency of patent applications Conclusion can be made, then, that this (BREVET), knowledge of external first group composed of 22 SMBs practice infringements on security (ATTAQ), "key- Economic Intelligence. people’s” knowledge being passed on The reader should note that the scores (HOMCLE) and the existence of security used represent an average, and that the measures relating to information (SECU). evaluation of the number of businesses A test of the variance (ANOVA) practicing Economic Intelligence should be identified a significant difference between viewed with caution. Moreover, it is the three groups for the variables important to note that these are scores of a BREVET, ATTAQ and SECU. The group, which implies disparities between difference between the three groups for the one business and another. variable HOMCLE was not significant. For Group 2 has a positive centroid for the this set of variables, the average scores for factors Anticipation and Vigilance, and a each group, measured using a scale of 1 to negative score for the dimension Influence. 6, are set out in table 6. This demonstrates that these businesses practice anticipative information gathering Table 6 Group scores for risk management and vigilance towards the current variables environment and the security of Var BREVET ATTAQ SECU HOMCLE information. Group On the other hand, they do not interact 1 2.27 3.18 4.23 4.18 with the environment, i.e. they do not 2 2.13 1.87 3.42 3.76 practice influence. This is why these 38 3 1.51 2.21 2.58 3.74 Average 1.90 2.30 3.24 3.84 SMBs are considered practicing (only) Significant? Yes Yes Yes No Competitive Intelligence. Their horizon of anticipation and the frequency of their In order to eliminate the effect of the intelligence activity (all types of sector7, a chi-squared test was carried out, intelligence included) are relatively similar crossing patent application and sector to that of Group 1. affiliation. It transpires that the variables They are less sensitive to managing are independent, which means to say that information risk and have only a few there is no significant link between which security measures in place. They own sector a business belongs to, and those that fewer patents and have never been the apply for patents. Thus Group 1 owns target of illegal activities, or, at least, do more patents than the others, and takes not know of such activities. They only measures to protect information. rarely put pressure on institutional bodies Furthermore, businesses in this group and local authorities (least than once per also claim to have been victims of security

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year) and never on international organisations. Group 3 is made up of businesses that seem to practice neither anticipation, nor vigilance towards the existing environment and the security of information, nor influence. The scores seem to indicate that Figure 2 Level of informational practice this group of businesses practice neither curve Competitive Intelligence nor Economic Intelligence. The horizon of anticipation key dimensions of Economic Intelligence, does not go beyond a few months, and even if prudence means highlighting the their directors keep up to date with what is necessary precautions linked with average happening within their business scores. 37% of SMBs that responded environment only rarely throughout the practice Competitive Intelligence and are year. They are not particularly sensitive to relatively anticipative. Finally, and the issue of information security and also surprisingly, 42% of SMBs that responded admit to taking very few protective seem to observe their environment very measures. little. Therefore, these 43 SMBs were named To end the presentation of our results, Disregarders. figure 3 image the three groups of small Furthermore, one could consider that businesses. Groups are represented in a the scores, calculated by the sum of space defined by axes Anticipation and coordinates on each dimension of a group Influence. Each circle has a surface area centroid, indicate the level of informational proportional with the size of the group. practice (see "total" on figure 2). To comment these results, additional This typology enables to conclude that data will be used. Economic Intelligence does exist in SMBs. 21% of businesses with less than 200 5 Groupsʼ description In order to better describe Influenc Economic Intelligence 2 e practices among French SMBs, additional data 1, Gp about their use of 5 1 networks and information 1 technologies, and their organization will be 0, exploited. Data not Gp 5 0,5 presented herein are 3 0 Anticipatio available on request to the - - 0 1 n author. 1 0,5 - Gp The evidence shows 0,5 2 that companies doing - Economic Intelligence 1 need to use each of these Figure 3 Groups illustration in specific ways.

5.1 Economic Intelligence: NB: the zero corresponds to the average calculated for all the companies A reticular, original and frequent practice employees use a combination of the three The examination of

ECIS 2009 ‐ 139 ‐ PROCEEDINGS variables relating to the idea of exterior principal source of information, then these networks (relational networks) figures should be similar, since the two use demonstrates that the exchange of a similar method of gathering information. information with other business leaders, Yet this is not the case. However, another collaboration with local authorities, function of Economic Intelligence is international organisations and institutional “networks consuming”: Influence. Not bodies (CCI in particular – French only the network helps a manager to Chambers of Commerce) is strongly linked collect information, but it is also a place to to the practice of Economic Intelligence. give information to stakeholders. This To explain this more fully, should be might possibly explain the difference in the noted that the directors of businesses that intensity of the use of networks by practice Economic Intelligence (Group 1) companies who practice Competitive exchange information with other directors Intelligence and those who practice that are not competitors several times per Economic Intelligence. year, or even per month. Their relationships with professional 5.2 Economic Intelligence and Information organisations are carried out with nearly Technology the same intensity. The analysis of the relationship between Company directors that practice belonging to one of the SMBs groups Competitive Intelligence (Group 2)consult coming from typology and some variables their counterparts slightly less often than measuring the use of Information their colleagues that practice Economic Technology shows that SMBs that practice Intelligence, and are much more Economic Intelligence are more likely to infrequently with professional use technology than other SMBs. organisations (once or twice per year). There is a visible difference in the use In businesses that practice Economic of an intranet to circulate information Intelligence, directors work closely and internally and in the use of information relationally with their competitors, management softwares. Businesses that institutional bodies or local authorities, at practice Economic Intelligence use tools least once per year, and a little less often that are more sophisticated than their with international organisations. counterparts. Those that do Competitive Intelligence This result is not surprising: It is clear exchange information with competitors at that Information Technology is one of the the same rate, but relate much less with most important facilitators for Economic public organisations (one or fewer times Intelligence in SMBs [De Vasconcelos per year on average) and work very rarely 1999]. with international organisations. An interesting fact becomes visible 5.3 A Participative Approach when the scores for all the network Firstly, results show a significantly more variables are added: it appears that important involvement of employees in directors who practice Competitive gathering information among businesses Intelligence (Group 2) and the one who that practice Economic Intelligence. This can be classified as Disregarders (Group 3) result supports the traditional Intelligence have a score far lower than those who saying: “information is everyone’s practice Economic Intelligence (Group 1). business” [Karger 1991]. The difference between those who practice Secondly, practicing Economic Economic Intelligence and those that Intelligence is positively linked to the practice Competitive Intelligence is great. participation of managers, employees and Now, if it is considered [Julien 1997], other people (bank personnel, consultants that a director’s personal network is their etc) when carrying out a strategic

ECIS 2009 ‐ 140 ‐ PROCEEDINGS diagnosis. Economic Intelligence involves enables to estimate the information a more participative strategic approach. gathering activity of the business, but from Lastly, the strategic visions of directors this to real Economic Intelligence is not a are shared better in SMBs than they are question of size. advanced in terms of informational Concerning ownership and sector, it practices. This results is consistent with the was found that they are not significantly DARPMI [2000] report on the pilot linked to Economic Intelligence either. operation aiming to introduce Economic Finally, contingency variables are not Intelligence in SMBs. It is told in this relevant to explaining the use of Economic report that having specific projects shared Intelligence among SMBs. with the personnel facilitate the However, these variables would appropriation of the approach. possibly have a larger impact if the study were to investigate a more varied group of 6 Discussion companies (SMBs and large companies). How can the results found in French SMBs The relative homogeneity of the survey’s be explained? Traditional contingency sample in terms of sector and size (10 to factors, then strategies, were examined as 200 employees) is likely to limit the potential explanations. Data not presented impact of the contingency factors used. herein are available on request to the But it is still possible to establish a author. relationship between size and disinterest in practicing any type of Intelligence. 6.1 Questioning Economic Intelligence Economic Intelligence is probably used by contingencies specific types of business. It is not simply French studies, dedicated to SMBs or not, that smaller businesses do not practice generally focus on Competitive Intelligence. There must be another Intelligence, and show that this correlated explanation, which is the reason why with the size of the firms [Bournois and strategies were studied. Romani 2000, CRCI Midi-Pyrénées 2002, Phanuel and Levy 2002]. 6.2 Economic Intelligence, a matter of The statistic analysis, which looked at strategy the size of the organisations in relation to Quite surprising results indicate that size, the practice of Economic Intelligence, is ownership and sector do not play a part in not statistically significant. Furthermore, whether SMBs practice Economic although businesses that use Economic Intelligence or not. Intelligence seem to be among the largest However, certain elements of firms’ in terms of workforce, this isn’t the case in strategies can, at least partially, explain terms of sales. this practice. Yet, if the businesses that practice In particular, it was found that SMBs Competitive Intelligence and those that do doing Economic Intelligence had a more Economic Intelligence (Groups 1 and 2) international dimension than others. Not so are put together, and if a means much in terms of exports, but more in comparison test (t-test) between this meta- terms of competition encountered, whether group and the group of Disregarders is this be across boarders (international carried out, the following result appears: development), or in France (the nature of The size, whether measured by sales or competition). This can be explained by the size of workforce, becomes significantly level of complexity (perceived or real) that different. international competition presents, and that On the other hand, a comparison test requires an investigative, or surveying, between Group 1 and Group 2 does not approach. An “international” environment show any significant difference. Size seems to be a particular criterion that

ECIS 2009 ‐ 141 ‐ PROCEEDINGS can be harder to understand than local or Furthermore, using Economic Intelligence national competition. in SMBs means paying attention to the Moreover, the study of Porter’s generic security of information, not only by being strategies carried out by SMBs gives us an sensitive to the issue, but by taking unusual result: Economic Intelligence is measures to protect a business and by linked, among SMBs, to three specific being aware of its vulnerability. In other strategic manoeuvres: differentiation, focus words, by managing information risk. strategies and diversification. These are Thus Economic Intelligence is not only manoeuvres that require businesses to me a French concept: It is also a real business more opened on their environment than behaviour, which needs to be studied, as cost domination. The relation between well. Economic Intelligence and strategies is In order to improve the adoption of probably bi-objective. On the one hand, Economic Intelligence, training programs they are empowered by the advantages should be generalized in business courses, offered by an Economic Intelligence but any form of action that might increase system, and inversely, Economic decision-makers awareness would be Intelligence can be made necessary by the useful. choice of these manoeuvres. Regarding what aids businesses that Finally, when attempting to find practice Economic Intelligence, it is explanations to the observed situation, we essentially the use of relational networks, a agree with Wright et al. [2002] and Tarraf participative management and quite and Molz [2006] on the idea that the sophisticated Information Technologies. practice of Economic Intelligence in SMBs This leads to another important conclusion: depends on the attitudes, perception and These are the skills and tools that training personalities of the decision-makers at the programs and the French government companies. Some of them see Competitive should focus on. Intelligence as part of strategic decision- And last, but not least, when trying to making, whereas some others feel that understand why some companies do having a Competitive Intelligence activity Economic Intelligence and others don’t, it is mostly for followers, not for leaders, or is obvious that strategies have a greater even as a waste of time and resource. The explanatory power than the usual training of managers could also be an contingency factors. Public and private explanation [Larivet, 2006]. policies aiming to develop Economic Intelligence should take it into account, 7 Conclusion and further surveys also. Beyond numbers and figures, what must be taken from this chapter, is the fact that Notes Economic Intelligence is practiced among 1. Levet and Paturel [1996] have added the French SMBs. This practice is defined, coordination of strategies to the functions described above all, as interactivity with the by Clerc. We have not kept this as, in our opinion, this generally goes beyond the framework of surrounding business environment, which, Economic Intelligence in terms of what literature in particular, consists in such businesses reveals. Furthermore, the practice of Economic influencing local authorities, governing Intelligence is not always carried out in a collective bodies and organisations, but also and concerted manner (such as in a situation of commercial and sometimes international economic war between two companies). 2. The number of authors that have given a organisations. This interaction is definition to Economic Intelligence is greater, but accompanied by anticipation of advances several of them use previously existing definitions. and changes in the environment in the Original and non conventional definitions were medium term, and ongoing vigilance favoured, until reaching a saturation point. towards current changes taking place.

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3. Or rather, they have so much information that it CGP (1994) Intelligence économique et is difficult to reach what is really useful. In the end, stratégie des entreprises, ed. Martre H, sourcing good information becomes expensive. 4. In the greater sense. La Documentation Française, Paris 5. Quoted by Décaudin [1997] Clerc P (1995) Intelligence économique, 6. Quoted by Thiétart [1999] Encyclopædia Universalis, retrived 7. One might think that certain sectors are less from http ://www.universalis- concerned with creating patents, for example, the edu.com/private/Article.asp?nref=UN95029# service sector. Colletis G (1997) Intelligence économique 8 References : vers un nouveau concept en analyse économique ?, Revue d’Intelligence Ackoff RL (1974) Redesigning the Future: Economique, (1), 25-34. A Systems Approach to Societal Colletis-Salles M (2001), Les besoins des Problems, John Wiley and Sons, New PME en information d’Intelligence York Economique : présentation des résultats Ansoff HI (1975) Managing Strategic d’une enquête en Midi-Pyrénées, VSST Surprise by Response to Weak Signals 2001, Barcelone, Spain, october 2001, California Management Review, 13(2), (1), 279-289. 21-33 CRCI Midi-Pyrénées (2002) Les pratiques Baron DP (1995), The Nonmarket Strategy des PMI de la région Midi-Pyrénées en System, Sloan Management Review, matière d’information stratégique et 35-37(1), 73-85 d’intelligence économique, in Les Baud J (1998) Encyclopédie du pratiques de l’Intelligence Economique, renseignement et des services secrets, huit cas d’entreprises, Levet J-L (ed), Lavauzelle, Paris Economica, Paris, 45-53 Baumard P (1991) Stratégie et surveillance DARPMI (2000) Intelligence économique, des environnements concurrentiels, Outils et méthodes développés en PMI, Masson, Paris. Les Editions de L’Industrie, Paris Baumard P (2000) Analyse stratégique, De Vasconcelos CRM (1999) mouvements, signaux concurrentiels et L’intelligence économique et la interdépendance, Dunod, Paris stratégie de développement de la PME, Besson B and Possin JC (1996) Du Thèse pour le doctorat en Sciences de renseignement à l’intelligence Gestion, Université Grenoble 2 économique, Dunod, Paris. Décaudin J-M (1997) Lobbying, in Bloch A (1996) L’intelligence Encyclopédie de Gestion, Joffre P and économique, Economica, Paris. Simon Y (eds), Economica, Paris, 1773- Bournois F and Romani PJ (2000) 1780 L’intelligence économique et Dedijer S (2003) Development & stratégique dans les entreprises Intelligence 2003-2053, Lund Institute françaises, Economica, Paris of Economic Research Working Paper Bulinge F (2002) L’équation de la sécurité, Series, 2003/10, retrieved December 2, une analyse systémique des 2008, from vulnérabilités de l’entreprise : vers un http://www.lri.lu.se/pdf/wp/2003-10.pdf outil de gestion des risques, Colloque Dou H (1995) Veille technologique et national de recherche sur la sécurité de compétitivité, l’IE au service du l’information, Paris, may, 2002, Cd-om développement industriel, Dunod, Paris. Carayon B (2003) Intelligence Fuld LM (1985) Competitor Intelligence: économique, compétitivité et cohésion How to Get It, How to Use It, Wiley, sociale, La Documentation Française, New York Paris Geiben B and Nasset J-J (1998) Sécurité, Sûreté : la gestion intégrée des risques

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dans les organisations, Editions Conférence Internationale de d’Organisation, Paris Management Stratégique, Lille, France, Goy H (2000) Les réalités de la mai 1996, Cd-Rom planification organisationnelle des Levet J-L (2001) L’intelligence petites et moyennes entreprises économique: mode de pensée, mode industrielles, Thèse pour le doctorat en d’action, Economica, Paris Sciences de Gestion, Université Lointier P (2000) Les limites de l’IE, Grenoble 2 Revue de l’Association des Diplômés Grandval S (2000) Dynamique des actions de l’IAE, 162, 15. grises dans l’intelligence Luhn HP (1958) A Business Intelligence concurrentielle, Thèse pour le doctorat System, IBM Journal of Research and en Sciences de Gestion, Université de Development, 2(4), 314-319 Caen / Basse-Normandie Manoir de Juaye T (2000) Intelligence Hassid L, Jacques-Gustave P, Moinet N économique : utilisez toutes les (1997) Les PME face au défi de l’IE : le ressources du droit, Editions renseignement sans complexe, Dunod, d’Organisation, Paris Paris Marchesnay M (1997) La moyenne Harbulot C (1995) La machine de guerre entreprise existe-t-elle ?, Revue économique. Etats-Unis, Japon, Europe, Française de Gestion, (116) 85-94 Economica, Paris Martinet B and Marti YM (1995) HRIE (nd) retrieved January 2, 2006, from L’intelligence économique : les yeux et http://www.intelligence- les oreilles de l’entreprise, Editions economique.gouv.fr/rubrique.php3?id_rubrique d’Organisation, Paris =6 Martinet B and Marti YM (2001) Jakobiak F (1998) L’intelligence Intelligence Economique, comment économique en pratique, Editions donner de la valeur concurrentielle à d’Organisation, Paris l’information, Editions d’Organisation, Jakobiak F (2001) L’intelligence Paris économique en pratique avec l'apport Massé G and Thibault F (2001) d'Internet et des NTIC : cment bâtir son Intelligence économique, un guide pour propre système d'intelligence une économie de l’intelligence, De économique, Editions d’Organisation, Boeck Université, Bruxelles Paris Miles RE and Snow C (1978) Julien P-A (1997) Les PME, bilan et Organizational Strategy, Structure and perspectives, Economica, Paris Process, McGraw Hill, New York Karger DW (1991) Strategic Planning And Oberson P (1997) L’Internet et Management : The Key To Corporate l’intelligence économique, Editions Success, Marcel Dekker Inc, New York d’Organisation, Paris Larivet S (2006) L’intelligence Paturel R (2002) Markal- La pratique économique : un concept managérial, d’influence dans la petite entreprise, in Revue Market Management, (3) 3, 22- Les pratiques de l’Intelligence 35 Economique, huit cas d’entreprises, Lesca H (1994) Veille stratégique pour le Levet J-L (ed), Economica, Paris, 83- management stratégique. Etat de la 100 question et axes de recherche, Phanuel D and Levy D (2002) Intelligence Economies et Sociétés, série Sciences économique ou économie d’intelligence de Gestion, 20, 31-50 dans les PME-PMI ? L’exemple d’un Levet J-L and Paturel R (1996) département français, XIe Conférence L’intégration de la démarche Internationale de Management d’intelligence économique dans le Stratégique, Paris, june 2002, Cd-rom management stratégique, Vème

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Prior VE (nd) retrieved November 5, 2008, Tarraf P and Molz R (2006) Competitive from Intelligence at Small Enterprises, SAM http://www.scip.org/content.cfm?itemnumber=2 Advanced Management Journal, (71) 4, 226&navItemNumber=2227 24-34. Raimbourg P (1997) Asymétrie de Thiétart R-A (1999) Méthodes de l’information, théorie de l’agence et recherche en management, Dunod, Paris gestion de l’entreprise, in Encyclopédie Tyson KWM (1986) Business Intelligence: de Gestion, ed. Joffre P and Simon Y, Putting It All Together, Leading Edge Economica, Paris, 188-199 Edition, Lombard, Rouach D (1996) La veille technologique West C (1999) Competitive Intelligence in et l’intelligence économique, Presses Europe, Business Information Review, Universitaires de France, Paris (16) 3, 143-150 Sammon WL, Kurland MA, Spitalnic R Wright S, Pickton D and Callow J (2002) (1984) Business Competitor Competitive Intelligence in UK firms: Intelligence: Methods for Collecting, A Typology, Marketing Intelligence and Organizing and Using Information, Planning, (20) 6, 349-360 John Wiley, New York.

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Competitive Intelligence and Strategic Governance Issues for French Groups of Mutual Banks Facing the Financial Crisis

Dr. Denis Malherbe CERMAT / Université François Rabelais (Tours, France) [email protected]

Département Management / Systèmes / Stratégie ESCEM (Tours-Poitiers, France) [email protected]

Abstract This introductory research paper presents a conceptual framework for enquiry and analysis regarding the contributions and limits of competitive intelligence approaches to the strategic governance of French groups of mutual banks. Originally organised as networks of territorial retail entities, these banks were set up under the institutional control of their membership. However, over the last decade, most of them have followed the mimetic trend for mergers and become global competitors in sophisticated finance operations such as asset management and credit reinsurance on the derivatives market. For this reason, French mutual bankers have evolved from network structures to group structures with central entities at their heads, under the legal form of public listed shareholding companies. Until 2006, such changes in strategy and structure were commonly considered as legitimate and successful practices within the banking and finance industries, because they always held the promise of high returns for their operators. However, since 2007, the effects of the US subprimes crisis on global finance have revealed the threat that these practices represent for bankers. Despite the numerous similarities of dedicated analysis techniques, credit rating assessments and regulation requirements as compared with CI instrumentation and principles, it is obvious that environmental risks were miscalculated and internal vulnerabilities were underestimated. French groups of mutual banks, and the mimetic strategies they followed in the 2000s, do not represent an exceptional case in the present harsh circumstances, as will be discussed in this paper through an examination of the Caisse d’Epargne Group and the Banque Populaire Group. Both of these mutual operators are now in the red, owing to the heavy losses of Natixis, their joint-subsidiary in corporate and investment banking. Accordingly, the change in the strategic activities and central structures of mutual bankers leads practitioners and researchers to first question the processes of environmental mimetism among competitors in a strategic arena. But it also requires more than generic statements about strategic intelligence failures in the banking and finance sectors. It calls for an analytical reflection on the specific biases inherent to an internal corporate governance structure where control of strategic choices was captured by top-managers and financial experts to the detriment of the principles of members’ ownership. In this respect, neo- institutionalist, structurationist and conventionalist theories offer interesting perspectives for understanding the considerable contributions of CI to the dynamics of strategic governance. A CI approach must take a wider view than that provided by the usual prism of informational engineering, i.e. it can be

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improved by a comprehensive analysis of the actors’ cognitive processes and socio-political behaviours. Keywords: Competitive Intelligence, Corporate Governance, Mutual Banks, Global Finance, Securitisation, Mimetism, Structurationism, Conventionalism

“French banks might possibly be bought In particular, their corporate governance out but they are not at all exposed to this relies on a framework put in place by danger because they are very watchful about risks. (...) As a mutual bank and, as such, specific legal forms and historical growth absent from the (buy out) market, I don’t see processes. how the CNCE (Caisse Nationale des • On the other hand, as nowadays they Caisses d’Epargne) could be coveted”ii compete on equal terms with their Charles Milhaud, as Chairman of commercial rivals, they tend to implement the Caisse d’Epargne group’s Management Board, in a hearing ever more technicised strategic before a commission of members of management policies, which are broadly the French Parliament, on October 7, common to all operators in the financial 2008, before he was dismissed by the sector. CNCE’s Supervisory Board on Traditionally established in the retail October 20, 2008 banking industry, operators with a mutual “The extension of standardized status have, for around ten years, been management practices (to mutual and making their presence felt in the global cooperative companies) sometimes tends to financial markets. But the momentous erase some of the main features of upheavals in international financial democratic governance.”iii François Marc [1984] markets during recent months and the predictions of an economic recession for “We must speak and act as if things that the year 2009 are now adding their have proved themselves in the past could decisive effects to these structural prove themselves again today or tomorrow; developments. These transformations thus as if communication were not improbable; as if constructing a consensus in a normal raise questions concerning the place of manner did not raise any problem.”iv Competitive Intelligence (CI) tools and Günther Ortmann [2004] approaches within the governance and Introduction management practices of mutual banking and insurance groups: The subprimes and securitisation crisis To which extend can CI contribute to which developed during the year 2008 the strategic governance of mutual affects all financial companies in the banks? Or, a contrario, what would world. Today, in many Western countries, be the consequences of applying mutual companies and groups are major insufficient or unsuitable CI competitors in the banking sectors. Their approaches to their governance? strategic position makes these operators Do CI principles and instrumentation particularly interesting because of the apply to financial competitors, tensions in their corporate governance whether or not one takes into account between their institutional specificities and their respective forms of governance their role in the competitive and and internal functioning, i.e. their sophisticated circuits of globalised finance: having mutual or public listed • On the one hand, due to their specific statutes? national socio-economic histories, groups Do CI and mutual governance constitute of mutual banks differ from their separate categories in managerial commercial share-capital competitors in dynamics, related to different their structures and modes of governance. objects, temporalities, logical criteria

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and levels of decision-making? Or, structurationist and conventionalist on the contrary, do they represent theories, this discussion leads on to… complementary - even interlinked – 5.…An attempted conclusion on the dynamic aspects of the same value and limits of CI approaches in strategic ability and responsibility? relation to their implementation within the At this stage, this paper does not aim to specific context of strategic governance in bring definitive answers to these questions. groups of mutual banks. Rather, it aims to investigate and improve 1. French Mutual Banks: historical the formulation of such questions within development and current issues the field of management science research. With this intention in mind, its aim is to Whether or not they operate in the fields throw light on some of its significant of the banking industry, mutual companies operational and conceptual dimensions, in are based on an original institutional order to study them further within the model, which is supposed to integrate scope of future research projects. The economic performance, social mission and analysis will be more specifically centred democratic governance [Jeantet, 2006a, on French groups of mutual banks. To this 2006b; Pfimlin, 2006; Lamarque and end, a five-part plan has been adopted, Alburaqui, 2007]. Being legally defined as dealing successively with: groupings of persons - their members - and 1. An overview of the main not as share capital companies, they escape characteristics of French mutual banks: the classic opposition between private historical origins and organizational companies with share-capital status and development over recent decades, public organisations owned by the State or institutional specificities of governance other public authorities [Glemain, 2006]. and current strategic management Major players in the development of the practices; financial services sectors, their strategic 2. A general review of the role and governance presents dual features. Over value of CI approaches and their logical the last two or three decades, their retail procedures for the management of networks have offered both socio- companies’ competitive advantages and for economic proximity and comprehensive the establishment of efficient modes of services while their central structures have development within their strategic become more and more involved in the environment; sophisticated circuits of international 3. A presentation of the case of Natixis; finance [Gianfaldoni, 2007; Malherbe, the relatively new corporate and 2008; Gurtner et al., 2007]. investment banking joint-subsidiary of the 2 major French mutual banking groups 1.1. Mutual banks in France (Caisse d’Epargne and Banque Populaire); Historical origins dating back to the social founded in late 2006; this French public movements of the 19th century listed company ─ and consequently its Although ─ from a strictly legal point of controlling shareholders ─ was adversely view ─ they do not have mutual but rather affected by the financial crisis in 2007 and cooperative status, savings and loans banks 2008; now constitutes another major sector for 4. An examination of the questions French mutual groups [Jeantet, 2006a/b; raised by a critical understanding of CI Rault, 2007]. Like many of their cousins in cognitive and behavioural issues related to the insurance sector, these mutual groups the strategic governance of groups of stem from the historical institutionalisation mutual banks. Based on the conceptual of the socio-economic solidarity views of neo-institutionalist, movements that developed during the 19th and early 20th centuries [Gueslin, 2002].

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However, nowadays they are major national networks, bringing together competitors in universal banking, autonomous regional banks. Each one of implementing their strategies not only on these regional banks is built upon a the national retail markets but also in the collection of local institutional funds, globalised financial circuits: officially managed by members. Originally established in local funds, Each mutual banking network is the Caisses d’Epargne (French federated both nationally and saving banks) were created from internationally by a superstructure of one 1818 onwards in order to promote or two entities. One of these entities has saving among the working class technical (financial) duties and the other [Christen-Lécuyer, 2003]. has a political purpose. These central Inspired by the German cooperative bodies are subject to institutional control experience introduced from 1844 by the regional mutual banks’ members. onwards by Friedrich-Wilhelm They in turn control their own subsidiaries, Raiffeisen, the Crédit Mutuel’s first dedicated to specific financial activities local funds appeared between 1888 (asset management, real estate, leasing, (in Alsatia, then part of the German private banking, factoring, insurance, Reich) and the first half of the 20th foreign subsidiaries, etc.). This generic century, in other regions model applies to the four French mutual [Moulévrier, 2003]. banking networks: The first Banque Populaire appeared in The Crédit Agricole mutual network 1876 in order to offer short-term consists of 39 regional banks and finance to craftsmen, commercial more than 2,500 local funds. All of and industrial small and medium- these are connected through the sized businesses, and the mutual FNCA (Fédération Nationale du organisation developed its specific Crédit Agricole), the representative positioning during the 20th century body, and Credit Agricole SA, the [Albert and Gueslin, 1997]. group’s actual financial body. Dedicated to the agricultural and The Crédit Mutuel group is organised farming world, the Crédit Agricole within a structure comprised of the Mutuel’s operational structures arose 18 confederations of regional banks at the same time within the of the Crédit Mutuel Agricole (not to framework of laws organising the be confused with the Crédit Agricole activity of the local branches (1894), mentioned in the preceding and were brought together a few paragraph) and their subsidiaries. years later within the structure of the Similarly, 18 regional Banques first regional mutual fund for Populaires and three other CASDEN agriculture (1899) [Gueslin and mutual banks (dedicated to teachers), Barral, 1984]. Crédit Coopératif and Crédit The current groups of mutual banks Maritime Mutuel are brought together under the group “Banque As with any other commercial banking Fédérale des Banques Populaires”. In company, mutual savings and loans banks turn, this federal body of the now offer a broad range of products and Banques Populaires network services. They operate under the general participates in the listed Natixis SA legal regulations covering credit company, an institutional investor institutions, defined by the French Banking created at the end of 2006 as a Act of 1984, which put an end to the corporate and investment banking former specialisation of the French joint venture with the Caisse banking system [Paulet, 2005]. Mutual d’Epargne group. banking groups are currently organised in

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Stemming from 440 local savings In 1999, recently endowed with the funds, 28 regional Caisses d’Epargne legal status of cooperative credit are the majority shareholders of the institution, the Caisse d’Epargne Caisse Nationale des Caisses Group took over control of Crédit d’Epargne, the central body of the Foncier, a specialized operator in network, set up with the status of mortgage operations. joint-stock company. In addition to In 2002-2003, the Crédit Agricole its role as political head of the Group launched and won its friendly network, the CNCE also exercises takeover bid for the large technical functions as the group’s commercial bank, Crédit Lyonnais, financial holding company. which has been renamed LCL. Crédit Major operators in the French banking sector Agricole and LCL are now building up the Calyon group. As with the mutual insurance In late 2006, Caisse d’Epargne and companies, the mutual banking groups Banque Populaire came together have also undergone spectacular strategic with the creation of Natixis SA, a changes over the last few decades. joint-venture integrating their Organised into financial groups, they now specialized structures in strategic have leading positions in a number of activities such as corporate and segments of the French banking system investment banking, asset and among the clientele (private management and financial services. individuals, freelance professionals, small In 2007, the Banque Populaire Group or medium businesses and non-profit acquired Foncia, a real-estate service organisations). On the French markets, company, and in 2008 it acquired 7 these four mutual banking groups currently regional banks previously owned by attract more than 60 % of deposits and the British commercial group HSBC. finance more than 40 % of loans, while In the early weeks of 2009, the Crédit their distribution structures comprises the Agricole Group (mutual) and the largest part of the network of commercial Société Générale Group retail banks throughout the country (commercial) announced their plan [CEGES, 2007; CECEI, 2008]. to create a joint venture in asset Having gone far beyond retail banking’s management [Les Echos, 2009-01- traditional limits, they now play an 09]. important role in the globalised capital Finally, during the same period, a markets, which causes their interests and majority of French mutual banking groups structures to follow the logic of financial developed their activities in the insurance management to an ever greater extent market. As a result, an interlinking of [Roux, 2002]. Accordingly, during the last strategies is increasingly prevalent between decade, some of them took control of mutual bankers and insurers, sometimes in important competitors such as commercial the form of strategic cooperation but also, banks and/or finance companies. in other cases, in the form of real rivalries In 1998, the Crédit Mutuel Group between operators in these two major bought out the Crédit Industriel et financial sectors Commercial Group (CIC). In 1998, the Banque Populaire Group 1.2. French mutual banks facing bought out the corporate and renewed strategic challenges investment Natexis Group, itself Several analogies between mutual resulting from the merger carried out competitors in the banking sector can in 1996 between Crédit National and easily be made on the basis of this general Banque Française du Commerce description, even if differences in the Extérieur (BFCE).

ECIS 2009 ‐ 150 ‐ PROCEEDINGS scope and depth of these similarities are to individuals and small or middle-sized be noted. Accordingly, on the basis of their businesses. institutional forms as well as their Crossing paths between mutual competitors development history and their current in the insurance and banking sectors operations, these common trends All of the French mutual bankers were essentially concern issues of strategic involved in a broad movement of positioning and governance in a more intersector-based diversification and competitive and sophisticated strategic competition within the framework of the environment. bank-insurance industries in the 1980s- The relativisation of a governance model 1990s. Certainly, a strict legal divide Most of the French mutual bankers had between institutional structures managing similar origins in local, regional and\or banking and those engaged in insurance socio-professional contexts. Set up several activities was imposed by the European decades ago, these companies took root in authorities. However, it is obvious that all the territorial proximity and/or professional of these mutual operators have developed community of specific socio-economic strategies of interlinked structures and movements. Their independence is often skills. Some groups chose the path of inter- based upon the demands of collective sector partnerships (e.g. Caisses management of sectional interests d’Epargne/MAIF/MACIF in 2005), some (farmers, craftsmen, small industrial and others chose to integrate both trades under commercial entrepreneurs, civil servants). a common holding structure (e.g. Crédit Nowadays, these historical origins explain Agricole, Crédit Mutuel) and some others the fact that they usually mention specific combined both of these approaches (e.g. principles of democracy and solidarity in Groupama). their official line. But obviously, it must be From retail banking to universal banking: remembered that, within the various a visible trend towards standardisation different companies, such signs may Over the last two decades, French indicate anything from simple institutional mutual bankers joined the international image to effective governance and movement towards industrial concentration management practice. in the financial sectors. This movement Broad targeting development strategy itself accelerated during the 1990s. and external growth Supported by the wide but not highly French mutual bankers all underwent profitable resources provided by their remarkable strategic development during traditional retail networks, several mutual the second half of the 20th century, as they groups established new development faced up to their direct competitors, the strategies, and as a consequence, renewed born and bred commercial companies, and governance structures which are now worked towards the attainment of critical openly oriented to gross banking and size [Lacoue-Labarthe, 2003]. Indeed, they financial market activities. successfully participated in the growth of More complex in their legal, economic national markets, based on the need for and financial dynamics, these holding provision of financial services within the structures aim at playing an active role in framework of territorial structures [Richez- the development of globalised finance Battisti and Gianfaldoni, 2007]. Moreover, markets (asset management, portfolio many of them very actively expanded their switching strategies, speculative trading, strategic boundaries from their traditional financial engineering...). Similarly, for membership to new customers won over around ten years, these same groups ─ the from the general public of private most important mutual retail networks ─ have tried to bring about takeovers of rival

ECIS 2009 ‐ 151 ‐ PROCEEDINGS commercial networks and/or to create these changes are regarded as major threats technical subsidiaries on the other to their vocation, purpose and principles of continents. governance by the executives of other Finally, French mutual bankers have companies ─ such as Crédit Coopératif in tended to become ever more commonplace the banking sector and MAIF, MACIF in competitors, subject to the increasing the insurance sector. technical standardization of their context, Nor is it any more surprising that some jobs and practices. These major of those mutual bankers and insurers who organizational changes affect their chose the competitive policy of alignment operational functioning as well as their are now faced with decisive, even internal management systems and their dangerous issues in the context of the strategic and institutional governance current financial crisis [Crouhy, 2008]. [Mottet, 2002; Roux, 2002; Gurtner et al., They are standing “at a crossroads” 2007]. [Pastré, 2007], oscillating between their Hybridising the structures of governance? purported historical mutual retail identity Among the changes described above, and their practised involvement in the one of the most visible and significant is search for financial performance in a the current hybridisation of the holding competitive flat world [Gurtner et al., structures of some of the main French 2007;Gurtner et al., 2006; Malherbe, mutual groups under the form of public 2008]. limited companies. On the one hand, the 2. Competitive intelligence majority of the equity capital continues to in strategic governance: be owned by the regional mutual banks guidelines and techniques [CNCE, 2008; Groupe Banque Populaire, 2008; Calyon, 2009]. On the other hand, a Having provided this general overview of floating part has been opened to market the French mutual banking operators, it is investors. This kind of institutional change now time to define the major common reflects the duality, even the managerial characteristics of Competitive Intelligence tension between two different strategic (CI) techniques. According to experts in businesses (retail operations vs. financial this managerial field, CI offers a wide techniques) but also between two spectrum of principles, methods and tools differentiated sets of governance for guiding and optimising the practice of structures, rationales and ethics (satisfying strategic management and governance in members and stakeholders vs. satisfying companies. What are CI’s main ideas and shareholders) [Jensen, 2001; Ory et al., instruments for these purposes? What are 2006; Batac et al., 2007; Gurtner et al., the principal steps for the implementation 2007, Malherbe, 2008]. of a global CI approach? It is therefore not surprising that over 2.1. From better knowledge to a better the last decade, French mutual operators in understanding of the environment general have been deeply concerned by all the implications of the debate concerning Defining the companyʼs needs for better strategic information the appropriate nature of their strategic alignment with their capitalist competitors According to its activity (-ies), any [CECEI, 2008; Richez-Battesti, 2007]. company operating in a competitive Considered as real strategic opportunities environment seeks to improve its strategic by the top managers of some French position vis-à-vis its customers, but also vis-à-vis its actual or virtual competitors, mutual groups ─ such as the bankers Crédit suppliers and other stakeholders. In this Agricole, Caisses d’Epargne, Banques perspective, gaining a sustainable Populaires and the insurer Groupama ─ competitive advantage depends on the

ECIS 2009 ‐ 152 ‐ PROCEEDINGS ability to build an alignment between its in the case of small and medium-sized position within the opportunities and businesses [Guilhon, 2004]. Moreover, threats presented by its strategic indifference appears here as one of the circumstances, on the one hand, and its many biases related to bounded rationality capacity in coordinating its internal in decision-making processes [Simon, resources, competences and capabilities on 1955]. the other [Porter, 1992]. In addition to this awareness, the Within this broad general view, CI common principles of CI emphasise the principles firstly require the definition of importance of adopting an appropriate the informational areas which need to be methodology in order to avoid pitfalls in mastered in order to make the company the resolution of complex situations. For governance as efficient as possible: this purpose, it is necessary to design a economic branch, industrial sector, country general interpretation grid allowing the aimed for export operations, public contents of the social representations that regulation authorities, existing competitors influence the decision-makers’ attitudes to and possible partners, consumers be clarified. On the basis of this cognitive associations, interest groups, etc. grid, the method then requires the building [Harbulot, 1992; Buysse and Verbeke, of a semantic map that can be shared as a 2002]. This determination of the strategic common reference for data analysis and for informational area must neither be too the expression of the company’s strategic limited, nor too wide. It must be flexible goals. This approach can easily be enough to take into account new connected to the basic representation of the circumstances or emerging obstacles ant modelisation approach: modelling is [Besson and Possin, 2001]. firstly the construction of meaningful Ideally, the determination of this representations in the modeller’s and/or informational area should be the result of a decision-maker’s mind [Le Moigne, 1999]. participative process involving the When these purposes are known and different parties concerned with governing formally approved, the next step consists and managing the company. It is currently in implementing management by process considered that benchmarking analyses of and/or by project within the organisational equivalent foreign companies offer a good structures. In this respect, activation of the basis for the precise definition of the limits networks linking the organization to its of this “cognitive field” to be mastered, environment is here a condition of notably in order to assess the company’s reliability: setting redundancy to ensure strategic responses to its various supplies, diversifying circuits of stakeholders’ value expectations [Buysse information and channels of and Verbeke, 2002; Jensen, 2002]. communication with the clientele as well Appreciating the environmentʼs level as channels towards the outer stakeholders, of complexity etc. In this perspective, CI principles also However, necessity and ease of insist on the managerial effectiveness of attainment are rarely synonymous. Prior developing autonomy throughout the awareness of this difficulty is a pre- organizational structure in order to arouse condition that should neither be ignored, initiative and competitive spirit. Finally, nor overestimated by top-managers and the parties involved in the company’s members of the boards in charge of governance and top-management are strategic governance [Génelot, 1998]. In responsible for clarifying, as often as this matter, indifferent and inhibited necessary, the sense, the meaning and the attitudes constitute major hurdles that can issues involved in their choices of action adversly affect the effectiveness and within the strategic environment. efficiency of strategic decisions, especially

