Advice From our Friends at the CIA

A few weeks ago we attended the FedEx Institute of Technology’s Innovation Expo to hear Philip Mudd, formally of the CIA and FBI speak about risk and A.G. Lafley, CEO of Proctor and Gamble discuss product development and market strategy. We will share with you their messages in our next two posts, as both had unique insight on strategy.

Philip Mudd was recruited to Memphis this year after retiring from the CIA to apply his unique analytical skillset in evaluating risk to the financial industry for SouthernSun Asset Management. Mr. Mudd believes the core premises of risk assessment apply to both the private and public sectors. We invited Mr. Mudd to the Studio for coffee to discuss this topic in greater detail and here are the top business strategy take-aways:

Comprehensive context allows you to evaluate risk and threats to your business. You must have a comprehensive context in which to evaluate the severity of the threat. Mudd encourages analytic rigor in assessing threats to deliver management a factually correct briefing. In other words, a single threat viewed in isolation may be cause for alarm but when evaluated against other threats and macro forces at work, it may have much lesser significance. It is important to conduct a comprehensive assessment of the company’s weaknesses and outside threats then prioritize scenarios according to probability to formulate your game plan.

Asking the right questions is paramount. In your market analysis, you must ask provoking questions in order to avoid cognitive bias that is part of  human nature. Questions like: “Are we doing it right? What if we got it wrong?” should always be in the background. Mudd suggests “biting yourself, before you get bitten” by asking a series of what if questions to generate a multitude of scenarios. He encourages direct discussion with the human informant, talking to your customers, your suppliers and your competitors. You must learn how to ask productive questions, and then draw inferences to layer into your analysis.

We are not in the business of prediction but rather out to gain a decision advantage.  Mudd is in favor of predictive analytics and simulation models, but since most of us are not prophets, what we are really after is rigorous analysis to give the management team solid situational context so that they have a decision advantage over competitors.

The Studio and Mudd agree that the real trick is getting a business team to move seamlessly from risk assessment to growth opportunity analysis. This might be harder than fighting terrorism… business growth depends on both defensive and offensive moves. We encourage you to cultivate this mental agility in your team.