Recently in Strategic Intelligence Category

John Boyd's essay Destruction & Creation (1976) and compendium.

John Boyd's presentation Organic Design for Command and Control (PowerPoint and original).

Background on the Nifty Nugget (1978) and Proud Spirit (1980) war mobilisation exercises, which Boyd mentions.

LTC Steven W. Peterson's interesting essay Central But Inadequate (2004) about Boyd's influence and the role of classical military theorists on the US military's 2003 campaign in Baghdad, Iraq.

The two recent academic studies on Boyd, Grant T. Hammond's The Mind of War (Smithsonian, Washington DC, 2001) and Frans Osinga's Science, Strategy and War (Routledge, New York, 2007), are on my PhD 'draft zero' reading list.

Nuclear proliferation expert Fred Kaplan and other analysts are writing about North Korea's third missile test launch and Kim Jong-il. Here's the Masters research thesis I wrote in 2006 on Jong-il's nuclear program viewed through Herman Kahn's early work on game theory, threat scenarios and Cold War era nuclear warfare. I finished it just as North Korea made its second missile test launch on 4th July 2006.

Social-democrat economist John Quiggin fires an interesting salvo in the journalist-blogger debate: ethics and journalistic practices are perhaps the key distinction between the two.

Watching the hostility between 'old media' journalists and some Web 2.0 bloggers is often like watching Muzafer Sherif's Robbers Cave experiment. For bloggers, traditional journalists are constrained by objectivity, news values and institutional power, and traffic in biased op-ed columns and lightly rewritten corporate press releases. For journalists, bloggers don't understand the norms and practices of the craft, don't navigate the institutional shadow network, and vary greatly in the quality of their analytical insights. The two clashing stereotypes fuel a circular debate, which like Sherif's experiment, may only change when a frame-changing exogenous threat is introduced.

For me, Quiggin makes three key points: (1) journalists have a socially recognised role to "pick up the phone" and talk to strangers; (2) journalists may select material from their interviews into a story and do not have to report everything; and (3) journalists have "a formal code of ethics and a set of informal conventions" to do this whilst bloggers do not. In doing so, I believe Quiggin adopts a middleground position similar to Terry Flew, Barry Saunders, Jason Wilson (from their YouDecide2007 project) and my own thoughts on citizen journalism, with some new insights.

My personal experience of Quiggin's first point is that their role can empower journalists with Freedom to talk with anyone, and to view a situation through different, iterative stances. As I discovered during a 1994 student journalism stint and 1995 coverage of Noam Chomsky's Australian lecture tour, this is a great shock: in the right situation, people can tell you anything, and you can also become a a participant-observer who is now inside the unfolding events. It's a little like Jim Carrey's character in the romantic comedy film Yes Man (2008): you 'forget' the self-limitations of yourself and act beyond normal social conventions.  As Quiggin observes, few people can ask questions of strangers and expect to get revelatory answers.

This approach reaches its zenith in New Journalism as a methodology and repertoire of practices in three ways. First, the journalist may create the "story" through a catalytic, influential effect on the external environment. Second, the journalist can become part of the "story" through capturing their subjective consciousness, and trying to capture a similar stance from the other participants through internal dialogue, scene reconstructions and other techniques. Third, the journalist has more freedom in convention, methodology and practice, such as using fiction techniques in a non-fiction profile. At its core, New Journalism fuses autoethnography, anthropology and acting, which are facets that a blog publishing system might not capture.

Quiggin's second observation is a major flashpoint in the debate: how journalists hone a story and select the facts to report. Bloggers turn to critical media studies for many of their arguments: objective news values, op-ed columnists and other biased sources, institutional forces, and a conservative implementation of web publishing capabilities. In turn, journalists point to the chatter/noise factor in blogs: they may be alternatives to op-ed columnists and newswire press releases yet do not yet replace areas that are resource-heavy and have mature practices, notably investigative journalism. Bloggers counterargue they have more freedom to use nonlinear narrative styles and to publish the raw sources. Perhaps one of the lessons from YouDecide2007 and AssignmentZero was that the editorial decision process to hone and select material is more nuanced in practice than Twitter's role as a first responder in disasters and emergencies.