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Estimating the impact of disinformation processes, resources and competences that and/or lack of information play an essential role in both the external Information has a competitive─ even and internal value chain [Porter, 1992]. CI warlike ─ dimension. Nowadays, no methods usually distinguish between: company operating in competitive markets a technological watch unit: latest can escape the conditions of economic scientific and technical advances, war. But as discussed in the previous setting up of new standards, paragraphs about awareness of instruments or processes, mapping of environmental complexity, CI guidelines competitors according to their here aim to avoid both naïve optimism and respective investments in research paranoia. The parties in charge of and development, etc. ; companies’ strategic governance must commercial watch unit: following-up constantly monitor and renew their customers and their ability to pay, knowledge of their competitive identifying new prospects, managing environment. Firstly, they need to distribution channels, commercial accurately read the decisive signals given methods etc.; out by political, economical, social, marketing watch unit: market trends, technological, environmental and legal positioning of present competitors events and changes, as classically analysed and potential newcomers, in the PESTEL model [Johnson and al., development of competitive / brand 2005]. shares, , assessment of brand and/or Some of these signals act as risk or corporate image in the customers’ threat indicators, and therefore can opinion, recognition of new needs, negatively influence their operational, if new products and services, break not their strategic performance in both changes or innovations affecting short-term and long-term perspectives. customers’ behaviour, etc.; Secondly, decision-makers in governance a purchasing watch unit centred on and strategic management also need to put prices and tariffs, the suppliers’ policies in place to protect the company’s financial health, assessment of own key information from possible possible partnerships and malicious or hostile infiltration. Here appropriateness or risk of sharing the again, the CI approach clearly depends development of new components, upon the decision-makers’ degree of products or services, etc. awareness of the actual strategic legal watch unit: changes in national or challenges as well as of their own possible supranational laws, acts and cognitive biases. regulations, jurisprudence, parliamentary debates etc. . 2.2. From better understanding and more generally, a competitive to better action. watch unit which first synthesizes the The organisation of strategic watch main opportunities and threats In order to maintain and even develop pinpointed by the previous the ability to accurately construe the specialized watch units, and whose signals sent out by the strategic aim is the assessment of their environment, generic CI principles possible impact in terms of recommend the organisation of technology, finance and human informational watch. This watch must be resources as well as in relation to active in the different functions, processes, external competition and resources and competences involved in the cooperation. strategic business (-es) [Jakobiak, 2006], The common CI literature considers that and more precisely, in those functions, the watch processes are based essentially

ECIS 2009 ‐ 154 ‐ PROCEEDINGS upon open information. They are aimed at Building a cognitively grounded strategic view recognising reliable and significant signals Possession of important information or amongst the diverse information collected knowledge is useless if this information or in the company’s strategic environment. knowledge does not directly inform This interpretation has its roots in decision-making. The condition for experience and benchmarking [Marcon and success in this respect is that such Moinet, 2006], accordingly, in order to information is able to penetrate into the remain pertinent, competent watch requires decision-makers’ cognitive field, or in not only frequent updating of its other ─ more direct ─ words, that the top- informational contents, but also, regular staff and those in charge of governance in upgrading of its collection and analysis the company are willing to accept this processes. informational model as being significant The implementation of [Génelot, 1998; Le Moigne, 1999]. In knowledge management accordance with the classical design of Within the same perspective, managers’ roles, CI guidelines recommend competitive watch is complemented by that the board of directors and the knowledge management tools and executive managers should ensure that methods. As mentioned earlier on many effective competitive intelligence occasions, benchmarking is one of the strategies reach the majority of decision- main KM instruments. KM consists not makers within an organization. But there is only in a collection of technologies and obviously no miracle solution for obtaining applications but also in a well thought-out an open-minded attitude among a approach, relying on a managerial attitude company’s various functional and of open-mindedness and communication operative managers. As a matter of fact, [Balmisse, 2002]. KM’s first requirement the top-managers themselves are the is the ability to stimulate interest among primary and major parties that must be the parties in charge of the company’s convinced of the relevance of such an strategic governance and management. approach. Because their cognitive Then, once this attitude has been orientation has a major influence on the established, it consists in sorting and construction of the company’s strategic exploiting the selected information. view, in accordance with its principles of At this stage, the methodology follows governance, and on its assimilation and the intelligence cycle, which is made up of implementation by all of the parties the following elements [Lucas and concerned by critical connections with the Tiffreau, 2001]: strategic environment. free questioning and expression of Establishing a global and coherent strategic information is needed in order to set vision up guidelines for the KM policy; According to CI authors, company building a research profile to collect strategic governance nowadays requires a interesting strategic information; global and coherent vision, based on CI exploitation of the informational methods and tools. Knowledge contents through a sequence of management and correlative benchmarking cognitive checks, processing, programs lead to a renewed appraisal of analysis and synthesis; facts in a broadened sense. However, distribution and accumulation of beyond this necessary but insufficient knowledge (wide or restricted instrumentation, the top-managers and according to subjects and other officials in charge of the governance addressees). of the company must develop their strategic culture in a historical perspective, not only from a short-term and/or technical

ECIS 2009 ‐ 155 ‐ PROCEEDINGS point of view [Génelot, 1998]. The result is defensive culture [Miles and Snow, 1978]. that the issues raised by today’s activity In both cases - but particularly for can be usefully read in the light of past defensive purposes - the organization has events, in order to draw several lessons to detect its own strategic weaknesses in from them, significant to a comprehensive comparison with the threats ands risks of knowledge of the present and useful for the its present positioning and historical management of future developments. development. To reduce its weaknesses However, in this perspective, once ─ in other words to lessen its exposure to again, it is very much in the interest of these environmental threats and risks ─ the executive managers and directors in charge company needs a fair assessment of the of strategic governance that they become situation, free from any naive or paranoid aware that their strategic vision of attitudes. But close involvement with environment and resources is always action and operational issues often renders conditioned by the biases of their cognitive managers effectively incapable of prism [Johnson et al., 2005]. The rational conducting a critical analysis of their own prism postulates, for example, that practice. For this purpose, using the strategic complexity can be reduced by services of a specialised consultant can be appropriate technical knowledge and a helpful practice. methods, such as the well-known matrices of the 1960s. Rigorously structured Strengthening organisational reactivity analyses lead to optimised strategic and readjusting strategic planning choices. Conversely, the empirical prism Following the example provided by considers that individual and/or collective servo-control systems, corrections must be experience is the only key that allows applied as quickly as possible and provide efficient decisions to be made. Here, appropriate responses to changes in the strategic choices in the positioning of the strategic environment. But here as in many company and in the development of its common circumstances, acting quickly performance do not rely upon making does not mean acting in great haste. information explicit through formal Officials and executives must be able to techniques. They result in large part from develop organisational behaviour, based on the tacit subjective/ inter-subjective collective learning and principles of knowledge that parties having autonomy. From this point of view, project responsibilities within the organization management and process management have assimilated while accumulating techniques offer efficient ways of professional experience. promoting a managerial culture, which enhances strategic reactivity and 2.3. From better action adaptability. Whether a company chooses a to better management determined or emergent strategy Defining and protecting areas of vulnerability [Mintzberg and Waters, 1985], its Any company makes efforts to control approach to strategic planning must the strategic resources on which not only include specific mechanisms for adapting its development, but more essentially, its to changes in its environment survival depend [Pfeffer and Salancik, (recursiveness, iteration, etc.). In any case, 1978]. For this reason, identifying this adaptive design approach to strategic environmental uncertainties in order to planning must be the result of an active reduce them and to protect one’s vital KM policy within and throughout the resources is a major issue in strategic organisation. governance. CI can be implemented in a Influencing the environment prospective or a defensive approach, One of the most significant respectively related to a prospective or transformations in the governance and

ECIS 2009 ‐ 156 ‐ PROCEEDINGS management of companies over recent November 2006 by two French mutual decades has probably been the change in banking groups, the Caisse d’Epargne the representation and practice of power Group and the Banque Populaire Group. [Giddens, 1979, 1984; Mintzberg, 1989;]. Natixis SA is a public listed company set Instead of the classical conception of up following the merger of the former power, essentially normative and specialised subsidiaries of these two hierarchical, contemporary views of mutual banking groups, respectively Ixis governance and strategic management tend Corporate & Investment and Natexis SA. to be based on the idea of acting through Natixis SA now plays the role of a joint- networks of influence. Besides relations of holding structure that manages the competition and agency, relations of financial activities of these numerous influence constitute a significant lever for specialised subsidiaries and consolidates the improvement of a company’s position their results [Natixis, 2008a, 2008b]. At in the strategic arena, in relation to three this stage of our research, the information categories of stakeholders: competitors, and comments contained in the following public authorities and other socio-political pages are uniquely based upon available groups such as associations, trade unions public sources (mainly official publications etc. [Attarca, 2000]. Lobbying policy is a from companies and the economic press basic lever of this CI oriented conception over recent years). of strategic governance and management. This determination to influence 3.1. Natixis (2006-2008): structures, decision-makers, both in the organization activities and performance and in the environment, depends upon the Natixisʼ governance structure ability to present them with the key factors needed for the analysis and resolution of a According to the core shareholders’ given problem, in accordance with the founding agreement, the Caisse d’Epargne company’s principles of governance and Group and the Banque Populaire Group strategic guidelines. In this context, it is a together own a majority holding in the question of "searching, processing and company (68.90 %), each of them owning supplying useful information to economic exactly the same proportion of the capital actors" [Mongin and Tognini, 2003]. (34.45 %). On 31 December 2007, the Although this CI definition is partial, it remaining 31.1 % of the capital was owned seems adequate for taking into by two European investors, DZ Bank AG consideration a company’s connections of (1.87 %) and San Paolo Intesa (1.68 %) influence with its strategic environment. and various other international Business life and organisational life as well shareholders (27.55 % free float). In turn, as social life are a network of influences Natixis SA holds 20 % of the capital of its [Mintzberg, 1983]. Some of these two main owners’ central bodies, Caisse influences are consciously exerted by Nationale des Caisses d’Epargne (CNCE) strategic actors, others are not; similarly, and Banque Fédérale des Banques they may be partial or complete, regular or Populaires (BFBP) in the form of intermittent. Company strategic preference non-voting shares [Natixis, governance and management therefore 2008a, 2008b]. needs to include a policy of influence, even Natixis was created with the legal status a lobbying strategy. of a French public company listed on the stock exchange. Under this status, the 3. The Natixis case: French mutual bank’s corporate governance is managed bankers in the financial turmoil by an executive board composed of three Natixis is a French corporate and members (executive chairman, chief investment bank, jointly created on 17 executive officer and board member), assisted by an executive committee (11

ECIS 2009 ‐ 157 ‐ PROCEEDINGS managers in charge of the main functional France and abroad (OCEOR, Crédit activities). This governance structure is Foncier, Banque Palatine…), in the placed under the authority of a supervisory insurance sector (partnerships with mutual board of 21 members (chairman, 2 vice- insurers like MAIF and MACIF), in real chairmen, 15 members, 2 non-voting estate and the social housing services and, directors and a board secretary). Among last but not least, in the global finance the supervisory board’s 18 voting activities operated by the Natixis Group members, four people are chairmen or [CNCE, 2007; Natixis, 2008]. executives of large industrial or service Established as a société anonyme à groups. All other acting members are directoire under French law (stock chairmen or executives in the central corporation with a board of directors), the structures and regional mutual banks of the CNCE is administered by a five-member two owning groups: 7 belong to the Caisse management board. The supervisory board d’Epargne Group and 7 others to the of the group’s central structure is Banque Populaire Group [Natixis, 2008b]. comprised of 20 members. 18 sitting The Caisse d’Epargne Group and the members represent the Caisse d’Epargne Banque Populaire Group are both large regional mutual banks as the CNCE’s mutual retail bankers in France, operating exclusive shareholders, and the two other in every French region, in the French voting members are directly elected by the overseas territories and, for some network’s employees. The CNCE’s activities, abroad through foreign supervisory board also includes six non- subsidiaries. They are also present in other voting members who have a consultative banking activities through bought-out capacity. Among these members, two are commercial competitors or through from the network and the FNCE, one from specialised subsidiaries positioned in Natixis, the remaining three are chairmen technical segments. or top-managers from major external The structures of governance corporations [CNCE, 2007]. of Natixisʼ two core shareholders With a very similar structure, the The Caisse d’Epargne Group is Banque Populaire Group relies on a currently comprised of 21 regional banks, network of 18 regional mutual banks, two which have been organised in the form of other specialised retail mutual banks - mutual banks since 1999, 80 % of whose Crédit Coopératif (dedicated to the social stakes are owned by local funds and solidarity economy) and CASDEN representing 3.5 million members. These (specialised for teachers) - and the joint 21 regional banks operate retail banking mutual bank Crédit Maritime Mutuel. All activities and services (private and of these operational entities are owned by a professional clients) as well as regional community of 3.4 million members. In development activities, such as financing turn, the 20 mutual banks own the common companies’ management and investment head structure, the Banque Fédérale des needs as well as those of local authorities, Banques Populaires (BPBP), on an almost hospitals, social housing associations etc. exclusive basis. The group has two central bodies: the Since 2007 the BPFP, the group’s Fédération Nationale des Caisses central body, has been acting as a holding d’Epargne (FNCE) plays the role of the company, integrating many subsidiaries network’s political head, while the Caisse such as commercial banks in France: Nationale des Caisses d’Epargne (CNCE) (Société Marseillaise de Crédit and the acts as the federative financial holding former French HSBC subsidiaries), finance structure, entirely owned by the regional service companies (Foncia), and also banks. Moreover, the CNCE owns many shareholding in foreign retail mutual banks subsidiaries in commercial banking in (Volksbank International). Lastly, since

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1996 the BFBP has held joint ownership of business information and receivables the corporate and investment bank Natixis, management. with the Caisse d’Epargne Group. In many of these various activities, The Banque Populaire’s various Natixis is a major player, not only on the operational mutual banks are set up with French market but also in Europe and even French legal status of “société coopérative worldwide [Natixis, 2008a, 2008b]: de banque”. Their corporate governance is At the end of 2007 for example, for organised with a chairman and chief corporate and investment banking executive officer, assisted by vice- activities, Natixis was ranked No. 2 chairmen. The board of executives is worldwide in primary jumbo covered supervised by a board of trustees, elected bond issues and No. 6 worldwide in from among the bank’s members aircraft financing. (cooperative shareholders). The same Concerning asset management institutional principles regulate corporate activities, Natixis was ranked as first governance at BFBP level. Unlike the operator on the French market, 5th in Caisse d’Epargne Group, governance is Europe and 13th in the world. only open to chairmen and executive Similar rankings can also be found managers of the group’s central and concerning service activities ─ with, regional structures [Groupe Banque especially, a position as leader in Populaire, 2008; Natixis, 2008]. France for insurance and Natixisʼ strategic activities and development sureties/financial guarantees and On behalf of its two majority employees’ benefit planning shareholders, Natixis operates in five activities. financial fields, the first two are oriented In its fourth strategic area of activities, towards banking activities and the three the receivables management, Natixis others concern expertise in financial appears among the world’s top ten companies with strong positions in operations: rd Corporate and investment banking credit insurance (3 ), receivables management (6th) and business including activities in coverage, th capital markets, debt and finance. information (7 ). Asset management comprising technical With regard to this data, since its resources and competences dedicated creation in late 2006, Natixis’ positioning to financial and real estate asset and development stands out as a successful management. strategic experience in the globalised Private equity and private banking world of finance and gross banking. It bringing together competences such could even be interpreted as a real success as operations in expansion capital, story in the joint-venture strategy managed buy-ins/buy-outs, venture capital, by both of its majority owners, the French private banking and wealth mutual banking Caisse d’Epargne and management. Banque Populaire groups. A set of activities is grouped under the Natixis security: a spectacular collapse generic name of services, ranging from insurance, sureties and financial But this is the other side of the coin, the guaranties to consumer financing, strong positions held by Natixis in its employee benefit planning, payments different activities are not sufficient to and securities services. eclipse the collapse of the quoted price of Lastly, receivables management its securities after their issue in late 2006. covering other specialised services Figure 1: Natixisʼ quotations from 6 December 2006 to 30 January 2009 such as credit insurance, factoring, (source: http://www.natixis.com)

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was caused by losses of €1.2 billion in corporate and investment banking ─ without here taking into account the consequences of Natixis’ involvement in the Madoff case in December 2008 [Les Echos, 2008-11-13, 2008-11-28, 2008-12- 16]. Figure 2 : Number of transactions on Natixis security from 2006.12.06 to 2009.01.30 (source : http://www.natixis.com)

Figure 1 above shows the spectacular decrease in their market value over a period of almost 26 months following their issue on 6 December 2006 at a unit price Figure 2 shows the variations in the of €19.55. The next day, capital amounting daily number of transactions on Natixis’ to €4.2 billion was raised, while the price securities during the same period. It shows per share reached €22.38 [Les Echos, repeated intensification in autumn 2008. 2007-12-07]. On 30 January 2009, the This can be explained in September by the price opened at €1.17 and closed at €1.23 recapitalisation issue, but on a much larger per share. In the meantime, the value of scale, by the brutal push in the hottest days Natixis securities has therefore of October, when the financial markets spectacularly decreased by almost 94% were under the pressure of the systemic compared with their initial price. In risk threatening the global banking October 2007, Natixis’ bad performance industry. still placed it second in continental Europe Facing the accelerated collapse of [Les Echos, 2007-10-27]. Furthermore, Natixis’ securities, the French authorities over this period of more than 2 years, this gave attention to Natixis’ difficulties. major collapse could not be offset by the During 2008, the Autorité des Marchés repeated capital contributions made by Financiers (AMF) - the French market both of its core shareholders. The two regulation authority - opened several mutual owners’ holding structures, the inquiries relating to the depreciation of CNCE and the BFBP, successively Natixis’ securities. In October 2008, the provided direct joint-contributions of €1 AMF set up an investigation on suspicious billion and later of €1.5 billion to Natixis arbitrage behaviour among some of [Les Echos, 2008-06-27]. They also Natixis’ competitors during the carried out a €3.7 billion recapitalisation of recapitalisation operation carried out in their subsidiary in September 2008, September [Les Echos, 2008-10-01]. In the through the sale of 1.7 billion new shares same period and for the second time that at a unit price of €2.25 [Les Echos, 2008- year, the French Parliament’s finance 09-22, 2008-10-07]. commission took an interest in Natixis’ Despite these injections of money, situation and its strategic governance as Natixis’ financial situation has still gone well as in the involvement of its core from bad to worse, without its negative shareholders, particularly, the Caisse performances being offset, with registered d’Epargne Group [Assemblée Nationale, write-offs in 2007 while it announced a net 2008b]. loss for the first nine months of 2008. This provisional €636 million negative result

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3.2. Underestimation of environmental risks The second environmental key in investment banking mechanism affecting Natixis’ case was the The trigger: the ʻsubprime crisis accelerated securitisation of subprime From a contextual point of view, the mortgages, related to a technical process in strong depreciation in Natixis’ securities the globalised finance markets [Sapir, can not be separated from the general 2008; Kohler, 2008]. This process was downward trend on the globalised financial carried out in four stages based on the markets that became a panic movement, issuing of sophisticated securities known especially for securities in the banking as ‘derivatives’ and ‘derivatives of sector in the autumn of 2008. Operating derivatives’. worldwide as a corporate and investment The amplifier: unsecured securitisation bank, Natixis was obviously affected by all In the first stage, credit institutions of the effects of the subprime crisis in the issued structured bundles of mortgage- USA and its financial difficulties were loans called Mortgage-Backed Securities, compounded by the severe problems including a proportion of subprime assets. resulting from the credit-bubble that MBS are a specialised kind of ABS (Asset- developed in the US real estate market. Backed Securities) credit derivatives. The latter “had become disconnected from These credit derivatives were offered on the general level of economic activity and financial markets to investors such as other was boosted purely by speculation” [Sapir, banks, insurers and industrial groups. In 2008] the USA, the development of credit The first environmental key-mechanism derivatives was so rapid that from 2006 of this critical sequence of events has its onwards, it represented more than 75 % of roots in the aggressive credit strategies the subprime mortgage volume: 1,500 followed by many US banks on the billion USD in 2002, 8,500 billion USD in housing market and was caused, or at least 2004 and 45,500 billion USD in 2007 prompted by the low money-market rates [Sapir, 2008]. decided upon by the Federal Reserve from Secondly, after 2005, in response to the 2002-2003 onwards. From the beginning increasing demand from international of the decade onwards, US retail banking investors for high-return transactions, US companies granted subprime loans to banks applied a second technical solution borrowers whose credit-worthiness was by issuing “derivatives of derivatives” in highly doubtful. They considered that the the form of obligations called CDOs risk entailed by their high debt-to-income (Collateralised Debt Obligations) and later ratio could be offset, firstly by adjustable synthetic CDOs. A synthetic CDO is a rate mortgages, and secondly, in case of structured credit product based on credit default and foreclosure, by the positive default swaps rather than physical debt effects of increasing transaction volumes securities. Derivatives of derivatives here and prices. Until 2006, housing-market play the role of coverage instruments prices rose regularly for many years and [Kohler, 2008]. In simple terms, CDOs can the community of financial operators be divided into three portions defined by hoped that they would continue to rise: that increasing levels of risk: senior or super- is to say bankers, investors, rating agencies senior, mezzanine and equity. Using the and a majority of credit economists [Sapir, deregulation of globalised finance markets 2008, Crouhy, 2008]. 2007 revealed the as a major strategic opportunity, many US surprisingly bad news when it was bankers set up dedicated entities, both estimated that foreclosure activities domestically and abroad, to manage the affected nearly 1.3 million U.S. housing issuing of CDOs, such as Special Purpose properties, an increase of 79% as Vehicles (SPV) [Sapir, 2008]. compared with 2006 [RealTrac, 2008].

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However, thirdly, ‘derivatives of principle, a central feature of the IAS/IFRS derivatives’ were not considered to be accounting standards applicable in sufficient in themselves to attract European countries. According to a vice- investors; as a consequence, credit chairman of the IASB (International enhancement institutions became involved Accounting Standards Board), steady in the securitisation process. Having financial results for banks are not appeared in the 1970s-1980s, credit compatible with the essential volatility of enhancers are specialised US insurers, financial markets [Le Monde, 2003-10-31]. which ensure the timely repayment of bond In this way, companies’ assets and principal and interest when an issuer liabilities ─ and particularly those of the defaults. They are commonly called public listed banks ─ must be valued ‘monolines’ because they originally according to their exchange price on the exerted a sole line of business, in the case financial markets. A technical standard of in point, providing bond insurance services this nature, specifying the required book to municipal issuers. In the 2000s, many value, is not purely an objective and credit enhancers ─ such as Ambac, MBIA, rational rule, as claimed in IASB XL Capital, FSA, CFIG, etc ─ diversified communications [IASB, 2008] but is rather their activities by offering guarantees to an institutionalised indicator of socio- issuers of structured credit securities. For economic convention, reflecting the socio- this purpose, they bought senior portions political process structuring modern of CDOs estimated at 2,000 billion to financial capitalism [Chiapello, 2005]. Due 2,400 billion USD according to figures to the ‘fair value’ principle, information on mentioned in French economic sources organisations’ economic activities and [Les Echos, 2007-12-26; La Tribune, performance is currently centered on the 2008-02-13]. The final point about credit shareholder’s financial view and interests, enhancers is that most of these US insurers despite the appearance of references to the followed the general movement of stakeholders in IAS/IFRS literature financial entities and transferred their [Demaria and Frery, 2007]. Before the company’s head offices to exotic settings financial crisis, the question of fairness such as Bermuda. was almost solely of interest to researchers In the fourth stage of the process, owing and auditors [Ernst & Young, 2005]. But to the guarantees subscribed with the since 2007, many investors and company monolines, the securities’ issuers took managers have criticised the accelerating advantage of high ratings ─ such as effect of the purely financial valuation of AAA ─ granted by the well-known credit their companies [Le Journal des Finances, rating agencies like Standard & Poor’s, 2008-03-21; Les Echos, 2007-12-10]. Moody’s and Fitch’s. Based on these Following IAS/IFRS rules, French banks rating procedures, the process finally came such as Natixis and its owners’ central full circle when international investors and bodies were unable to avoid this corporate and investment banks bought intensification of their price depreciation these structured securities [Sapir, 2008, and seem to have been harshly affected by Crouhy, 2008]. this similarly underestimated risk in their strategic environment. The loudspeaker: financial volatility and the IAS/IFRS ʻfair valueʼ principle 3.3. Natixis and its mutual core shareholders facing the crisis A third key mechanism should be briefly mentioned, although it will not be From strategic euphoria to breakdown developed at length in this paper. This last A very large majority of financial environmental risk factor operates operators ─ issuers, enhancers, rating downstream and concerns the ‘fair value’

ECIS 2009 ‐ 162 ‐ PROCEEDINGS agencies and investors ─ shared the same reinsurer set up in Bermuda [CIFG, 2002- confidence in sustainable economic growth 01-07, 2002-06-01, 2003-02-26]. in the US. Fed by what the operators In 2006, the outstanding credit considered as a rising trend on the US guaranteed by CIFG rose sharply, from 38 housing market, the globalised to 78 billion USD, exposing Natixis to the securitisation process seemed to be problems induced by the emerging soundly built upon a double advantage: subprime crisis [Mauduit, 2008]. In July obtaining high returns on investments 2007, Natixis decided to provide the credit while benefiting from repayment security enhancer with an additional 100 million guaranteed by credit enhancers and USD in growth capital, claiming in a press assessed by the most famous rating release that this “injection of additional agencies [Sapir, 2008, Crouhy, 2008]. But equity (...) demonstrates how satisfied we from mid 2006, the underestimated risks are with CIFG’s performance” [Natixis, showed their effects with the slowdown, 2007]. However, beyond the public braking and, finally, collapse of the relations claims, Natixis executive housing market, calling the mortgage managers and those of both of its lenders into question. Within a few controlling shareholders, the Caisse months, a domino effect spread throughout d’Epargne Group and the Banque the entire securitisation process, inducing a Populaire Group, seem to have become major crisis of confidence among aware of the major financial risk in early operators. Security issuers, credit 2007. enhancers and investors suddenly became Although this was repeatedly denied by aware that they were not able to precisely Charles Milhaud, when he was executive estimate their exposure to the risks of chairman of the CNCE [Les Echos, 2008- excessive borrower indebtedness in a 09-08; Assemblée Nationale, 2008b], the swinging housing market. As a CNCE and the BFBP decided in late consequence of this domino effect; a September 2007 to find a new buyer or Natixis expert stated in an international investor on the international markets. conference that an “unprecedentedly However, the search proved ineffective massive quantity of senior portions of because of the general decline in the subprime CDOs were downgraded from financial markets and the very low triple-A to junk within a short period of attractiveness of credit enhancement time” [Crouhy, 2008] entities in this critical context. Both of Natixis’ main owners were compelled to Natixis, CNCE and BFBP facing the monoline CIFGʼs losses buy CIFG directly in November 2007 [Mauduit, 2008]. Having provided at that As a result of the 2006 merger of the date 1.5 billion USD in capital support to Banque Populaire and Caisse d’Epargne buy out CIFG, the two French mutual groups’ corporate and investment banking groups became the credit subsidiaries, Natixis held shares in CFIG, a enhancement company’s sole shareholders. US monoline company created in 2002, in Finally, despite the reminder by Moody’s, which the Caisse d’Epargne Group had Standard & Poor’s and Fitch’s regarding invested in 2004 through its dedicated the CIFG’s triple-A rating in its press entity, IXIS. CFIG ranked among the 8 releases [CIFG, 2007-12-21], the Caisse major credit enhancers in the USA insuring d’Epargne Group and the Banque structured finance, public finance and Populaire Group had to deal with the infrastructure transactions. CIFG’s difficult circumstances in which CFIG and structure was composed of CIFG North Natixis found themselves. CFIG’s America, CIFG Europe - a monoline outstanding debts were estimated at around financial guarantee company operating in €70 billion in February 2008 and impacted Europe – and, lastly, CIFG, a dedicated

ECIS 2009 ‐ 163 ‐ PROCEEDINGS the continuous depreciation of Natixis’ experts, through their joint-dedicated entity securities prices [Assemblée Nationale, Natixis. These consequences could/should 2008a, 2008b]. affect technical, organisational and human Waterfall losses for the two mutual bankers resources thus reinforcing the negative institutional image of bankers in French As described above (cf. supra 3.1), the society, even when they claim allegiance two mutual banks’ successive attempts to to mutual social responsibility. Finally, the provide new resources to Natixis itself did global financial turmoil triggered by the not succeed in halting the progressive US subprime crisis became, within a few collapse of their subsidiary’s securities months, an internal crisis of confidence [Les Echos, 2008-09-22, 2008-10-07, within the Caisse d’Epargne Group’s 2008-11-28]. For Natixis, estimated losses governance. This led to the replacement of reached €1.2 billion for the first quarter of its chairman, Charles Milhaud 2008 alone, without including the losses [La Tribune, 2008]. It has also caused due to the Madoff case in December 2008 ongoing suspicion and political difficulties [Les Echos, 2008-12-16]. Under such within the strategic negotiations circumstances, the corporate strategic and concerning the strengthening of the two restructuring plan announced in May 2008 mutual groups’ partnership [Les Echos, ─ involving 1,100 lay-offs of which 850 in 2009-01-09], after a long period where France ─ was considered as insufficient by Caisse d’Epargne and Banque Populaire both shareholders [Les Echos, 2008-05-16, repeatedly insisted upon their joint desire 2008], as stated by the CEO in March for a merger of their central structures 2008: “Natixis is too small, too heavy, not [Les Echos, 2008-10-11]. reactive enough” [CFDT Banques, 2008]. Moreover and far worse, in late 2008, 4. Competitive Intelligence, global both mutual groups were exposed to losses finance and French mutual banks in their respective central structures, Despite these waterfall recapitalisations, although they made profits in their retail losses and write-offs, Natixis was banking and real estate activities. These relatively less exposed than other major disastrous performances obviously resulted players in the banking and insurance from their co-subsidiaries’ financial woes: industries such as Union de Banques Natixis in corporate and investment Suisses (about 38 billion USD) and Meryll banking, CIFG in credit enhancement Lynch (about 25 billion USD). However, activities. The Caisse d’Epargne Group an issue remains concerning the difficulty and the Banque Populaire Group were both of distinguishing Natixis’ behaviour from in the red on 31 December 2008. The that of its competitors. In fact, this Caisse d’Epargne Group announced losses difficulty can be dealt with through two of €751 million for the first 9 months of types of questioning that are deeply the year [Les Echos, 2008-12-16] while the intertwined with the Natixis case, which last known estimations at early 2009 were will be later pointed out and discussed between 1.5 and 2 billion euros [Les separately, in order to facilitate conceptual Echos, 2009-01-22]. examination and development: Owing to both banking groups’ In the strategic environment of interlinked ownership structures, their corporate and investment activities, central bodies, the CBCE and BFBP, could what was taken by the majority of ─ even should ─ compel their owners, the competitors to be an unmissable regional mutual banks, in 2009, to pay the opportunity in 2005-2006 has proven consequences of the financial policies a bitter, not to say painful, example levered into place over the previous three of miscalculation of risks in a years by empowered top-managers and misunderstood strategic

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environment. To what extent can or direct strategic governance of gross- could a CI approach help banking banking entities dated back to the end of operators to identify, evaluate and the 1990s, i.e. at a time when they were manage the double-sided risks of relative newcomers in comparison with their participation in the globalised most of their national and international finance markets? rivals. But in the mid 2000s, their top- The mutual governance origins of managers aimed at becoming large-scale Natixis’ two majority shareholders, competitors in the opened channels of the Caisse d’Epargne and the Banque international finance. Consequently, they Populaire groups, seem quite needed to focus their abilities and obviously not to have carried much resources on acting globally or, at least on weight in the strategic analyses and intercontinental operations between their decision-making processes. French bases and the very attractive North Concerning the particular hybrid American opportunities. structure of mutual groups of Caisse dʼEpargne and Banque Populaireʼs regional banks as both of Natixis’ mimetic strategy owners, what specific factors should In the perspective of this paper, it must be taken into consideration for the be repeated that such a merger strategy, implementation of a relevant CI centred on finance activities, was not approach? Which conditions should particularly original when compared with be better understood in order to observed behaviours which had already comply with and serve the logic of been standard practice for many years in corporate governance based on the international banking industries, and democratic principles? more specifically, in the French mutual 4.1. Strategic intelligence in the arena of banking sector. In 2004, Crédit Agricole globalised finance: the risks of ─ the French leader in retail banking, benchmarking in a mimetic world? which also has mutual origins ─ carried out One of the internal origins of Natixis’ a comparable merger, creating Calyon as a difficulties might be found in the relative joint entity for corporate and investment lateness of its joint-creation by the Caisse activities, from its own Crédit Agricole d’Epargne and Banque Populaire groups. Indosuez structure and the corresponding In March 2006, the top managements of subsidiary of Crédit Lyonnais, the Banque the two French mutual banking groups de Financement et d’Investissement announced their joint-decision to set up a [Calyon, 2009]. strategic partnership between their central With some latency, both of Natixis’ bodies. The underlying idea was and core shareholders joined the movement remained in the early weeks of 2009 the towards concentration of specialised subsequent development of extended structures, enlarging their operating cooperation in many of their banking and capacity as international players in services activities. Natixis was established globalised financial competition. In in November 2006 as a co-subsidiary of making such strategic decisions, they the CNCE and BFBP and resulted from the followed the international crowd of merger of gross and specialised banking bankers and insurers looking for activities, notably corporate and opportunities to increase their profit levels. investment activities such as asset The main point here is not to question nor management. challenge the advantages that imitation of Neither the Caisse d’Epargne Group nor competitors offers to strategic players. the Banque Populaire Group was an Similarities in the definition and absolute beginner in financial markets. implementation of strategies are a very However, their respective experiences in commonplace reality in many sectors, so

ECIS 2009 ‐ 165 ‐ PROCEEDINGS that it is possible to qualify these not only based on normative financial mainstream strategies with the adjective techniques and standards (normative ‘orthodox’ [Johnson et al., 2005]. processes) but also on a certain need to However, understanding the competitive belong to a global flat and open alignments in a specific industry, such as professional community. Moreover, the banking, is not a question of mechanically hypothesis can be advanced that this need copying the other competitors’ choices and was particularly strong for French mutual behaviours. In general it is not even a bankers who had recently become directly question of following a rational strategy of involved in international circuits, whereas imitation in order to reach their level of they were themselves products of the performance, unlike CI principles which history of national retail banking. advise the use of voluntary benchmark In this way, mimetic processes exerted a analyses [Harbulot, 1992; Buysse and major influence upon these bankers and Verbeke, 2002]. The causes here can be investors. Like almost all of their major found through an understanding of the competitors and peers, Natixis, the CNCE attitudes of an individual competitor who and the BFPV top-managers and experts wants to model his behaviour on that of his were obviously seeking high profits in the rivals. In this perspective, the search for securitisation circuits. By following the reciprocal legitimation among competitors crowd of these rivals and partners, they is a major issue that guides their strategic thought that they had found valid choices and which can be conceptualised procedures and instruments for reducing in complementary outlooks. the uncertainty of strategic decision- A neo-institutionalist approach: mimetism making in the complex environment of the as a strategic decision-making process finance industries. But on a much deeper Firstly, from a neo-institutionalist point level, they were possibly seeking of view, convergent choices such as professional recognition among their peers, organising a joint-venture in corporate and the players of global finance. Such investment banking, can be analysed as the cognitive attitudes can act as a strong result of isomorphic processes that can be, structuring feature in the managerial according to the circumstances, either approach to strategic diagnosis. Strategic coercive or mimetic or normative positioning and strategic design [DiMaggio and Powell, 1983]. In the case development are always related to events of Natixis, the setting up, the structural path-dependencies in the history of organisation and the positioning decisions organizations and in the way their on the markets were not the effects of decision-makers think [Martinet, 2000]. strategic coercion, as in the case of agency Moreover, finance-oriented mimetism relation structures [Jensen and Meckling, in the strategic governance of mutual 1976, Jensen, 2001], for example, the banking groups is related to the theoretical outsourcing cooperation between a major debate about the embeddedness of assembly-manufacturer and its parts- economic and social structures [Polanyi, manufacturers in the automotive sector. 1944; Granovetter, 1985]. In this view, The Natixis, Caisse d’Epargne and according to their historical origins, French Banque Populaire groups are not only groups of mutual banks were entities controlled by mutual banks. They institutionalised during the 20th century in are also players in the dual world of the form of networks of territorial entities international bankers and investors, with democratic governance structures. operating at the same time as strategic Financial performance was embedded in competitors and as institutional partners on their socio-economic vocation, placed the globalised finance markets. This under the joint control of regional duality of rivalry and interdependence is membership and regional management.

