This week was, for me, an extremely important turning point for the management of the company. Substantial issues concerning Intelligence were presented for the executive’s knowledge and consideration. The Meiners issue and the Strategic Intelligence/Tactical intelligence dispute are of vital importance to the company. Until now, these matters have generally been treated as a non-management issues. The view has been for many years that production takes care of itself and that sales and finance are what management is about. Without production there is nothing to sell, so it has seemed to me that executives in this company should be aware of the fact that these are vital issues. The re-organization of the executive team was intended to achieve this. We have.
On the Meiners hire. I urge you all to read, reread and commit to memory the Elder’s report that outlined this company’s strategy. The company spent many months developing that strategy and that is what guides us in all things. I have already said that it is important that you not think not only in terms of departments, but also in terms of the five strategic thrusts.
The issue that the report grappled with was the creation of value for the company and avoidance of risk. It was noted that revenue, by itself, does not create value if there is undue risk, and that the major risk to the company’s survival was the loss of even a small number of analysts. Therefore, the report set retention of analysts as a priority. All other positions can be hired in the marketplace, with greater or lesser difficulty. Analysts cannot be hired at Stratfor. They must be grown here and that takes years. The Elder’s report noted this and set as its goal the creation of a pipeline of analysts via the internship program. Therefore, the decision to act quickly to retain Meiners flowed directly from the Elder’s report.
Applying the Elders report to our work as executives is essential. The Report is not one of those documents that we just put out there and forget. It is the guide to how we run the company and make decisions. Working as hard as we did on it and then ignoring it is not going to happen. The report has five thrusts. Two are revenue related: building institutional sales and individual sales. Two are viability/value related: building the analytic staff and the monitoring system. One involves both revenue and value: business development. In deciding what to do in any particular case, let’s stop and see what the Elder’s report has to say.
Obviously, if there were a substantial shift in revenue, we would have to control costs. Revenue generation without mitigating the significant risk in the company would be a fall back position, but a very bad one. We have heard of Lauren’s health and hope that it improves. But it would not take a great many losses of analysts to cripple this company’s ability to make money. Generating revenue only to lose our ability to produce product is not a good idea. That’s why revenue generation was not the only thrust in the report.
Obviously, if the revenue situation deteriorates, survival comes ahead of value generation. However, I am not yet convinced we are facing that problem. Darryl’s report is a balanced analysis and from where I sit, it would be imprudent to shift strategies based on what we have seen to this point. We have had friction, but not yet cracking, and it is my expectation that Aaric is going to working his magic to ramp sales, and that a solution to the Institutional sales problem will show itself. We have some reserves and CIS is holding. Therefore, I am not prepared to move into a singular focus on revenue until I have seen that Individual and Institutional can’t ramp, or we see a more substantial fall off in revenue. I do not want to abort one of the strategic initiatives—building the analyst staff—until and unless it becomes necessary. Jeff’s warnings are appropriate and appreciated. But I think we are far from having to abandon the Elder’s strategy.
If we do switch strategies we will do so as a group, and very consciously. We will spend a lot of time debating it and creating a new strategy. At the moment we are looking at some troubling but indecisive numbers, and I am not prepared to abandon risk mitigation and value generation in favor of a sole focus on revenue. That can change, but if it does, our new strategy will be consciously and rigorously defined. So everyone, please, familiarize yourself with the Elder’s proposal. It guides this company in all things.
Let me then turn to the issue between Strategic Intelligence and Tactical Intelligence contained in Peter’s weekly. It is a substantial issue whose emergence was inevitable. It is now here.
Until the creation of a separate Tactical Intelligence department, Strategic Intelligence, thought of as Analysis, was controlled by Peter and before him, Roger and Matt. The head of analysis decided what was good enough to publish and how to develop analysts. Therefore, Peter was the arbiter of quality.