How do journalists navigate such decision processes? Journalists have discipline-based norms, practices and ethics as barometers. This acts as a check and balance within newsroom culture and its role only becomes clear in a go/no-go decision where the editor has to weigh up the competing interests of different stakeholders and the potential outcomes of publication. In contrast, many bloggers appear to be driven by normative-based anchors (Web 2.0 compared with institutional journalism) and commons-based advocacy (education, sustainability, future generations). But belief alone in noosphere politics and networks may not be enough to surmount the different manifestations of power. If bloggers want to influence the objective universe they can learn much from journalist ethics and strategic nonviolence.

The debate about the Obama administration's nomination of Leon Panetta as the Central Intelligence Agency's next director highlights the greater visibility of the United States intelligence community.

Media pundits diverge in their opinions about Panetta's suitability for the role.  In doing so, they reveal how each makes assumptions about the CIA's institutional function, the CIA's relationship to the Director of National Intelligence (DNI), the budget process, and the experience of political outsiders in assessing the quality of analytical product.

In the sample I looked at The Nation's Robert Dreyfuss reflects the consensus view that Panetta is a "doomed" appointee as a political outsider.  Dreyfuss makes four key arguments:

(1) Dreyfuss is a political appointee to a non-political organisation.

(2) As a "consumer of intelligence" Panetta is passive and unable to spearhead the operational transformation that the CIA needs.

(3) Panetta opposed the Bush administration's interrogation techniques yet a CIA insider would have been a better choice.

(4) As "a relentless centrist and a conciliator" Panetta will be outwitted by the Pentagon, the DNI and private military contractors, even though Dreyfuss opines, "the very office of the DNI is a useless post, and the entire office ought to be abolished by Obama on day one. Who needs it?"

Dreyfuss writes great, sarcastic op-ed commentary but the limitations of his arguments becomes clear when you compare his analysis with two columnists who actually know about the intelligence bureaucracy and its function: Slate's Fred Kaplan and The New Yorker's Steve Coll.  Each show for different reasons why Dreyfuss's arguments are interwoven.

Political appointees to the CIA have a poor track record, Kaplan and Coll agree.  Coll finds Panetta's nomination "unconvincing".  Kaplan suggests that Obama's priority was to distance his incoming administration from Bush's perceived politicisation, and in the absence of other candidates, Panetta was the best choice.

This priority also discounts Dreyfuss's third argument on why a CIA insider would be inappropriate.  "He seems to have been selected as a kind of political auditor and consensus builder," Coll suggests, in agreement with one premise of Dreyfuss's fourth argument.  Coll however does not write-off DNI and suggests Panetta's limitations: his lack of foreign policy experience, and his lack of direct experience in managing the CIA's operations and relationships "with other spy chiefs, friendly and unfriendly."

Dreyfuss believes that Panetta would therefore be under the control of Admiral Dennis Blair, who is Obama's DNI appointee, and thus undermine the CIA's civilian status.  Kaplan has a more nuanced view of the DNI-CIA relationship and Panetta's leadership style.  He suggests Panetta could retain the CIA's deputy director Steven Kappes, a move that would please insiders and consolidate his position.

Kaplan also reveals that Panchetta knew more about the CIA's intelligence programs than Dreyfuss's write-off suggests.  As the Clinton administration's Office of Budget and Management "director and White House chief of staff, he was not just passively exposed to intelligence issue," Kaplan counters.  He then quotes an email from former counterterrorism chief Richard A. Clarke which reveals that Panchetta "knew about all of the covert and special-access programs."  This experience gives Panchetta the budget skills, special knowledge, and high-level overview of CIA activities that few insiders would have, and that is a close fit with operational transformation methodologies.

If Panchetta's nomination doesn't work out I have a Team B that could probably do the job of cleaning up the CIA's black budget programs, or at least make an Open Source Intelligence attempt.  It would include award-winning journalist James Bamford whose book The Puzzle Palace (1982) features revelations about the National Security Agency; anthropologist Carolyn Nordstrom whose book Shadows of War (2005) revealed the new contours of global conflicts; and Economic Gangsters (2008) authors Raymond Fisman and Edward Miguel, who use publicly available information such as diplomats' parking tickets to uncover potential corruption.  Add Kaplan, Coll and their New Yorker colleague Lawrence Wright, and that's a pretty substantial investigative team with foreign policy and intelligence community experience.