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From the 1980s/1990s onwards, the ability to influence. Rules and resources transformation of these networks into are both used by every agent in the group structures came about with the production or reproduction of social life. emergence of a global self-regulated When one considers the strategic finance market. The representations and choices operated by the Caisse d’Epargne logical systems characteristic to the and Banque Populaire groups, in their competitive environment moved from relations with the financial environment, retail and territorial banking to gross and through their joint subsidiaries in corporate international finance markets. As an and investment banking and in credit internal consequence of this displacement insurance, mimetism can be understood as of external scope, financial performance a very traditional process of social became, within a few years, an uncritically structuration. On the one hand, such accepted goal and a major competitive strategic players as the CNCE and the issue for the heads of central entities. Over BFPB brought economic and political a period of one or two decades, the mission resources to Natixis and CIFG, which goals of groups of mutual banks were mostly came from their retail banking subordinated to system goals in the flow of structures (capital, formal governance a socio-political transition [Mintzberg, legitimacy). On the other hand, however, 1983, 1989]. Mutual banking logic was their access to market activities and yields now embedded within the framework of was basically conditioned by the need to market dynamics. Competitive action and adopt ─ perhaps to follow ─ the structuring governance structure changed codes in terms of financial techniques, correlatively. regulations and professional behaviour. A structurationist approach: rules and And these social codes were controlled by resources, cooperation and influence Natixis and CFIG managers and experts, in In a structurationist outlook, structure accordance with a common global and action are linked by a double community of reasoning and decision- interaction loop [Giddens, 1979, 1984]. making shared by the finance sphere’s Social action is not possible without a operators [Godechot, 2001]. supporting social structure that provides a At a structural level, the interpretational framework for social relationships¸ approach is here very close to those of firm behaviours and decisions. Social structure, behavioural theory [Cyert and March, in turn, must be understood as the result of 1963] and agency relations models, whose the operation of social action within these designs are based upon informational relationships, behaviours and decisions. asymmetry [Jensen and Meckling, 1976; Strategic choices appear as significant Jensen, 2001, 2002] between two actions instigated by individual actors differentiated categories of actors within ─ executive managers for example ─ acting the organisational structure: top-managers within the framework of social and members of boards of directors on the structures (e.g. the head of a company one hand, analysts as members of a and/or a market). In Gidden’s perspective, financial technostructure on the other social structures’ properties consist of rules [Mintzberg, 1983; 1989]. In a social action and resources. Taken in a general sense, perspective, it can also be related to action rules have various forms, such as technical theories such as socio-political [Crozier standards, social standards or common and Friedberg, 1979; Friedberg, 1993] and cultural values, for example, shared by socio-regulationalist views [Reynaud, players competing or cooperating in a 1993; Sainsaulieu, 2003]. According to professional context. Resources can Giddens, strategic intelligence in finance broadly be thought of as economic and market activities is a matter of structure technical means, professional abilities and and action. In other words, structure is

ECIS 2009 ‐ 167 ‐ PROCEEDINGS embedded in action and action is management revealed not only the need, embedded in structure. but also the will to conform to the Strategic mimetism as a cause and effect prevalent competitive attitude in the of change in governance compromise banking and finance industries. Finally, the Control for some players and autonomy internal dynamics of the compromise were for others represented significant stakes in balanced in a traditional manner between the internal influence games that structured the resource contributions, controlled by corporate governance, in banking groups top-managers and directors, and the rules, operating in the strategic environment of mastered by the internal and external finance markets. On this basis, another experts. hypothesis can here be put forward for But in the case of Natixis, owing to the interpreting the Natixis story. As long as late founding of the company (2006) and securitisation processes based on US the speed with which it was affected by the economic growth renewed development worldwide financial turmoil (2006-2008), and performance opportunities, such stakes such a view ─ one might even say faith ─ were heavy, but relatively non conflictual, had become inappropriate to the brutal and mimetism was a relevant attitude in changes in the strategic environment. this context within banking competitors’ Nowadays, strategic foundation and corporate governance. legitimacy seem to be found more in low- Like their banking rivals and partners return operational activities than in high and, broadly speaking, any of the French return sophisticated finance circuits. As a public companies listed on the Paris stock significant example of this obligation to options exchange CAC40 reference, adapt Natixis’ strategic view to these Natixis, CIFG, CNCE and BFBP were able disastrously changed circumstances, it is to follow this common route and bet on interesting to read the answer given, in short term profit gains, as if in a early 2008, by the chairman of the bank’s sustainable perspective, without board of directors to the question “Is the questioning the relevance of these financial crisis leading you to change commonly recognised “good practices” to Natixis’ strategy?”: “It is truly a severe their strategic management and governance crisis (...) that will inevitably lead to [Batsch, 2004; du Tertre and Guy, 2008]. strategic reappraisals among most In broad terms, governance actors operators, at least in order to take into considered their experts’ cognitive account the changes in the competitive and mediation to be a reliable and satisfying regulatory environment. For Natixis, some means of understanding and managing adjustments must be made, but a certain their choices in the complex, competitive number of our strategic plan’s main themes environment of global finance. The joint- will not change. (...) Retail banking action of executive managers and finance activities will continue to have a profound v experts at the top of these groups of mutual importance (...) ” [Natixis, 2008b]. banks could thus be analysed as a typical expression of socio-cognitive and socio- 4.2. CI approaches and corporate governance in groups of mutual banks political compromise, establishing the prevalence of financial logic in their During the last two decades, many of strategic governance over the last decade. the main French mutual banking groups In a structurationist view, this governance ─ such as Crédit Agricole, Banques compromise was both structuring and Populaires, Caisses d’Epargne ─ chose to structured by their action in a competitive position their strategic development environment. Strategic choices in according to a renewed and ambitious positioning, implementation of business model. Briefly, the value equation performance standards and risk depends on combining, on the one hand,

ECIS 2009 ‐ 168 ‐ PROCEEDINGS the solid but low return capacities of their banking and asset management, strategic commercial networks in the French retail management falls within the scope of markets and, on the other hand, the shareholding governance, focusing its opportunities provided by participation in efforts on presenting the attractive image the highly profitable activities of of a high-return competitor, professionally globalised finance markets. From this point managed by reliable experts in finance of view, strategic governance in the mutual techniques [Gurtner et al., 2007]. banking companies is faced with a In this perspective, top-management particularly complex environment, because teams and the directors and supervisors of of its duality. This environment is mutual groups’ central bodies, have the characterised by the juxtaposition of two advantage of having two specialised major activities ─ retail and gross ─. cognitive grids at their disposal, through Obeying their own specialised logic, these which they can understand the corporate domains are also affected by the needs and environment, one in each of these two constraints of their different geographical strategic activities. Governance teams are areas ─ local, regional, national and assisted by experts from both strategic areas. From a conceptual point of view, international ─where different stakeholders mapping techniques can be adapted to the act upon and influence their strategic context of banking activities using choices and practices. appropriate methodology [Fourie and Integrating differentiated cognitive worlds Schilawa, 2004]. But here the real and Moreover, the difficulty does not lie essential complexity remains in the solely in the fact that these banking groups building of meaningful concept mapping have had to combine different functional which is able to interconnect the respective and geographical dimensions in their views and logical systems of both areas institutional and organisational structures. into a coherent framework. Such cognitive The complexity of this strategic change mapping must also be capable of lies also in the fact that the cognitive integrating the differentiated levels and conditions are not the same within these logical frameworks of expectations that two differentiated professional worlds. strategic decision-makers must face in this The first cognitive world is structured in dual environment of retail and gross the traditional frame of territorial mutual finance activities. banks. Management practices are here Beyond institutional governance connected to a democratic governance Here it is a matter of establishing structure, leading to the taking into suitable connections between an consideration ─ even more or less partially organisation’s structure, culture and and formally ─ of the demands of their strategic environment [Porter, 1992; membership and other stakeholders such as Martinet, 2002; Cremadez, 2004]. local authorities, for example [Richez- Moreover, an essential issue is also the Battisti and Gianfaldoni, 2007]. ability to reduce the cognitive distance, The second professional cognitive even the cognitive conflicts, between world was discovered by French mutual separate representations of performance bankers more recently, as a consequence of among differentiated experts and decision- the deregulation and globalisation of makers [Lawrence and Lorsch, 1967]. financial markets from the 1980s onwards, Going far beyond the institutional as discussed in an Anglo-Saxon view of mechanisms of mutual banking groups’ the common public company model, listed ownership, this process of integration on stock-exchange markets [Hansmann, requires the ability to recognise risks in the 1990, Hansmann and Kraakman, 1996]. In practiced development path of a given this world of corporate and investment corporate strategy such as:

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strategic dependence or threats as capital markets, coverage, financial and resulting, for instance, from the real estate... setting up of some technical Acording to its official Profile 2008 operations such as financial [Natixis, 2008a], Natixis’ pushed forward partnerships or equity participations its leading position in French equity in other companies; research and indicated that”Research structural or cognitive bias influencing commands strategic priority status” in the the decision-makers behavioural corporate and finance banking pole. It was choices, such as, for example, the asserted that its “Economic Research team bias of mimetism among the (…) provides clients with a range of competitors in a strategic sector; services including interest rate, currency and, more generally, inner-outer and equity market analyses, economic and inconsistencies between the strategic financial forecasts, country assessments governance model and the identity, and investment strategies. Some 40 values and principles guiding the countries are covered in total, including the group’s mission and management. main emerging countries”. The same It should here be emphasised that document advanced reliability was based French mutual bankers are obviously not on sophisticated core competencies in the alone in being exposed to such risks. field of strategic, econonomic, financial Because these risks are broadly connected and competitive intelligence. And it to large-scale strategic engagement in praised more precisely the qualities of its international financial circuits and markets quantitative research practices supposed to [Crouhy, 2008; Kohler, 2008; Sapir, 2008]. be “geared to developing and maintaining However, their specific form of models for valuing and managing the risk hybridisation between membership and associated with financial products”. shareholding structures and their Natixis’ quantitative research was theoretically democratic mode of described as “the Bank’s technology governance impose upon them ─ ideally ─ watch” concerning the latest financial the need for particularly accurate engineering developments” and was intelligence about the threats and usually “used by traders and structurers”. opportunities in their strategic From an instrumental point of view, the environment. The question is that of techniques used are not very far removed determining to what extent this desired or from those recommended by the CI displayed ideal does or does not approach. The aim is to assess and control, correspond to their effective strategic as far as possible, a company’s strategic governance practices. links with its complex environment through the implementation and use of Beyond apparent similarities between financial risk analysis and a CI approach dedicated intelligence techniques. But a second similarity can also be identified, From this point of view, a first obvious which relates to influence processes, similarity with the generic CI approach through which managers in charge of (described above in part 2 of this article) strategic governance can reduce obstacles concerns the importance of watch and resistance to their outlooks and techniques [Marcon and Moinet, 2006] and choices. vulnerability analyses related to strategic Because of their involvement in the resources [Pfeffer and Salancik, 1978]. complex play of globalised financial These systems act as functional watch transactions and the establishment of their units or KM facilities; their highly competitive position, several French implementation offers obvious advantages mutual bankers and insurers invested in a for the strategic and operational number of technical instruments intended management of such specialised activities

ECIS 2009 ‐ 170 ‐ PROCEEDINGS to effectively monitor and evaluate their technical references and assessments environment: economic studies of exonerating management. Expressions structural trends and present such as “future events could be different circumstances, financial risk analyses in from the hypotheses selected by Natixis accordance with financial regulation top-managers”, “coverage strategies do not authorities’ requirements, such as those of make the risk of losses insignificant” and the AMF in France, and various “Natixis could be exposed to unidentified performance ratios in accordance with the and unforeseen risks that could cause rating agencies’ assessment criteria significant losses” [Natixis, 2008b] [Natixis, 2008b; Caisse d’Epargne, 2008; indicate a thinly veiled communication Groupe Banque Populaire, 2008]. strategy intended to play down experts’ Between intelligence techniques and top-managers’ responsibility [Roux, and communication practices 2002; Batsch, 2004]. In other words, areas Like any of their international of vulnerability are mentioned, but levels competitors, French groups of mutual of uncertainty, analysis criteria and impact banks collected, processed and measurements are not really made disseminated apparently well-structured available to those who do not belong to the and well-argued technical information closed circle of experts and top executives. about their performance indicators and Furthermore, although this risk approach is their exposure to strategic risks [Groupe included in the official documents, its Banque Populaire, 2008; CNCE, 2008; presence is aimed not only at complying Natixis, 2008b]. In compliance with with the regulation authority’s technical French regulations imposed by the AMF, a requirements, but also at influencing 10 page chapter (written in small type) in external stakeholders by means of a well- Natixis reference document 2007 sets out a polished communication exercise. wide range of potential but non-prioritised Even if in its present state, this line of risks relating to its structures and activities investigation cannot draw upon internal [Natixis, 2008b]. sources, it is presumable that the 8 items (2.5 pp.) discuss risks in the instruments used in Natixis’ strategic governance structure such as, for governance were related to many CI instance, the risk of disagreement techniques featured, at least partially, in between its controlling shareholders, their guidelines. As decision-making tools, CNCE and BFVP. these instruments fed, justified and/or The other 21 items (7.5 pp) concern the reinforced the strategic views held by different strategic activities. They list senior-managers and governance board various issues ranging from the members in charge of the Banque possible effects of “primary or Populaire and Caisse d’Epargne groups’ secondary debt conditions on the central entities as well as Natixis itself. financial situation and results” and They may have played the same role in the governance structures of the Caisse “significant rate variations” ─ to put d’Epargne and Banque Populaire regional it plainly, subprime and mutual bank networks. The question here securitisation crises and their is to determine how and how far. consequences ─ to difficulties in Without conducting interviews with the upstream retail banking activities various parties involved and/or having such as changes in French savings’ access to what are probably highly regulations and “the intensification confidential documents, no precise answer of competition” [Natixis, 2008b]. can be ascertained. Nevertheless, at the This central financial communication is time of issuing this paper, some extensive written in a traditional style but contains a information is fully available for the year curious mixture of highly popularised

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2007, but little concerning 2008, even on However, their group structures are also official websites. These open sources mainly and broadly controlled by indicate that watch information in these executive experts in the logic and banks also functioned as official top-down temporalities of strategic management communication from specialists to non- [Spear, 2004; Regnard and Gouil, 2005; specialists, from executive managers to Rousseau, 2007], not to say by stakeholders [Crouhy, 2008], as is usual in shareholder-friendly logical criteria any bank, whether mutual or commercial. [Richez-Battisti and Gianfaldoni, 2007; Under these circumstances, during the Ory et al., 2008; Malherbe, 2008]. Natixis merger process and in the CI as a managerial attitude following months when share values rather than purely technical instrumentation collapsed despite successive waterfall As discussed above, from an capitalisation, the stakeholders instrumental point of view, the ─ especially the basic memberships of both informational techniques used in banking mutual groups ─ probably felt well strategy appear relatively close to those informed and well protected against major recommended by the CI approach. But in risks by reliable executives and inner and the general perspective of management outer experts. science, the implementation and use of 5. Provisional conclusions: CI in the such technologies are never goals in themselves. Like any management tool or mutual banking industry, more technique, their usefulness and than an engineering issue performance are related to the context in From a general perspective, managerial which they are constructed and/or used practices can be characterised by the wide [Moisdon, 1997 ]. From this general use of informational instrumentation. perspective, instrumentation never exists Informational instrumentation can in turn without the actors that implement and use be analysed as a “form of investment” in it. As implementers, end-users and the sense that its structure and contents are decision-makers, actors play socio-political a mixture of formal features and socio- games [Crozier and Friedberg, 1977; economic actors’ commitment [Eymard- Friedberg, 1993] and position themselves Duvernay, 1996]. In the case of financial around instrumentation within regulation activities, information structures in processes, oscillating between logical environmental risk analyses are not only frameworks of control and of autonomy. built in order to satisfy technical or Moreover, as in the case of any normative requirements. They are also technology [Gouldner, 1976]; no supposed to demonstrate how far strategic managerial instrumentation can be and technical competences are mastered at considered to be independent from explicit the head of the companies. They are or tacit underlying ideological models therefore used for influencing some [Pesqueux, 2002, 2002; Alvesson and categories of shareholders in order to Willmott, 2003; Pezet and Sponem, 2008]. legitimise their strategic action closely One of the main questions to be discussed related their financial performance. concerning CI’s effectiveness and This point is particularly important with limitations relates to the contextual and regard to the value and limits of CI-related organisational capabilities required for the techniques in the specific corporate integration and development of an agent- governance of groups of mutual banks. oriented approach to decision-making, Mutual banks such as the French regional which is both cognitively and socio- Caisses d’Epargne and Banques Populaires politically grounded. are officially governed by institutional Besides or even beyond technology and processes of democratic ownership. methods, organisational structure and

ECIS 2009 ‐ 172 ‐ PROCEEDINGS culture play a significant role in the from functionally heterogeneous process of KM implementation [Gold et information? and how can one ensure al., 2001]. This cognitive dependence coherence throughout the stages of the concerns the strategic view taken in cognitive process aimed at producing this corporate governance and is related to past synthesis? success paths ─ e.g. business models of CI, strategic integration and mutual retail banking. But it can also be an organisational / institutional coordination effect of other forms of dependence caused The first question concerns the ability to by the heavy technical specialisation that is elaborate a CI system aggregating different a major feature of strategic financial functional dimensions linking the company activities. This double dependence has to its double strategic environment, been particularly strong in relation to the corresponding to its retail and gross actors, rationalities and temporalities that activities. In the case of activities operated structure the levels and processes of on global financial markets by groups strategic governance in mutual groups. stemming from mutual banks, the different Within regional retail-oriented types of functional watch to be coordinated structures, governance results from concern many aspects such as: coordination between institutionalised transformations of the macro-economic control by the membership and the context [Sapir, 2008], executive management, but this the reliability of strategic partners and articulation very often uncoordinated, market trading [Williamson, 1985; owing to differences of legitimacy, rhythm Aoki et al.; 1990; Ring and Van de and terms in strategic decision-making Ven, 1994; Kumar and Seth, 1998], [Regnard and Gouil, 2005; Rousseau and the prudential policies followed by the Regnard, 2007; Malherbe, 2008]. At the public or private regulation level of mutual banking and insurance authorities and similarly the groups’ central bodies, most of the procedures and requirements strategic decision-makers are members of implemented by the assessment and two generic categories, top-managers rating agencies [Paulet, 2005; (directors and supervisory board members) Gurtner et al., 2007; Assemblée and experts in various financial techniques Nationale, 2008b], (in executive boards). The former sit in the technical innovations in the field of governance structure, usually as sophisticated financial instruments representatives of the mutual retail etc. companies they manage, while the latter But once again, the difficulty concerns belong to the holding’s central not only the well-known dialectics of technostructure. If we consider this organizational differentiation/integration governance structure, mutual banking and [Lawrence and Lorsch, 1967]. It is also insurance groups are no longer “mutual related with the logic of coordination and groups” but have often changed into of control in and around organisations “groups of mutual banks (or insurance [Mintzberg, 1983, 1989; Nizet and companies)” [Batac et al., 2007; Gurtner et Pichault, 1995]. al., 2007]. Furthermore, if the question is CI in strategic governance: representations and legitimacy issues considered here at the functional level of specialised financial activities, it again The difficulty is more deeply rooted raises the issue of the juxtaposition of with regard to legitimacy practices [Weber, retail and market financial activities. The 1921]. Legitimisation is a basic mission of difficulty seems to lie in two points: how managerial activity [Mintzberg, 1989; can one conceive a meaningful synthesis Laufer, 1996]. Moreover, it consists in

ECIS 2009 ‐ 173 ‐ PROCEEDINGS connecting strategic management and steps of collecting and analysing corporate governance [Suchman, 1995; information are seldom the same as those Malherbe, 2008]. In a closely related concerned with the upper and final steps of perspective, managerial activities, like the process. governance practices, depend upon the In the particular case of strategic attainment of a meaningful understanding governance within groups of mutual banks, of the complex environment in which they this issue is at the crossroads between are positioned and act. [Weick, 1995; standardised logical frameworks of Autissier and Bensebba, 2006]. technical management and principles of Ideological justifications [Boltanski and membership governance [Marc, 1984; Thévenot, 1991; Eymard-Duvernay, 2006; Spear, 2004; Malherbe, 2008], at least at Pesqueux, 2000, 2002], professional the two institutional levels of regional and imaginary and organizational fictions central entities [Richez-Battesti and [Levy et al., 2003; Ortmann, 2004] here Gianfaldoni, 2007, Cadiou et al., 2006; play a major role. They ground the Gurtner et al., 2007]. For example, within strategic decision-makers cognitive the regional banks of mutual networks, representations of their executive managers share some aspects of environment, discriminating between what strategic governance with elected is symbolically right and wrong. In the representatives of the local membership. same manner, they also structure their However within the same mutual banking control levers around economic resources group’s central body, corporate strategic such as their ability to influence other governance is exercised over retail and social actors and actors through gross activities by top managers and the institutional regulation channels and/or board of directors, both of whom are relationships of domination [Giddens, informed and advised by experts and 1979, 1984; Crozier and Friedberg, 1977]. specialised managers, mainly originating From this perspective, as in the case of any from highly qualified financial functions. managerial activity within an organisation, Beyond their different roles, all of these CI can legitimately contribute to strategic actors in charge of the governance of the governance if it integrates cognitive formal central entities are very close to the rules, appropriate social norms and values shareholding logical schemata, not only in and shared meanings into a coherent accordance with their own interests ─ as design [Scott and Christensen, 1995; Scott, representatives of institutional investors, 2001]. for instance ─ but also due to their CI contributions viewed as the results international financial culture as banking of social construction processes executives, technical experts, internal Concerning the ability to construct a CI actors such as financial managers, system aimed at collecting, producing and economists and external actors such as sharing significant strategic information, rating agencies. As a matter of fact, the second question is therefore related to cognitive and socio-political gaps probably the presupposed cognitive continuum in separate these different categories of the course of the successive stages of the actors’ informational needs and strategic "intelligence cycle". Procedural integrity representations, as is explored, for here constitutes the central issue in the CI example, in a number of comprehensive approach. This integrity alone permits the sociological and administrative studies on transition from a preliminary expression of French retail banking marketing people informational needs to a final distribution [Courpasson, 1995; Cadiou et al., 2006] and capitalisation of expected results and finance market traders [Godechot, towards the targeted adressees. However 2001]. the actors involved in the intermediary

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The remote echo of Panurgeʼs sheep by the French author François Rabelais: Finally and ideally, the main issues “Suddenly Panurge threw his screaming concerning CI contributions to mutual and bleating sheep into the sea. All the banking groups’ strategic governance other sheep, screaming and bleating in the depend to a great extent upon the actors’ same way, began to jump into the sea. cognitive and behavioural attitudes and They rushed forward so eagerly that each interactions, and not uniquely upon of them attempted to jump in front of the instrumental and methodological other. (But) it was impossible to save them techniques. In the perspective of this paper, from jumping because, as you know, it is these cognitive and behavioural abilities in the nature of sheep to always follow the are based upon the progressive leader, wherever he goes.”vi construction of a sustainable governance 6 References and performance convention [Gomez, 1996] that articulates principles of Albert E., Gueslin E, (1997), Les Banques legitimacy of democratic control and Populaires en France (1917-1973), Economica, Paris technical responsibility within a shared AMF (Autorité des Marchés Financiers) strategic view [Malherbe, 2008]. Because (2008), website of the French regulation of the complexity of the strategic authority on financial markets, environment, this convention does not www.amf-france.org have to be reduced to the formally applied Aoki M, Gustafson B, Williamson OE institutional mechanisms of purely (1990), The Firm as a Nexus of Treaties: an Introduction, Sage representative governance. Furthermore, Publications, London because of the underestimation of strategic Assemblée Nationale (2008a), Audition, risks by experts structuring both a mimetic ouverte à la presse, de M. Charles competitive arena and an overconfident Milhaud, président du directoire de la professional community, it should not be Caisse nationale des caisses d’épargne, reduced to the passive and utilitarist sur la distribution du Livret A et le duplication of rivals’ choices and financement du logement social, Commission des Finances, de behaviours. l’Economie générale et du Plan, Mardi The Natixis misadventure that has been 20 février 2008 (séance de 18 heures), briefly discussed in this paper illustrates compte rendu n° 65 how far French mutual bankers like the Assemblée Nationale (2008b), Audition de Caisse d’Epargne and the Banque M. Charles Milhaud, président du Populaire groups went astray from this directoire de la Caisse nationale des second strategic alternative. Attracted by caisses d’épargne, sur la crise financière internationale, Commission des the compellingly sophisticated and Finances, de l’Economie générale et du profitable world of finance that governed Plan, Mardi 7 octobre 2008 (séance de economy and society during the last 16 heures 15), compte rendu n° 3 decade, they broke their conventional links Attarca M (2000), Un modèle conceptuel with their regional mutual banks’ logical du lobbying pratiqué par les entreprises, schemata of governance. Following the in Proceedings of the IXEME Conférence Internationale de mainstream of their rivals, they built up a Management Stratégique, AIMS 2000, new convention, founded on the Montpellier, 24-25-26 Mai 2000 paradoxical connection of the principle of Autissier D, Bensebaa F (eds) (2006), Les competition with the practice of mimetism. défis du Sensemaking en entreprise : Perhaps the top-managers and financial Karl E. Weick et les sciences de gestion, experts who took control of strategic Economica, Paris governance at the head of these groups Balmisse G (2002) : Gestion des connaissances : outils et applications forgot the famous metaphorical story of th du Knowledge Management, Vuibert, Panurge’s sheep, written in the 16 century Paris

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économie sociale, CIRIEC, Victoria le défi de la performance et de la BC, 22-24 octobre 2007, translation 3 solidarité, L’Harmattan, Paris Janvier 2008 Richez-Battesti N, Gianfaldoni P (2007), Pastré O (2007), Le mutualisme bancaire à La gouvernance des banques la croisée des chemins, in Rapport coopératives françaises : démocratie et moral sur l’argent le monde 2007 : les territoire, in Actes du colloque ISTEC : entreprises de l’économie sociale en « Coopératives et mutuelles : impact du questions / les enjeux éthiques statut sur l’efficacité et l’organisation Association d’Economie Financière, managériale », Paris, 20 septembre Paris, 115-117 2007, 10-40 Paulet E (2005), European Banking: Ring PS, Van de Ven AH (1994), Historical Roots and Modern Developmental processes of cooperative Challenges, Hermès Lavoisier, Paris interorganizational relationships, in Pesqueux Y (2000), Le gouvernement Academy of Management Review, vol. d’entreprise comme idéologie, Ellipses, 19, n° 1, 90-118 Paris Rousseau A, Regnard Y (2007), La Pesqueux Y (2002), Organisations : légitimité mutualiste à l’épreuve : modèles et représentations, PUF, Paris administrateurs, salariés et bénévoles Pezet A, Sponem S (eds) (2008), Petit dans une banque coopérative, in Actes bréviaire des idées reçues en du colloque ISTEC : « Coopératives et management, La Découverte, Paris mutuelles : impact du statut sur Pfeffer J, Salancik G (1978), The External l’efficacité et l’organisation Control of Organizations, Harper & managériale », Paris, 20 septembre Row, New York 2007, 549-588 Pfimlin E (ed.) (2006), Coopératives et Roux M (2002)., "Services limités ou mutuelles : un gouvernement responsabilités limitées ?" : le d’entreprise original, Institut Français mutualisme de la sphère financière des Administrateurs (IFA), Paris française en proie à la banalisation, in Polanyi K (1944) The Great Revue d’Economie Financière, n° 67, Transformation : the Political and 211-239 Economic Origins of Our Time, new Sainsaulieu R (2003), Entreprise et edition (2001) Beacon press, Boston démocratie dans l’économie Porter M (1992), L’avantage mondialisée, in de Terssac G (ed.) concurrentiel, InterEditions, Paris (2003), La théorie de la régulation Rabelais F (1552), excerpt from Le Quart- sociale de Jean-Daniel Reynaud : Livre [in Lagarde A, Michard L (1970), débats et prolongements, XVIe siècle, Bordas, Paris] La Découverte, Paris, 359-366 RealtyTrac (2008), US Foreclosure Sapir J (2008), Global Finance in Crisis : a Activity Increases 75 Percent in 2007, Provisional Account of the “Subprime” January 29, 2008, Crisis and How We Got in It, in Real- Regnard Y, Gouil H (2005), Les World Economic Review, n° 46 (may temporalités du mutualisme, Actes de la 2008), 82-101 1ère conférence internationale COM-ICI, Scott WR (2001), Institutions and IAE de Bretagne Occidentale, Organizations, Sage, Thousand Oaks Université de Brest, 1er décembre 2005 (Cal.) Reynaud J-D (1993), Les règles du jeu : Scott WR, Christensen S (1995), The l’action collective et la régulation Institutional Construction of sociale, Armand Colin, Paris Organizations, Sage, Thousand Oaks Richez-Battesti N (2007), Les banques (Cal.) coopératives en France : entre Simon HA (1955), A Behavioral Model of banalisation et reconquête identitaire ?, Rational Choice, in Quartely Journal of in Rapport moral sur l’argent le monde Economics, n° 69, 99-118 2007 : les entreprises de l’économie Spear R (2004), Governance in Democratic sociale en questions / les enjeux Member-Based Organizations, in éthiques, Association d’Economie Annals of Public Cooperative Economy, Financière, Paris, 103-117 Vol. 75, n° 1, 33-59 Richez-Battesti N, Gianfaldoni P (2006), Suchman MC (1995), Managing Les banques coopératives en France : Legitimacy: Strategic and Institutional

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Writing cases as a knowledge capture process in a competitive intelligence program

Monica M Mallowan*, Christian Marcon** *Department of Management Université de Moncton New-Brunswick Canada [email protected]

**ICOMTEC Université de Poitiers France [email protected]

Abstract Students in Competitive Intelligence (CI) programs submit a report following their internship in an organisation. It is proposed that the result of their experiences be shared with their peers, in the form of cases written for in-class analysis. A knowledge base is thus created, which gradually becomes the program’s memory and, by its constant renewal and connection with the reality, the most useful teaching tool for the professor. Keywords: Case study, CI program, guide, knowledge base, writing case study

1 Introduction a database readily accessible by all students. Invited to consult this collection, In 1996, the Institut de la Communication a journalist from the daily newspaper La et des Technologies Numériques (the Tribune has written an article noting the Communication and Digital Technologies richness and value of this first “real life” Institute - ICOMTEC) of the University of test in CI, where organizations are seen Poitiers created the first French from the inside, beyond statements of Competitive Intelligence (CI) postgraduate principles and synthetic essays. Consulting program. Previously structured as a one documents in their integrality within this year training program, it was expanded large collection, however, can be a trying into a two-year professionnal training exercise, lacking in a user-friendly, program. For twelve years now, one initial attractive dimension, hence, limiting the batch of students followed by two pedagogical utility to the individual effort. subsequent others, have annually realized Casting dissertation abstracts online their internship in CI and have elaborated was not deemed conlusive: most their master’s thesis on the basis of this organizations proved unfavorable to informational raw material. having either internship-related work- The first step in capitalizing existing content or even the topics of the assigned knowledge contained in these theses has missions showcased on the web. It was been achieved through the development of therefore no longer possible to make the

ECIS 2009 ‐ 181 ‐ PROCEEDINGS diversity of this work available outside the indeed, write either deliberately for Institute. practitioners in the field, with the concern The attempts to circumvent the of presenting them with “good practices” obstacles challenging the previous in CI, or, ever so rarely, for academics, in experiment gradually articulated order to evidence the possibility for the CI themselves around a logic of case writing to become a real discipline, subject to as the single best tool of knowledge fundamental research. capitalization, insofar as the designing Given this current general status of process around which it is built observes literary production, the necessity springs strict and rigorous scientific parameters. for enriching the specialized corpus of texts in CI, especially in terms of real, field 2 Problem experience, for professors and studens to Standing at the confluence of such have access to teaching material reflecting scientific fields as information sciences, the subject matter taught in class, as well communication, management, economics as the multiple and concrete applications and information technologies, the CI within the organization. Between the [Bloch 1999; Martinet and Marti 2001; highly specialized topics examined by Marcon and Moinet 2006], as an academic researchers in CI and the unavailability of program at ICOMTEC, whilst certainly the practitioners to write articles describing benefitting from classical teaching their professional reality, the students’ methods seeking to enhance acquisition of experiences may very well represent an theoretical knowledge through lectures, important reservoir of evidence to be case studies, readings, evaluations, etc., recorded under the form of cases, as must pay special attention to learning by valuable contributions to the literature fund doing, taking the form of either internships with a vocation towards training. Through that students are called to undertake at the the case-writing process, student-trainees end of each academic year or sponsored are able to report their professional professional projects or contributions to experience, deliver learning material to Junior Enterprise. Internships, usually their peers and contribute to the creation of varying between sixteen to twenty-four knowledge base of specialized cases in CI. weeks, are mandatory and lead to the In an era of changing paradigms, the drafting of the master’s thesis, whose transmission of this knowledge could objective is to bring students to elaborate represent a very important leverage factor upon the mission they were assigned and in preparing the students towards the solution they were called to design, in achieving their internship and towards order for them to further address topical eventually integrating the labor market, in problems experienced during the internship this highly complex profession. and integrate these to the CI model, in an exercise of placing into perspective the 3 Review of literature specific knowledge of the profession. 3.1 The tacit knowledge Despite the richness and abundance of The contemporary organization, in its specialized literature examining different corporate, institutional or associative form, angles of CI – background, concepts, faces a crisis whose facets are multiple : methods, tools, perspectives, etc. – the economic, financial, energetic, managerial, relative youthfulness of this academic field to name only some of the areas facing can partly explain the absence of a true increasing turmoil. It is necessary to add to fundamental manual in CI, which can be these factors the current declining testified by the narrowness of the demographic trend which constitutes a collection of pedagogical texts available to crucial issue for several countries, sudents during their training. Most authors, considering planning with regards to

ECIS 2009 ‐ 182 ‐ PROCEEDINGS emerging workers and the need to secure of the persons who work or who have transmission of the organization’s worked there. immaterial capital, such as acquired Nonaka [1994] analyzed the dynamics knowledge and the know-how [Blair 2002; of the knowledge creation process : the Bourhis et al. 2004]. This know-how or socialization enables the traditional knowledge is defined as “…the transfer of the know-how to someone else, information that has been comprehended the externalization covers the attempts to and evaluated in the light of experience, explain to someone the knowledge and the and incorporated into the knower's know-how. He adds to these mechanisms intellectual understanding of its the internalization, which allows for the subject…”[ODLIS 2007] and it has a high explicit knowledge to be internalized or impact on the entreprise’s competitiveness embodied and for the combination or [Davenport and Prusak 2003; Nonaka and connecting of the explicit knowledge in Takeuchi 1995]. order to generate new knowledge. This very context accounts for the Prax [2003] and Dalkir [2005], among interest that knowledge management has others, identify several methods of tracking been arousing for some time amongst or capture and capitalization of the tacit management specialists and from knowledge, methods that hold our attention specialists of other fields as well because of their relevance to our aim, [Moldovan 2005]. which is to find a manner to facilitate the The authors insist on the difference transfer of the experience acquired by the between knowledge and information : trainees during their internships and the when it is interpreted, utilized in action or utilization of these texts in the analysis in a process, the information becomes exercises in class. knowledge, which divides into tacit From all the tacit knowledge tracking knowledge, on one hand, or the know-how, and capture methods identified by these not expressed in words, represented by authors –storytelling, imitation of gesture, reflexes, automatisms, gestures and apprenticeship, brainstorming, mind difficult to transfer because of its mapping, role-playing games, metaphor, subjective, informal, contextualized and images, drawings and videos, we can experiential character. retain the method of the storytelling of a On the other hand, the explicit real-life situation, which is closest to the knowledge represents the knowledge presentation of a professional experience expressed in words, formal, easily through the technique of case-writing, and transferable orally or in writing, because the method of the corporate memory or objective, formalized, observable, corporate repository. These two methods conceptual and operational [Le Coadic will be adopted in order to launch the 1997; Prax 2003]. Through using project of conception of a knowledge base organizational knowledge (tacit and dedicated specifically to the case study in explicit) existing in structures and in CI, a first of its kind in France. processes, one either becomes competent The narration may be written (tale, or a holder of knowledge-to-act and able to drama, novel) or oral (description of an solve problems, make decisions, act. event, anecdote, etc.). The knowledge Managing knowledge, throughout the management is interested in the knowledge life cycle (process of creation, storytelling because it can transfer tacit capture, formalization and capitalization of knowledge. It is difficult, however, to knowledge), gives the organization the extract the sense which contains the most possibility to build its capital of important elements for the organization. knowledge, composed of the experiences The extraction of the hidden sense contained in a narration demands an

ECIS 2009 ‐ 183 ‐ PROCEEDINGS analysis of this narration, especially of the of this case study base is to serve as a following components : context of the repository of formative experiences in CI, action described; the plot of the story (the but also as a reference and a training tool events described in their causal and for the members of the CI professional temporal structure, the actors, the community. interaction); the steps of the problem solving (plan, sequence, etc.). The 3.2 The case method relevance of the narrative depends on its Inspired by English common law to which proximity (temporal, spatial, cognitive, concepts of jurisprudence and judicial emotional, of action and of interest) with precedent are central, the case study was the receivers (other members of the first introduced at the Harvard School of professional community or the staff of the Business in the early XXth century as a organization). tool designed to train specialized The formalization of knowledge practitioners in fields as varied as law, through the corporate repository method is medicine or management. In opposition to highly effective in building knowledge discursive pedagogy, the case study bases wherein content can range from method emphasizes learning through the generic knowledge, acquired through concrete, through the action (learning by education, to contextualized knowledge, doing) and could therefore be qualified as acquired as a result of the study of a “active and experiential” [Arrow 1962; problem, a file, or a topic. These Anzai and Simon 1979]. knowledge bases can take many forms: The case study method has been references, case or project repositories, developed for adult learners [Bédard et al. economic and professional information, 1991, 2005; Hammond 1976; Hlady Rispal patents, records of experience, glossaries, 2002; Leclerc et al. 1996; Pagès 2008], directories, repositories, visual documents, leading the student or the group to analyze, technical reports, best practices, cases, discuss and resolve a case, which, for all procedures, guides, manuals, etc. In intents and purposes, consists of a setting up these knowledge bases, certain problematic situation based on real life or criteria must be taken into consideration, fiction. According to the situations they such as the features of the target audience, describe, cases fall into three categories : the value of information, the goals, the real cases (natural or selected), typical codification and validation level, the cases (constructed or built) and natural editorial board, etc. typical cases (built from data collected in It is therefore from within the category organizations or Harvard-type cases).The of tacit knowledge that we must take the case study method has been successfully CI professional experience of students into adopted and applied in most law, medecine account. Hence, the usefulness of and management schools around the world. capturing this knowledge under case form, It allows for contact with a multitude of thus, facilitating its transfer, on one hand, debatable situations, while helping while enabling this knowledge, on the improve effective argumentation, problem other hand, to become the organized solving and analytical skills. Authors have content of the knowledge base: the been singling out, however, the challenges “accumulating sum of knowledge on raised by the scarcity of real cases which the advance of a particular industrial [Armisted 1984; Ross and Wright 2000], sector relies, including not just codified which alone reflect the complexity of real knowledge but also tacit knowledge and situations; the relatively long delay of knowledge embedded in plant and preparation, evaluation and publication equipement” [Grand dictionnaire that are specific to the regular process of terminologique 2009].The main objective case study writing; and, last but not least,

ECIS 2009 ‐ 184 ‐ PROCEEDINGS the cost of consulting the cases repositories The suggested alternative approach to online. One way to respond to these the classical model is the “internship critiques is by involving students in the conclusion approach” [Moldovan 2008]. activity of writing cases arising from their According to this new model, the student- own professional experience, as means to trainee assumes the task of writing the case vary the training strategies and to study, based on his knowledge of the « integrate experience, theory and organization where he where he served as reflection » [Gosling and Mintzberg an intern. Written at the end of the 2004], in order to better prepare the next internship, as a complement to the master’s generation of CI professionals to assume thesis, the case study represents a formal positions of responsibility or positions very opportunity for the student to elaborate on close to the decision centers. his internship and defend his thesis, as a means to demonstrate his experience and 4 Methodology conclude his training. 4.1 Writing cases In utilizing the “internship conclusion Having noted the need experienced by approach”, the case study serves to professional training programs for relevant illustrate in a practical form both the learning material, reflective of the social- concepts covered during the training and economic reality, and conclusive to the their appropriation by the learner. The review of literature focussing on environment within which the case is knowledge management, on appropriate situated corresponds to the organization methods for knowledge transfer, and on where the internship takes place, and the case learning strategies designed to collection of data and the recording of implement real case writing by CI interviews is achieved throughout the students-trainees, we hereby examine the internship, in consistency with the assigned methodological benchmarks to be applied activities and the research through the in launching the pilot project of the case complementary sources of information study base (knowledge base). (economic newspapers, data bases, etc.). Under the conventional approach to the The aim is to continue with the selection, case study writing technique, it is the the analysis and the further elaboration of professor (or his research assistant) who the case study, while observing the assumes this task, in the following methodology and the ethics of the sequence of steps : profession. • identify the need to exemplify a concept or a situation, 4.2 Methodological benchmarks • choice of the environment / organization The end-product product, the « real case – which illustrates the concept or the situation, internship conclusion », lays out the • relevant data and facts collection, problematic situation at the core of the • conduction of interviews, internship, within a document of varying • drafting of the first version, length (from few pages to dozens of • verification / test in class (case study) • rectifications, pages). This document is precise, clear, • preservation of the organization’s logical, written objectively, and based on anonymity, the study of the organization. The first • permission to use the case provided by the organization, draft is validated by the internship tutor, • utilization and publication. adjusted in accordance with his comments In synthesizing this process, we obtain and disguised in order to respect the the following methodological cycle: “need confidentiality requirements of the – current situation – data collection – text organization. drafting – test – text review – permission The case must remain narrative, to use – official use”. journalistic, logical, technical in style. The

ECIS 2009 ‐ 185 ‐ PROCEEDINGS writer combines real and fictional studies that are closest to the reality of the CI assignments in the organizations; characters, information pieces and useful • participants who contribute to the life data, some less significant, even cycle of the base: producers, users; contradictory. The case becomes then a • audience: members of the community of practice (professors, students, CI history, as in “real life”; it describes professionals); events, introduces participants, and • value of the information: period of suggests the study of a problematic validity: long; scope: informative document; situation which requires a solution. • aim: training; Different possible approaches that can be • degree of codification: documentary identified may include presenting the structure: bibliographic data base / full text, controlled indexing; decision that was made and the discussions • degree of validation: personal story, with it may have generated, confronting with a respect to the consigned elements; series of several options, or a situation • editorial board: contributions placed in the base after the professor’s evaluation, scenario where the problem or its nature frequency, etc. are not explicit. Without being binding, the structure of 5 Results the document should be articulated around The establishment of a CI case study base the following: at ICOMTEC is at its inception; the • introductory paragraph, giving the reader experiment was started in the course of the possibility to locate the action; • history of the organization, creation date, summer 2008. The project is also being evolution; conducted within the second training-track • highlighting the problem and the of the institute, the professional master participants, the core of the case study – key dates, facts, figures; “Strategy and Communication • conclusion of the case study, including a Management” with the goal to examine, several possibilites: a presentation of the following a three-year-pilot, the decision to be taken, which the reader has to justify during the in-class discussion; educational benefits generated in both the decision already made, which the fields. Despite this short interval, it is reader will be invited to discuss; confrontation with a series of options possible for us to remark that the students which the reader has to select and justify; adopted the process with interest and that situation scenario where the problem or its they are comfortable with the framework nature are not explicit; • bibliography, of the project and its leading parameters. • annexes and tables related to the problem, On a comprehensive cohort of • note on the industry or the technology. approximately thirty students which have The case the student must write does realized their internship and submitted not necessarily disclose the real solution their cases, we selected the top twenty that was retained, nor does it have to texts, in order to be placed in the case data produce a fictitious one, if that corresponds base. For a first experiment, the proportion to the wishes of the organization or the is quite satisfactory. Some of the non- student himself. selected texts reflect general difficulties in After it is written and made anonymous, writing which are not related to the very the case is evaluated by the internship tutor logic of the case; some others have failed and the professor, and placed in the to comply with the instructions, knowledge base, whose design must factor particularly with regard to the anonymity in the following non-exhaustive elements: of the organization. Some of the cases have objectives, audience, the value of the not been successfully concluded or were in information, degree of codification, degree such instances where they were deemed of validation, editorial board, etc. inexploitable for our current purposes, The projected database should be a either due to the contradictory instructions function of the following parameters: given by the organizations or because of • raison d’être (the reason for being) of the knowledge base: the need to access case

ECIS 2009 ‐ 186 ‐ PROCEEDINGS the obligation to abide by confidentiality http://www.adm.usherbrooke.ca/admwe requirements. b/centredecas/ Ultimately, at this point of the project, Dalkir K (2005) Knowledge management we consider that the novelty of the in theory and practice, Elsevier experiences described in these cases, the Burlington, MA proximity between authors-students and Davenport T and Prusak L (2003) What’s their colleagues, the shortness of the cases the big idea? Creating and capitalizing and their conciseness reflect the high on the best management thinking, diversity of work situations and represent a Harvard Business Scholl Press, Boston strong argument in favor of the creation Gosling J and Mintzberg H (2004) The and utilization project of a CI case base, education of practicing managers, MIT for the training of students enrolled in the Sloan Management Review, 45(4) programs of the Institut de la Grand dictionnaire terminologique, Communication et des Technologies http://w3.granddictionnaire.com Numériques (ICOMTEC). Hammond JS (1976) Learning by the case method, Harvard Business School, 6 References Boston, MA Anzai Y and Simon HA (1979) The theory Hlady Rispal M (2002) La méthode des cas : of learning by doing, Psychological pplication à la recherche en gestion, De Review, 86(2) Boeck Université, Paris Armisted C (1984) How useful are case L’Art du management de l’information studies? Training and Development (2000) Financial Times Limited, Journal, 38(2) Éditions Village Mondial, Paris Arrow KJ (1962) The economic Le CoadicYF (1997) La science de implications of learning by doing, The l’information, Presses Universitaires de Review of Economic Studies, 29(3) France, Paris Bedard MG, Dell’Aniello P and Desbiens Leclerc JM, Lapierre L and Reboh-Razan D (1991) La méthode des cas, Gaëtan A (1996) La méthode des cas : guide Morin, Montréal d'accompagnement, École des Hautes Bedard MG, Dell’Aniello P and Desbiens Études Commerciales, Montréal D (2005) La méthode des cas : guide Levet JL (2002) Les pratiques de orienté vers le développement des l’intelligence économique : huit cas compétences, Gaëtan Morin Éditeur, d’entreprises, Economica, Paris Montréal Marcon C (2008) Réussir son stage et son Blair D (2002) Knowledge management : mémoire, ICOMTEC, Université de hype, hope or help? Journal of the Poitiers American Society for Information Marcon C and Moinet N (2006) Science and Technology, 53(2) L’intelligence économique, Dunod, Bloch A (1999) L’intelligence économique, Paris Economica, Paris Martinet B and Marti YM (2001) Bourhis A, Dubé L and Jacob R (2004) La L’intelligence économique : comment contribution des connaissances à la donner de la valeurconcurrentielle à gestion de la relève : le cas Hydro- l’information, Éditions d’Organisation, Québec, Gestion, 3(29) Paris Centrale de cas et de médias Moldovan M (2005) Gestion des pédagogiques, connaissances : préambule à un portrait, http://www.ccmp.ccip.fr Revue de l’Université de Moncton, Centre de cas de la Faculté 36(2) d’administration, Université de Moldovan M (2008) La rédaction de cas Sherbrooke, en intelligence économique : repères