I deliberately divided Strategic and Tactical Intelligence in order to achieve two ends. The first was concentrating collections in one place. The second was to create a class of analysis that was not geopolitical in method, and which dealt with a much more detailed perspective of the world. This was to include not only security, to economic and military analysis.
Tactical Intelligence was placed under Stick for two reasons. First, he understood the area well. Second, he was an excellent writer in his own right. Stick’s job was not only collections, but the management of tactical analysis. The reason SI and TI were divided was that they have very different rules, criteria of success and tempos of production. Interestingly, the production of articles in SI is always faster than in TI, because SI begins with a robust theoretical framework in which events can be rapidly assimilated, while TI beings with intelligence gathering and avoids preconceived analytic frameworks. It is the Zero Based Analysis to SI’s Net Assessment. From the geopolitical point of view, it appears pedestrian. It is. That is its strength.
I know nothing of Schroeder’s month long work on investigating Nigeria, but a month long investigative project seems to me lightening fast. Intelligence simply takes a lot longer than analysis, when analysis is driven by set analytic framework. The tempo, focus and criteria for success are just very different. I’m a huge fan of geopolitics as you might all have noticed. But I do not regard it as the only type of analysis there is and I’m also a huge fan of intelligence gathering and tactical intelligence. Both are needed for a GLOBAL INTELLIGENCE company.
Therefore, in the production of tactical analysis, it is Stick’s call when an article is ready to go, just as it is Peter’s call as to when an SI piece is ready to go. There should be robust interaction on all levels as is our culture, but in the end, there are now two separate departments with two equal heads and in the end they make the decision on their own product. I am not always certain that Stick appreciates geopolitics, and I’m not always certain that Peter appreciates intelligence/tactical intelligence. That’s why I divided the departments, to make the highest and best use of each.
Now, there is a question as to which department various people should belong. It is possible that we need to move some people or at least temporarily transfer them. I would like Stick and Peter to work this out. The proper placement of non-geopolitical analysts who are primarily area experts is flexible. They can go either way. Perhaps it is time to shift Kamran and see if he can be more flexible. Peter and Stick need to discuss this carefully and if they can’t agree, come to me.
In disputes I suggest the following rule:
1: Work it out.
2: If at loggerheads, the department head decides what gets published by his people.
2: If there is really a serious issue or disagreement, check with Walt.
4: If it really is important and someone can’t let rule 2 operate, call me. I am CIO and in the direct chain of command.
This raises another issue I’ve touched on in the past but haven’t really pressed. In a newspaper, the debate between two departments would rage over newsprint and the front page. We don’t have newsprint limits and the front page is controlled by Jenna under Walt. So while that isn’t an issue, we still need to discuss how much we should publish and on what topic and what frequency. Intelligence is about speed. But it is also about distinguishing the vital from the routine. We need to take a careful look at what we publish. This will be part of product differentiation between Institutional and Individual, and possibly about a new lower priced product. But the general question of how much we publish and of what sort will need to be addressed in its own right.
I was reading a magazine on the plane here, and it contained some rules from David Ogilve, the advertising guy. I though they were important. He had three rules:
1: Sack incurable politicians. Crusade against paper warfare.
2: When people aren’t having any fun, they seldom produce good advertising. Get rid of sad dogs who spread gloom.
3: Top men must not tolerate sloppy plans or mediocre creative work.
I’d say we are in pretty good shape, but politics, negativity and tolerance for mediocrity are the three things that can drag us down. I regard Peter’s weekly and Jeff’s email on Meiners as exactly what we need. Direct, no bullshit assertions of views. We heard both loud and clear, and it gave me a chance to state my own views. I think we are having fun. And I think we are holding each other to the highest standards of planning and implementation.
One last thing: The leak about Hargis to Fred is a one time only event. It won’t happen again.
Istanbul is full of Muslims. The Muezzin are calling the faithful to prayer and the faithful, as they rush to the Mosque, keep looking at me a mumbling something I can’t quite make out. I’m not sure it’s “welcome.”