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méthodologiques, Université de Prax JY (2003) Le manuel du Knowledge Moncton, Campus de Shippagan, Management : une approche de 2e Nouveau-Brunswick génération, Dunod, Paris Nonaka I (1994) A Dynamic Theory of Reitz J ODLIS – Online Dictionary for Organizational Knowledge Creation, Library and Information Science, Organisation Science, 5(1) http://lu.com/odlis/odlis_k.cfm Nonaka I and Takeuchi H (1995) The Ross JW and Wright L (2000) Participant- knowledge-creating company, Oxford created case studies in professional University Press, Oxford-New York training, The Journal of Workplace Pagès R La méthode des cas, Encyclopaedia Learning, 12(1) Universalis, http://www.universalis.fr

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Knowing is action: from noticing to sense-making

Nicolas MOINET*, Pascal FRION**, * Lecturer, CEREGE Laboratory, Institut of Administration of Entreprises, University of Poitiers, Adress : ICOMTEC, 2, rue René Cassin – BP 60164 – 86962 Futuroscope cedex, tél : 33 (0) 6 12 23 68 41 [email protected] ** Phd Student, CEREGE Laboratory, Institut of Administration of Entreprises, University àf Poitiers, Adress : Acrie, Aéroport Nantes-Atlantique, rue Nungesser et Coli, 44860 Saint- Aignan-de-Grand-Lieu, tel : 33 (0) 6 14 63 78 55 [email protected]

Abstract Knowledge and action: a chicken and egg situation. Who is first? Knowledge is traditionally implicitely separated from action. Knowledge is supposed to be ahead of action. We turn information into knowledge. Foreknowledge is supposed to bring victory on competitors or enemies. If it is not possible to be clever with no information, information does not necessarily brings brightness. Information overload can even produce stupid behaviours and wrong decisions. Should humans consider themselves as separated from their environment so that they have to analyse it before they act? Our knowledge is largely made of considerations (culture, education, context, etc.) and it regularly makes us act with no prior intention. To this extend knowledge is action. A new information management has to be built on this issue. Keywords: action, knowledge, competitive intelligence

Knowing is action: from noticing to foolishness by an educated ignorance sense-making rather than by stupidity. Philippe Dumas (1991, p 8) reminds us that « information According to Auguste Comte and the overload can lead to an inintelligibility of positivist thinking we need to « know to the world and desastrous decisions… ». As foresee to be able to ». Althought this an example we can consult the works of mecanist pattern does not hold to facts, it is the sociologist Christian Morel (2002) on still very much in use because it answers absurds decisions and the works of Isaac numerous interpretations over control by Ben Israël on intelligence (service) information. philosophy (2004). Also, who could stand in front of J.F. In his book La mal-info (2006), the Kennedy's sentence « ignorance costs media sociologist Denis Muzet develops more than information » ? In fact we take the idea that we have unconsciously turned shortcuts and think as if the reverse is true. into « media-sensitive beings ». And yet To be precise, we should say that the media represent nourishment that we intelligence deficit costs more than don't know very well, facing the risk of intelligence. Of course it is not possible to being overloaded with information or be clever without information, however, badly informed to say the least. We often information by itself does not allow to be passively consult accessible data from the clever and can even create some media and we rarely voluntaristly seek rare

ECIS 2009 ‐ 189 ‐ PROCEEDINGS information that answer our preexisting harmony in the couple agility/paralysis needs. According to Denis Muzet, we look relation? for information to be connected and to stay This is precisely what Miguel tuned rather than to really understand the Benasayag claims. Our inability to act (our world. Information would cause this paralysis) relays on the illusory idea that anxiety and would also be a remedy. Is this we are distinct from the world whereas we a vicious cercle? Denis Muzet suggest are part of it. Being informed prior to act means to break our chains: being on an is not the reality for two reasons. One empty stomach over the media, using the one hand, we are already in action. specialized media, re-establishing On the other hand, information needs to connivance with the media, being a media be turned into knowledge. Benasayag (p by ourselves, etc. Indeed, these suggestions 23) warns us: acting is not following the can be successful if they distinguish inintelligible flow. We have to accept that information and knowledge. The person's each knowledge develops with a myth must also be replaced by the idea of a structural opacity. We are not far from link. questioning the paradigm of progress for information (Frion, 2009b). 1. From « knowing to doing » to « knowing Michel Benasayag uses is doing » neurophysiology to develop the idea that Sociologist and psychologist Miguel conscience is superficial with regards to Benasayag (1998) criticizes the idea of the knowledge. Our conscience intervenes individual as the center of our occidental very late in the process but is seen as world. This myth would explain this central due to the fact that of its existence: feeling of inability that is strenghthened by before the conscience in the process, we this deluge of information. Therefore when are not conscious of it! Not only we think as individuals we feel we can not knowledge is deeper than the only state of do anything. Psychologist Loeweinstein knowledge but also perception is closely (1994, 2000, 2996) shows us that curiosity related to the landscape. Therefore we tends to put us into an information refute the cartesian view of duality of soul overload situation without helping us to and body. take decisions. So what shall we do? Neurology professor Antonio R. Damasio develops the idea (1995) that 1.1. « Knowing is doing »: the collective rationality does not consist of separating intelligence challenge with emotions. On the contrary, reason Miguel Benasayag and Angélique Del does not ignore emotions. Absence of Rey (2006) start criticizing the individual emotions and feelings prevents from being myth and suggest a constructive approach rational. The famous Descartes' « Cogito, to answer a crucial challenge: how can we ergo sum » should be reversed. Thinking recover our ability to act? They introduce is due to the existance of our boby the idea of landscape. We are not free (Damasio, 1995, p 311). Our reason hasn't individuals in the world. We are linked to got less value than emotional perceptions. one another. We are parts of a all-in-one A better understanding of physiological living scenery. This landscape is evolving mecanisms will improve our capacity to with its constraints and unsolved feel and express emotions, being more contradictions. In this idea we notice the conscious of the traps in scientific key topics of dialectic (Dumas, 1991) observation. dialogic (Morin) and emergence (Varela, Edgard Morin is also suggesting this 1988). Isn't it the OODA15 loop? Could the idea when he investigates strategy (Morin, idea of unity by Benasayag represent 1980, pp. 224-226 in Dumas, 1991, p 74). On the one hand strategy needs a capacity 15 OODA stands for Observe, Orient, Decide, Act

ECIS 2009 ‐ 190 ‐ PROCEEDINGS of doing in uncertainty. On the other hand, The word "intelligence" is tacitely strategy is built during the action. Again understood in anglo-saxon countries we find the Ooda loop. Edgard Morin (Martre, 1994) […] and put in practice reminds us that knowledge is also a (Martre, 1994, p 21). Why? strategist. The strategy of knowledge is Edgar Morin (1999) states that the first necessary for the strategy of doing. We can two fondamental knowledges are: notice the Prescott's idea of competitive the understanding of the blindness of intelligence as a triple component: art, the knowledge (mistake and illusion); science and craft (2008). We also notice the principles of a relevant knowledge. the Mintzberg view of the myth of the total According to Edgar Morin, education information system that could provide us can not be blind on humain knowledge, its with every information needed (1972). systems, its weaknesses, its difficulties, its Mintzberg believes that strategy can be propensions to mistakes and illusions. obtained by planning and by emergence « Knowledge can not be a ready made tool (1987). » (Morin, 1999, p 1). As far as the Competitive intelligence is suggesting principles of a relevant knowledge is the same message. Unfortunatly, related concerned, it has become necessary to concepts have not found their full range of promote a knowledge that would be use, for semantic reasons based on cultural capable of approaching global and reasons. Watching gives us the passive fondamental challenges in order to insert image of the radar screen. A very useful partial and local knowledge. Unfortunatly concept for software developers for whom « suprematy of a fragmented knowledge a watching software can raise the alert. does not allow to link parts to the whole However, this concept can be counter and must face a way of knowledge capable productive if there is little distinctions to grab its parts in their context, between key topics. Indeed, knowledge is complexity and group. It is necessary to not limited to consciously integrating develop a natural competence of the information with the refenery model humain mind to situate all the informaiton (petroleum would be the black gold and in a contexte and in a group » (Ibid, p 2). information the grey gold in the post- He carries on with his 5th fondamental industrial age). The relationship between knowledge, facing uncertainty: « facing the manager and the person in charge of hazards, unexpected and uncertain, and the environment scanning is frequently modify their development […]. We need to poor in the refenery model (Frion, 2009a). learn to navigate in an ocean of uncertainty In a biological model, knowledge is first troughout archipalagos of certainty » (Ibid, because it starts with perception. This is p 3). in opposition with the classic pattern that states that our thinking would 1.2. Competitive intelligence, a matter of traditionaly start by being aware of the education problem in order to identify solutions to In the Edgard Morin's tradition, Jean- solve them. Pierre Hamon (1994 et 2005) mentions that And yet, with this information the French educational system is teaching explosion this illusion is more obvious an impoverished cartesian method (logic) than ever: being informed is not enough to that distinguishes and puts up the elements act, all the more that too much information of a same reality and is allowing at the can paralyse action (see as an example very most to process the complication but Loeweintsein, 2000). In order to get out of not the complexity [...]. The teacher leaves this dead end, it is necessary to reaffirm the learner the action to « transversalize » our faith in the grec thinking that is the provision of each educational teaching. « knowing is doing ». Of course this mistake is also noticeable in

Competitive scanning ECIS 2009 ‐ 191 ‐ PROCEEDINGS

POTENTIAL ENTRANTS

SUPPLIERS INDUSTRY BUYERS COMPETITORS Commercial Commercial scanning scanning

SUBSTITUTES

Technological scanning

Environment scanning

CI for a long time when it is only seen a 1994). A lack of opening-up follows, in list of environment scanning topics. particular to other cultures and negligences Martinet & Ribault, pioneers in this topic in security. How could we secure our (1989) present the 4 main types of information when we already experience information scanning (figure), using the 5 difficulties to actively acquire information? forces or Porter (1986) that command Contradiction is rapidly fading. Cnquerors competition in a sector. and open companies know best how to Refering to Porter's work, this didactic protect themselves. Openness and closure presentation is seeking a legitimacy in are the two sides of one same dynamic. A many books. Competitive Technical Watch French weakness in a compartmentalized and innovation are put forward by society that does not suggest to protect engineers (Rouach, 1996 ; Bloch, 1996). collective goods nor to distribute This presentation is rapidly counter- information in a network-centric approach. productive in the management culture that Further, the French educational system likes to divide tasks to the detriment of favours passive acquisition of knowledge collective intelligence. It ends up with a and memory too often (Hamon, 1994). division of the watching process (Achard, Obviously, in a society that experiences Bernat, 1998) impoverishing considerably information overload the anglo-saxon the analysis capacity of the whole. The tradition that puts forwards that ability to leader of a little company gathers and access information is an advantage16. A the conjugates thinking, memory, will, high education level, the French exception decision and production, therefore hi does not value the training by the phd represents a CI appraoch that does not research. This analysis is to be linked to separate the project from the information, Patrick Fauconnier's view (2005). He as it is frequent to notice in large firms believes that two models of school exist at (Frion, 2009a). Practicaly, we can see the consequences 16 We have noticed over the years educative of a mind set that concentrates more on shortcommings in the frech educational system in the structuring disciplines than minds (Hamon, ability to identify accessess and sources of information (Frion, Moinet, Samier 2007 ; Moinet, 2008a).

ECIS 2009 ‐ 192 ‐ PROCEEDINGS the same time: the refinery model (France) mediator always tries to set up this kind of and the nursery (Anglo-saxons, and north unproductive organization, due to the of Europe countries). The refinery model is computor representation in a world of from Plato, with the theorethical mathematics and the link with the capacity knowledge. The nursery model is from to govern (and to manage). This Aristotle with the know-how. Of course conception favors the Logos (scheduling the nursery model is more favorable to CI the verbing and theories) over the Metis logic. (practical intelligence). According to The Refinery and Nursery Paradigms Béatrice Vacher tasks that manipulate Refinery Nursery information belong to the Metis and the Approach Platonic Aristotelian centralized mediator belongs to the Dogmatic Pragmatic reassuring Logos. Chosing centralization Apprentic Theorical Know how consiste in re-establishing hierarchy eship knowing between the important-information-and the Masters's Instructor Youth worker minor-backup. Backup is less important Profils Professor Nursery teacher and is devoted to information warehousemen (Vacher, 1998, p 34). Promoted Abstract Practical Faculties intelligence intelligence With no intent to take the anglo-saxon Brain Will, courage model as a friction-free model, it is Left brain Heart necessary not to trust the French way of Speculation Right brain team work. Indeed in distributing Induction Observation information to everybody it becomes the Superiority Deduction Différence victim of the communication and Methods Dictation Explaination, transparency myth (Breton, 1995) that can Selection demonstration lead to paralysis. Vacher believes that Individual work Cross- French conception is to reach a perfect Competition fertilization agreement with an identical view of the Team work Cooperation situation. The fondamental advantage of Results Head well filled Head well done the North American culture is the Superiority Diversity culture acceptance of the practice with no culture opposition between Logos and Metis Source : adapted in english from Fauconnier, 2005, p 81. (Vacher, 1998, p 38). Further, Patrick Fauconnier mentions The former is dedicated to talents to that in the second model, the other one, is hatch. The later aims at elaborating the considered as a competitor to beat and not perfect liqueur, whatever the waste that as a chance to add. This exclusion and goes with it. reproduction social logic leads to In the field we investigate, this analysis arrogance and corporatism all the more needs to be completed by Béatrice Vacher that effectiveness is not met. For Francis (1998). She has analysed the information Kramarz and David Thesmar (2006), distribution in two differents companies: larges French firms management by one is an architect office and the other is formers students from the high public Edf. In her study she describes that reality service education system is worse than the can be very different from the traditional average. Their co-option networks would conceptions. Whatever the central particularly impact negatively on their regulation, the information organizational intelligence. warehousemen have obscure and Thus, French social relations between neglected tasks and are the true vehicles employees and managers strongly remain for information exchanges in the marked by hierarchy, elitism, lack of trust company. In the large company Béatrice and cooperation, in spite of openness to Vacher observes that the centralised

ECIS 2009 ‐ 193 ‐ PROCEEDINGS globalization of French companies. A ten- for our culture built on individual country study by Bpi and Bva shows that « genius » (Les Echos, 2008, April 21st, p French employees gives lower marks to 14). theirs managers, 15 to 20% below the In contrast with « knowing is doing », ones for English, Americans, Germans and « knowing for doing » are the cornerstone Scandinavians. Brice Mallié17 (2008) of the French CI with an adverse point of refuses to use the old cliché that shows the view. CI is not limited to a tool box, it is a French as a moaner and the Anglo-Saxon company project. In the 60s in the Usa, CI as positive. was included in the company strategy from « There is a correlation between the start. In France the ingineers' mindset competitiveness, growth, employment rate, often uses plans (Siegel, 2008). In France, on one side and quality of social relations status surpasses function, membership and management on the other. Trust, surpasses competence. Therefore we constructive confrontation, cooperation, a understand why CI is not distinct from sens of balanced hierarchy, give original strategic thinking in performance […] In the XXIth century, hypercompetition. Insisting on ongoing work organizations request a network- revolutions, the French official speech over centric approach, trust and responsibility CI is calling for a modification of from all » (Mallié, 2008). information behaviours and social Thomas Philippon18 (2007) analyses structures so that we call this peculiar this French paradox: French flee their firm « French exception ». If the French school and value the work. The economist shows in CI often mention behaviours, it often that this situation is largely based on a limits itself to set theories, library and capitalism that favours direct inheritance information science, computing and most or sociologist social reproduction by a of the time it ignores authors like Bates, diploma or a status. Capitalism of heirs Dervin, Wilson, etc. offers some stability but also prevents Economists Yann Algan and Pierre from the renewal of the managerial elite Cahuc (2007) demonstrate that France is and discourages the most enterprising involved in a vicious circle with persons. It also deprives the economy of considerable economic and social costs. rare talents. Ignorance and distrust are For more than 20 years, more than fed. anywhere else, we have been distrusting Now does it come as a surprise that the our fellow citizens, public services and the French management culture is still market. Distrust and no sense of civic reluctant to the importance of strategic responsibility are not immutable but they management of knowledge? The Boston are fed by corporatism and statism. This Consulting Group and the World situation diminishes the capacity of the Federation of Personnel Management French to cooperate, stimulating the State Association have recently launched a vast to regulate and to empty the social dialog. enquiry towards 4.700 executives in 83 It goes on and on. This lack of trust countries. Results are significant: talents drasticly decreases employement and management is within the top priorities of growth. As it happens, wealth is the companies all around the world except in daughter of trust. CI is claiming this France. Distributing knowledge within the message of trust when it states that company is not considered as a strategic knowledge and information management objective in France, which is not surprising are keys to competitiveness for companies and regions. Therefore, we need more than 17 Director of the management department at the just methods, we need a collective impulse consulting firm BPI. 18 Economist, Professor at the New York University to win. Alain Peyrefitte (1995) believes a – Leonard N. Stern School of Business. country with distrust, on a win-lose basis, www.stern.nyu.edu

ECIS 2009 ‐ 194 ‐ PROCEEDINGS is not gaining anything and ever destroyes gives metteur en information with regards wealth. On the contrary, a country with to competitive intelligence (Frion et Frion, trust, is growing on a win-win relationship, 2008). This expression combines with solidarity, collective projects, knowledge with ingenuity on the spot openness, exchanges and communication. rather than with process on an This last word is very important. Indeed, if administrative mode. national culture is not spread uniformly nor 2. From strategic information to it is futile to change it. Crises of all kinds knowledge can help to force it to change. A good example is the Atlantic Shypyard near CI foundations tell us that Nantes, in France (Moinet, 2006a). information is not enough to act. In 1997 the Atlantic Shypyard are going Wilensky (1967) sees CI as a process of down and their new Ceo is new in this production and not accumulation. business so that his strategic analysis « Interpretation skills » are essential. brings radical changes. Some large markets are rather free of competitors, 50% of the 2.1. Operating limits of the concept of construction constraints are benchmarked information with other industries, etc. Competitiveness Researchers from economics, library is low with a high level of subsidies. A and information sciences, communication, new plan-Cap21-has 3 objectives that will know it by heart, since Shannon (1949) be successfully reasched: 30% costs cut, and Wiener (1952): information is a becoming the world leader on liners and treatment object and a means to reduce increase production. Culture also moved uncertainty. Action is considered as an forward with a fascinating interest for the ongoing logic that adjusts with feedbacks product they make. However, the Ceo- between the sender and the receiver. This Patrick Boissier- reckons French are physiciens' vision does not apply directly arrogant to the point that they know better in social sciences. Neo-classic economists than their clients and only notice what they received it favorably to start with when do better than competitors (and not what they considered that the agent is rational competitors do better). When Alstom and the market provided him with needs to recrut 600 people for its information to be rational (Albertini, shipyards, things change because they Silem, 1983, pp. 80-88). As for Friedrich bring with them some fresh thinking. For Von Hayek information is the central 19 the Ceo, the important thing is problem in economic processes . Herbert communicating beforehand and not letting Simon introduces bounded rationalityitée: the flamme go off. information in uncomplet and information And now Anne Mayère (1990) argues treatment is limited. Organization is that « information does not exist by considered as a process that gets closer to itself ». Information is a process that turns rationality providing people with necessary the receiver as a co-producer. Information information to treat information. For James is treated and obtains a significance that March and Herbert Simon (1958) the depends on its use and the tolerated decision process is made of 4 stages: uncertainty related to it (Mayère, 1990, p environment observations, analysis, 285). Then, knowledge appears has an operating system selection and decision. individual and collective production, Once again we fing the famous guided by a common vision for the information cycle. March and Simon objective to achieve and for sense-making believe that indivuals can not face the huge to give to the action. Thefore the French 19 His article in American economic review: « The expression metteur en scene witch is use of knowledge in society » is traduced in the Revue adapted from the film director expression, française d’économie with the title « L’utilisation de l’information dans la société ».

ECIS 2009 ‐ 195 ‐ PROCEEDINGS amount and complexity of information and when people know how to use it and that only individual cognitive capacities can can make sense of it. He argues that face this challenge. Crozier and Friedberg knowledge find its aim in action (Ibid., p (1977) introduce a new conception in 179) and CI looks like a sensorial vigilance strategic analysis when they state that an system. This conception is very much organization is made of power relations, adapted to the agility/paralysis couple and influence, bargaining and calculation that to the Ooda loop. use 4 sources of power corresponding to Jean-Louis Levet (2001) observes that the sources of uncertainty: competence information and knowledge are generaly mastering; relations with the not distinct in economics. environnement; mastering of As for Philippe Dumas, cognition is a communication and information; « knowledge activity based on the organizational general rules; the need for traduction of symbols handling by calcul, a networking (ibid, p 83). Philosophy of CI building of a representation of the situation appears here but has not hatched yet before and a direction toward the solution of a information and knowledge are distinctly problem by conception and evaluation of presented. action scenarii » (Dumas, 1991, p 50). Edgar Morin does not consider Using this systemic philosophy and information by itself but embeded in noticing that mosts authors in CI consider organisation and communication (Laulan, objects rather than processes, we use Pierre Perriault, 2007, p 187). In smes (Jacques- Chapignac's pattern (1994). Working on Gustave & Moinet, 1995 ; Moinet, 1999 ; the value of information, He considers that Moinet, 2006) we noticed that information is determined by its reductionism does exist. The mecanist integration in a group that can be called conception of information, hereabove, « thinking action ». In other words, have been largely used despite the fact information value is defined in context of their difficulty for operating use and of the action. This value can be a the persisting myth of the information evaluated as a content, redundancy, market. diversity or quantity. The value of Very few are the CI literature books that information is determined by usage or distinctly present the differences between help it provides, not by itself. Chapignac data, information, knowledge and shows the functional link between intelligence (in the French sense of information and knowledge : « The value renseignement). Philippe Dumas (1991, p of information is proportionate to the 4) seperates data as physical signal, and integrated knowledge. Knowledge all the information as an interpretation of the more brings value that is diversified » signal in context. Guy Massé (2001, p 176) (Chapignac, 1994). Therefore the value draws our attention on the fact that of information is determined by the level information exists when someone has got a of sharing and by the quantity and need an a will, whereas knowledge exists quality of exchanges.

ECIS 2009 ‐ 196 ‐ PROCEEDINGS

From this diagram « thinking the collective organisation based on action » we bear in mind the idea of information scharing rather than on a system.. None of these elements can be genious intuition. The leader that does linked to any other one with no not decide completely is still very consideration to the whole lot. In some usefull. The gap is large between the cases, links are direct and short but quality of information or cognitive bias strategic decision needs the the complete and the vague attempt about decisions set. Strategy can be defined as « the art of that have to be considered.

Thinking the Action

Information

Action Problem to solve

Knowledge Rationality Culture Experience Know-How Intelligence solution using information that pop up in action, « Decision-makers do not decide, they integrating them, and spontaneously take part in the decision making » (Bellier, formulating action diagrams, and being Laroche, 2005, p 19). capable to gather the maximum of After his phd in economics Antoine certainty to face what is uncertain » Saïd realises that in setting up a technical (Morin, 1990, p 178). No doute the watch system at the French Company Sfr, favoured intuition of the heads of the main difficulty is human-related companies is nothing else than this hidden (Granger, 2005, pp. 31-32). This is often diagram, whether it is conscious or not. ignored by CI theoreticians, in France in The missing link between and CI and particular. Often, individual technics win information could be the communication over collective management. process. « There is no communication Antoine Saïd (2004) believes « above without organization, no organization all CI is a process that helps people to without communication. » (Dumas, 1991, modify their point of view of the p 36). In 2003, Ratan Tata from India, environment (…) with three major decides to launch a new car called « Tata elements: appropriation, sensemaking and nano ». The very low price is decided in a action. discussion with a journalist (1700 euros). • appropriation of necesary information ; Ratan Tata decided to build the car • sensemaking (Weick) to bring out the accordingly to the price and put greats possible sens of a strategy;. efforts in communication to convince the • action is based on knowledge of the employees that it was possible (Julien company over itself and the Bouissou in Le Monde January 23rd 2008). environment » (Saïd, 2005, p 28). Ratan Tata set up the price in a partially Antoine Saïd highlights the importance of conscious process based on a clever the people absoption capacity within a CI

ECIS 2009 ‐ 197 ‐ PROCEEDINGS system. Cohen et Levinthal (1990, 1994), well with the heart » says the fox to the define the absorption capacity as the Little Prince, « What is esentiel is capacity to identify the value of a new invisible to the eyes » (Saint-Exupéry). information, to digest it and use it French CI that went to Japan came there (knowledge) for business purposes. with an idea to discover the information Overall, the conception of information is samourais of information, and came back moving from usefull information with change management, the willingness (Martre, 1994) toward the power of to listen to other people, and participative absorption capacity in order to produce management principles that will have to be collective knowledge. If information does put in practice back in France. exist, it will be consulted and turned into Intelligence is a collective matter, knowledge, otherwise, it will be necessary therefore it is a cultural matter too. This is to seek and invent it with successive tests why the famous CI tools like surprise and (Frion, 2009a). We can seen from here discovery reports, benchmarking, seem so that knowledge is an operating concept easy to realise to start with. And as soon as because it allows to get out of the job starts, they need participative intellectual and conceptual dead ends management and networking to make car such as information overload, sense. It is a constructionnist and an infopollution, infoxication or infobesity. interactionnist approach of organisation, Information is strategic if it allows the such as Karl Weick or Brenda Dervin appearance of knowledge. The difficulty is (Dervin & Nilan, 1986) have put forward. to create and run efficiently a vertuous Psychologist and organization Professor apprenticeship cycle for the organization. Weick considers that organization is Politics is the key because intelligence is moving and building itself with the capacity to link what is separated, to communication, interpretation, mutual turn information into knowledge, to drive adaptation. It is breakthrough compared to an apprenticeship dynamic (Senge, 1991) objective caracteristics like size, with a close relation with the environment. technology, environment, etc. It is also unlearning what could paralyse Karl E. Weick (1969, 1979) explains the thinking of action (Baumard, 1995). that organizations only can react to various Thus, it is not a surprise that Japan has elements of the environment through their been taken as an example and used for CI own congnitive tasks. Sensemaking is a models to CI pionneers, providing collective task and comes from cycles of platforms to share and cross information enaction (Varela, 1988): acteur α (an before making a choice and a decision. individual or a group) suggests an « [in France, information] becomes an interpretation that is accepted, rejected or object that is distributed on a trading base, modified by β (interaction) and this leads α whereas on a relationship model, to abort, modify or maintain his choice information mostly remains a means, a (double-interaction). These cycles of ressource that strenghten the relation » behaviours are linked and allow to making (Ribault, 1995). sense collectively and face the unforeseen. This is the strenght of the Japanese As such the survival probability of an CI model, which intelligence is the fruit organization increase. Especialy when of a collaboration-based relation variations and possibilities increase and capitalism. In Asia, the conception when tests and errors become more diverse individual does make much sense until he and less typical, when individuals is contributing to a group, whereas, in reproduce less often previous tasks and Occident, individuals exist by themselves. when creativity is encouraged. This Japan is therefore fascinating for France process of making sense is triggered by where distrust is high. « We only can see

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VARELA F.J. (1988), Autonomie et connaissance, essai sur le vivant, Paris : Seuil. WEICK K.E. (1979), The social psychology of organizing, New-York : Random House. WEICK K.E. (1995), Sensemaking in Organizations, Californie : Sage Publications. WIENER R. (1952), Cybernétique et société, Paris : Editions des Deux Rives. WILENSKY H. (1967), Organizational Intelligence: Knowledge and Policy in Government and Industry, New York : Basic Books. WILSON T.D. (1999), « Models in Information Behaviour Research », in Journal of Documentation, 55(3) [Available at http://InformationR.net/tdw/publ/papers /1999jDoc.html]

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Methodology to integrate Competitive Intelligence with the Hoshin Kanri planning system: Application to a Commercial Strategy

Filiberto Luévano Narváez*, Marisela Rodríguez Salvador** and José Roberto Antonio Vega Pino*** *Company X México [email protected]

**Quality and Manufacturing Center, ITESM Instituto Tecnológico y de Estudios Superiores de Monterrey México [email protected]

***Quality and Manufacturing Center, ITESM Instituto Tecnológico y de Estudios Superiores de Monterrey México [email protected]

Abstract This proposal integrates the Competitive Intelligence with the Hoshin Kanri methodology in order to improve the planning process of the organizations. This approach conducts to generate strategic plans proactively considering future trends in markets, competitors, clients and business opportunities. The proposed methodology is applied in a case study of the strategic commercial area in a cement company. Keywords: Competitive Intelligence, Hoshin Kanri, Commercial strategy, Strategy definition, Planning System

1 Introduction preparation and actualization that in addition to the development of strategies, Today, globalization is affecting many increases the company’s competitiveness companies. In order to remain competitive in the market. these companies should constantly monitor Companies need strategies to be its environment to define strategies, avoid competitive and consequently require well- threats and benefit from opportunities in defined processes to generate the expected the market. To plan strategically and react results. According to Porter, this to the changes in the environment, it’s formulation process is generated with the necessary to know and analyze it. For this, following three elements companies and organizations use different What does the company do? tools like the competitive technical • What happens in the company’s intelligence, the Balance Score Card or the • environment? Hoshin Kanri planning system, among What should the company do? others. These tools allow a constant •

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From the list above, the second element Competitive Intelligence is a systematic process focused on the search, selection, analysis and is the most important one because it allows distribution of the environment’s information. CI having a detailed review of the company’s adds big value to strategy formulation and implementation, including specific actions for environment and allows strategies to be business units, production areas and other formulated. Is in this context where the departments. Its objective is to obtain competitive Competitive Intelligence (CI) is applied. advantages not only for the present but also for the future organization’s development. 2 Background In order to develop the appropriate CI As Comai and Tena [2006] establish, program, it’s necessary to focus on the anticipation is a key success factor in the following six dimensions stated by Comai business world, thus special attention and Tena [2006]. “Process” describes the should be focused in new business models, functionality of the CI program inside the innovation, emerging markets and other company by considering the idea, the aspects that could affect the company’s project and system. “Type” refers to the competitiveness. Planning systems help organizational model that the program companies to react similarly to specific needs to incorporate either being situations using the same language and centralized, decentralized or a hybrid. taking concrete actions. “Strategy” focuses on the kind of system used either for tactical, business or 2.1 Competitive Intelligence strategic decisions. “Localization” defines After WWII, Japan had to improve its the specialization of the study from seven manufacturing companies in order to different themes, including market, achieve world market competitive technical and financial intelligence. standards and increment their sales. “Time” considers the life span of the Throughout the years, the multinational information to be used that could be short, companies established internal medium or long term. Finally, the “Object departments who collaborated with the of the research” specifies if this study will Scientific Information Center to gather and get knowledge of the competition or the analyze information of what was important environment in general. for their company Herring [1999]. During To obtain a holistic vision of the the 1990’s, the concept of business environment analyzed it’s necessary to use intelligence kept evolving until it was primary and secondary sources. Primary introduced to businesses as Competitive sources contain data that is recollected Intelligence. directly by who generates the information,

ECIS 2009 ‐ 204 ‐ PROCEEDINGS which are competitors, employees, 2.2 Total Quality Management gatekeepers, distributors and others that Businesses have considered the can be classified as internal, external and importance of quality for the development experts Fleisher [2004], Mockler [1992], of objectives and productivity since long Peters [1993]. Secondary sources contain time ago. In the production area, products primary information that has already been are manufactured to meet established processed and can be presented in standards, but the principal goal has newspapers, magazines, statistics, always been client’s satisfaction. databases and the Internet Fleisher [2004], Employees must create systems and Mockler [1992], Peters [1993]. procedures to avoid defects in production, Figure 1 represents the intelligence they require specific knowledge and cycle considering the review of appropriate tools to anticipate problems. information needs, the appropriate Total quality is a strategic factor that many channels to obtain information and companies depend on to evolve and determining how to incorporate the results expand its goals and facilitates the business of the intelligence process to the strategic administration to meet the client’s needs. planning of the company. In the planning Total quality is an integral philosophy stage of this process, needs, users, that searches and promotes continuous objectives, available resources, an activity improvement through all its areas and schedule and responsibilities are business functions by involving its designated. Information sources are employees toward the final objective: the selected depending on the users’ needs and client’s satisfaction. Deming and Duran’s objectives stated before, which can be quality research focuses on the company’s primary or secondary information sources. commitment, improvement, use of quality In the Information collection stage, control techniques and the importance of information is gathered depending on the employee training Soin [1999]. On the available time, quality, and cost taking into other hand, Crosby analyzes the primary account the process of intelligence behavior and cultural change in the proposed by Ashton and Klavans [1997]. company Soin [1999]. Evans and The two most utilized techniques are Lindsay[1999] states four important technology exploration and use of quality elements; those are the client’s databases. During the Data processing needs, planning, manufacturing (zero stage, useful information is selected defects) and management process. depending on the needs and objectives of Total Quality Management benefits the the project. In the Analysis stage, the entire company by satisfying the information is transformed into an customer’s needs; this philosophy directly actionable product that supports the affects all the company’s management and decision-making process. In the Results tries to motivate employees in the sense delivery stage, a tool for distributing that their work is crucial to improve the information is selected; it could be a quality and characteristics of the products combination of reports, memorandums, e- and services. mails, telephone calls, meetings or oral presentations. The Timely decision making 2.3 Planning Process stage involves creating a direct benefit for The objective of this stage is to consolidate the company, looking for success as a a capacity to anticipate facts in long term result of the decisions taken. Finally, the horizons with the focus of preparing a complete program should be evaluated and work group with strategies and action improved given the dynamic nature of plans specifically oriented. Johnson [1999] companies and the environment. states that planning is “a formal process of establishing a mission with objectives and

ECIS 2009 ‐ 205 ‐ PROCEEDINGS goals, as well as the processes through year objectives and an annual plan in which they are accomplished.” which each objective specifically includes Porter [2004] establishes that the information related to who is in charge, fundamental bases for planning are: the how the work should be done and time strengths, competitive advantage, threats limits. The Hoshin Kanri planning system and weaknesses present inside and outside is a methodology that helps define the the organization. According to Johnson annual plan for businesses. [1999] the fundaments for a planning Hoshin Kanri originated as part of Total process are vision, strategic thinking, Quality Management, is a control system problem solution, decision-taking process, and activity for continuous improvement. focus on goals, commitment to change, Nayatani [1984] in Yoji [1991] states that commitment to development and this kind of plans could operate as a preparation for possible failure. systemic control of activities for annual Each of these fundaments must be politics based on the company’s vision, validated periodically and thoroughly by management concepts and its medium and planners to prevent setbacks since well- long-term plans. Sugimoti [1986] in Yoji prepared plans are a guide to achieve [1991] refers Hoshin Kanri as the most success. For a company to be successful, effective system to manage an organization all people involved should have access to since it globally improves its capacities. information, assimilate it and be able to put This methodology is an effective it into action. management system that conducts to the Plans should also count with simplicity, continuous advancement of the flexibility, credibility, applicability, organization by the development of an operability and vision. When these annual politics plan. The main benefit of characteristics are applied, the result is an this system is the orientation to the effective and easily comprehensible plan company’s vision providing a that establishes the same language methodology that focuses the company to throughout all the organization. At the end the most important goals and is extended of the process, the defined plan is a map to through all levels in the organization. achieve the expected goals by exactly Figure 3 presents the Hoshin Kanri model defining what, who, how, when and where. proposed by Cowley & Associates [1995] in Cowley and Domb [1997]. This model is based on the control cycle, which has four steps: plan, do, control and act. This model can be divided in two parts: the inter-functional part and the functional part. The inter-functional part displays the company’s strategy to develop, follow, and achieve proposed objectives in the top level of the organization. In the functional

A long-term plan should include an part, the main processes supporting the analysis of strengths, weaknesses, strategy are defined and strengthen in order opportunities and threats to define the to accomplish the company’s strategic strategies to follow by establishing objectives. In the first stage, the objectives based on real information and environment and the company are data. These plans should also be aggressive analyzed. Then the strategy, objectives and and reachable through the correct performance indicators are settled to have assignation of resources. Figure 2 shows a continuous review. At the end, the steps to create a long-term strategic executives, managers and employees plan. The long-term plan creates 3 to 5

ECIS 2009 ‐ 206 ‐ PROCEEDINGS create specific action plans as well as paths During the selection, gathering and to execute them. database processing, sources should be selected according to the company’s 3 Proposal of integration resources and the needs stated at the The proposed model is showed in figure 4. beginning of the cycle. These sources can It integrates the intelligence cycle be primary or secondary depending on the proposed by Escorsa and Rodríguez [1997] results expected. To analyze effectively the and the Hoshin Kanri planning process by information, the following models are used Cowley & Associates [1995] in Cowley by different industries: competitor profile,

and Domb [1997]. Briefly, this ten-step the six angles of the competence, model starts with the establishment of the stakeholders, blind spots, technology and key objective the company is searching patent map, chain value, analysis of the for. Then the intelligence cycle is industry (five forces), STEEP, hypothesis developed to generate knowledge from the analysis, scenario, war games, SWOT, etc. environment. Finally, an action plan is Prescott [2006] recommends to apply a created, implemented and ideally model widely used by companies (industry monitored continually. analysis: 5 forces), to combine it with the The organization should first establish chain value model and apply a SWOT the key objective where the company’s analysis. This approach summarizes the vision is stated and aspects are prioritized actual situation of the company and its through the creation of an action plan. To industry and it should be periodically develop the company’s vision, the working updated with the results obtained by the group generates ideas through an affinity intelligence cycle. To evaluate the diagram. It is recommended to start with intelligence cycle, the affinity diagram only one department or with few objectives allows group participation to show the since employees might be saturated and the points of improvement in order to proceed implementation effort could be sabotaged, to the next step of the intelligence cycle. Babich [1996].

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Considering the key objective and the results must be considered for the next results gathered in the intelligence cycle, period. strategic objectives are formulated and are 4 Application in a commercial distributed to all the levels of the company. strategy Babich [1996] recommends using the catchball process where strategic object- This study case consists in applying the ives are used to create specific objectives. proposed methodology, which integrates Again, the affinity diagram is applied to the intelligence cycle and the Hoshin Kanri create the objectives of each strategy planning system, with the purpose of through the brainstorming process. creating a strategic commercial plan for a For the implementation, each depart- cement company. For confidential reasons, ment and person should work together to the company should be called X accomplish the strategic objectives formu- throughout this research. We selected this lated. To establish the basic activities, study because: responsibilities and completion dates, the Presents a real opportunity to validate Gantt diagram provides an adequate tool. the results of the research During the monitoring stage, the action The company’s information was plan is modified according to the advances accessible given that one author was an in the objectives execution and the results actual employee obtained from the intelligence cycle. These The development of a commercial changes allow the plan to be adjusted strategy clearly defines the path for other according to new opportunities or threats departments, such as production, quality in the environment. A periodical review is and service recommended comparing the expected and real results in a tendency graph. 4.1 Intelligence cycle plan For the continuous improvement phase, After using the affinity diagram, the key it’s necessary to analyze the objective proposed for the intelligence accomplishment of the proposed goals for cycle was the following: gather relevant each action and easily update the changes information of the ready mix concrete to the implementation plan. industry and its commercial context in the Each indicator should be evaluated; city of Guadalajara, Mexico. To lessons learned, expected results and accomplish this objective and create a differences between real and proposed commercial strategy it was necessary to comprehend the environment and its

ECIS 2009 ‐ 208 ‐ PROCEEDINGS dynamic. The information to be collected in the cycle was: Guadalajara’s growth and development Demand’s map Competitor’s production capacity Once the objective was defined, the author of this paper from the company, some other employees and industry experts started the project with a 14-week deadline to present the outcomes. To fully investigate the competition’s 4.2 Selection, recollection and databases production capacity, the author and processing industry experts made visits to each of the Interviews with the commercial 36 plants located in the city. Figure 6 manager, the local manager and the sales presents the estimated production capacity representatives in Guadalajara were used of each concrete company in Guadalajara. as primary sources. Their know-how and points of view were taken into consideration during the project. The Company also contracted an agency to make a field research in the city. On the other hand, the secondary sources included own files, databases and information from the Instituto Nacional de Estadística y Geografía (INEGI). 4.3 Outcome Analysis Using this information, the growth and By means of the intelligence cycle it was development of Guadalajara city was possible to obtain a broad knowledge of analyzed. The following conclusions were the ready mix concrete business in formulated: Guadalajara. The conclusions of the results 9 development areas were identified obtained were: where 6 of them were currently active Opportunity to capture new sales The construction in these areas prima- Opportunity to grow in specific markets rily consisted of housing and commercial Opportunity to establish contracts with buildings. One area in Guadalajara’s top clients downtown has a resurgence of vertical Opportunity to improve market construction. coverage 2 other development areas could be of Competitors with limited production importance for the housing and capacity commercial buildings construction in the The outcome of the intelligence cycle next 5 years. was used to define the strengths, The agency contracted for the analysis weaknesses, opportunities and threats for of actual constructions analyzed more than the company and industry. Analyzing its 700 constructions sites with a ready mix 3 strengths, Company X is the industry concrete demand greater than 120,000 m leader and has the biggest capacity in the per month. Figure 5 presents market share city allowing the possibility to absorb for Company X and its competitors. greater sales. On the other hand, the company is not able to easily reach the housing and commercial market, additionally has only a few plants in specific parts of the city. Considering the

ECIS 2009 ‐ 209 ‐ PROCEEDINGS industry, X can increase its market share, it was possible to analyze these two as the company can increase coverage in disciplines incorporated in the new areas and many competitors have methodology. The proposed methodology reached its production limits. The industry integrates the environment understanding also has threats since many small with the planning system of the company competitors can keep growing and few by creating strategic plans to constantly clients concentrate the concrete demand. monitor competitors, customers, markets This SWOT analysis was presented to the trends and business opportunities in a 10- commercial manager, the local manager step process. It should be noted that the and some members of the sales department inter-functional part of the Hoshin Kanri showing the achievement of the objectives planning system should be introduced in defined at the beginning of the intelligence the methodology process by empowering cycle. key business processes to meets customer demands and keep the business 4.4 Intelligence Cycle evaluation competitiveness. Another important aspect The intelligence cycle was evaluated using is that the model should be modified to be the affinity diagram tool. The results successfully applied in other companies established that for the next cycle, prices, given that the time cycle and the size of the products and competitor service levels company is different from one were included. organization to another. A worldwide company with thousands of employees will 4.5 Action plan formulation and distribution take more time to apply the model, Once the company and the industry were compared with a small local company. analyzed, several strategies were The application of the methodology in established to pursue the main objective the company X was successful, a detailed defined before. The local manager in action plan was designed with a broad Guadalajara established a goal of 45% knowledge of the environment. This market share to maintain leadership. To business plan established keys objectives complete this goal he designed a specific of the company, a detailed process to strategy to increase the market share in 2 develop a market research and an action zones of Guadalajara. Once this strategy plan that completed each objective and was established, the commercial manager goal with a big employees’ contribution. applied tailored strategies for the Once the methodology was applied, commercial department. market share of Company X in the housing and commercial industry increased by 2%, 4.6 Implementing and monitoring action one plant was relocated to satisfy latent plans demand and improve coverage, and Using the goals defined in the action plans, negotiations with 3 key clients were started the location and commercial managers with exclusivity contracts. applied Gantt charts to define activities, We are convinced that the integration of responsibilities and deadlines to complete Competitive Intelligence and the Hoshin the strategic objectives. For each goal, the Kanri planning system in one methodology intelligence cycle was used to compare could help companies consider in advance actual versus expected results. This cycle the changes in the environment to currently also helped to detect new opportunities or create more competitive action plans. threats in the industry that should be taken into consideration. 5 Conclusions 6 Acknowledgements Using the scientific method proposed by Hernández, Fernández and Baptista [2006]

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We would like to thank the concrete Systems to Support Strategic Decision company, X, for their valuable support and Management Decision Making, information needed for the development of Advanced Management Journal, 57(1), this research. 4-9 Peters P (1993) The right quality tools are 7 References as good as a first rate map, The Journal Ashton W and Klavans R (1997) Keeping for Quality and Participation, 16(6), Abreast of Science and Technology, 56-58 Battelle Press, Columbus, OH Porter, M (2004) Competitive Strategy, Babich, P (1996) Hoshin Handbook (2nd Free Press, United States ed.), Total Quality Engineering TQE Prescott, J (October 18-20, 2006) The Comai A and Tena J (2006) Mapping and Strategy Confection: Visualization of Anticipating the Competitive Competitor Strategies and Landscape, EMECOM Ediciones, Implementation Processes, Society of Barcelona, Spain. Competitive Intelligence Professionals, Cowley M and Domb E (1997) Beyond Boston, MA Strategic Vision: Effective Corporate Soin S (1999) Total Quality Essentials: Action with Hoshin Planning, Elsevier Using Quality Tools and Systemas to Science Improve and Manage Your Business, Escorsa P and Rodríguez M (October 27- McGraw Hill Professional, United 29, 1997) De la información a la States. inteligencia tecnológica: Un avance Yoji A (1991) Hoshin Kanri Policy estratégico, VII Seminario Biannual Deployment for Successful TQM, Latinoamericano de Gestión Productivity Press, United States. Tecnológica (pp. 833-856) ALTEC Evans J and Lindsay W (1999) The Management and Control of Quality, South-Western College Publishing, Michigan, United States Fleisher C (2005) Competitive Intelligence Education: Competencies, Sources, and Trends, Information Management Journal, 38(2), 56-61 Hernandez R, Fernandez C and Baptista P (2006) Metodología de la investigación (4 ed.), McGraw Hill, Mexico Herring J (1999) Key intelligence topics: A process to identify and define intelligence needs, Competitive Intelligence Review 10(2), 4-14 Johnson R (1999) TQM Management Processes for Quality Operations, ASQC Quality Press, United States Luevano F (2008) Metodología de integración de la inteligencia competitiva con el sistema de planeación Hoshin Kanri, ITESM, Monterrey, Mexico Mockler R (1992) Strategic Intelligence Systems: Competitive Intelligence

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Marginalizing the periphery: enhancing competitive awareness by looking less hard

Michael Neugarten Manager, Competitive Intelligence Israel Aerospace Industries Israel [email protected]

Abstract Despite an understandable organizational tendency to over-focus, Competitive Intelligence, which seeks to understand the organization’s external business environment, needs to take a wider perspective. Day and Schoemaker [2004, 2006] declared it was time for organizations to focus on the periphery; but to really benefit from the periphery, one must actually resist this temptation, and look less hard, and in a less focussed manner. Analogies with human vision show how marginalizing the periphery can actually enhance CI insight. Keywords: situational awareness, periphery, defocus, visual analogies, looking less hard1 Introduction – over-focusing and neglecting the periphery

and March [1981] observed that although 1 Introduction organizations complain about a lack of Much of what passes for modern-day information, they constantly seek more, Competitive Intelligence, at least regarding and this, while failing to use what they Collection, is akin to looking for one’s already do have. This state of affairs must keys under the lamp post. This is surely sound familiar to many current CI increasingly common in the so-called practitioners. Internet age, where the tendency is to seek This tendency to over-focus leads, when more and more information (not least viewing one’s external competitive because it is now so easy to do so), and environment, to the neglect of the focus more and more on what one is periphery, even though it is a key source of seeking (as evidenced by the use of weak signals and of what shortly will be keywords). This trend is often important and require attending to [Weick implemented or influenced by information and Sutcliffe 2001; Neugarten 2006]. scientists who themselves are often Some management researchers and implicitly taught to look for what they’re practitioners, such as Day and Schoemaker looking for, and that focused search (which [2004], have realized the importance of the returns as few ‘hits’ as possible) is to be periphery and now seek to focus preferred to ‘simply’ wandering around. organizational attention on it. But this call But in a paper that is still relevant, to focus on the periphery in itself negates despite having been first published almost the characteristics of peripheral vision that thirty years, and incidentally having are so important to humans – namely nothing ostensibly to do with CI, Feldman motion detection, the ability to notice

ECIS 2009 ‐ 212 ‐ PROCEEDINGS small changes, and the ability to process strange’, as the German romanticists of the information subconsciously before we are 18th century would have it, thereby required to consciously attend to it [Zeki opening ourselves up to the wonders of 1999, Findlay and Gilchrist 2003]. surprise and serendipity. It is not easy to Focusing on the periphery thus causes the implement this ‘defocus’ in many ‘real’ very characteristics that we can usefully organizations, where surprise is often exploit from unfocused awareness of the discouraged and even feared [Cunha et al periphery to be lost as the price we pay for 2006], but has nevertheless proven to be of yet more focusing. utility in sensing and generating new business opportunities. 2 Objective – the need to marginalize the periphery 3 Visual processes and peripheral In this paper, I propose that there is utility vision to be gained in marginalizing the Much can be learnt from our own visual periphery, that is, in keeping it deliberately processes. Human eyes possess foveal, unfocused. In an earlier paper [Neugarten focused, central vision and also much 2003] and in my doctoral thesis [Neugarten wider peripheral vision. Foveal vision 2008b] I explored the use of optical and provides our main (colour, daytime) visual analogies and metaphors to viewing capability, used for exploring the understand how better to enhance world, reading, looking at something. It is awareness and noticing in the practice of what we use when looking at anything, Competitive Intelligence. reading, recognizing other people, and Analogies with human vision are used when asked to read eye charts at the here to show how organizations can make opticians. better use of their peripheral vision in 3.1 The need for a trade-off between foveal and trying to make sense of their external peripheral vision competitive environment. As I have But our foveal vision covers only an previously pointed out [Neugarten 2003], infinitesimal part of our visual field, much we see to make sense of the world around less than 1 percent of the visual field, and us [Zeki 1999] but conduct CI to make this accounts for the need to scan our field sense of the business world around us [see of view and the importance of not also Weick 2001 who discusses our neglecting peripheral vision. There are attempts at sensemaking]. good ‘engineering’ reasons for this. Our Despite those who still believe that brains would have to be far larger and more intelligence is gained by gathering heavier were our vision to be uniformly of more information, non-intuitive the quality we experience with our foveal approaches such as looking less hard, vision. Because our eyes can move, in looking for what is not there, focusing less, heads that can turn and on bodies that are wandering around in one’s search, and able to move in our environments, we are drawing on concepts of peripheral vision, able to make the trade-off between a small are shown to be effective ways towards but highly accurate, central, focused, enhancing noticing. foveal vision, and a much wider spread of The prevailing and dominant peripheral vision. organizational tendency is to privilege the Were our eyes to have constant high- central or the focused, which makes any acuity vision (of the quality exhibited by attempt to ‘look around’ and defocus or the fovea) over the entire retina, the human back off seem counter-intuitive at best. brain would have to weigh some ten tons Ways of stepping back from what we [Findlay and Gilchrist 2003, 5]. An eye are observing will be discussed. These capable of scanning and angular motion in have the advantage of ‘making the familiar the skull, coupled with head and body

ECIS 2009 ‐ 213 ‐ PROCEEDINGS movements is no coincidence or luxury, and almost instantaneously to any desired but the only way that a high performance location. What directs our attention to a visual system “can combine high particular part of the environment is resolution with the ability to monitor the noticing something of interest. whole visual field.” This represents a Recent moves towards what is now trade-off between high-performance in the called ‘active vision’ [Findlay and central foveal area, coupled with less Gilchrist 2003], take this into account, and effective resolution and colour imagery out explain the utility of peripheral vision as a towards the periphery. But peripheral precursor for foveal attention. In human vision provides some advantages: vision, it is now appreciated that peripheral enhanced sensitivity to small changes, vision helps provide the context for what flicker, and movement sensitivity. In those we attend to. Despite its (much) lower activities where variables connected with resolution and acuity, and almost total lack temporal change are involved, peripheral of colour vision, it is peripheral vision that performance exceeds that of central, foveal signals where next to look and direct vision. foveal vision and attention, and provide the 3.2 The Grand Illusion and Active Vision necessary information for subsequent eye motions to bring the desired object of For many years, the role of peripheral interest into the foveal (high acuity) region vision was ignored, and eyes were of vision. assumed to be static, viewing a central, Visual tests show that incongruities are focused area, and there was an implied picked up quickly when objects are in assumption of constant and immediate peripheral vision [Gilchrist 1999], and this focused vision over the entire field of means that from a CI perspective we view. This is now known to be far from an should strive to keep them there, so as to accurate view of how our vision works, be more attuned to such incongruities. and the notion that we merely open our Peripheral vision is thus seen to be akin to eyes and see everything in full-colour and a scout, providing early-warning signals, at the highest acuity, has been termed the an indicator of things to come. What we Grand Illusion [Noë 2002]. subsequently attend to is generally seen A fundamental neglect in previous first in our peripheral vision. The same passive vision studies has been the may be true for our organizational vision. inhomogeneity of the retina. Human vision is at its best in a limited foveal area which 4 Organizational aspects of extends out to an angle of about 1°, and peripheral vision image quality degrades rapidly as the In many organizational and business object of interest is to be found further and situations, (peripheral) context is often further out towards the periphery of our seen as a distraction and a nuisance vision. detracting from the main organizational Findlay and Gilchrist’s insight is easily task of focusing on whatever the stated [2003, 1-2]: “the (previously organization is deals with. But ignored) movements of the eyeballs are a organizations, like retinas, are not uniform: fundamental feature of vision. … We have some in the organization have more the subjective impression of an immediate, focused vision, while others are more full detail, pictorial view of the world [but] active on the organizational periphery, and are prone to forget that this impression is others may be more attuned to the outside an illusion.” Detail in which we are environment, able to feed this back in to interested is there for the seeing, being the organization as boundary-spanners, “potentially available in the environment” acceptable to those external and internal to [their emphasis]. The illusion derives from the organization. Organizations, like our ability to direct our eyes effortlessly

ECIS 2009 ‐ 214 ‐ PROCEEDINGS intelligence agencies, should cultivate both as a blinder restricting peripheral vision focused and peripheral vision. [Prahalad 2004]. Neugarten [2006] dealt 4.1 Is more better? with this in a paper discussing foresight, and whether it is wise to look forward at Many still believe that ‘more is better’. A the expense of looking around at the workshop on Peripheral Vision in organization’s periphery. Organizations [Day and Schoemaker Being able to determine an 2004] found that while organizational organization’s blind spots based on peripheral vision is necessary it may often knowing or understanding its dominant be lacking. Two papers in that workshop logic would be a considerable asset. But called for gathering more information even increasing organizational awareness ‘from the external business environment’, as to the existence of blinders and blind and processing it faster while focusing spots would be a major step forward for resources on peripheral information many organizations. [Haeckel 2004; Huston 2004]. Anyone who drives or plays a sport uses The problem with this approach is, in their peripheral vision (perhaps without CI as in human vision [Neugarten 2006], consciously realizing it) to identify that focusing on the periphery ‘kills’ or imminent threats (or opportunities) which ‘destroys’ the very periphery that is sought may be seen out of the corner of one’s eye. [Cunha and Chia 2005]. For the unique Similar skills are needed in organizations. characteristics of peripheral vision (providing contextual information and 5 Advantages of peripheral vision enhanced sensitivity for change and Although we put blinders on horses movement) to make themselves felt, the specifically to cut down their exposure to periphery should remain deliberately vague peripheral signals and prevent them from and unfocused. This is not to imply that ‘looking around’ or being startled, we detection of surprise and minimizing the would not normally wish to put blinders on damage caused by mistakenly ignoring ourselves in business, sport, or when peripheral signals are not important in driving. Without peripheral vision, we themselves. For a further reflective would constantly be in a state of surprise, discussion of the role of peripheral having no forewarning of what is entering awareness in strategic thinking, see Chia (or about to enter) the small central area of and Holt [2007]. our foveal, high-acuity vision until after 4.2 Organizational viewing and environmental this had occurred. scanning This would be akin to a kind of tunnel Organizations can use peripheral vision to vision, which no serious organization guide and channel subsequent attention for wants to be accused of suffering from. To the high-performance detailed vision, overcome this, “the way forward is gaining awareness of the surroundings, and paradoxically to look not ahead, but to heightened sensitivity to changes. look around” [Brown and Duguid 2000, 8; However, since they usually have a Neugarten 2006]. By setting a context and prevailing dominant logic, what concerns gist for what we are seeing and are about us here is the downside of dominant logic. to see, our peripheral vision, by performing Not only is dominant logic a filter an early-warning pre-scanning of the governing how and what is seen, but it is environment, allows us to better direct our also a blinder constraining vision and attention, reducing or being more ready for thought processes and limiting via the surprise. possibilities that the organization is able 5.1 Using visual metaphors and analogies (or willing) to see. The prevailing The use of visual metaphors or analogies dominant logic in an organization may act to teach CI can usefully help develop

ECIS 2009 ‐ 215 ‐ PROCEEDINGS awareness [Neugarten 2008a], informing CI, and is also a critical component of people as to the contribution of peripheral entrepreneurial initiative as seen in the vision, while weaning them off too- Austrian school of economics, as argued focused, too-categorized looking which by Kirzner [1973]. seeks information instead of insight. The urge to focus in on information is Becoming more aware, a person’s thinking still a bugbear of information professionals changes: they ask more questions, become who have frequently stressed the need to more sceptical, see more alternatives, and seek what they need, ensure definite and examine their own and others’ underlying sharp definitions and keywords, and reduce assumptions, while improving their ability exposure only to what is deemed a priori to notice anomalies [Kuhn 1962/1996, 62- to be relevant. 65; Trudgian 2001]. 6.1 Learning from foreground and background in Anomaly and serendipity are not art popular among managers, but should be In vision and art, or at least in Western art, embraced to elicit new ways of thinking a painter or viewer selects a significant and seeing. ‘figure’ to concentrate on while neglecting 5.2 The desire for more information or marginalizing the insignificant (back-) Part of the problem arising from categories ‘ground’. This division is much less and categorization is connected to the pronounced in Eastern art, especially in the incautious use of taxonomies and so-called Japanese style of ‘flung paint’. keywords, which are now an integral and Gestalt thinking, though necessary and almost inevitable part of information efficient, pushes (in what Ehrenzweig science and internet and business database [1967/2000] refers to as a compulsion) in searches. this direction as we (tend to) select the But these have certain problems: they most compact, simple and coherent are usually nouns not verbs, implying a pattern, but this leads to generalities and division of the world into ‘things’ not ignores syncretistic individuality. Neither processes [Chia and MacKay 2006]. This artists nor CI practitioners should fall into division constrains us to look in certain the over-focusing trap. ways at business information. It leads to a Like peripheral vision in the human ‘look for what you’re looking for’ visual system, Ehrenzweig’s syncretistic philosophy and induces a certain vision is sensitive to small cues and arrogance: if a search for certain keywords changes. This is important because returns no hits, we are quick to assume that “superficially insignificant or accidental what is sought does not exist. It is as looking detail may carry the most though we reify the keywords and then let important unconscious symbolism” them ‘get in the way’ in our information- [Ehrenzweig, 1967/2000, 20-21]. In a seeking. Over-emphasis on keywords, rebuttal for those who prefer to focus on alerts that work according to keywords, and look for (and at) what they are looking and personalization, all reduce our for (and at), he writes that syncretistic serendipitous exposure to peripheral vision “impresses us as empty, vague and material and the possibility of being generalized only because the narrowly surprised; these are all dangers that a focused surface consciousness cannot cautious and humble CI practitioner will grasp its wider more comprehensive try to avoid. structure.” Its non-intuitive and counterproductive nature means that it is 6 Getting individuals to notice often rejected without fully understanding better – by backing off the advantages it can bring. As with peripheral vision, the ability to As an example of the interplay between discern changes and anomalies is central to foreground and background, and by

ECIS 2009 ‐ 216 ‐ PROCEEDINGS implication, focused and peripheral, Chia To demonstrate this, Livingstone filters [2002] has used the example of the well- the visual information in the painting into known map of Italy and the Adriatic its constituent spatial frequencies – the coastline to show how we may consciously spatial equivalent (in light, optics, and need to move between viewing the figure imaging) of temporal frequencies (used in and (back) ground. As students of acoustics, electronics, and geography, we focus on the land mass telecommunications). High spatial seeing the familiar shape of Italy, but as frequencies of light and shade carry sailors we look primarily at the sea and the detailed, precise information, while low coastline. But whichever way we look, we spatial frequencies carry more general make one or other aspect of the (back) indications of light and shade. This is ground invisible. equivalent to a division into focused Undifferentiated, unfocused glances are (detailed), and trend (more general) what are needed: a description found in information, with high spatial frequencies Gunaratana [2002, 138-139] states: being equivalent to what is seen when we “[w]hen you first become aware of focus on something, and low spatial something, there is a fleeting instant of frequencies equivalent to and carrying pure awareness just before you information about slower and less abrupt conceptualize the thing, before you changes in the environment or image. Only identify it. ... That flowing, soft-focused by taking in the facial periphery (the Mona moment of pure awareness is mindfulness Lisa’s cheekbones) can one appreciate the … This is very much like what you see smile, which derives from the play of light with your peripheral vision as opposed to and shade on the subject’s cheekbones and the hard focus of normal or central vision. face. The enigmatic nature of the smile Yet this moment … contains a very deep arises from its being seen by our peripheral sort of knowing that is lost as soon as you and not our foveal vision. focus your mind and objectify the object 7 Different kinds of noticing into a thing.” Vipassana meditation, in Buddhist teaching is one means to prolong The importance of peripheral vision has the moment of awareness, engendering been stressed throughout this work. The mindfulness as non-judgmental implication has been that individuals and observation. organizations neglect peripheral vision at Peripheral vision needs to remain just their peril, sometimes by focusing too that. A framework allowing the periphery much on what they seek or on what they to contribute what it is best at – noticing are looking at. The central is privileged weak signals, small movements, and over the peripheral, attracts more attention, providing an early-warning of impending and is generally regarded as more salient. changes – is needed, but without forcing Seeking insights to help people see in the issue. new ways is not confined to any one 6.2 The smile is in the periphery discipline. A different and humbling insight to peripheral vision can be found Looking and focusing less strongly may by looking at a class of people for whom help. Consciously using peripheral vision direct vision is a significant problem and makes us more attuned to changes: some for whom peripheral vision is preferred things are best (or only) seen with and enhanced as a result – those suffering peripheral vision. Work by Livingstone from different types of autism. One early [2002] on Leonardo da Vinci’s Mona Lisa indication for the possibility of autism in shows that her enigmatic smile disappears babies is a reluctance to engage in eye if one looks straight at her mouth and lips, contact, and avoidance of eye contact in the assumed or expected ‘site’ of the smile. small children may indicate autism-related

ECIS 2009 ‐ 217 ‐ PROCEEDINGS problems. For such people, being stared at they should be allowed and encouraged to or having eye contact with others can develop their peripheral vision instead. represent a massive information overload, Some autistic people may have a more and they may feel discomforted and holistic view of a computer keyboard or threatened by this, leading them to rely display, resulting from their enhanced more on their peripheral vision than on peripheral vision, and such skills can be direct eye contact. put to use for certain applications. Grandin The ability to see and notice differently [1996] writes of one autistic woman whose has made unexpected and useful ability to recognise patterns made her one contributions: Grandin, herself autistic, and of the most capable technicians in a a professor of animal science, uses her own laboratory identifying different cancer sensory capabilities to enable her to notice cells, noticing abnormal cells faster and things that others do not. Seeing what more positively than other people, because others fail to, she uses this ability to design they just jumped out at her. Other autistic solutions to problems based on these people may have excellent visual failures of noticing. She has demonstrated memories, especially for detail, or be less that some autistic people may have an capable of differentiating foreground from excessive preoccupation with detail while background [Bogdashina 2002], which in being unable to see a wider picture, in some activities might be a major ways similar to animals [Grandin and advantage, as it frees them from Johnson 2006]. By looking through animal privileging the one over the other. eyes and listening with animal ears (thus I mention these examples to show that becoming more aware of harsh or startling other fields entirely can nevertheless background noises), she is able to notice inform and enrich our understanding of aural and visual details that ‘normal’ ways in which awareness can be enhanced; people normally gloss over. As a result, CI practitioners can then adapt and use she was able to recommend successful these ideas in our CI activities. redesigns of livestock facilities via changes 8 Benefits of focusing less in layout, materials, and colour and lighting, which significantly reduce animal Cultivating a less-focused approach to stress (which could otherwise cause injury Collection in one’s CI practice can allow to animals and workers). This is one weaker signals to emerge and increase the example where changing the way we look likelihood of their being noticed. Just as at something can cause different features to human peripheral vision has a greatly become more prominent, allowing us to enhanced sensitivity to small motion and sometimes arrive at quite different changes, despite suffering from highly- conclusions about the environment we degraded colour vision and poor visual perceive. acuity, so to can an awareness of the Williams [2007], herself also an autistic periphery, without overly concentrating on writer and presenter, has also written about it or focusing on it provide enhanced the effects of her peripheral vision on her sensitivity to small changes, awareness of and her lecture audiences. She finds herself the beginnings of trends, and anomalies. looking 40-80 degrees off to the side of her The ability to be aware of anomalies is audience or interlocutors to avoid eye a necessary skill for any CI practitioner. It contact, yet still picking up many signals is through anomalies, cracks, disparities, of individual and intra-group body surprises, and the unexpected, that we may language that others miss. She suggests learn of new issues, or areas worthy of that ‘forcing [autistic] people to learn eye further exploration. As Kirzner noted contact’ may be inappropriate, and that [1973], an entrepreneur is someone who becomes aware of something that others do

ECIS 2009 ‐ 218 ‐ PROCEEDINGS not. So too, the legendary and fictional important - eye contact or Sherlock Holmes “saw what others did understanding? retrieved 24 April, not.” It is this different way of ‘seeing’ that 2003, from is so important. Otherwise, as Hamel has http://www.suite101.com/print_article.cfm/1710 pointed out in an interview with Kurtzman 0/97315 [1997], not only do people in the same Brown JS and Duguid P (2000) The social industry all see the same things, but they life of information, Harvard Business all tend to become blind to the same School Press, Boston, MA things. Chia R (2002) What is foresight and does Recent events in many sectors of the it matter? presented at the First world economy have shown how easy it is International Conference on Probing the to become blind or unaware to what is Future: Developing Organizational going on around us, until it is too late to Foresight in the Knowledge Economy, react in a timely and satisfactory manner. Graduate School of Business, University of Strathclyde, 11-13 July 9 Closing remarks Chia R and Holt R (2007) Peripheral This paper has attempted to show the Awareness in Strategic Thinking, utility of adopting a less-focused approach presented at the EGOS Conference in to CI, counter-intuitive though this may be Vienna; subsequently published in to many practitioners and information Aesthesis, 1(2), 63-71 scientists. By drawing on visual analogies Chia R and MacKay R (2006) Post- and metaphors and comparing processual challenges for the emerging organizational and human vision, I have strategy-as-practice perspective: finding shown that the periphery is best left alone, logic in the practice itself, presented at in the sense that when one does not focus the EURAM Conference, Oslo, May on it but is simply more aware of its 17-20 existence, one can reap the maximum Cunha MP e and Chia R (2005) benefit from its inherent properties. Chief Teamworking and the Sharpening of amongst these is an enhanced ability to Peripheral Vision, presented at the 9th sense small changes and motions, and EIASM International Workshop on thereby direct our human or organizational Teamworking attention to what we should next be Cunha MP e, Clegg SR, and Kamoche K attending to. (2006) Surprises in Management and Organization: Concept, Sources and a 10 Acknowledgments Typology, British Journal of This work derives from part of my doctoral Management, 17(4), 317-329 thesis in business administration Day GS and Schoemaker PJH (2004) [Neugarten 2008b], conducted at the Swiss Editorial - Introduction to Special Issue University of St Gallen, which dealt with on Peripheral Vision: Sensing and noticing, as applied to the practice of Acting on Weak Signals, Long Range competitive intelligence. I am grateful to Planning, 37(2), 117-121 my supervisors Professor Chris Steyaert Day GS and Schoemaker PJH (2005) and Professor Martin Hilb, and to Scanning the periphery, Harvard Professor Robert Chia, then at the Business Review (November), 135-148 University of St Andrews, for many Day GS and Schoemaker PJH (2006) fruitful discussions. Peripheral Vision – Detecting the Weak Signals That Will Make or Break Your Company, Harvard Business School 11 References Press, Boston, MA Bogdashina O (2002) Peripheral Ehrenzweig A (1967/2000) The Hidden perception in autism: what is more Order of Art: A Study in the Psychology

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of Artistic Preception, Phoenix Press, Neugarten ML (2006) Foresight – are we London looking in the right direction? Futures, Feldman MS and March JG (1981) 38(8), 894-907 Information in Organizations as Signal Neugarten ML (2008a) Visual metaphors and Symbol, Administrative Science and analogies as teaching tools in Quarterly, 26, 171-186 Competitive Intelligence presented at Findlay JM and Gilchrist ID (2003) Active the European Competitive Intelligence vision: the psychology of looking and Symposium: Comparative Practices seeing, Oxford University Press, Oxford Approach (Trends and Evolutions), 27- Gilchrist ID (1999) Psychology of vision, 28 March 2008 Lisbon Lecture 6: Fovea and periphery, Neugarten ML (2008b) Noticing noticing: retrieved 16 November, 2001, from the role of noticing in the praxis of http://psychology.dur.ac.uk/teaching/dps0jmf/y3/3v Competitive Intelligence, unpublished att99.htm doctoral thesis, University of St Gallen, Grandin T (1996) Thinking in Pictures and Switzerland Other Reports from My Life with Noë A (ed) (2002) Is the visual world a Autism, Vintage Books, New York, NY grand illusion? Imprint Academic Grandin T and Johnson C (2006) Animals Prahalad CK (2004) The blinders of in Translation: Using the Mysteries of dominant logic, Long Range Planning, Autism to Decode Animal Behavior, 37(2), 171-179 Harvest Books, New York, NY Trudgian J (2001) Williams Inference, Gunaratana BH (2002) Mindfulness in Business Intelligence Service, retrieved plain English, Wisdom Publications, 26 May 2001, from Boston: MA www.williamsinference.com Haeckel SH (2004) Peripheral vision: Weick KE (2001) Making sense of the Sensing and acting on weak signals organization, Blackwell, Oxford making meaning out of apparent noise: Weick KE and Sutcliffe KM (2001) The need for a new managerial Managing the unexpected: Assuring framework, Long Range Planning, high performance in an age of 37(2), 181-189 complexity, Jossey-Bass, San Francisco, Huston L (2004) Mining the periphery for CA new products, Long Range Planning, Williams D (2007) Peripheral vision in 37(2), 191-196 autistic people, retrieved 6 March 2007, Kirzner IM (1973) Competition and from entrepreneurship, University of http://blog.donnawilliams.net/2007/03/05/periph Chicago Press, Chicago, IL eral-vision-in-some-people-on-the-autism- Kuhn TS (1962/1996) The structure of spectrum/#comments scientific revolutions, (3 ed), University Zeki S (1999) Inner vision - an exploration of Chicago Press, Chicago, IL of art and the brain, Oxford University Kurtzman J (1997) An Interview with Gary Press, Oxford Hamel, Strategy+Business (Fourth Quarter) Livingstone MS (2002) Vision and art: the biology of seeing, Harry N Abrams, New York, NY Neugarten ML (2003) Seeing and noticing: An optical perspective on competitive intelligence, Journal of Competitive Intelligence and Management, 1(1), 93- 104

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Enterprise 2.0 as a way to facilitate, enhance, and coordinate intelligence work within large organizations: A Case Study at Toyota Material Handling Europe

Jon-Erik Olsson and Jimmy Sandell Uppsala University Sweden [email protected]

Abstract Unstructured information is an essential ingredient of Business Intelligence, and in order to improve issues of handling unstructured information, there is a need for change of the organizational culture in many large industrial organizations, which are shaped by a mindset stemming from the 20th century, built upon the concept of central control. We present the technologies connected to the concept Enterprise 2.0, as tools that could help organizations to improve their Business Intelligence work. The case company, Toyota Material Handling Europe, is a large industrial organization with a functional structure. Work that can be categorized as “intelligence work” is performed within most corporate functions, but lack of coordination results in double work and inefficiency. We see that the Enterprise 2.0 concept could be successfully used to help overcome these issues. Keywords: Business Intelligence, Enterprise 2.0, Organizational Culture, Information Handling, Unstructured Information.

1 Introduction implementing technological solutions without acknowledging the needs for Recently, articles have emerged covering necessary cultural changes, changes in the the entry of Enterprise 2.0 technologies way of working or changes of the and concepts into the business sphere, as a organization. natural ingredient in companies in general The topic for this paper is sprung out of and in business solutions in particular. a Master Thesis (2x30 ECTS) written by When investigating conceptual systems us, the authors, centered on a Case Study support solutions to meet the needs for conducted at Toyota Material Handling facilitating information handling Europe (TMHE) and the initiated process improvements for intelligence purposes, of defining and enhancing Strategic we have come to see this as something that Business Intelligence. Together with a ought to be interlinked. This connection is multi-dimensional structure in order to not made in any of these articles (known to better capture the complexity of the us), which is why we would like to subject, we argue in the report that highlight and elaborate on the Enterprise 2.0 technologies could be used improvements that could be made possible in order to enhance, facilitate, and with such an approach. However a classic coordinate intelligence work. pitfall is that any problem can be solved by

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1.1 Methodological remarks 1.2 Business Intelligence as an umbrella The paper is a product of our six month, concept full time engagement in the project at Academically, Business Intelligence TMHE. For the project, a qualitative (BI) is a rather unexplored research field research method was used. The material and within the business context BI leads an was primarily gathered via two extensive equivocal existence. BI is foremost used rounds of interviews with 16 members of either as a term capturing other intelligence top and middle management at TMHE. An terms (e.g. Competitive Intelligence, Information Needs Analysis built upon Per Competitor Intelligence, and Market Frankelius' World Mapping Method was Intelligence) or as a denotation for also carried out. Prior to the interviews, a technical decision-support systems [Olsson 20 literature study was performed in order to & Sandell, 2008]. We have approached build the theoretical framework of the BI as an umbrella concept covering both Thesis. The literature study followed the these offshoots, which also is valid for the overall structure of the Thesis and was situation within our case company. divided into the three parts Business However, independent of the level or Intelligence, Information Needs Analysis, context, the overall purpose of BI can be and Information Handling, with an simplified as delivering support to business additional section covering Systems decisions. Support for Handling Unstructured One major challenge affecting Business Information. Intelligence work is the problem of The material for the part on Business organizing and making use of the Intelligence was written literature from this continuously growing amount of emerging field of study together with information in many organizations today. primary sources through contacts with A lot of this information is unstructured; researchers working with Business produced, received, and collected in Intelligence. The major part of the material personal computers, databases, email on the Information Needs Analysis is built servers, external hard drives etc. The issue upon literature discussing this type of of unstructured information is tightly tied analysis. The Information Handling section to the issue of information handling in is primarily made up of literature covering general, since ineffective or unsatisfying theories of information sharing, information handling not only will make information ownership, distribution/ the effort of finding the unstructured retrieval of information, and how information harder, it can also make organizational culture affects information structured information unstructured. This handling. The overview of information is something that we saw in our Case systems for improving the handling of Study [Olsson & Sandell, 2008]. unstructured information was built upon literature and Internet sources. It also 1.3 Using Enterprise 2.0 for enhancing Business Intelligence contains primary source material from interviews made with a provider of system The term “Web 2.0” can be defined as solutions. an agglomerate of Web technologies and This article is mainly built on the concepts that enhance information sharing, literature that made up the Information 20 Handling section together with some For an extended discussion of the different definitions of Business Intelligence, as given by e.g. material from the overview of information Global Intelligence Alliance [2004], Brouard [2006], systems for improving the handling of Power [2003], Solberg Søilen [2008], Turban et al. unstructured information. [2008], Hoppe [2002], Kahaner [1997], Pollard [1999], SCIP [2008], Gilad & Gilad [1988], Pagels-Fick [1999], Thorson [1997], Hannula & Pirttimäki [2005], Hamrefors [2002], Sandström [1988], please refer to Olsson & Sandell [2008], chp. 3.1.

ECIS 2009 ‐ 222 ‐ PROCEEDINGS creativity, and collaboration among its taxonomies). McAfee [2006] instead users. The foremost examples of Web 2.0 advocates folksonomies, which means a concepts are Wikis, Blogs, social- categorization system that is developed networking sites, and video-sharing sites. over time by the users of the information In order to separate the rise of these system. One example of folksonomies is concepts within a company context, the tagging, i.e. one-word descriptions of the term “Enterprise 2.0” is often used. information in question. McAfee [2006] Basically Enterprise 2.0 is a term argues that the advantage of folksonomies promoting collaboration and information over taxonomies is that they better reflect sharing in an organization by applying the information structure that people Web 2.0 concepts [Olsson & Sandell, actually use instead of the structure that 2008]. One definition is made by McAfee was planned for in advance. [2006], who rather than listing the concept Extensions. Extensions means that technologies, specify six key components there is functionality in the information Enterprise 2.0 solutions should contain: system to automate some of the work and Search. No information system is of to find patterns in the way the user uses the any value if its users do not find the system or in the information retrieved by information they are looking for. A study the user. One example is the online performed with 600 American companies shopping site Amazon.com, which has a shows that knowledge workers spends in function that by analyzing the purchases average 3.5 hours per week looking for made by others, gives recommendations information within the organization, i.e. “if you liked that, by extension you without finding what they are searching would like this”. for. Because of this they spend another Signals. In order to keep track of three hours re-creating this information, changes or updates of information in a even though it already exists [IDC, 2005]. system, which can be cumbersome in an Links. McAfee [2006] argues that environment characterized by a fast hyperlinks help to build a good structure of growing amount of information, McAfee online content as well as guiding to the [2006] highlights technologies that provide most important information. He means that signals whenever something is updated. the best pages are also the most linked a One technology is called RSS, which theory that e.g. Google uses when generates a feed of information that keeps prioritizing search results. The difference track of updates of a specific information in companies and organizations is that it is source, e.g. a Blog. The users choose difficult to maintain a rich link structure themselves which feed to subscribe to, and when the content and links are being therefore they do not have to constantly published by a small group of intranet visit the information source to see if there administrators [Olsson & Sandell, 2008]. are any changes made. Instead, all changes Authoring. In order to enhance the to websites they are interested in will be quality and create convergent content, presented in one location. McAfee [2006] believes that information In practise, the Enterprise 2.0 platforms should be created by a large group of used today are made up by a seamless individuals rather then a small. He states integration of the different core that “most people have something to technologies, Wikis, Blogs, RSS, and so contribute, whether it’s knowledge, called Mashups21, into one single interface. insight, experience, a comment, a fact, an Hansson [2008] means that it is when edit, a link” [McAfee, 2006: p.24]. combining these; the best result can be Tags. Today most categorizations of achieved. He argues that one blog post information in information systems are might generate a new wiki page as well as pre-defined by experts (in so called 21 Mashup is one kind of extension.

ECIS 2009 ‐ 223 ‐ PROCEEDINGS an edit in a wiki page might generate a and that this permeates how the entire new blog post. RSS feeds provide a simple information handling apparatus (sharing, way for keeping track of what is happening finding, retrieving etc.) work. in the Wiki, in Blogs as well as in other Achterberg [2001] uses the term information sources (e.g. competitors’ information hoarding for an adjacent websites etc.) and thus is a simple tool for phenomena. She means that it is often not conducting scanning of the business the senior management that sits on the environment. The information in the RSS knowledge or information that is needed in feeds might also generate both blog and order to meet the changing business wiki posts [Hansson, 2008]. environment, but people further down in the organization, and that information th 1.4 Industrial organizations and 20 hoarding then is a sign of lack of trust. She century mindsets means that it is important to revise how to Stenmark [2006] argues that many encourage and provide incentives for the industrial organizations are shaped by a “hoarders” to share their information mindset stemming from the 20th century, regardless of level. built upon the concept of central control (with central authority, established 1.5 Enterprise 2.0 brings change of the role hierarchies, and standardized structures). of the user When information infrastructures such as According to Stenmark [2008], company intranets were created, they came decentralization of the control of to reflect the norms and attitudes of the information is central in the concept past. He means that the information is Enterprise 2.0. He means that the concept owned22 and maintained by an is more about the shift of the role of the “information elite” that often does not have user, i.e. a changed behavior, rather than anything to do with the tasks of the about the technology in itself. It is about information users. Stenmark [2008] uses drivers that change how people interact the cliché “information is power” when with each other. The arguments of describing the situation in many Stenmark [2008] are in line with those of organizations today, where the Telleen [1996], who sees a possibility with organization (and thus the management) new technology to switch the control of knows (or think it knows) what information from the assigned publishers information its members need and they to the creators of the information. He control the access. means that when users can retrieve and Stenmark [2006] argues that it is view needed information in an easy way impossible to determine the structure of when they need it, there is no longer a need information usage when having the “top- to send information just-in-case, causing down” approach, since this only shows information overload situations. Thus how the management wants people to use publishing can be separated from information, not how it is actually used. automatic distribution of e.g. reports or Because of this, he proposes the use of meeting minutes. folksonomies instead of taxonomies (cp. Telleen [1996] also acknowledges that a McAfee [2006]). He describes that the new information infrastructure is not taxonomies are reigning in traditional enough to shift of control of the electronic industrial businesses because of history information management, a shift in attitude and culture is also necessary. Stenmark 22 According to Loshin [2001] information ownership [2008] argues that the norms and attitudes means the control of information as an enterprise asset. that control the traditional industrial This control is including not only the right to access, organizations are not the same as the create, modify, package, derive benefit from, sell, or remove information, but also the right to give others norms that are the foundation for the access to the information.

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Enterprise 2.0 concept. Here, information 1.7 The importance of information sharing is created from a blank page by interaction Hoppe [forthcoming] stresses that the between individuals who also uses and personal network is crucial for transfer and needs this information, which is why he creation of intelligence and knowledge. argues that the information is owned by the Even though all sources of information and users. He also claims that if an intelligence have value; text-based organization wants to take a step towards information does not have the same power Enterprise 2.0; it needs to reconcile with to penetrate as meeting face-to-face. the idea that information ownership should Because of this, Hoppe [forthcoming] be distributed among all employees. The emphasizes the importance of utilizing difficult part of turning an organization what he describes as arenas in an into Enterprise 2.0 will, according to organization, where knowledge is created Stenmark [2008], be the shift from a non- or exchanged. Examples of arenas are democratic top-down perspective of public events e.g. conferences, third party information ownership towards a organizational think tanks, regulatory democratic bottom-up perspective. organizations, internal or external R&D groups, sales meetings, discussion groups 1.6 Generation shift will bring change in etc. corporate culture When discussing information sharing, If an organization discourages the use Achterberg [2001] emphasizes the of Enterprise 2.0 because they do not importance of having a business purpose of understand the concepts, there is a risk that information sharing so that it is not shared this attitude repels young adults, which just for the sake of it. Such sharing does could be a major issue for the future, not support business decisions or argues Stenmark [2008]. According to innovation, even though she acknowledges Hansson [2008] the necessary change in that a corporate culture that supports corporate culture is a matter of generation information sharing, in general, is ahead of shifts in the organizations. When the 23 one that does not. She argues that it is the Generation Y and later generations enter engineer’s problem solving conversations the working life they will organically by the coffee-machine that should be change the culture for how information is captured and shared in order for the shared and what tools are used. He means organization to benefit from their that the concepts of Enterprise 2.0 are a expertise. natural part of their everyday lives, which is why they will demand these concepts 2 Toyota Material Handling Europe also in their work life. Stenmark [2008] In 2000, Toyota Industries Corporation shares this belief when claiming that the (TICO) acquired the Swedish forklift truck organizations of today are changing producer BT Industries (BT). After the towards Enterprise 2.0 from below, when acquisition, both corporations continued to hiring young people. He argues that the exist independently side-by-side until young generations are brought up with the 2005, when an organization for all material public Web and have different attitudes to handling operations of TICO was new technology in general than older announced, where TMHE is the generations. operational organization in Europe. One of the main objectives for TMHE has been the integration of the operations of former BT Europe and Toyota Industrial 23 Generation Y does not have a univocal definition, Equipment Europe24. The work of but is often referring to people born between 1980 and the mid to late 1990s, who have grown up with information technology as a natural part of their everyday 24 Toyota Industrial Equipment Europe is a part of life. Toyota Industries Corporation.

ECIS 2009 ‐ 225 ‐ PROCEEDINGS integrating the operations is an ongoing impact on information handling in general process; it has been completed in several and for the view of a Business Intelligence countries, but not even started in others function in particular [Olsson & Sandell, [Olsson & Sandell, 2008]. 2008]. The results of Business Intelligence 2.1 An industrial company with a functional work in the organization are not stored in a structure central source of intelligence/information TMHE can be characterized as a today. Instead it is mainly stored on local company with a functional structure (see hard drives or in personal computers. A fig. 1). In a functional organization it is common view from our respondents is the easy to miss out on the transfer of need for coordination of information, even information between functions; a lack of though the opinions differ whether this an orchestrator role. If looking at the should be an organizational unit, or a functions as islands, it becomes obvious central information system. Another issue that when an island is big enough the is that the information is often in different perceived need for communication with formats and uses different definitions. inhabitants of other islands decreases, Before being able to assimilate the whereas if the islands are small you information and perform analysis, it has to automatically feel the need for interaction be processed, challenged, and/or re- with others. At TMHE, the overall structured. The Case Study also highlights knowledge level is extensive; but since the the lack of sufficient tools for facilitating corporate functions can be characterized as information handling connected to information silos, there is poor knowledge Intelligence work performed within the about what colleagues in the other organization [Olsson & Sandell, 2008].

2.2 Business Intelligence as coordination and handling of information From the Case Study, we know that the coordination role is prevalent among the respondents and it is often connected to information, analysis, and cross- functionality. The coordination is also connected to resourcefulness and the

expected task of avoiding duplication of departments are doing, and therefore the work within the company. Another company risks wasting resources [Olsson frequent theme is as an extra resource, e.g. & Sandell, 2008]. for finding new potential in already gathered data from the corporate functions. Figure 1 Organogram of Toyota Material Information handling is another evident Handling Europe [Olsson & Sandell, 2008] area of concern associated with Business Intelligence, e.g. as the handler of external The TMHE governance is built upon a information or to facilitate strategic use of high level of autonomy. The company is operative information. Our respondents aware of the problem with wanting also highlighted the responsibility to act as employees to take initiative and be an assurer of necessary structures and autonomous, and therefore building little availability for different profiles at kingdoms of there own and then being different levels in the company [Olsson & upset when they feel somebody else is Sandell, 2008]. touching upon what they regard as their own property (cp. the “Not Invented Here” 3 Discussion Syndrome). We saw that this had a major

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We saw that the heterogeneous Stenmark [2006], Stenmark [2008], information sharing culture at TMHE Telleen [1996]). In line with this, we needed to be transformed into a more highlight that information is to be shared homogenous one, with clear policies for by making it available, not by sending it to how information is to be shared. An aspect others. Ensuring transparency between of the cultural differences when it comes to different corporate functions is also sharing information is given by these two essential. In order to make this feasible, it different views: Is information shared to has to be clear what information can be the extent of what is necessary to share, or shared and what information cannot. Our is information shared to the extent of what standpoint is that information should be is possible. This is illustrated with the made available to the extent possible and example in fig. 2. not pushed to the final recipients. We also see the potential of Enterprise 2.0 as being Case 1. You are going on a holiday with your the incentive that Achterberg [2001] family and you tell them that they have to be packed and ready by 8AM tomorrow morning. inquires for the “information hoarders” to The only beforehand information they get is that share their information. When the they are going to a country where they can swim, Enterprise 2.0 technology has a real break the temperature will be around 25 degrees, but the evenings are cold, so bring a sweatshirt. through and becomes a part of everyone’s modus operandi, an “information Case 2. Tomorrow morning at 8AM we are leaving for Spain. We will stay in an apartment hierarchy” will be created along with the and spend time on the beach. The temperature classic organizational hierarchy. This will be around 25 degrees. Sometimes it will be means that the “true experts” will make up raining and there will be cold evenings. We will also go to a certain restaurant, which is why this information hierarchy, regardless of formal clothes need to be brought. where in the physical organization they are or on what level. It is of great importance to set up cross- Figure 2 Sharing information to the extent functional frameworks and structures for possible versus necessary information and knowledge sharing (what is referred to as arenas by Hoppe The point is that the difference between [forthcoming]), since the personal the two cases is bigger than it might seem. networks might not be fully developed With the extra information in the second over the organizational borders. In the case case you will be more prepared and thus of TMHE, this is very important find it easier to adjust to new considering that it is a newly formed circumstances (cp. def. of BI). We mean organization with its roots in two that a conclusion on which of these traditional industrial companies. strategies to use is necessary and we have In the best possible world, arenas for all seen from the Case Study that it is members of an organization to meet and especially important to have a common exchange information and knowledge view within the management team, would be created. However, as we saw in because their views will be spread the Case Study, TMHE as a large throughout the company. multicultural organization, Enterprise 2.0 However, by clear policies we do not would be a way of creating digital arenas mean that it should be clearly defined where information can be shared, accessed, exactly which, when, how, and to whom and organized in an effective manner. It is information is to be shared. We believe also important to realize, as argued by that people need to take control over their Stenmark [2008] and Hansson [2008], that own information supply, mainly because Enterprise 2.0 is natural part of the ways of no one can possibly know what working for young adults, which is why it information other people need, but also in is important to implement these concepts order to avoid information overload (cp.

ECIS 2009 ‐ 227 ‐ PROCEEDINGS in order to attract younger generations. perspective that cannot be changed This is especially important in traditional overnight. We think it is important for industrial organizations. organizations to work towards a more For teams or groups working with bottom-up perspective of information Business Intelligence, heavy on handling, where the user takes the power unstructured information, we see Wikis as of his or her information supply by an effective tool for structuring of primarily an information pull strategy. information and at the same time, they We see the use of Enterprise 2.0 as a allow the possibility to cooperate within way of enhancing, facilitating, and the group even if participants may not be coordinating intelligence work, by located at the same place or working enabling the use of knowledge and within the same function. This will ensure resources in more efficient ways. When a common picture and the advantage of implemented by an evolutionary approach always having access to updated (starting in small teams and growing information. We see Wikis as a possible through viral marketing), we mean that tool for all teams or groups in the Enterprise 2.0 can be a catalyst for organization (virtual or physical does not necessary change of organizational culture. matter), because of the ease of use and set Enterprise 2.0 is also an interesting factor up. for attracting Generation Y (and younger Wikis could also play an important role generations), which demands and “lives” in the continuous Business Intelligence this way of working. work of building up a knowledge base. 5 Acknowledgements When storing information in a Wiki, it is easy to update the information whenever We would like to thank the Department of necessary. This means that the latest Information Technology at Uppsala information on a specific topic always is University for support and funding. available, and thus not only published in an Especially we thank the supervisor and updated report at set dates. This also reviewer of our Master Thesis, Roland N. enables effective information gathering Bol, for his encouragement and through information pull. Areas that would indulgence. specifically benefit from using Wikis are A special thanks is also sent to Magnus groups working with competitor analysis Hoppe, for the enthusiasm with which he and mergers and acquisitions. has provided invaluable feedback and For RSS there are several potential input to our work. Finally we would like to areas of application. Monitoring activities show gratitude towards our steering group regarding information available on the and respondents at TMHE, who have given Internet or intranet could be performed of their scarce time and taken part of our through the use of RSS tools, in order to project. avoid having to frequently visit each web 6 References site. Examples of sources are monitoring of press, sites containing logistic theory, Achterberg M “How culture affects competitors web sites, web sites of vertical information sharing in an organization.” industries, and information services of dmDirect.com. Issue November 30, different institutions. 2001 Brouard F “Development of an Expert 4 Conclusions System on Environmental Scanning In a large industrial organization, issues of Practices in SME. Tools as a Research information handling are deeply rooted in Program.” Journal of Competitive an organizational culture and ways of Intelligence and Management. Vol. 03, working characterized by a top-down No. 4, pp. 37-58, 2006

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Gilad B and Gilad T (1988) The Business Pollard A (1999) Competitor Intelligence: Intelligence System. A New Tool for strategy, tools and techniques for Competitive Advantage. American competitive advantage. Financial Times Management Assoc. New York City, Pitman, London, Great Britain USA Power DJ “A Brief History of Decision Global Intelligence Alliance (2004) Support Systems.” “Introduction to Competitive DSSResources.COM, Intelligence.” White Paper, available at: http://DSSResources.COM/history/dsshist http://www.globalintelligence.com ory.html, version 2.8, May 31, 2003 Hamrefors S (2002) Den uppmärksamma Solberg Søilen K (2005) Introduction to organisationen: från business private and public intelligence: the intelligence till intelligent business. Swedish school of competitive Studentlitteratur, Lund, Sweden intelligence. Studentlitteratur, Lund, Hannula M and Pirttimäki V “A Cube of Sweden Business Information.” Journal of Sandström B (1988) Business intelligence: Competitive Intelligence and företagets underrättelsetjänst. Liber. Management. Vol. 3, Number 1, 2005 Malmö Hoppe M (2002) ”Platser för organiserad Stenmark D “Corporate intranet failures: intelligence.” Thesis Proposal. interpreting a case study through the Företags-ekonomiska institutionen, lens of formative context” Int. Journal Stockholms universitet, Stockholm, of Business Environment. Vol. 1, No. 1, Sweden pp. 112-125, 2006 Hoppe M (forthcoming) ”C in the I of the Stenmark D (2008) “Web 2.0 in the beholder.” Unpublished article. business environment: The new intranet IDC (2005) “The Hidden Costs of or a passing hype?” European Information Work.” White Paper, Conference on Information Systems available at http://www.idc.com (ECIS 2008), Galway, Ireland Kahaner L (1997) Competitive Telleen S (1996) Intranet Organization: intelligence: how to gather, analyze, and Strategies for Managing Change. use information to move your business Online Book. Available at: to the top. Simon & Schuster, London, http://www.iorg.com/intranetorg/ Great Britain Thorson M ”Business Intelligence. En Loshin D (2001) Enterprise Knowledge teoristudie inom området Management: The Data Quality omvärldsbevakning.” Rapport, SISU Approach. Morgan Kaufmann Publikation, Vol. 04, 1997 Publishers, San Diego, USA Turban E, Sharda R, Aronson, JE and King McAfee A “Enterprise 2.0: The Dawn of D (2008) Business Intelligence – A Emergent Collaboration.” Sloan Managerial Approach. Pearson Management Review. Vol. 47, No. 3, Education, Inc., Upper Saddle River, pp. 21-28, 2006 New Jersey, USA Olsson J-E and Sandell J (2008) Strategic Business Intelligence at Toyota Web Publications Material Handling Europe. Master Society of Competitive Intelligence Thesis. Institutionen för Professionals (SCIP), 2008-04-28, informationsteknologi, Uppsala http://www.scip.org/ universitet, Uppsala, Sweden Pagels-Fick G (1999) Business Personal Communication Intelligence. Om organisation, metoder Frankelius, Per, Ph.D. Swedish Business och tillämpning. Industrilitteratur, School, Örebro University. Personal Stockholm, Sweden

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communication (telephone) 17 July 2008 Hansson, Richard, CEO Mindroute AB. Interview (telephone) 7 July 2008 Hoppe, Magnus, Ph.D. Candidate, Åbo Academy. Personal e-mail correspondence. April – Oct. 2008

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Representing territory resources within a territorial intelligence system

Maryse Salles*, Gabriel Colletis** *IRIT – Université de Toulouse (UT1) France [email protected]

** LEREPS - Université de Toulouse (UT1) France [email protected]

Abstract This paper focuses on the development of a territorial intelligence system and more particularly, on the representation of territory resources in the form of an ontology. We acknowledge that the structure of the information used by public decision-makers restricts choices when it comes to territorial economic development policies. The work on the representation of resources is therefore preceded by an analysis of the different visions of the resources already present in the field. Two ‘doxai’ are thus identified as coexisting in the texts and in the actual practice. In order to respect the diverse views, we decided to include both doxai in the ontology, hence forming a polydoxical ontology and it is from this that any excerpts have been taken. Keywords: territorial intelligence, territory resources, public decision-making support, territorial intelligence system engineering, ontology, polydoxy.

Introduction The stance we have adopted here is one of TIS engineering, and also, as both issues The research as presented here concerns are closely related, one of public policy first and foremost territorial intelligence as engineering. a cooperative system for supporting public TIS can come in different forms, but the decision-making via the implementation of information that they are likely to contain specific information systems: TIS (Terri- is always organised at the core of a torial Intelligence Systems). Territorial structure. The latter will determine the decision-making assumes its own charac- main categories and objects via the teristics and requires specific tools to information will be understood. According maintain it (Joerin, 2008). When it comes to the particular context, this structure can to territorial economic development, an take the form of data models, ontologies or TIS, by way of its ‘supporting public even simple nomenclatures. decision-making’ function (policy As is the case for all information definition, implementation, assessment), systems, how the information is structured must participate in the development of the in an TIS reflects a representation of the territory, and directly or indirectly, in the world which cannot be compared to a development of companies.

ECIS 2009 ‐ 231 ‐ PROCEEDINGS simple ‘objective’ coding of a unique and The remit that Regions have in relation pre-existing reality. It is a social construct - to territorial economic development has the formalisation of a particular vision of become very wide, and the social and the world. The design of an information economic issues associated with the system and knowledge engineering decisions in this field are primary. The (speaking more generally) are widely development of a system aimed at recognised within the academic commu- supporting the decision-making process nity as being ‘constructivist’ approaches must take into account the performative (Masolo et al., 2004, Charlet 2003, nature of the categories included in the Aussenac-Gilles, 2006). system. How the information is structured via those categories that are proposed and Our work comes within the framework those categories that are not proposed of the CAVALA research project; this influences policies (Salles and Colletis, project focuses on supporting the 2007). In the case of TISs and consequent- definition of assessment indicators for ly, supporting decision-making in terms of actions undertaken by the Midi-Pyrenees economic territorial development, we must Region (France) in terms of economic pay particular attention to the “strange development. It is being financed by the loops” (Hofstadter, 1979) that link up the Region and has the aim of developing a information with the decisions (Le cooperative method in the construction of Moigne, 1991). The representations these indicators. The key aspect to the inscribed in the information systems will in project approach is the formulation of a effect restrict both the thinking and the common language that can be shared by action. We can note as illustration that the the relevant stakeholders. The role of such nomination of a sector within the a language is to represent the main information structure will make possible working objects and concepts within any actions directed towards those territorial economic development from the companies known to belong to this sector. perspective of supporting public decision- By contrast, not nominating a sector will making. This language takes the form of an make this sector invisible to public ontology27 for territorial economic decision-makers and hence inaccessible in development. This ontology has specific terms of specific actions. Defining an applications in the CAVALA project ‘employment rate’25 indicator to replace where it is used in particular to determine that for the unemployment rate26 (cf. the certain indicators (no details are provided Lisbon Strategy) will shift actions away here). from the latter towards improving the This paper deals with the problems in former, and developments in the measured identifying the objects and concepts for rate will reinforce how actions are territorial economic development and targeted. Here we can find the describing them in the form of an performative aspect of the nomenclatures; ontology. In particular, it focuses on (Boydens, 1999) reminds us that they have territory resources and their depiction always been “situated socially and within the ontology. historically”, and that they have Part 1 highlights the key position “performative effects (that) influence the occupied by resources in territorial real, which itself has been standardised”. economic development and in the development of companies, and provides some examples of the role that an TIS

25 A person is considered to be employed when he or she holds one or two jobs regardless of the time spent doing this job/these 27 The term ‘ontology’ is considered here to mean all the useful jobs. concepts, as well as how they connect to each other in a relevant 26 An unemployed person is a person who is without a job. way (mainly via hierarchical relationships).

ECIS 2009 ‐ 232 ‐ PROCEEDINGS could adopt within this context. In the light the growth of phenomena stemming from of the complex relationships that exist polarisation. between resources, territories and Paradoxically, we can observe a companies, it would appear necessary for growing mobility occurring in a policy makers to have access to an ad hoc synchronised way amongst stakeholders resource typology, i.e. created with and activities, and the endurance of a well territorial economic development policy established phenomenon: the rising formulation in mind. concentration of wealth that has been Part 2 proposes such a resource produced in certain territories. typology for a territory. Here two slightly This paradox can be explained in different, but ultimately complementary different ways. It is also possible to place visions of resources are presented in an emphasis on the different barriers to succession. spatial homogenisation (the maintenance These two visions of resources are of protectionist policies by different States, formalised as an ontology, first separately, the ‘resistance’ from national or local then in an integrated way. Part 3 cultures, etc.) or even on the cumulative demonstrates the different stages in the effects of processes involving spatial work by providing excerpts from the concentration. It is, for example, easier to ontology for territorial economic invest in those territories where there is development. already a certain level of development in infrastructure than in those where nothing 1. Resources and territorial or next to nothing exists. economic development 1.1.2. Resources and Territory: a dual-direction In this first part we will re-examine the link issue of territory resources as it presents We however think that the main reason for itself within the framework of a territorial the phenomenon of polarisation relates to economic development policy. the existence of resources that are linked or We will also raise a number of points attached to particular territories. The on the link between mobility (rising) and existence of these resources and a fortiori, the persistent phenomenon of polarisation, their value, cannot be analysed outside of on the choice between resource availability the territorial context from which they and resource creation, on endogenous came. development or even, on productive In Part 2 we will see that there is a good territory/company encounters. reason for making a distinction between 1.1. Resources and Territory two types of resources, one set considered to be ‘factorial’ and the other linked to 1.1.1. Mobility and (at the same time) processes that are, in the final analysis, Polarisation specific and that can be presented in terms Obviously, resources, in whatever form, of coordination. At this stage we would can exist without being part of a particular like to describe the link between resources territory, i.e. without being attached to that and territories by showing that the territory. Financial capital and know-how resources we are referring to only exist and are resources, but they are fluid and have value when related to a particular apparently able to circulate today without territory. Conversely, a territory cannot being bound by distance. exist without such resources. In other In a globalisation which is synonymous words, without its own resources, a with mobility, even the question having territory cannot exist over time. It becomes activities embedded in a territory could a ‘place’ and therefore cannot become the create a problem if at the same time we object of economic development. ignore the persistence, and perhaps even

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The link between resources and we place the emphasis on the territories therefore operates as a dual- competitiveness of the territory. The direction link. structure and content of the information 1.1.3. A territory as a recipient of resources required for decision-making differ versus a territory as a space for the according to the two foci. creation of new resources The mobility/attractivity perspective The resources/territories dual-direction shifts the TIS towards the detection of link can be configured in two different mobile investments. Which company is ways depending on whether or not it is likely to leave the territory or to be existing resources that are under redeployed? consideration or resources that are likely to The polarisation/competitiveness be created. perspective implies that an TIS is further In the first case we can consider that a oriented by the production of information territory ‘contains’ resources for which it is aimed at the promotion and the the recipient. These resources belong to the accompaniment of the different territory and it is possible to inventory configurations via which the stakeholders them. A territory is deemed as being ‘rich’ in a territory coordinate themselves - via or ‘developed’ when it possesses a all types of project, policies relating to significant number of resources that other ‘pôles de compétitivité’ (competitive territories do not possess. The cumulative- clusters), policies in terms of fields of or auto-reinforcement effect can then activity, etc. explain why rich or developed territories 1.2. Companies, resources and territory continue to develop or become richer. And yet, we can also observe that rich 1.2.1. Company needs and territory needs territories decline and that less developed The needs of companies in terms of territories succeed at surmounting their resources do not imply that these resources state of least development. From this we have to be produced locally. Nothing can conclude that processes exist whereby prevents a company from mobilising a territory, at any level of development, resources that have been produced outside may become richer or poorer. A territory of a territory. However, the fact that a can create or destroy resources. We assert company is very much embedded in a that these resources, whether created or particular territory would seem to indicate destroyed, are coordination resources. that the company has found specific They come about because of coordination resources in the territory that it will not between stakeholders or, by contrast, the need to look for elsewhere, at least in the inability or the refusal of the latter to short term. coordinate themselves. The coordination In the same way that a company does between stakeholders creates new not totally base its operations in a single resources linked to the process of territory (even when embedded) a territory coordination itself. The inability or refusal cannot be grasped solely through its to coordinate destroys existing resources. companies. On the one hand, it is not only The territory, as perceived in a dynamic companies that create value within a way, then becomes a positive-sum or a territory; on the other hand, there are ways negative-sum game. of perceiving territorial dynamics other 1.1.4. Territorial economic development than through its stakeholders. Generating policies the creation of resources that are specific While the observation that mobility can to or particular to the territory is one way encourage public policy to focus on the to ensure the development of that territory. attractivity model for a territory, the Of course, companies’ needs and resources polarisation model seems to suggest that and territories’ needs and resources are not

ECIS 2009 ‐ 234 ‐ PROCEEDINGS mutually exclusive and the notion of the 1.2.3. An TIS guided by company/territory “productive encounter” (Colletis, 2009) productive encounters demonstrates its meaning here when the Three cases in point can be roughly needs of one group are met by the identified when configuring the productive resources of the other. encounters between companies and 1.2.2. Productive company/territory encounters territories. For each case the TIS can produce ad hoc information. If a cost reduction rationale dominates the The first case is that of companies for configuration of the encounters which competitiveness is guided by costs. (sustainable to a greater or lesser extent) The TIS in this case can help the company between companies looking for an to identify everything that contributes to ‘optimum’ location and territories the achievement of this objective: underpinned by a comparative costs information on support grants or approach, this rationale is not in the exemptions to which it is entitled, foreground of encounters between information on the price of certain network companies looking for skills to services (transport, energy, etc.) complement their own and territories information on the price of land, basing their development on the premise information on the bidding conditions for that the dominant mode is the specification government tenders. Of course, of their resources. The development (old information on market prices (prices for and new) of externalisation practices is an competitive products, prices agreed to by organisational choice for a company’s suppliers, etc.), although supposedly freely ‘architecture’ and leads to considerable available and without cost according to consequences, especially in a spatial sense. economic theory, will be more difficult to We can thus consider that the longest obtain. lasting territorial embedding will occur The second case in point is that of the when there is a company looking for specialised company. This type of production flexibility in meeting company will look for information unexpected problems that require renewed pertaining to its sector of activity: who are and original skills, and a territory its main competitors? their clients? their characterised by a strong plasticity and suppliers? Who are the potential favouring the redeployability of its technological partners (universities, resources. technical centres, training centres)? What It is probably when the instability of a place does the territory hold in the activity company’s organisational architecture is at of the various parties? its strongest (and when the geometry of its Finally, the third case is that of the limits changes the most - in the case of a company in search of production ‘project-firm’) that the most lasting flexibility, as mentioned earlier. This type encounters - embedding - occur with of company especially needs resources that territories that are themselves characterised are linked to a coordination process in the by highly redeployable resources. sense that its competitiveness depends less Embedding is then a gamble for the future, on cost control than on its ability to an assumption of subsequent coordination coordinate with stakeholders from different in the resolution of problems that will sectorial horizons (see 2.2). undoubtedly present themselves, but the The three cases that we have referred to nature of which are currently impossible to here concern the company/territory anticipate. relationship from the angle of the company and their need for a variety of resources. A policy of territorial economic development can strive, simultaneously or

ECIS 2009 ‐ 235 ‐ PROCEEDINGS successively, to enhance existing resources and to manage the scarceness of resources, to favour the creation of new certain resources, etc. resources or to bring about lasting The so-called ‘classical’ analyses productive encounters. The TIS must (Smith, 1776; Ricardo, 1821) use the therefore also provide the necessary notion of ‘factorial’ resources in this information when defining public policies respect. In a similar way to a company, for territorial development and the territories associate labour with capital, implementation thereof. and of course we cannot forget land. This analysis has been enriched and diversified using the three terms and today As pointed out in the introduction, the has led to the formation of a ‘doxa’28 structure of the information used to shape which can be described as ‘standard’ (or and implement policies can also drive them dominant). forward. This is especially the case for This doxa is the one that can be found national statistics information systems and in more or less the same form throughout their nomenclatures (sectors, activities, the books as well as in the diagrams territories, etc) (2007). prepared by those who work in local Part 2 proposes to represent territory development. It is mentioned widely in the resources according to two different texts from the Midi-Pyrenees Region, typologies that match two ‘grand’ visions setting out the Region’s territorial for the resources, but also two for the economic development policy and in territory. particular its SRDE29. The interviews that 2. The different types of resources we held with regionally elected The analysis of the texts that set out the representatives responsible for economic territorial economic development policies, development, members of Regional along with that from research produced on departments along with a variety of the regional economy, enable us to identify peripheral regional stakeholders who are two key visions of the resources. The first involved in territorial economic vision considers resources as factors and development, confirmed the dominant most often presents them as existing in position of this vision of resources. their own right, independent of their part in 2.1.1. Land the process. The second vision considers Land, after having almost disappeared as a resources to be linked to processes that are resource and after having been assimilated particular and that can ultimately be into a particular form of capital, has grasped in terms of coordination. reappeared as three items: a traditional mineral resource, an agricultural resource, 2.1. Factorial resources including deposits of raw materials, and a A territory’s resources have been the provider for energy production (deposits object of observations that usually come and renewable energy). within the framework of a ‘resource- 2.1.2. Capital endowed’ territory. The existence of the territory is therefore presumed; the Capital appears as a ‘classical’ factor of territory is endowed with resources. Here production (in particular machinery for the universe of reference is that of a static companies), but also as a loan to pay for representation of the economy with a finite equipment and workers. In the latter case it set of resources. This universe leads to is a financial capital that must not be policies that aim to attract available 28 resources to the territory from outside, to From the Greek δόξα: opinion. This relatively wide term covers notions of opinion, paradigmatic choice, social optimise the allocation of existing representation, even ideology. 29 Schéma Régional de Développement Économique (Regional Scheme for Economic Development)

ECIS 2009 ‐ 236 ‐ PROCEEDINGS confused with productive capital (the the said resources, etc. The relevant actual machinery of the company). We can policies will focus on establishing add a third form of capital to productive conditions that favour the creation of capital and financial capital; this third type resources and on actions that identify and of capital, most often public capital, is tied promote redeployable skills. up in infrastructures (transport, Here the emphasis is placed on the telecommunications, energy production, resources that on the one hand allow etc). stakeholders to operate within a network 2.1.3. Labour and on the other hand, on resources that are produced as a consequence of this Labour constitutes the third and final networking operation. factor. Labour, more often than not, is This vision of resources is by and large assimilated into workforce and is then present in research texts, but it appears specified as being either abundant or not, only occasionally in the interviews that or available or not. More recently, the two were held with the Region’s stakeholders, worlds of research and training have been, and when it did appear, it was expressed in by extension, associated with labour. A de the form of a need for ‘new types’ of facto difference is thus introduced to resources. differentiate between simple and complex Two types of resource can be identified work, and between a person’s capacity to as resources linked to a process. The first work and his capacity for creative work. includes a territory’s permanent resources,

that is, those resources that will not Whether we are referring to land, disappear once the coordination has been capital or labour with their varying completed. The second category covers meanings, an TIS must be in a position to resources that are specific to the produce the factorial information that is coordination. necessary for both the company and the 2.2.1. Permanent resources territory. This especially means A permanent resource is one that existed information which is quite descriptive before the coordination and will survive (even if ‘structured’) presented in an after its completion. Two resource ‘inventory’ style and capable of being categories can be distinguished. The first is organised, often in the form of a ‘guide’. a territory’s cognitive heritage. This 2.2. Resources linked to a process heritage includes the history of a territory While the factorial resources for the first and the events that have marked it. This history (account) is the one that is shared doxa are in some ways immanent and existent in themselves, the second doxa by all those stakeholders who see themselves as stakeholders within the considers that resources linked to a process do not exist outside of this process. territory, whether or not they have lived through the above events. The heritage If the factorial resources are those that correspond to a vision of a presumed and also includes the memory that stakeholders have of previously successful examples of resource-endowed territory, the resources linked to a process are those of an active coordination. In fact stakeholders within a territory remember the coordinated territory, a territory that must be ‘revealed’ by virtue of the coordination that can occur activities that they have already been engaged in and these activities may act as a amongst a number of stakeholders. So the universe we find ourselves in is one launchpad for subsequent cooperation. The second resource category is one involving the development and creation of resources, the redeployability of resources, that can be described by the notion of ‘shared representation’. This shared and hence the potentially infinite nature of representation can be broken down in three

ECIS 2009 ‐ 237 ‐ PROCEEDINGS identifiable ways. The first is the existence way that they can cooperate over the long of a common language - the stakeholders term, that is, they can imagine further within a territory share the same semantics possibilities for coordination). for a set of key objects. The second is the 2.2.3. The role of an TIS feeling of belonging. Not only do the Identifying and passing on information stakeholders within a territory give the about skills before facilitating their same meaning to the terms that they use, availability to a network are considered they also have the feeling of belonging to here to be the three key tasks of an TIS. It the same community (the sense of ‘us’). is important to note that having The third and final is trust; because they stakeholders within a network is seen as a speak the same language and have a sense distinctive feature of territorial intelligence of belonging to the same community, the (Moinet, 2008). stakeholders within a territory have a Even though attracting skills comes under mutual trust in each other. This trust can be public policy, it also constitutes an considered both as an outcome and as a objective (the quality of an TIS could be precondition (occasionally a condition) of deemed as non-negligible factor in subsequent cooperation. attractivity). 2.2.2. Specific resources A specific resource is very contextual; it is 2.3. Two doxai that coexist substantially linked to the coordination Factorial resources and process-linked process. It concerns the skills that have resources correspond to two doxai which been mobilised during this process and are are different, but which can appear of two orders: individual and collective. concomitantly within the same texts or the The individual skills are those of the same practices. This is the situation for the stakeholders, for example, in order to Midi-Pyrenees Region, which although resolve a problem, a skilled stakeholder largely in line with the first doxa, here and will seek out another nearby stakeholder there shows the need for a more dynamic who has complementary skills to his/her vision of resources, though in a quite own in the resolution of the problem. The imprecise way. It is important to note that individual skills comprise the above a similar situation exists with reference to stakeholders’ qualifications and their how the territory is represented by two experience (active knowledge). main doxai acting concomitantly. However, it is not enough that the Moreover, (Salles & Colletis, 2008) have exploitable individual skills for the shown that these two visions of the resolution of a problem are available in territory lead to very different, if not order to ensure the achievement of both an conflicting, types of policy. effective coordination and a positive As far as we are concerned, the outcome. ontology for territorial economic We also have to add collective skills to development must therefore integrate the individual skills; the former can be broken two doxai. Indeed, solely taking the first down into three (progressive) levels: doxa (which is dominant in the Region’s communication skills (stakeholders texts and practices) into account within the succeed in communicating with each other, ontology would lead - via the performative in exchanging information and data), effect, as mentioned in the introduction - to coordination skills (for example, the policy decisions focusing mainly on stakeholders are aware of the modalities existing resources to the detriment of that will enable them to work together as a resource creation. part of a project team), cooperation skills The work involving the construction of (beyond a one-off coordination, the the ontology as presented in the following stakeholders organise themselves in such a

ECIS 2009 ‐ 238 ‐ PROCEEDINGS part, sets out to integrate the two visions of resources. 3. The construction of the ontology In this section we will present simplified excerpts from that part of the ontology that has been given over to the notion of ‘resource’, following three stages in its Land construction.

3.1. Stage 1: Analysing the Regionʼs texts Capital The first stage involved analysing the Region’s texts as well as the interviews Labour that we held with the Regional stakeholders responsible for territorial economic development. This initial work provided us with a list of resources and very little classification of these resources. Intermediate Figure 1 Excerpts of concepts taken from classifications were added, some taken doxa 1 from the literature and some from 3.1. Stage 2: Analysing the research texts ‘classical’ ontological construction work A second stage involving the analysis of (Bachimont et al., 2002). A final look at territorial economic research texts (the economic literature helped us regroup the ‘proximity’ school of thought) helped us to types of resource according to the three identify a second vision of resources. classical categories of land, capital and Figure 2 portrays the concepts taken from labour. doxa 2 where doxa 2 considers resources Figure 1 shows an excerpt which has as being linked to processes. been constructed from notions found within the texts and the interviews and 3.1. Stage 3: Integrating the two doxai completed with intermediate A third stage was devoted to the classifications. These notions are indicated integration of the two doxai within the by the first doxa (factorial resources). final ontology. In this particular case, the integration did not pose any specific problems because the two doxai do not entail any overlap.

We will describe an ontolgy that integrates several doxai as a polydoxical ontology. When taking into account the exploratory nature of the project, as well as the fact it was designed to be used over the short term, the final ontology is a light ontology, formalising concepts that are linked by subsumption Figure 2 Excerpts of concepts taken relationships (Is-A), marginally, by from doxa 2 meronymy (Is-A-Part-Of) and by a number of ad hoc relationships.

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and to integrate them both into the same ontology. Figure 3 shows the first levels of the The representation of the territory’s ‘resources’ part taken from the final resources so constructed is intended to be ontology. The lower levels remain integrated into a general ontology for unchanged in relation to figures 1 and 2. territorial economic development. A first version of this ontology was created within the context of the CAVALA project (with the aim of defining indicators to evaluate economic policies), but considerable work remains to be completed. The clarification of the different doxai at stake, those that are often the most tacit in the texts and sing practices, could prove to be an effective tool in encouraging consistency and effectiveness within policies (Salles, 2007). Figure 3 Excerpt from the final ontology References integrating doxai 1 and 2 Aussenac-Gilles N. (2006) Méthodes ascendantes pour l'ingénierie des We need to remember that as we have connaissances, Mémoire d'Habilitation chosen to represent the resources linked à diriger des recherches, Université Paul concepts in the form of an ontology, the Sabatier (Toulouse III), version work undertaken could be relatively easily complétée. adapted for another type of information Bachimont B., Isaac A. and Troncy R. structure. (2002) Semantic Commitment for Conclusion Designing Ontologies: A Proposal, In A. Gomez-Pérez & V. Benjamins (eds.), In this paper we have set out a study, 13th International Conference on undertaken within the framework of a Knowledge Engineering and Knowledge project financed by the Midi-Pyrenees Management (EKAW’02), Sigüenza, Region, that represents a territory’s Spain, volume (2473) of Lecture Notes resources. The first part demonstrated the in Artificial Intelligence, p. 114–121, vital role of resources when choosing Springer Verlag. territorial economic development policies. Boydens I. (1999) Informatique, normes et As these choices were restricted by the temps, Bruylant, Bruxelles. structure of information, and in particular, Charlet J. (2003) L'ingénierie des the available categories, it was incumbent connaissances. Développements, upon us to examine what a typology of résultats et perspectives pour la gestion resources could be. The work led us to des connaissances médicales, Mémoire identify two separate visions (doxai) of d'Habilitation à diriger des recherches, resources, each expressed in a different, Université Pierre et Marie Curie, but complementary typology. These two version complétée. doxai coexist with the relevant Colletis G. (2009) Local Development, stakeholders involved in the field of Proximities & Productive Encounters: territorial economic development, either The Case of Development Dynamics in within the Region or in economic research. the Region of Toulouse, Canadian The choice was made to respect the Journal of Regional Science, n°32 (to simultaneous existence of these two doxai appear).

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Hofstadter D. (1979) Gödel, Escher, Bach: Salles M. and Colletis G. (2007) an Eternal Golden Braid, New York: Représentations de l'entreprise dans les Basic Books ; trad. française, Paris, systèmes d'information statistique et 1985. décision dans les collectivités Joerin F. (2008) Information and territoriales, Droit et Société, n° 65. Territorial Decision Support, Invited Smith A (1776), An inquiry into the nature conference, International Conference of and causes of the wealth of Nations, Territorial Intelligence, Besançon Clarendon Press, Oxford. (France) 16-17 October. Le Moigne J.-L. (1991) La conception des systèmes d'information organisationnels : de l'ingénierie informatique à l'ingénierie des systèmes, Colloque AFCET : Autour et à l'entour de Merise, les méthodes de conception en perspective, Sophia Antipolis, 17-19 Avril 1991. Masolo C., Vieu L., Bottazzi E., Catenacci C., Ferrario R., Gangemi A., and Guarino N. (2004) Social roles and their descriptions, In D. Dubois, C. Welty, & M.-A. Williams (Eds), Principles of Knowledge Representation and Reasoning: Proceedings of the Ninth International Conference (KR2004), Whistler, Canada, Jun 2-5, Menlo Park: AAAI Press, pp. 267-277. Moinet N. (2008), L’intelligence économique territoriale de la théorie à la pratique : réflexions autour du dispositif régional Poitou-Charentes, 2nd European Competitive Intelligence Symposium, Lisbon (Portugal), March 27th-28th 2008. Ricardo D. (1821) On the principles of political and taxations, Cambridge University Press, Cambridge. Salles M. (2007) Eléments pour une méthode d'audit des politiques d'aides aux entreprises des régions, In: Colloque Veille Stratégique Scientifique et Technologique (VSST'2007), Marrakech (Maroc), 21-25 October. Salles M. and Colletis G. (2008) How to deal with the conflicting views of the world expressed in regional economic development policies? In: International Conference of Territorial Intelligence, Besançon (France), 16-17 October.

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Evaluating Business Intelligence Software - Testing the SSAV Model30

Yasmina Amara *, Klaus Solberg Søilen*, Per Jenster and Dirk Vriens†

*Department of Management Blekinge Institute of Technology Sweden [email protected]

China Europe International Business School Shanghai, China [email protected]

† Nijmegen School of Management, Netherlands [email protected]

Abstract Choosing the right Business Intelligence (BI) software is critical to increasing productivity and effectiveness in organizations today. At the same time it is a very elaborating and complex process to choose the right software due to the fact that a large number of BI products exist on the market, which are quite different and updated frequently. The objective of this study is to develop and test a model for the evaluation of BI Software. The findings of the study revealed that it is difficult to declare what is the most competitive BI software as what is good for one user might not be good for another depending on their different business needs. Having said that the study initiated a new classification of BI Software vendors depending on the degree to which they comply with the functions in the Competitive Intelligence (CI) cycle. The software tested was divided into five categories: Fully complete, Complete, Semi Complete, Incomplete and Insubstantial. We conclude that the SSAV (Solberg Søilen, Amara, Vriens) Model Together with some proposed non technological variables and a classification developed can be used as a user's selection tool for deciding which BI Software to purchase.

Keywords: Business Intelligence, Software evaluation, Competitive Intelligence, SSAV model

30 This is a summary of a study by the same title.

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1 Introduction • What is the potential for the proposed variables/criteria and vendor's categories? With the emergent volume of data handled by companies in our fast changing business environment, staying competitive means 2.1 A short background to the problem constantly analyzing the existing market Business survival today is based on for relevant changes. This puts a burden on companies’ abilities to analyze their rivals’ business owners, continuously to find and moves, and to anticipate market interpret information that is imperative for developments rather than simply react to their survival. According to Gartner Group them (Millre, S. 2001). CI enables senior (2007) "The amount of data collected by managers in companies of all sizes to make an organization doubles every year. informed decisions about everything from Knowledge workers analyze only 5% of marketing, R&D, and investing tactics to this data. Knowledge workers spend 60% long-term business strategies. Moreover, of their time searching for important CI is considered a value-added concept relationships in the data, 20% analyzing that outperforms the top of business the discovered relationships, and only 10% development, market research and strategic on doing something with the analysis (i.e., planning (Arik, J. 2005). making decisions, implementing strategies Authors mostly refer to two reasons and plans, etc.). Information overload for obtaining a competitive intelligence reduces decision-making capability by capability. Firstly, CI contributes to the 50%". There is an increasing demand for overall organizational goals such as software that can assist in this process, improving its competitiveness or what is broadly known as Business maintaining the viability of the Intelligence (BI) software (Solberg Søilen, organization. In addition it contributes to K. 2005). the organizational activities needed to reach the overall goal like decision-making 2 Problem formulation or strategy formulation (Vriens, D. 2003). The purpose of this research was to Hence as claimed by Jan P. Herring (1993) generate a new model with a new set of the roles of CI efforts fall into the criterion for evaluating BI software. The following categories: • Strategic decisions and actions (tactics) idea was to propose an assortment of • Early-warning topics that prevent surprises to evaluation variables for each function of the organization relating to product launches, the CI cycle. So far the BI term has been new emerging, or changing market and new used by a too large variety of software technologies or business methods solutions. Moreover, the research aimed at • Knowledge of, learning from and assessments testing the model upon a chosen sample of of key players and competitors, and • Intelligence assessments for planning and BI software vendors to determine the most strategy development. complete BI Software. The aim was also to determine the software’s most important Therefore, with CI capabilities a business values, which ought to be considered by can predict the action of their competitors companies when deploying BI & key players, remain competitive in the applications. The new BI Software market and reach its goals through better evaluation criteria and vendors categories decisions and more focused strategy aim to differentiate various vendors in the planning. market and hence initiating a more informed user selection discussion. 2.2 Business Intelligence (BI) software

The research will attempt to answer the More and more intelligence tasks today are following questions: automated, by the use of Business • What discussed variables/criteria are selected Intelligence. Effective competitive for evaluating Business Intelligence BI intelligence results not from luck, but from software? the same careful planning, discipline, and • How are these BI software variables measured? systematic process that scientists employ. • According to the criterion selected what are the "However, the companies with the highest most competitive BI Software available among success rates at winning new business have the few that have been selected? found that competitive intelligence is not a • What credible categorization can be used to classify BI Software vendors? magical art; it is a science whose ethical

ECIS 2009 ‐ 243 ‐ PROCEEDINGS practice readily impacts a company’s top has been integrated in the evaluation is a and bottom lines" (O'Quinn, O. 2001). non-probability purposeful quota sample According to Vriens (2003) in order for the that includes 11 BI Software products: intelligence cycle to be carried out Business Objects, Microstartegy, properly, an organization should Microsoft, Information Builders, implement a balanced mix and an Panorama, QlickView, Spotfire, Cognos, intelligence infrastructure that consists of SAS, Astragy and Digimind. Observations following three parts: and experiments were conducted using • A technological part, comprising the ICT mostly the free software accesses obtained applications and ICT infrastructure that can be from the software trial demonstrations used to support the intelligence cycle phases already available and the vendors' • A structural part, referring to the definition and allocation of CI tasks and responsibilities (e. g., presentations & white papers to collect should CI activities be centralized or data regarding the capabilities. The decentralized), and evaluation model developed with its • A human resources part, which has to do with variables and proposed measuring scale selecting, training and motivating personnel (Likert Scale) were documented and that should perform the intelligence activities. mapped as a checklist and used to evaluate Thus, although technology matters for the BI software samples and demeanor building effective CI it should be quantitative analysis of numerical data combined with good planning for the obtained from the Likert scale scores allocation of the CI tasks, making sure CI enabling the comparative investigation of activities are carried out by professionals the BI vendors who are participants in the and get others involved. Human resource study. departments should plan the selection of CI staff cautiously to ensure a superior CI The research will attempt to answer the performance. following questions: All along different Information & 1) What discussed variables/criteria are selected for evaluating Business Intelligence BI Communication Technologies (ICT) tools software? are used for supporting the different 2) How are these BI software variables measured? activities in the competitive intelligence 3) According to the criterion selected what are the cycle. ICT for CI (or Competitive most competitive BI Software available among Intelligence Systems, CIS) is best seen as a those few that have been selected? 4) What credible categorization can be used to collection of electronic tools (Vriens, D. classify BI Software vendors? 2003) that support strategic decision- 5) What is the potential that the proposed making, that are dispersed over different variables/criteria and vendor's categories can management levels; and that supports be used as BI Software users' selection structured and unstructured intelligence foundation? activities. According to Vriens three types of For business intelligence systems to be ICT tools can support or sometimes even successful, there is need to create an replace the CI activities: the internet as a appropriate infrastructure to capture and tool for direction or collection activities, create data, information, and knowledge, general applications to be used in CI and store them, improve them, clarify activities (groupware or intranets etc) and them, analyze them and disseminate them Business Intelligence software. This paper is concerned with the latter. to decision makers so that there can be an overall understanding of a company's 3 Method operations for actionable results (Thierauf, Empirical research was carried out to test R. 2001). the developed model. A selected sample of Thus for ensuring effective BI Software vendors and their products business intelligence platform, five was tested against the set of evaluation essential steps are needed: Understanding criteria originated from the conceptual the problem, collecting the data, analyzing work. Initially a custom-made cover letter requesting free access to the sample the data, sharing the results, and acting on vendor's products for measuring purposes the information which represents the was sent out. The vendor's sample which phases of the CI cycle all of which are

ECIS 2009 ‐ 244 ‐ PROCEEDINGS supported with different technologies to exploit IT innovations and advances to (capabilities) whether data warehousing, consistently produce high-quality business business analytics, Analytical models applications" (Brynjolfsson, 1993; Gibbs, (user's interfacing) Business Performance 1994). The evaluation of software and its Management (BPM), user's interfacing as business value are recently the subject of explained by Ericsson (2004): many academic and business discussions. Since Investments in IT are growing Figure 1: BI SOFTWARE CAPABILITIES (Ericsson, 2004) extensively, and business managers worry about the fact that the benefits of IT investments might not be as high as PLANNING & expected (Van Grembergen, 2001). The

DIRECTING business value of a software product (FRAMEWORKS) DATA WAREHOUSING results from its quality as perceived by both acquirers and end users. Therefore, quality is increasingly seen as a critical attribute of software, since its absence results in financial loss as well as dissatisfied users, and may even endanger BUSINESS lives (Duggan, E. 2006). Thus users’ INFORMATION ANALYTICIS perception of software quality is the base DELIVERY OLAP Analytical Data Mining of evaluating software. Models (user Predictive interfaces) Analysis Palvia (2001) interpreted information Report & Qualitative Queries Analysis system quality as discernible features and

characteristics of a system that contribute to the delivery of expected benefits and the satisfaction of perceived needs. Other The priorities of the business are scholars, such as Ericsson and McFadden understood here by mapping the existing (1993), Grady (1993), Hanna (1995), data flows and structures and Hough (1993), Lyytinen (1988), Markus understanding the needs of the decision and Keil (1994), Newman and Robey makers (Ericsson, 2004). This BI function (1992), have further explicated IS quality basically supports the planning phase in CI requisites that include: cycle.

Timely delivery and relevance beyond 3. 1 Software Evaluation • deployment "Business organizations are still struggling • Overall system and business benefits that to improve the quality of Information outstrip life-cycle costs Systems (IS) after many research efforts • The provision of required functionality and and years of accumulated experience in features • Ease of access and use of delivered features delivering them" (Duggan, E. 2006). • The reliability of features and high probability Building an information system, whether it of correct and consistent response is a customized product for proprietary use • Acceptable response times or generalized commercial package, means • Maintainability which means easily providing sophisticated high-quality identifiable sources of defects that is correctable with normal effort software, with the requisite features that • Scalability to incorporate unforeseen are useable by clients, delivered at the functionality and accommodate growth in user budgeted cost, and produced on time. base, and However, these goals are not frequently • Usage of the system. met; "Hence, the recurring theme of the past several years has been that the Besides Quality, Bass (1998) uses the Information System community has failed following attributes to evaluate software:

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• Performance: The responsiveness of the vendors that want to assist them to achieve software their business objectives. • Reliability: The ability of the software to keep operating According to CBR staff writer • Availability: The proportion of time the system (2007) "the scope for differentiation is up and running between BI vendors has shifted higher up • Security: The measure of the software ability the stack, towards issues such as predictive to resist unauthorized attempts at usage and analytics and real-time BI. It has also denial of service while providing the service to the user moved lower down the stack, towards • Portability: Is the ability to make changes to more pervasive BI and client BI software quickly and cost effectively applications. Other differentiation • Functionality: The ability of the software to do strategies may focus on strategic issues the work for which was intended such as ease of deployment, on-demand • Variability: How well the software can be expanded or modified offerings, industry-specific packages, • Conceptual Integrity: The underlying theme or enterprise application integration or go-to- vision that unifies the design of the software at market approaches". For this reason, all levels, and choosing the right BI software is critical to • Usability: The user's ability to utilize software increase productivity and effectiveness in effectively. the organization. Nevertheless it is a very

elaborating and complex process due to the Furthermore, Fenton & Pfleeger (1997) fact that numerous BI software packages introduced a quality model which exist on the market most of which are evaluates software based on the following updated very rapidly. three dimensions. Most importantly the selection process • The People dimension: This dimension includes the competent IS specialists along involves various criteria and variables with their skills and experience necessary to against which BI software are compared manage both the technical and behavioural and evaluated which on the whole are not elements of the software. Whereas delivery is apparent and generally vague (Turban et central to ensuring high-quality IS products (Perry et al., 1994). al., 2007). Besides, most of the evaluations done are not able to combine both the Additionally, it is said that the user-centred testing of the BI effectiveness as a tool and perception of the software delivery its support of the phases in the Competitive increase the opportunity of producing Intelligence CI Cycle. So far only Gartner, higher quality systems (Duggan, E. 2006). Forrester and Fuld & Company are • The Process dimension: This dimension established for performing evaluations of prescribes the timing of each deliverable, BI software. The attributes that are used procedures and practices to be followed, tools here to evaluate software can't be used and techniques that are supported, and identifies roles, role players, and their directly for evaluating BI Software. Hence responsibilities (Riemenschneider et al., 2002). the need to find specific attribute to evaluate BI Software quality. Its target is process consistency and repeatability as IS projects advance through the 3.2 Gartner systems life cycle (Duggan, E. 2006). Gartner Inc. is accredited for having

• The Product dimension: The product quality is introduced the term “business concerned with inherent properties of the intelligence”. Gartner initiated the Magic delivered system that users and maintenance Quadrant for Business Intelligence personnel experience (Duggan, E. 2006). Platforms evaluation which states that users should evaluate vendors in all four The noticeable growth in the BI Software quadrants, including the Niche Players, market is leaving companies of different Visionaries, Leaders and Challengers. spheres in bewildering status by having to According to Gartner research 2005 the decide amongst diverse BI software

ECIS 2009 ‐ 246 ‐ PROCEEDINGS vendors are placed in one of four positions To conclude, Gartner's evaluates BI (leaders, challengers, visionaries and niche Software from the pure business players) in a “magic quadrant.” As perspective. It assesses BI software ability follows: to achieve its business goals and vision. Although it looks at BI software functions • Leaders: have strong market position, solid to determine the intrusion condition of any customer support, and an extensive pool of BI software in the Gartner's evaluation, it skilled developers. Their products have generic functionality. Also, there is limited or no doesn't measure the BI functions access to key personnel, and there is little room effectiveness nor the software support of to negotiate prices. the CI cycle phases. • Challengers: are characterized by their stability, solid customer support, reliable 3.3 Forrester Wave BI technology, and functional completeness. Their Forrester Wave BI Software evaluation products’ architecture may be outdated, they have a limited pool of skills, and they may includes a detailed in depth evaluations compete with potential application partners. criteria based on three level buckets: • Visionaries: have cutting-edge functionality in Offering, Strategy, and Market Presence their offerings and have the potential for (Keith, G. 2006). Forrester wave evaluates aggressive discounting. On the flip side, they BI vendors who met the following criteria: are potentially unstable, offer limited support, A vendor with annual estimated BI revenue in and have an extremely meagre skills pool. • excess of $100 million

• A vendor with or more products specifically • Niche players: typically have critical and targeted at the BI reporting and analysis unique functionality—but they have a limited market, and ability to compete in the market and enhance A market-leading pure-play BI vendor, their product. Of course, not all of these • RDBMS, or enterprise application vendor with characteristics apply to each and every one of a native analytic or enterprise reporting the vendors, but they serve as a framework to product/component, or a supporting reporting categorize them for comparison purposes. engine and repository.

Vendors were included in the Magic Forrester found through users interviews Quadrant if they met the following that most users are unsatisfied with the requirements: way they currently receive analytic information. Thirty percent of those • They deliver at least eight of the (12) BI platform capabilities divided into three surveyed thought their analytic software functionality categories integration, has significant gaps in usability. Twenty- information delivery and analysis. two percent cited lack of detail as an issue. • They have a reasonable market presence, Forrester assesses the BI vendors on their which we define as greater than $20 million in functions effectiveness and usability but in annual revenue from BI platform software. • They demonstrate that their solutions are used a very general manner without going into and supported across the enterprise, and go any depth of each BI capability. Moreover, beyond departmental deployments. (Gartner it didn't evaluate the level of support BI 2007). software functions provide to the CI cycle phases. Later on the vendors who can be added to Gartner's magic quadrant are evaluated 3.4 Fuld & Company CI Software evaluation based on two evaluation criterions. The Fuld & Company compare CI users’ first is based on vendor's ability and reactions of CI software to those of success in making their vision a market animals with certain traits in order to reality and the second on their motivate hundreds of users to respond and understanding of how market forces can be complete a survey that is aimed to convey exploited to create value for customers and both the characteristics of the technology opportunity for themselves.

ECIS 2009 ‐ 247 ‐ PROCEEDINGS and their responses to that technology. The acts as criteria in judging CI applications animals they chose were as follows: in the direction phase: • Providing a framework to input Key • Slug because of its lack of speed and Intelligence Topics and Key Intelligence responsiveness Questions, and • Gerbil a fast animal but one that seems to go in • Receiving CI requests managing a CI work circles, quickly spinning its wheels, but going process and project flow that allows nowhere collaboration among members of the CI team • Bee for its speed, smarts, and sense of the as well as with the rest of the company. bigger picture • Parrot that would spit back the information, For the data collection phase the criteria adding little, and includes the following: Labrador a dog who would go and retrieve • • The ability to capture qualitative, ‘soft’ what you need when you need it. information from employees throughout the company, either through internal message "The largest single segment of boards, e-mail, or another easily accessible respondents, 42%, compared their medium by which primary information can be competitive intelligence CI technology to a inputted and retrieved bee- an insect that “creates a useful pattern • The capacity to target and retrieve qualitative information (such as consumer feedback) from or swarm of information and helps me message boards, news groups, and other connect the dots.” Nearly one-third (29%) external forums, and saw their solution more like a Labrador • An area in the software and user interface for retriever, “good at fetching and retrieving.” inputting interviews, field reports, and other first-hand accounts.

A vocal minority of nearly 30% of The criteria for the analysis phase include: respondents gave the software low grades, • The ability to sort information by user-defined comparing it to a parrot (11% - “just spits rules back what you sent to it; no added value”), • Data visualization interface(s) to sort and view a slug (12% - “just takes up space and collected information never seems to go anywhere”), or a gerbil • Multiple viewing models, such as SWOT (Strength Weaknesses Opportunities Threats) (6% - “lots of action, spins its wheels and and Porter’s Five Forces model offers no substance whatsoever – and • Display of information in chronological order definitely consumes my time”) (Fuld & • Extraction of relationships between people, Company, 1999). places, dates, events, and other potential Fuld & Company evaluates the correlations • Text-mining technology to locate and extract software packages with regard to the five user-defined variables, and steps of the Intelligence Cycle in relation • The ability to relate analyses to quantitative to how much we can reasonably expect the data. technology to support each step of the CI Cycle. They first had to distinguish For the reporting and informing phase: between packages that promoted • Both standardized and customizable report themselves as Business Intelligence tools. templates • The ability to link and export reports to “Business Intelligence software”, as the Microsoft Office formats, CorelDraw, PDF, industry labels many of its products, multimedia formats, other databases, and/or typically deals with data warehouses and other reporting systems, and quantitative analysis, almost exclusively of • The capability to deliver reports via hard copy, a company’s internal data (e.g. CRM, the corporate intranet, e-mail, and/or wireless sources. Customer Relationship Management data) (Fuld & Company intelligence report, Fuld's evaluation criteria evaluated 2006-2007). software packages with regard to the Fuld (2002, page 12-13) state that backup it provides for the four CI Cycle the fulfilment of the following functions phases. The software packages that have participated in the Fuld's evaluation were

ECIS 2009 ‐ 248 ‐ PROCEEDINGS the one not dealing with BI functions from: 3 = GOOD, Frameworks, Data Warehousing, Business 2 = SATISFACTORY, analytics and User's interface but rather 1 = POOR, those with more simple functions assigned 0 = (N/A) for planning, data collection, and analysis and information delivery methods. Seeing that, selecting the right BI software Fuld's criteria didn't measure the is critical to improve the productivity and effectiveness & efficiency of the software effectiveness of organizations huge as a tool. Hence, this study used and set off burdens are put into developing a suitable further from Fuld's Model criteria by applying the developed Model on Software methodology that can be used for selecting packages escorts BI functions. BI software that will best suit the users' needs. 4 Results and Analysis In this paper the focus is to develop The SSAV BI Software evaluation Model a new technological Model for evaluating was developed and tested on a sample of BI software effectiveness & efficiency as a BI Software discussed earlier by analyzing tool besides assessing the extent in which their various capabilities (Functions). Its they support the four phases of the CI aim is to evaluate BI Software cycle. Consequently, these technological effectiveness & efficiency as a tool in variables can be used as a starting point addition to assess how each BI function when selecting a BI tool. supports a particular CI activity in the Although, the technological cycle. Moreover, the variables used for variables can aid users in narrowing down evaluating BI Software can be divided into their BI vendors alternatives, they are not the following three classes: enough. Further, investigation should be • PROCESS VARIABLES I: They include conducted to extract some non variables for evaluating the effectiveness technological variables which could be & efficiency (quality) of BI Software critical to enhance users end decision functions (Capabilities). regarding which BI tool to pursue. • PRODUCT VARIABLES: They include variables for evaluating the effectiveness Three additional non technological & efficiency (quality) of artifacts, variable groupings can be used as a BI deliverables or documents that result from evaluation criterion and hence as a BI Software function, and selection tool as demonstrated below. PROCESS VARIABLES II: They include • • Human & Structural Variables: It includes variables for evaluating how a BI function variables relating to the effectiveness of the supports a particular CI cycle activity. development teams and the allocation of CI tasks and responsibilities among them. Consequently, the variables used in the Moreover it has to do with the human evaluation criterion were divided into four competencies that should be available when parts as illustrated. selecting, training and motivating personnel that should perform the intelligence activities. A five point Likert scale was used The proposed human & structural variables are to evaluate the BI Software functions illustrated in the table (4) below: against the developed evaluation criteria • Users Variables: They include variables by selecting a number from highest to concerning the In-House staff using the lowest (0-4) for each specified software. As shown in table (5) below. • Vendors Variables: Usually the final choice trait/variable. The numbers are arranged regarding the BI tool selection is often based horizontally and are added up to arrive at on the ability of the chosen vendor to support an overall score as follows: the company's current and future projects in terms of stability, resources, and experience. 4 = EXCELLENT, Consequently, to aid users in their BI tool selection it is recommended to evaluate the software upon the technological and non technological variables mentioned in this

ECIS 2009 ‐ 249 ‐ PROCEEDINGS chapter using the Likert scale. However, in highest overall score in the CI phases this study only the technological variables together. Below are the findings resulted are used in the SSAV Model to test some from analyzing the Likert scale scores for BI vendors' software for two reasons, time the limited number of BI Software vendors constraints and the difficulty to assess the who participated in this study. non technological variables using the projected methodology. Using BI Vendors 4.2 The top data collection vendors free trials, demos, presentations and white According to the scale below Information papers collected, performance assessment Builders is the best BI vendor when it along with comparative analysis were comes to data collection followed by conducted for each vendor software Cognos and Business Objects. participating in testing the SSAV Model; Alternatively TIBCO Spotfire is the least resulting in a pertinent score on the Likert good. scale for each variable in the different BI TABLE 1: BI SOFTWARE RANKING IN DATA RANKING BI SOFTWARE VENDOR COLLECTION RANKING BI SOFTWARE VENDOR 1. SAS 1. INFORMATION BUILDERS 2. MICROSOFT 2. COGNOS 3. BUSINESS OBJECTS 3. BUSINESS OBJECTS 4. SAS 4. MICROSTRATEGY 5. MICROSOFT 5. COGNOS 6. PANORAMA 6. TIBCO SPOTFIRE 7. MICROSTRATEGY 7. PANORAMA 8. QLICKVIEW 9. TIBCO SPOTFIRE 8. ASTRAGY 10. ASTRAGY 9. DIGIMIND 11. DIGIMIND 10. INFORMATION BUILDERS Source: Evaluation Results 11. QLICKVIEW Functions & CI phases of the Model for As for the two CI software vendors each vendor. In addition to an overall score Digimind and Astragy they come at last for each BI function, support of CI Cycle since they don't provide any BI functions phase and the total phase score were which here contribute to the data collection calculated correspondingly for each BI overall score. Both vendors score high in participant. supporting the CI data collection variable but using different means and functions. 4.1 The most competitive BI Software Saying that a particular BI Software 4.3 The top vendors in analysis vendor is the most competitive is not From the next figure we see that SAS is possible. It is possible to say that a certain the best in analysis followed by Microsoft BI vendor concentrates and stands out in and Business Objects. And the vendor who one phase or more in the CI cycle while is less good in analysis is QlickView. disregarding the rest. Moreover, a software While the rest vendors analytical vendor can do better in a certain BI capabilities are somehow below average. function compared to the others functions. Again although Digimind & Astragy So, it is of great importance for provide good analysis their score are low users to determine what intelligence cycle on the scale since they don’t provide any feature or BI software function is essential BI business analytics from OLAP, data to work properly. And decide which mining, predictive or qualitative analysis. software to purchase. On the other hand it is important to be able to spot the complete (standard) BI vendors which offer the four CI cycle phases in one TABLE 2: BI SOFTWARE RANKING IN ANALYSIS, package and identify those who have the

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Source: Evaluation Results Source: Evaluation Results support it provides for the CI cycle phases as follows. When it comes to the ability of Dissemination the list is as follows: • Fully complete: BI Software in this category excels in the four phases of the CI Cycle TABLE 3: BI SOFTWARE RANKING IN DISSEMINATION including: planning, data collection, analysis RANKING BI SOFTWARE VENDOR and dissemination. 1. BUSINESS OBJECTS • Complete: Since the planning & directing 2. COGNOS phase is seldom supported by any BI software, 3. PANORAMA 4. INFORMATION BUILDERS they can be considered complete but not fully 5. MICROSTRATEGY complete if it performed very well in the other 6. TIBCO SPOTFIRE three phase of the CI cycle: Data collection, 7. SAS analysis and dissemination. 8. MICROSOFT • Semi complete: In the case the BI Software 9. QLICKVIEW excels in two CI phases out of four it is 10. DIGIMIND 11. ASTRAGY considered to join this category For example: Data collection & Analysis, Data collection & Source: Evaluation Results Dissemination or Analysis & dissemination. • Incomplete: When the BI Software stands out The top dissemination vendors are in only one phase of the CI cycle it is Business Objects, providing the best positioned as incomplete. For example: merely information delivery, followed by Cognos data collection, solely analysis or just and Panorama. Microstartegy is at the dissemination. bottom of the list. As for Astragy and • Insubstantial: If the BI Software perform well in any of the CI cycle phases is it included in Digimind they have low scores for the this category. same reason mentioned above though their score for supporting the CI dissemination In order to consider a BI software phase is almost the same as for other BI excelling in a phase it ought to have an vendors. overall score of (2.5) or more in that particular phase on the Likert scale. 4.4 The top vendors in planning & directing Consequently, the sample BI software Astragy is the only vendor who supports evaluated can be classified using this this phase of the CI cycle as its consultants categorization, as shown in the following helps and advises users with the table: organization of their intelligence system. No list is therefore added here. TABLE 4: BI SOFTWARE CLASSIFICATION BI CATEGORY PHASES IT EXCELS IN The most complete (standard) SOFTWARE vendors Information Semi Complete Data Collection & Builders Dissemination are Business Objects, with the highest Microstrategy Incomplete Dissemination overall score making it the most complete Microsoft Semi Complete Data Collection & Analysis vendor followed by Cognos, Microsoft and Business Complete Data Collection, analysis Information Builders. QlickView has the Objects & Dissemination Panorama Semi Complete Data Collection & lowest overall score. Dissemination If the total score was calculated by Cognos Semi Complete Data Collection & Dissemination adding up only the CI phases supporting Spotfire Incomplete Dissemination variables without the BI functions QlickView Insubstantial: None variables Digimind would have scored SAS Semi Complete Data Collection & Analysis highest followed by Business Objects. Source: Evaluation Results From the empirical findings and their analysis a new categorization for BI The proposed categorization can be software can be generated. This used as a foundation when selecting BI categorization segregate BI Software into Software by enabling users to clearly see five categories depending on the level of what CI phases are critical for serving their business needs.

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5 Conclusions metadata reports, qualitative analysis, user interfaces and reports. The purpose of this paper was to develop a The best OLAP is from model (The SSAV Model) with a scale and Microstrategy and Data Mining & test it on a small sample of BI vendors. predictive analysis from SAS. Whereas Moreover the aim was to decide upon Cognos stands out in the user interfaces & which BI Software is the most competitive, in reporting. classify them using a credible It is crucial to point out that categorization and examine the models' Astragy & Digimind BI Software don't and the categorizations' potential to be include any kind of frameworks, Data user's selection foundation. warehousing, Business Analytics or user By reviewing the theoretical interfaces capabilities or any other BI framework comprehensively, the SSAV Software functions being evaluated in the model with its evaluation criteria for SSAV Model. Their more ordinary assessing BI Software using a five point common functions for supporting the CI (0-4) Likert scale is developed. It consists cycle phases results in a low score on the of technological variables covering the BI overall CI cycle phase score, even though functions and CI cycle phases which is they could be achieving an outstanding capable of evaluating the BI tool performance in that particular phase. effectiveness & efficiency as well as Hence, further adjustment ought to be assessing its level of support for the CI started in order to develop a model that cycle phases. Thus, being able to build up will be able to give these kinds of BI a model that benefits and add from Software a more reliable evaluation. previous evaluations' models as Gartner, Generally speaking the planning & Fulds and Forrester Wave. direction phase of the CI Cycle is not The assertion that a particular BI commonly available in any BI Software Software vendor is the most competitive is being evaluated. Therefore more attention difficult. A Business Intelligence vendor should be given to the development of might excel in one phase or more in the CI frameworks that support this phase since it cycle and/or stand out in a certain BI is fundamental for determining the function while disregarding the rest. strategic information requirement and it is Accordingly, it is of great importance to considered the base for the other phases in determine what intelligence cycle feature the CI Cycle. or BI software function is crucial to work Nevertheless, the analysis of the properly for them users when pursuing BI empirical shows that on average BI software. vendors perform good in the dissemination

and data collection phases but still most of As of the analysis of the empirical findings them lack the analytics capabilities where for our limited number of BI software more emphasize should be placed. participants we found that Information Lastly, BI Software vendors Builders is number one in data collection, nowadays can be classified into five SAS is the best in analysis and business categories: Fully Complete, Complete, objects is the leader in dissemination. The Semi Complete, Incomplete and most complete BI tool are Cognos and Insubstantial depending on the level of Astragy, the only vendor in our sample support it provides for the CI cycle phases. who supports the planning & directing Hence, it can be a further help for users' phase of the CI Cycle. Additionally, selection of the BI Software vendor that Information Builders are the top in best meets it business needs by helping providing data warehouses and data users select from these five categories the integration; Business Objects excels in

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BI Software that will aid them in achieving The alternative measuring method their long & short term objectives. can include using the same data source Business Objects is the only (Data set) for all the participant BI vendors complete BI vendor among the vendors and thus tracking what occurs to this data being evaluated. Information Builders, source throughout the whole CI cycle Microsoft, Panorama, Cognos and SAS phases for each vendor separately and can belong to the semi complete category. be considered as a further suggestion for Whilst, Microstartegy and Spotfire are advanced studies. considered Incomplete and QlickView Besides, again due to the time Insubstantial. constraints and not being able to get free Accordingly, the technological trials from all the credible BI vendors the variables of the SSAV Model, the SSAV Model was tested only on 11 BI proposed non technological variables and vendor. So, in order to make a more the categorization developed can together comprehensive reliable evaluation it is be used as users' BI Software selection vital to include the rest in another study. At tool. least it can include: Proclarity, Teradata, Pilot, prelytis, Epicor, Codec, SAP and 6 Suggestions for further study ComArch. During the theoretical and empirical study, Finally, the SSAV Model couldn't many questions, which deserve further be totally applied on Astragy and Digimind investigation, have come up. These BI Software since they don't contain the questions can be answered through some usual BI functions like Frameworks, data future studies. So the followings future warehousing, business analytics and user studies can be suggested subsequently. interface but rather other functions that One of the findings of this study support the CI Cycle phases. Accordingly, was that the SSAV Model of technological Building a new version of this evaluation criterion in conjunction with the proposed model to support these kind of BI software non-technological variables consisting of could be an interesting topic for further Human, users and vendors factors are to be studies. used to evaluate BI Software. Consequently, the first suggestion for 7 References future studies is to test these non Arik , J. (2005). What is Competitive technological variables on the BI Software. Intelligence? Retrieved 2008-04-13 This couldn’t been done during this from http://www.aurorawdc.com. study due to the time limitations as it was Brynjolfsson, E., & Yang, S. (1996). difficult to observe development teams in Information technology and their natural working environments nor productivity: A review of literature. conduct personal interviews with end users Advances in Computers, 43, 170-214. and BI vendors. Eckerson, W., White, C. (2003). Additionally, free software Evaluating ETL and Data Integration accesses, free trial demonstrations, vendor Platform. Seattle, WA: The DW presentations and white papers were used Institute. to compare BI Software and grant each a Cognos (2008). Industry Analyst review. score on the Likert scale depending on the Retrieved variable being evaluated which good to 2008-04-14, from www.cognos.com. some extent. But, in order to get more Dan, S. (2004) Exploring Text with accurate measuring results an alternative Qualitative Data Analysis. Retrieved 2008- way could be implemented which were 05 constricted along with the time factors. 27, from www.dmreview.com

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Davenport, T. H., Harris, J. G. (2007). Miller, S. H. (2001) CI: Now More than Competing on Analytics: The New Ever Competitive Intelligence Review, Volume Science of Winning Boston, MA: 12, Issue 4 (p 1). Harvard Business School Publishing. Palvia, P., and Chen, L. (2001) Duggan, E. W. (2006). Measuring Proceedings of the Second Annual Information Systems Delivery Quality. Global Information Technology Hershey, PA, USA: Idea Group Management World Conference Publishing, Bryant, P. (2001). CI is NOT Espionage! Dutka, A. (2000). Competitive Intelligence SCIP 2000–2001 Competitive Intelligence for the Competitive Edge. Lincolnwood, Review, Volume 11, Issue 3 (p 1-2). IL, Contemporary Publishing Company. Prescott, John (2001). Proven Strategies in Ericsson, R. (2004). Building Business Competitive Intelligence: Lessons from Intelligence Applications with.net, the Trenches. New York, NY: John Herndon, VA: Charles River Media. Wiley & Sons, p. 2. Erikkson, I., McFadden, F. (1993). Quality Riemenschenider, B. C., Hardgrave, F. D. function deployment: A tool to improve (2002). Exlaining Software Developer software quality. Information and acceptance of methodologies. IEEE Software Technology, 35(9), 491-498. transactions on Software Engineering, Fenton & Pfleeger (1997). Software 28, 12, pp. 1135-1145. Metrics: A rigorous and Practical Soe-Tsyr Yuan and Ming-Zeng Huang Approach, PWS Publishing Company. (2001). A Study on Time Series Pattern Fuld & Company intelligence report, 2006- Extraction and Processing for 2007, available at www.fuld.com Competitive Intelligence Support, Gartner (2007). Business Intelligence Expert Systems with Applications, Vol. Market Will Grow 10 Percent in EMEA 21(1), P. 37-51. in 2007. Retrieved 2008-04-15, from Solberg Søilen, Klaus (2005). Introduction http://www.gartner.com/it/page.jsp?id=500 to Private and Public Intelligence. Garvin, D. (1984). What does product Studentlitteratur: Lund quality really mean? Sloan Thierauf, Robert J (2001); Effective Management Review, 24. Business Intelligence Systems Westport, Gibbs, W. W. (1994). Software’s chronic CT, USA: Greenwood Publishing crisis. Scientific American, 271(3), 86- Group, Incorporated 95. Turban, Jay Aronson, Ting-Peng Liang Gilad, B. (1998). What is intelligence and Ramesh Sharda (2007); Decision analysis? Part II. Competitive Support and Business Intelligence Intelligence Magazine, 1(3), 29–31. Systems, Pearson Education. Gilad, B & Gilad, T. (1985). A systems Van Grembergen, Wim (2001). approach to business intelligence, Information Technology Evaluation Business Horizons, 28(5): 65-70 Methods and Management. Hershey, Herring, J. P. (1993). Institutionalizing PA: Idea Group Publishing, p 6. Our Profession. Competitive Vriens, Dirk Jaap (2003). Information and Intelligence Communications Technology for Review, Vol. 4 (2-3), 86-88. Competitive Intelligence. Hershey, PA: Keith G. (2006). The Forrester Wave™: Idea Group Inc., p 2. BI Watson, H. J. (2005). Sorting out what’s Reporting and Analysis Platforms, Q1. New in Decision Support. Business Michael C. O’Guin, Ogilvie, T. (2001). Intelligence Journal. The Science, Not Art, of Business Intelligence. Competitive Intelligence Review, Volume 12, Issue 4 (p 15-24).

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How application integration, security issues and pricing strategies in business intelligence shape vendor differentiation

Klaus Solberg Søilen*, Anders Hasslinger** *Department of Management Blekinge Institute of Technology Sweden [email protected]

**Department of Economics Kristianstad University College Sweden [email protected]

Abstract This paper is investigating, through a mixed-method research combining interviews and an online survey, how BI vendors differentiate themselves when it comes to application integration, security issues and pricing strategies. The conclusion is that BI vendors differentiated themselves mainly by having individual definitions of what BI is. Buyers should therefore compare vendors through the vendor’s definition of Business Intelligence. Security issues were mainly user centric and pricing strategies implied that vendors approach buyers in a similar way where they offered standardized software bundles that could require some degree of customization in order for the buyer to derive the maximum benefit from the applications. It can be deduced from the obtained results that the most competitive BI vendors are acting more homogenous towards buyers when they offer their products and handle customers, compared to niche BI vendors. Keywords: Business Intelligence, Software production, Application Integration, Pricing Strategies, Security Issues, Definitions, Context

Introduction sometimes even hardware applications, as well as associated products, it is difficult to Making the right decision has always been overlook these aspects and solely focus on of major importance within any strategic BI. Business Intelligence is a discipline field. Businesses are constantly under which overlaps with other subjects such as pressure to make the right decisions. Business Performance Management Having the right information timely at (BPM), Customer Relation Management hand is crucial for maintaining a (CRM), Decision Support Systems (DSS) competitive position in the market. In this and Knowledge Management (KM). paper we study the BI vendors. The core of The overall objective of this paper is to the study focuses on vendor differentiation, account for how vendors chose to although implications may be drawn for differentiate themselves in what has clients. Furthermore, as most of the larger evolved into a homogenous business vendors cover a huge area of soft- and

ECIS 2009 ‐ 255 ‐ PROCEEDINGS environment. The focus of the industry lies Intelligence vendors. The Magic Quadrant in distinguishable differentiation in terms for Business Intelligence Platforms report of pricing strategies, application issued by Gartner Inc., an American based integration and security issues. This paper IT research and advisory firm, also provide does not intend to identify the individual insights into the BI market and which differentiation strategies of single vendors. vendors are relevant. The program used to The aim is rather to generalize the findings create the questionnaire was eVal. across the BI market. The research questions will provide answers to the title and are limited within Description the context. They are as follows: Data collection in this research is Q1. How versatile in respect to data exchange and integration are BI products today? conducted partly through one deep Q2. What are the major information security issues interview with Oracle, followed by eight associated with BI products today? completed online-questionnaire from Q3. How do BI vendors chose to differentiate themselves from their main competitors? vendors. Q4. What pricing strategy do BI vendors pursue? The questions asked in the interview are Q5. What are the main reasons for customer rejection? the same as in the questionnaire, but leave Q6. What clients, servers and databases does the more room for discussion and depth. The BI platform support? interview was possible, using a digital Q7. How importantly do vendors view customer needs for a complete solution? recording device. Hence, the data collected Q8. Where do BI vendors see their competitive through the online-questionnaire and the advantage? interview is considered to be primary Q9. Where do BI vendors see their future opportunities and threats? sources of data. Secondary sources of information come in form of books and journals. Contextual framework Table 1 – List of Participants According to Howson [2008] Business Intelligence is a set of technologies and Vendor Participant Country Method processes that allow people at all levels of Oracle Director BI Sales GER Interview Consulting an organization to access and analyze data. EMEA Loshin [2003] uses the definition of The SAP Product GER Online Data Warehousing Institute to define BI as Management Survey “The process, technologies, and tools Micro EMEA Marketing USA Online needed to turn data into information, Strategy Director Survey information into knowledge, and TIBCO European USA Online knowledge into plans that drive profitable Manager, Survey Technical Sales business action. Business Intelligence Traction President and Co- USA Online encompasses data warehousing, business Software founder Survey analytic tools, and content/knowledge Astragy Marketing NED Online management.” [Loshin 2003, 6]. Director Survey Business Intelligence may however be SAS Academic Sale SWE Online defined in many ways. Often vendors Institute Survey “craft” their own definition to show their QlikTech Country Manager SWE Online tools in the best possible light [Langit Survey 2007]. There are often not only different Microsoft Marketing SWE Online definitions of BI, but different terms are Manager BI Survey used to describe Business Intelligence. Thus BI is often wrongly referred to as The BI vendors that were included in the Competitive Intelligence (CI), Business research are presented abow. Performance Management (BPM), The population was defined as a result Executive Information Systems (EIS), of an internet based research on Business

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Management Information Systems (MIS), analyzing business processes and systems Business Information System (BIS) or that drive business performance to achieve Decision Support System (DSS) to name a maximum value [Blansfield 2003]. Indart few. [2006] concludes that performance It is vital to distinguish between the management solutions are more process- differences in terminologies. E.g. orientated. Lee & Dale [1998] conclude according to Clifton and Sutcliffe [1990], that BPM could be considered a customer- DSS support the decision-making process focused approach to the systematic and is most effective at calculating risk, as management, measurement and for example probability situations, where improvement of all company processes the manager is faced with a number of through cross-functional teamwork and alternative choices. DSS enables managers employee empowerment. Bose [2005] to retrieve information ad hoc and as claims that BPM is a combination of straightforwardly as possible in order to planning, budgeting, financial facilitate decision-making. consolidation, reporting, strategy planning, Executive Information Systems (EIS) and business scorecard tools. Specifically, are a function of a DSS, as they provide BPM helps operational BI decision making decision support to management, with become more proactive and timely, and information retrieval powerful display support a wide range of business users capabilities for business graphics, and [Ballard et al. 2005]. Therefore with communications. Thus the term EIS may regards to the analytical capabilities, one be seen as an old fashioned term to could argue that BI is a part of BPM. As describe today’s digital dashboards, which Bose [2005] points out, Menninger are also often described under concluded that “most vendors do not offer Management Information Systems (MIS). the full set of these components, so they An Enterprise Resource Planning (ERP) adjust their version of the definition to suit system could be described as the backbone their own product set” [Bose 2005, 50]. It and perhaps basic IT system in an could also be argued that MBP is so wide a organization. The creation of ERP-systems term it risks to become equivalent to terms integrates all the functional areas of an like Management, which at the end can organization. Although ERP-systems can come to mean all that managers do within integrate all business transaction data, it is the private organization. An overview of not a system for data analysis. These the definitions is presented below: transactional systems, however, do not meet management’s needs to discover Table 2 – List of Definitions trends and patterns for performing optimized and effective decision-making. Abbr. Term Definition BI Business A umbrella term referring to the ERP-systems are designed to record and Intelligence technical side within private intelligence and the process of manage business transaction data. If BI collecting, processing, analyzing and and ERP are integrated, they contribute disseminating intelligence BPM Business A framework for automating, with additional value to the organization, Performance organizing, and analyzing business Management processes and systems that drive which may be used to enhance ERP- business performance to achieve systems. In contrast, analytical BI systems maximum value CI Competitive A umbrella term referring to the are designed to examine large volumes of Intelligence managerial side of private intelligence data as a foundation for decision-making DSS Decision Computer-based information [Chou, Tripuramallu, & Chou 2005]. Support systems that support decision- System making activities by presenting Business Performance Management alternative choices EIS Executive Computer-based information system (BPM), also known as Enterprise Information providing easy access to both System internal and external information Performance Management (EPM), is a relevant to meeting the strategic framework for automating, organizing, and goals of the organization on a graphical user interface. Sometimes

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referred to as to digital dashboards EPM Enterprise See BPM into which BI often finds its way, Performance especially when gathering data about Management ERP Enterprise Enterprise-wide information system customers such as through CRM. At the Resource designed to coordinate all the Planning resources, information, and activities end what should decide what term is used needed to complete business for each study or specialization is if it can processes such as order fulfillment or billing. be clearly defined and thereafter its usefulness. The two most related terms are BI and CI. Defining the differences between BI and Application Integration CI has caused considerable debates Within the context of enterprise systems, between practitioners and academics there is no single definition what [Wright & Calof 2006]. The term has integration entails. General consensus lays become clearer now that the impact of the within the description that integration technology side has become more evident. makes applications work together that E.g. Solberg Søilen [2005] points out that “were not intended to work together by Business Intelligence relates to the passing information through some form of technical side whilst Competitive interface” [Gulledge 2006, 5]. Companies Intelligence relates to the managerial side that implement a BI solution often have an within private intelligence. A logic existing ERP-system from which they overview of the most important terms is obtain the transactional data which is used presented in a Venn diagram below (white for analysis. It automatically becomes an background indicates IT based): important issue how well the systems work together. Howson [2008] states that, historically, companies had to buy multiple Figure 1 – Logic of Terms BI front-end tools from different vendors, because no single vendors offered the full spectrum of tools. According to Howson [2008], as an example Microsoft Office Excel is sometimes referred to as the leading BI tool for creating spreadsheets. Hence, the importance of offering integration to applications such as the Microsoft Office Series or similar products with widespread usage. From a customer’s point of view BI

projects should be funded based on a Another question which often arises is the projected Return-on-Investment (ROI) one about Knowledge Management (KM) [Hedgebeth 2007]. On the other hand, Fuld and how it should be treated in respect to [1991] argue that companies should not BI. Knowledge Management deals with the make an intelligence program a strict ROI process of creating value from an issue. Yet, BI is often ROI driven. organization’s intangible assets [Liebowitz Companies that implemented ERP 1999]. BI has more practical problem solutions and that were unable to justify solving features, whilst KM more ROI for ERP implementation, were encompasses the realization and sometimes implementing BI software since preservation of knowledge. Solberg Søilen BI enhanced the utilization of the argues that all subjects dealing with enterprise data [Chou et al. 2005]. information and knowledge may be Security Issues gathered under the term Information Management. Marketing is also an area

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There are several threats to computer [Rasmussen et al. 2002]. However, IT security which of course influence the security in general and BI security, are security of BI systems. Sanderson and much broader topics than what has been Forcht [1996] show that there are a number suggested here. of intruders that pose threats for a number Role-based security usually has roles of different reasons. Examples are foreign defined for different levels of intelligence services, organized crime, responsibility within an organization. terrorist organizations, industrial espionage Rasmussen et al. [2002] describe role- agents, private investigators, and based access as associating a user ID with information brokers who illegally sell a role which has certain restrictions for information as well as hackers. Security information visibility. Employees that fall threats to system structures are constantly into certain areas of responsibility then being added as the overlapping of become members of those roles. computers, resources and industries, Vendors often offer two types of referred to as convergence, integrates IT licenses: named-user licenses and infrastructures to provide more customers concurrent licenses. Named-user licenses through established lines. Sanderson and are purchased and assigned to specific end- Forcht [1996] argue that, “threats to users, whilst the concurrent user licensing companies through convergence have a structure provides a specific number of great range” [Sanderson & Forcht 1996, licenses that may be shared amongst a 33], involving anything from fraud, group of users [Bontis & Chung 2000]. For unauthorized disclosure of information, example, a business with two concurrent and unauthorized modification of sensitive licenses to an application that are set to information, to information brokering. three workstations can have two Computer fraud and abuse may involve employees using the application the accessing of computers without simultaneously. A third user is not allowed authorization or exceeding that and has to wait until one of the two users authorization to perform malicious acts logs-off. Some vendors also offer different against computing resources. Generally classes of users, for example a standard regarded as the biggest threat to an user and a light user license. The standard organization’s information resources, user is given full application access, whilst however, are insiders employees and the light user is given a restricted set of others in trusted positions with an features [Bontis & Chung 2000]. organization that have great access to It may also be a great advantage to information within the organization businesses making BI information [Denning 1999]. available to its employees across the Regarding BI, there are typically two internet. It may range from information major security areas discussed in the that is running on a secure connection to literature: role-based access and Internet information that businesses wish to make security. The first deals directly with the public. The advantage of using the internet employees and the second more generally is that it offloads all the infrastructural with computing. The two terms role-based responsibilities of an IT department, which access and Internet security are explained could stand for significant savings. The with greater detail below. downside is associated with security issues The weakest spot in a BI system may as the growing success of the Internet, also vary. The information in OLAP make it easier to invade corporate privacy structures is often very sensitive. The [Wright & Roy 1999]. sensitivity can range from highly Pricing Strategy confidential internal data to data that has a high level of intellectual capital investment

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In terms of B2B software pricing capital, the pricing of software often strategies, there is not a single perfect requires a more subjective approach. generic pricing model. In a case study, A recent study [Pricewaterhouse- Bontis and Chung [2000] conclude that Coopers 2008] shows that software vendor “vendors must understand the value they revenues are shifting from license fees to provide to customers and create a price maintenance fees. The study explains that structure that aligns pricing with value a consistent trend is the transition from realization, but more importantly facilitates large perpetual licenses to alternative their business objectives of the product and models that stretch payments over a period service.” [Brontis & Chung 2000, 246]. of time. Other vendors are finding greater Thus, it depends on the need of the buyer success by generating more revenue from that vendors align pricing with the buyers maintenance and support instead. product goals. Another trend that has emerged within Originally, as software ran on the software industry are Software-as-a- mainframes, it was priced according to Service (SaaS) solutions. SaaS is web- CPU speed. This pricing method, based on based software which is purchased on processing usage, did not consider the subscription basis and allows an needs of neither buyers nor vendors organization to shift almost all their [Bontis & Chung, 2000]. As software technological responsibility to the vendor architectures evolved through time, pricing [Lashar 2008]. models moved towards named and The SaaS model is an objective pricing concurrent user licenses. Named-user model based on transactions volume and licenses are purchased and assigned to usage. The adoption of a SaaS model, specific end-users, whilst the concurrent however, eliminates most of the challenges user licensing structure provides a specific that occur with product installation and number of licenses that may be shared allows firms to optimize their resource amongst a group of users. Bontis and allocation. [Bhingarde et al. 2008] Chung [2000] explain that the price Lashar [2008] also states that SaaS can structures, associated with concurrent be a compelling option especially for licenses, charge customers according to larger business if the need for their peak user predictions. A software standardization, data centralization and BI vendor is, therefore, looking for both exists as opposed to the need for revenue maximization as well as market differentiated functionality within the share as concurrent licenses are accessibly organization or specialized functionality; from a corporate site. in which case, SaaS would not be an Additionally the license time is of option. importance. The possibility to offer a Results perpetual license, that is one that continues indefinitely [Bennet & Kosc 2002], or a The overall objective of the paper was to term license, one which is limited in time account for how vendors chose to and can be renewed are important and differentiate themselves in terms of pricing common possibilities for vendors to charge strategies, application integration and its buyers. Other possibilities are for security issues. Nine research questions example rental or leasing, where there are were set of which eight could be answered. no boundaries set to the payment or pricing One research question could only be options. Hence, as concluded by Bontis answered partially, but is viewed upon as and Chung [2000], software development not answered. is an output of a programmer’s intellectual

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The study collected data from a BI suggested in the table and the Venn model vendor population that what was set to one above, can help avoid this. deep interview and 27 vendor There was no clear reason to why questionnaires. Out of these 27 a total of 9 potential customers, such as customers that vendors completed the questionnaire, are in negotiations with several vendors, which can be said to have been expected would reject (Q5) a vendor. One reason given that no financial remuneration was was that the vendor perhaps did not fulfill offered. the client’s needs, but not what the The areas of application integration

(Q1), security issues (Q2) and pricing strategy (Q4) can be summarized within Issues this research to the BI market as that Strategy application integrated easily. The research question, what clients, servers and Security databases does the BI platform support Pricing (Q6), could only be answered fully. The reason for this is that the received answers Application Integration could not be organized to support any general conclusions. Due to the way the question was phrased, the research Differentiation question remains unanswered. Security issues (Q2) were mainly user centric and pricing strategies (Q4) implied that vendors approach buyers in a similar way Figure 2 – Contextualization of contiguity within where they offered standardized software applied field of study bundles that could require some degree of underlying reasons were. Due to the customization in order for the buyer to received answers, it can be said within this derive the maximum benefit from the context that vendors generally did not applications. It can be deduced from the know the specific reasons. obtained results that the most competitive Most vendors saw that their competitive BI vendors are acting more homogenous advantage (Q8) was that they were able to towards the buyers in the way they offer offer the customer a complete BI solution their products and handle customers, (Q7) within the entire spectrum of BI compared to niche BI vendors. applications, or that they were focusing on An implication that can be drawn for niche areas such as Traction Software. Not buyers from the obtained results is that many vendors chose to answer the question buyers should carefully look at what they where they saw their future opportunities want to do with a BI system and find a and threats (Q9). Those that did, however, vendor that has a definition of BI similar to delivered some interesting market insights. the buyer’s vision. The bigger BI vendors clearly saw their More importantly BI vendors chose advantage in working with the full mainly to differentiate themselves (Q3) spectrum of BI tools and possibilities. through their individual definition of how Most vendors did not see any threats, or at they define BI, as also stated by Howson least did not state them. One stated that it [2008], to create a definition that best suits did not see any threats, but rather their products. We could call this the opportunities whilst another feared low- Selling Theory of the Business Intelligence end competition from generic tools such as label. Hopefully a clearer difference at to offered from Google and Microsoft. Most the meaning of the terms used, as opportunities were seen in making BI available across an entire company and

ECIS 2009 ‐ 261 ‐ PROCEEDINGS thereby moving more towards operational Networking Applications and Policy, BI. Oracle saw huge opportunities for BI Vol. 10 No. 3, pp. 246-255. for the future as the demand for decision Bose, R. (2006). Understanding making based on intelligence obtained management data systems for enterprise from data is increasing. Further Oracle performance management. Industrial points out the possibilities that are Management & Data Systems, Vol. 106 emerging within RFID. Regulatory No. 1, pp. 43-59. changes make it possible for data to be Chou, D. C., Tripuramallu, H. B., & Chou, stored even longer and be used for A. Y. (2005). BI and ERP integration. analytics. TIBCO saw opportunities within Information Management & Computer pervasive BI, by optimizing today’s BI Security, Vol. 13 No. 5, pp. 340-349. environment and responding to the Clifton, H. D., & Sutcliffe, A. G. (1990). emerging demand from this convergence Business Information Systems. Hemel to make decision making available in real- Hempstead, Hertfordshire, UK: Prentice time within the right context to any Hall. specific business process. Traction Denning, D. E. (1999). Information Software looks towards a Web 2.0-style Warfare and Security. Addison-Wesley: integration with ERP software, in the New York. context of product development and Fuld, L. (1991). A Receipe for Business manufacturing, with BI through human Intelligence Success. The Journal of analysis, dissemination and issue tracking. Business Strategy, pp. 12-18. Astragy saw possibilities within SaaS and Gulledge, T. (2006). What is integration? SAS Institute within analytics while Industrial Management & Data Microsoft expected future opportunities are Systems, Vol. 106 No.1, pp. 5-20. to be found in making BI available to Hedgebeth, D. (2007). Data-driven everyone within an organization. decision making for the enterprise: an overview of business intelligence References applications. VINE: The journal of Ballard, C., White, C., McDonald, S., information and knowledge Myllymaki, J., McDowell, S., Goerlich, management systems, Vol. 37 No. 4, pp. O., et al. (2005). Business Performance 414-420. Management...Meets Business Howson, C. (2008). Successful Business Intelligence. North Castle Drive Intelligence - Secrets to Making BI a Armonk: IBM Redbooks. Killer App. Columbus, OH: McGraw- Bennet, M. P., & Kosc, J. (2002). The Hill. Basics of Software Licensing. Journal Indart, B. (2006). Operationalizing of Investment Compliance, Vol. 2, No. Business Intelligence - Turning Insight 4, pp. 18-29. into Action. Business Intelligence Bhingarde, N., Arora, H., & Simon, E. Journal, Vol. 11 No. 2, pp. 35-38. (2008). SaaS and Corporate Actions. Langit, L. (2007). Foundations of SQL Wall Street & Technology, Vol. 26, Server 2005 Business Intelligence. No.1, p. 36. Berkeley, CA: Apress. Blansfield, D. (2003). A New Urgency. Lashar, D. J. (2008). Are You Ready for Business Performance Management, pp. SaaS? Customer Relationship 4-5. Management, Vol. 12, No. 2, pp. 12. Bontis, N., & Chung, H. (2000). The Lee, R. G., & Dale, B. G. (1998). Business evolution of software pricing: from box process management: a review and licenses to application service provider evaluation. Business Process models. Internet Research: Electronic Management Journal, Vol. 4 No. 3, pp. 214-225.

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Liebowitz, J. (1999). Knowledge Intelligence. New York: John Wiley & Management Handbook. Boca Raton, Sons, Inc. FL: CRC Press LLC. Sanderson, E., & Forcht, K. A. (1996). Loshin, D. (2003). Business Intelligence - Information security in business The Savvy Manager's Guide. San environments. Information Management Francisco: Morgan Kaufmann & Computer Security, Vol. 4, No. 1, S. Publishers. pp. 32-37. PricewaterhouseCooper (2007), Software Solberg Søilen, K. (2005). Introduction to Pricing Trends: How vendors can Private and Public Intelligence. Lund, capitalize on the shift to new revenue Sweden: Studentlitteratur. models, Retrieved June 20, 2008, from Wright, S., & Calof, J. L. (2006). The http://www.pwc.com/ quest for competitive, business and Rasmussen, N. H., Goldy, P. S., & Solli, P. marketing intelligence. European O. (2002). Financial Business Journal of Marketing, Vol. 40 No. 5/6, pp. 453-465.

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Operational Business Intelligence: A Viable Concept

Matthijs van Roosmalen Nijmegen School of Management Radboud University Nijmegen The Netherlands [email protected]

Abstract This position paper seeks to conceptualize operational business intelligence (OBI) from two perspectives: the product view and the process view. In doing so it presents a holistic, non-IT biased overview of the current body of knowledge on OBI and places this in a wider context of related disciplines. The end-results are definitions of OBI form both perspectives, with the OBI cycle as a new way of viewing the operational intelligence process. This facilitates future research into OBI as well as the deployment of OBI activities to support operational decision making and continuous adaptation. Keywords: Business Intelligence, Competitive Intelligence, Operational Business Intelligence

1 Introduction BI is both a product and a process [Vriens & Philips, 1999]. As a process it Operational business intelligence (OBI) is consists of a number of activities an emerging field where business ultimately producing the product intelligence (BI), traditionally aimed at intelligence from relevant developments in strategic decision making, is deployed in the environment. The same is true for OBI, an operational setting. It has attracted the and to understand and define OBI fully it is attention of both academics and necessary to explore both the process and practitioners due to both the proliferation the product perspectives. of new technologies and the business needs The goal of this position paper is to arising from a volatile and competitive fulfill this need by conceptualizing OBI as business environment. both a product and a process. The resulting Despite this growing interest in OBI, definitions and budding body of there is a lack of a comprehensive knowledge will allow more focused overview of currently existing literature, as research into this emerging topic. They well as a usable working definition. Some also highlight some relationships with authors have contributed relevant work, in other fields of study, encouraging BI as well as related disciplines that can be interdisciplinary research as well as typified as operational without labelling it practical considerations for BI OBI. As such the body of knowledge is professionals. fragmented and future research is hindered To do this, in the next paragraph an by lack of clear definitions. intuitive understanding of OBI will be

ECIS 2009 ‐ 264 ‐ PROCEEDINGS developed in order to start the discussion. environmental data and applyig it in the An overview of related work is presented context of organizational needs, not in paragraph 3, positioning OBI in a wider focusing exclusively on the supporting context. The next two paragraphs discuss technology. According to Vriens [2004], OBI as a product and as a process, this is in line with historical use of the term constituting the main body of the paper. BI, before it came to be used by the Finally, paragraph 7 summarizes the software industry to refer to a specific set findings and gives some suggestions for of IT tools. further research. 2.2 Operational vs. Strategic 2 What is “Operational” BI? The traditional consensus regarding BI, as This paragraph will elaborate the concepts hitherto discussed, is that it is largely central to this paper. Before OBI can be focused on strategy formation. When we discussed and defined, it is essential to consider OBI, we refer to the discipline of develop an understanding of what BI applied to the operational level of the ‘operational’ and ‘business intelligence’ organization rather than the strategic. mean in the context of this paper. Also an Before we can proceed to define OBI, intuitive sense of what OBI’s goals are in either as a product or as a process, it is relation to non-operational BI helps to imperative to understand what preciselt we position the discourse ahead. mean with the word ’operational’ in this context. 2.1 Business / Competitive Intelligence A common trichotomy in management The literature on BI is diverse and has been divides the structure of an organization the subject of several studies, revealing a into roughly three basic levels: strategic, multitude of perspectives and definitions tactical and operational. The strategic level [see e.g. Jourdan, Rainer, & Marshall, is concerned with setting the overall goals 2008]. Some authors focus almost entirely and course of the organization, while the on IT systems when they refer to BI, operational level is where the actual meaning systems used to store, process and execution of the strategy takes place. The analyze data. They reserve the term intermediary tactical level is usually seen competitive intelligence for the discipline, as translating the overall strategy into activity or process of gathering external concrete activities and guiding these data and generating intelligence from this acivities. data [e.g. Kahaner, 1997; Tyson, 1998; In OBI, we have business intelligence Fleisher & Blenkhorn, 2001]. that is focused on the operational level in Other authors have described competitive terms of goals and applications. This does intelligence as synonymous with business not mean that the data sources are located intelligence [Vedder, Vanecek, Guynes, & here, or that it has no consequences for Cappel, 1999] or as subset of business other levels of the organization, but simply intelligence [Negash & Gray, 2008]. Often that it serves specifically the needs of the they distinguish between data gathered operational level. It is argued in this paper from within the organization itself, and that this requires very different intelligence that which originates in the external compared to the strategic level, as well as a environment [Philips, 2005]. spcialized process. Regardless of which of these views is more Non-operational BI may also be appropriate, the object of this paper is not referred to as ‘traditional’ or ‘strategic’ BI. to get involved in this terminology debate. This does not imply that OBI is a more Instead it is simply established here that advanced form of BI or should be pursued we use the term business intelligence to completely separately. It is simply a indicate a holistic approach of gathering specialized variant that should ideally be

ECIS 2009 ‐ 265 ‐ PROCEEDINGS part of an integrated whole of BI and other more interested in real-time information functions supporting organizational about the daily activities on the floor. decision-making. These decisions are set within the constraints laid out by the overall 2.3 Goals and Applications organizational goals and the available What sets OBI apart from non-operational, resources allocated by higher management strategic BI is exemplified through its [Beer, 1981]. goals and applications. The demands of the Operational decisions govern the operational activities are different from improvement and adaptation of the those of strategic decision making, and as operational activities. OBI must support such present a different environment for BI these functions by providing the relevant activities. intelligence. As posited by Babbar and Rai The operational level is rich in interfaces [1993], “competitive intelligence gathered with the environment [Aldrich & Herker, through continuous scanning should form 1977] that span the boundaries of the the basis for changes on the operational organization. Sahay and Ranjan [2008] list level that drive continuous improvement”. four core groups of data sources for OBI, This continuous scanning through OBI of which three are in the external supports a wide range of decisions which environment: may directly influence the way the • Employees organization positions itself vis-à-vis the • Suppliers environment. An example may be the • Customers monitoring of procurement and sales on a • Partners daily basis, enabling the organization to This environment today is characterized constantly adapt its business processes and by a high degree of uncertainty and rapid produce personalized products [Cingil, change, becoming ever more turbulent for Dogac, & Azgin, 2000; Adomavicius & organizations to navigate [Zohar & Tuzhilin, 2005] or provide Morgan, 1996]. Forces such as recommendations to customers as a form globalization, changing demographics, of flexible marketing [Sahay & Ranjan, demanding consumer markets, 2008]. technological innovations and increasing The performance of the operational environmental concerns are driving this processes can also be watched and turbulence [Laudicina, 2005]. improved by using BI methods focused According to Sadiq, Marjanovic and inwards at the operational level itself Orlowska [2002], this turbulence is [Marketos, Kotsifakos, & Theodoridis, manifested in the form of ”changing 2007]. This internally focused application process requirements and time of OBI borders closely on the discipline of constraints” for the operational activities. peformance management. Such related Coping with these changing requirements areas will be discussed in the next and constraints drives the case for OBI. In paragraph. particular the operational processes require 3 Related Work more flexibility, under highly demanding time constraints. There is much research in areas of BI that This reflects a critical difference relate to operational activities, contributing between OBI and non-operational BI. to the development of a compehrensive Operational management needs different body of work regarding OBI. Other information to support its decisions than disciplines focused on the operational level strategic management does [Marketos, that somehow involve processing Kotsifakos, & Theodoridis, 2007]. They information or benefit from the supply of depend less on historical data, and are information from the organizational

ECIS 2009 ‐ 266 ‐ PROCEEDINGS environment, are also relevant to performance of the operational activities. developing OBI. This paragraph outlines Integrating these two sources produces a some related work that is relevant in the complete picture of the organization’s context of this paper. internal performance and external threats Of particular note to OBI is research into and opportunities, supporting decision evolving BI practices to make it more making on all structural levels. agreeable to the operational level, such as Another class of related disciplines reducing latency. Real-time BI has concerns the management of the received a large amount of attention in operational activities themselves and recent literature [e.g. Weiss & Verna, performing regulatory actions to control 2002; Jeng, Schiefer, & Chang, 2003; them. OBI can provide the intelligence Nguyen, Schiefer, & Tjoa, 2005; Seufert & required to support such actions, and is Schiefer, 2005], due to trends such as the therefore closely linked to this class of increasing environmental turbulence and disciplines. the business demand for actionable The integration of BI with such information from analytic applications approaches as business process using real-time business performance data, management (BPM) and business rule exactly when and where it is needed. management (BRM) has already been According to Azvine, Cui and Nauck proposed (e.g. Golfarelli, Rizzi, & Cella, [2005], real-time in this context can mean: 2004; Marjanovic, 2005; Coenen, the requirement to obtain zero latency Hermans, van Roosmalen, & within a process Spreeuwenberg, 2008). OBI is thus said to that a process has access to information close the ”execution gap” between having whenever it is required the information available and acting upon that a process provides information it directly [Keziere, 2006]. This is also whenever it is required by management commonly refered to as ’sense-and- the ability to derive key performance respond’ [Schiefer & Seufert, 2005] and measures that relate to the situation at the seeks to increase the flexibility and speed current point in time and not just to some with which the operational processes can historic situation respond to impulses from the environment. Despite the recognition of multiple As Marjanovic [2007] notes, the above levels of BI [see e.g. Hussey & Jenster, strongly favors an intimate relationship 1999, p. 5], it has historically been focused between OBI and business processes. largely on the strategic domain. Other Some work to elaborate this relationship disciplines have been developed has been done under the monicker specifically for information management at ’business process intelligence’ [e.g. Casati, the operational level. These may include a Dayal, Sayal, & Shan, 2002; Grigori et al., real-time element for continuous 2004]. This is essentially part of OBI, and monitoring. OBI introduces an outward contributed to establishing the process looking process, focused on generating view as outlined in a later paragraph. actionable intelligence from data regarding As a final note we briefly turn towards relevant environmental developments. the issue of IT support. Examples of OBI A relevant field for synthesis in this supporting technologies include text- and area is corporate performance management data mining, BAM dashboards, rule (CPM), as both OBI and CPM have an engines, case-based reasoning and other operational focus and affinity for real-time tools implementing various AI algorithms processing [Ballard, 2005]. Whereas OBI and statistical analyses. Since this paper is predominantly targets the business not about discussing such tools, no specific environment for relevant information, examples will be discussed here, but CPM collects internal data about the various practical studies can be found in

ECIS 2009 ‐ 267 ‐ PROCEEDINGS the literature [e.g. Haake & Wang, 1999; to be interpreted; given meaning. When the Weiss & Verma, 2002; van Dongen et al., data has been interpreted, the observer can 2005; Azvine, Nauck, Ho, Broszat, & Lim, decide whether it is meaningful and 2006; Coenen, Hermans, van Roosmalen, whether action is required. All of this takes & Spreeuwenberg, 2008]. place within the context of existing knowledge. This is the case regardless of 4 The Product view of OBI whether the system in question is an In defining intelligence as a product, some individual or an organization. authors refer to the ‘information’ or When applied to organizations and BI, ‘knowledge’ obtained and used for the knowledge in this model refers to strategic purposes somewhat vaguely [e.g. strategic knowledge; that is knowledge Gilad & Gilad, 1988; Fuld, 1995; Kahaner, contributing to the process of strategy 1997]. The origin of the term as such goes formation, the strategic decision-making back to it’s military meaning [Kahaner, process. The actions taken are strategic 1997]. Intelligence as a product is defined by Greene as “processed information, relevant to management, about the current and future environment in which the organization operates” [Greene, 1966]. A more specific model to put intelligence in the Figure 1 This model positions operational intelligence in the context context of of the decision making process. organizational decision making and clarify its conceptual relationship with the concepts actions, and the process leading up to those of data, information and knowledge, is actions takes place in the context of given by Vriens [2004]. This model arises strategic knowledge. In this context, the from the functional definition of information received is what we mean by knowledge as “that which serves as a intelligence. This is information that has background for assessment of signals, i.e., been collected and interpreted in the perceiving, interpreting and evaluating context of strategic knowledge, with the signals, and as a background for purpose of contributing to strategic performing actions, i.e., articulating, knowledge and the strategic decision selecting and implementing actions” making process. Intelligence is the result [Achterbergh & Vriens, 2002]. It states of the perception and interpretation of data that an individual, or more generally a collected in a strategic context, and feeds system, takes in signals from its into strategy formation, which ultimately environment (input) and performs actions leads to strategic action. (output) that influence this environment In the same vein, the model can be used Perceived signals, representing data to position OBI. Figure 1 shows it in this from the environment, are informative to form. As a product operational intelligence the observing system when they produce it is very similar to the intelligence in ‘something new’ [Vriens, 2004]. To strategic BI. The difference between the determine whether they do this, they need operational and the strategic manifests itself in the following three ways.

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Firstly, the context in which the data is operational process, possibly but not interpreted is the operational perspective. necessarily through IT tools that automate From this viewpoint, more detailed decision-making, is an example of what information regarding daily operations is den Hamer [2005] refers to as closed loop. relevant. The people involved in this It is also what Keziere [2006] refers to as interpretation of data will also have more closing the “execution gap” between detailed and specialized knowledge about collecting data and taking action based the operational environment. upon this input. Secondly, this knowledge forms the This direct involvement with execution background for the perception and blurs the line between OBI and disciplines interpretation of signals and the generation associated with controlling and automating of actions. It can be referred to as processes mentioned in the previous ‘operational knowledge’. It is fed by paragraph. For instance, Golfarelli, Rizzi operational intelligence which is the result and Cella [2004] view the closed loop as of interpreted data, and is used in all steps an essential component of a BI setup at the of the action generating process. operational level. This requires that Thirdly, these actions are operational organizations integrate their intelligence rather than strategic, and thus only infrastructure with the operational business operational options are formulated. The processes [Marjanovic, 2007], which has emphasis is on actions affecting the consequences for the intelligence process operational domain, which can be carried itself. out immediately, but exceptional situations 5 The Process view of OBI may also be found which require an action that consists of reporting the situation to When viewing OBI as a process, we are higher management. referring to the process that produces the The product of OBI, operational product of intelligence, as described in the intelligence, can now be defined. Based on previous paragraph. This process consists the contextual model discussed above (fig. of a series of activities or tasks that 1) we propose the following functional ultimately produce intelligence from raw definition: data concerning relevant environmental developments. Operational intelligence is information based on [external and internal] data, 5.1 The intelligence cycle interpreted from an operational Several authors have defined different perspective, relevant to operational numbers of activities in the BI process decision makers for taking actions. [e.g. Bernhardt, 1994; Kahaner, 1997; Den Hamer, 2005], but the most commonly A major difference in the way held view of the traditional BI process operational intelligence products manifest incorporates four key activities: themselves vis-à-vis more traditional BI Direction: determine the scope and the products, is the way they are presented. information need Whereas BI produces information Search: conduct search activities to primarily in reports and scorecards, collect data disseminated through mailings and Analysis: interpret data and synthesize reporting structures, OBI needs to provide findings into intelligence more real-time information and is directly Dissemination: distribute and apply the concerned with how this information is put intelligence into practice [Seufert & Schiefer, 2005]. Together these four activities are The extreme case, where the commonly referred to as the intelligence information is fed directly into the cycle, because the BI process is typically

ECIS 2009 ‐ 269 ‐ PROCEEDINGS carried out in a cyclical fashion. It starts phases in turn. But first the nature of the with the direction phase, and a single actual OBI cycle needs to be established, iteration ends with dissemination which illustrates a key difference The cyclical nature provides the compared to the original intelligence cycle necessary opportunity to evaluate and concerning the way in which the process correct the process for future iterations. proceeds through it. The criteria for this evaluation are the This difference stems from the need for goals set in the direction phase regarding near real-time intelligence at the the information-need. If these goals were operational level [Golfarelli, Rizzi, & not met, this calls for regulation; either by Cella, 2004; Marketos & Theodoridis, improving the process itself or adjusting its 2006; Azvine, Cui, Majeed, & Spott, goals. If the goals were met, then a new 2007]. This requirement implies that the information-need can be determined for duration of a single iteration of the the next iteration of the cycle. As has been intelligence cycle will have to be shorter seen in the previous section, the than is the case in traditional BI. Whereas knowledge gained from the intelligence strategic BI might be served by going acts as a background for this new iteration. through the intelligence cycle once every The notion of a cyclical process few months, in OBI a matter of days or producing intelligence applies to OBI as even hours would be preferred. well. In an operational environment, the In this cycle, the speed at which four basic steps of the intelligence cycle intelligence is produced and applied is only are the same. The information need will as great as the sum of the time spent in all have to be determined, directing the search the different phases. The slower phases can activities that bring in data. This data will therefore introduce significant latency. The then have to be interpreted and the demand for greater speeds at the resulting information distributed and used. operational level requires that every phase This is all true for operational as well as of the OBI cycle is executed rapidly, strategic intelligence. The intelligence without a great deal of such latency [Sahay cycle is therefore a sensible departure point & Ranjan, 2008]. While BI technology can in grasping and defining the OBI process. be made to incorporate real-time analytics The precise nature of the activities that [Seufert & Schiefer, 2005], this is a lot make up the four phases of the original harder when people are involved in parts intelligence cycle is different for OBI. In of the process, which is almost always order to understand more precisely how the inevitably the case, as OBI actually OBI process differs from the traditional BI, directly involves more people than this paper will examine each of these traditional BI.

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Everyone involved in the execution of simultaneously, each with a different cycle the operational process is a potential time depending on the nature of the source of data, as well as part of the wider activities and capabilities of the agents audience for the intelligence. OBI tools involved. Completely automated cycles and methods have to be available to can, once directed, continue to iterate workers in the daily operations, rather than without human intervention until a a few people specifically selected for this predefined exceptional situation is reached purpose [O'Connell, 2007]. This is or humans decided to interfere and contrary to tactical and strategic BI, which redefine the information need [Grigori, is typically the domain of staff Casati, Dayal, & Shan, 2001].

Figure 2 The OBI cycle represents the process of OBI, producing operational intelligence and applying it either through automation or human dissemination functionaries and targeted at middle and Such a distinction between those upper management [Marketos & processes and rules which can be Theodoridis, 2006]. At least it is probably automated and the ones which have to be safe to say that the initial direction phase executed by humans is a vital part of will always have to be carried out by integrating business and IT systems, but humans, as even the most sophisticated IT needs to be approached from a holistic tools require some human input. perspective [Coenen, Hermans, van This suggests a duality in the Roosmalen, & Spreeuwenberg, 2008]. In implementation of the actions that are part taking such a process centric view as is of the intelligence cycle; between those preferred for OBI [Marjanovic, 2007], actions that can successfully be automated every operational process would be and those that are better carried out by supported by one or more unique OBI human beings. Conceptually this can be cycles. The direction phase should not be represented with a fork in the OBI cycle, neglected here because it always after the direction phase. Depending on determines which cycle is going to be run whether the agents carrying out the actions and how, and the coordination of all the are humans or IT systems, the remainder of direction phases provides the holistic the activities will be different. Multiple perspective required. instances of the BI cycle could then run

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Figure 2 schematically depicts the OBI may require distinct information. cycle as it has been described above. The Secondly, organizational knowledge on the light grey hue in some blocks represents operational level tends to be more activities carried out by humans, while fragmented due to specialization [Postrel, dark grey colored blocks are the domain of 2002]. The challenge this presents is to machines. The gradient blocks are shared coordinate the direction phase over by both. This creates the potential for a multiple different OBI cycles. double cycle, one of which contains The search phase is also similar. Like in exclusively automated activities. Note that the BI cycle, the OBI process draws on this cycle can only be entered once a both internal and external sources of data. direction phase has been initiated earlier. These sources have to be identified and The dotted line back to the direction phase then drawn upon, either by automatic data expresses the fact that certain machine- collection or by human search activities. generated exceptions or conscious human Since every person involved in the interference could break the automated operational process is a potential source of cycle. Which course is chosen for each data, they should be involved in the search situation depends on the needs and time- phase [O'Connell, 2007]. They may yield constraints, be they (near) real-time or less for example internal data about process critical. performance or external data regarding customers. A specialized IT infrastructure 5.2 Phases in the OBI Cycle may be necessary to support the fast What such a real-time automated OBI processing required by real-time OBI solution might look like is presented by [Nguyen, Schiefer, & Tjoa, 2005]. Nguyen, Schiefer and Tjoa [2007], who In the analysis phase, the time demands describe a loop that continuously: imposed by OBI are clearly visible. In observes and collects events from a order to achieve a rapid iteration of the business environment OBI cycle near real-time, analysis will converts the event data into meaningful have to keep up. This inevitably involves business information large amounts of computerized analysis, discovers and analyses business but also on-the-spot interpretation by situations and exceptions operational people [Seufert & Schiefer, automatically selects the most 2005]. If sufficiently advanced tools are appropriate actions for a response to the available, simulations of changes to business environment processes and business rules can be used to executes the business actions based on do what-if analyses as described by den the decision that has been made Hamer [2005]. The phases of the OBI cycle can be The final phase in the cycle is split clearly recognized in these activities as between disseminating to people and search (1), analysis (2 and 3), and automating using IT systems or machines. automation (4 and 5). The remainder of The reason for this has been outlined this paragraph will be devoted to briefly above. In the disseminating phase, the outlining these different phases of the OBI acquired intelligence is relayed to the cycle (fig. 2) in more detail. operational decision makers who defined The direction phase is much the same as the information need, and to all places for regular BI, since all forms of BI need to where it needs to be put into practice. This be directed based on a certain information can involve quite a large number of people, need. In an operational setting though, as everyone involved in the operational more people are likely to be involved in processes is potentially affected determining information need for two [O'Connell, 2007]. When the intelligence reasons. Firstly, each operational process can be put to use in automated changes to

ECIS 2009 ‐ 272 ‐ PROCEEDINGS operational processes, the interface with connecting the intelligence flow to the these processes is direct, without human execution, rapid changes and the interference. This allows for the shorter, continuous improvement envisioned by rapid cycle where certain automated Babbar and Rai [1993] can be achieved. operational processes react to continuous More interdisciplinary and holistic streams of intelligence concerning relevant research is needed in this area. events as described by Nguyen, Schiefer Future research should focus on further and Tjoa [2007]. developing and enlarging the body of knowledge about OBI, building bridges 6 Summary with related disciplines and attempt to This paper presented a discussion on form an integrated framework for operational business intelligence (OBI). supporting operational activities with OBI is concerned with generating environmental data. actionable intelligence regarding relevant As a first step the concepts discussed in developments in the environment for the this paper should be brought into practice, specific needs of the operational level of through case studies and field work organizations. Compared to non- validating the models and developing operational BI, these needs reflect some valuable guidelines for industry specific goals: practitioners. As more experience is gained • improve the quality of operational decision in the application of OBI, more refined making • increase operational flexibility models can be developed leading to a • enable the continuous improvement of better understanding of this emerging operational processes discipline. OBI has been defined as both a product and as a process, filling a knowledge gap 7 References in the current literature. Along the way this Achterbergh, J., & Vriens, D. (2002). revealed some crucial insights into the Managing Viable Knowledge. Systems nature of OBI that have consequences for Research and Behavioral Science , 19, practice and future research. 223-241. The nature of the operational activities Adomavicius, G., & Tuzhilin, A. (2005). and their relationship with a rapidly Personalization Technologies: A changing environment calls for real-time process-oriented perspective. or near-real time latency in the OBI Communications of the ACM , 48 (10), process. This may require parts of it to be 83-90. automated, which has far reaching Aldrich, H., & Herker, D. (1977). implications for the development and Boundary Spanning Roles and deployment of OBI solutions and tools. Organization Structure. The Academy of The OBI process is intimately related Management Review , 2 (2), 217-230. with the operational processes which it Azvine, B., Cui, Z., Majeed, B., & Spott, supports in improvement and flexibility. M. (2007). Operational risk Much more than non-operational BI is the management with real-time business product of OBI directly actionable. intelligence. BT Technology Journal , Because operational decisions can be taken 25 (1), 154-168. on a daily basis and directly affect the Azvine, B., Cui, Z., & Nauck, D. D. performance of the organization, the (2005). Towards real-time business intelligence that supports them has to be intelligence. BT Technology Journal , closely tailored to the local needs. 214-225. This calls for close integration with Azvine, B., Nauck, D. D., Ho, C., Broszat, disciplines such as BPM and BRM, which K., & Lim, J. (2006). Intelligent process are concerned with the control aspect of the operational process. By directly

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Weiss, S. M., & Verma, N. K. (2002). A system for real-time competitive market intelligence. Proceedings of the eighth ACM SIGKDD international conference on Knowledge discovery and data mining (pp. 360-365). Edmonton, Canada: ACM. Zohar, A., & Morgan, G. (1996). Refining our Understanding of Hypercompetition and Hyperturbulence. Organization Science , 7 (4), 460-464.

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ii From French :”Les banques françaises pourraient éventuellement être reprises mais ne présentent absolument pas ce risque, d’autant qu’elles sont très vigilantes vis-à-vis des risques. (...) La CNCE étant un établissement mutualiste et par conséquent absent du marché, je ne vois pas comment il pourrait être convoité.” iii From French :”L’extension des pratiques standardisées de gestion (aux entreprises mutualistes ou coopératives) tend parfois à effacer certains traits majeurs de la gouvernance démocratique.” (quotation from Cadiou et al, [2006]) iv From German : ”Wir müssen sprechen und handeln, als ob, was sich gewährt hat, sich auch heute und morgen wieder gewähren werde; als ob Kommunikation nicht unwahrscheinlich wäre; als ob Konsens herzustellen, normalerweise problemlos gelänge” (Underlined word in the original text) v Philippe Dupont, as Chairman of Natixis Executive Board [Natixis, 2008b, 5] From French : « Il est vrai que la crise est sévère, qu’elle va entraîner inévitablement des révisions stratégiques chez la plupart des acteurs, ne serait-ce que pour prendre en compte un environnement concurrentiel et réglementaire qui va se modifier. Pour Natixis, des ajustements devront intervenir, mais un certain nombre de lignes de force de notre projet stratégique ne changeront pas. (…) Les activités de banque de détail garderont un poids important (…) ». vi vi Adapted form old French :”Soudain (...) Panurge (...) jette en pleine mer son mouton criant et bêlant. Tous les autres moutons, criants et bêlants en pareille intonation, commencèrent soi jeter et sauter en mer après, à la file. La foule était à qui premier y sauterait après leur compagnon. Possible n’était les en garder, comme vous savez être du mouton le naturel, toujours suivre le premier, quelque part qu’il aille.”