I recently blogged about a presentation the 2008 Communications Policy Research Forum in Sydney on disruptive innovation in the music industry.

You can now download an Adobe PDF version of the PowerPoint slides here.

The refereed paper has been published in the Proceedings of the Communications Policy Research Forum 2008 (pp. 155-175 or PDF file pp. 179-199).  You can also download a local copy of the paper here.

The paper's case study examines why Radiohead and Nine Inch Nails released their new albums as digital downloads.  I suggest a major reason why, and one that was overlooked by Web 2.0 pundits, is that each artist was in the 'label shopping phase' of a new contract and defected after negotiation problems with their major labels.  This fits a pattern in mergers and acquisitions: the major labels lost artists due to integration problems in a merger or acquisition.  Terra Firma Capital Partners has since partially confirmed this hypothesis: the private equity firm endures more post-acquisition integration problems with EMI and is fighting against government regulation of Great Britain's financial services sector.

The paper's data appendices contrast the artists' strategies with signficant events and innovations in music industry contracts, conglomerate mergers and deal structures.  Somehow I missed U2's March 2008 deal with Live Nation: I found out about it in an October 2008 announcement.  Guns n' Roses also finally released Chinese Democracy (MySpace audio stream): a new album that has taken 15 years, a rumoured US$14 million budget and 14 recording studios in New York, Los Angeles, Las Vegas and London.  I may write a paper on it . . .

The New Yorker's James Surowiecki provides an overview of volatility in the global food market.  Three insights emerge for me:

(1) Differences between policymakers and food security experts at the problem diagnosis stage may have complicated the implementation of structural adjustment programs.  Food security poses solutions that are potentially counterintuitive to policymakers: the former will value food stocks to ensure stability in sovereign nation-state the international political economy whereas the latter may prioritise food flows for international trade, to hedge commodities and currency risks.  Surowiecki explores a contemporary scenario of potential market failure due to demand-supply, pricing and other distortions with the allocation mechanisms.

(2) David Ricardo's theory of comparative advantage - in which each nation specialises in the efficient production of goods and services to trade with others for maximum payoff - may not be scalable in its simple form to a complex, interconnected and global system.  Surowiecki's analysis suggests tha the over-reliance on a few countries for specific foods will undermine the global system's resilience and capacity to cope with exogenous shocks and volatility.

(3) Paramaters for investor and market models of the global food market using Vensim simulation software: production supply, demand volatility, pricing, subsidies/tariffs, stocks and flows, and leverage points.  Undertake different short- and long-run simulations noting the role of capacities, dynamics and thresholds, and the impacts of exogenous shocks and volatility.

Malcolm Gladwell's new book Outliers: The Science of Success (New York: Little, Brown & Co., 2008) appears to be the publishing event of the week.

Gladwell (The Tipping Point, Blink) spearheads a group of writers who are masterful at using anecdotes about insights from statistics, system dynamics and the decision sciences that will interest a broad readership.  This group also in  Chris Anderson (The Long Tail), James Surowiecki (The Wisdom of Crowds), Nassim Nicholas Taleb (Fooled by Randomness, The Black Swan), Tim Harford (The Undercover Economist), Steven Levitt and Stephen Dubner (Freakonomics), and Michael Lewis (Liar's Poker, The New New Thing, Moneyball) also belong to this group.  Apart from outliers and tipping points these books explore intuitive decisions, long tail distributions, the Law of the Many, chance, low probabilty high-impact events, martingales, and data-driven decisions.  Each author has a different background: Taleb is an epistemologist and former trader, Anderson is a technology pundit, and Lewis, Gladwell and Surowiecki are essayists and journalists.

For me, six observations emerge from these authors.  First, they have a writing style that appeals to a broad audience.  Second , they provide an introduction to quantitative elements of decision-making and judgments.  Third, their publishers have created a niche market in airport reading and popular science paperbacks.  Fourth, they differ in their approach to theory building: Anderson, Gladwell and Surowiecki take an insight, interview people, and promote it; Taleb, Harford and Lewis draw on their domain experience; and Levitt and Dunbar illustrate how a subject matter expert can collaborate with a journalist to reach a broader audience.  Fifth, their books have seeded a range of Web 2.0 strategies, which vary in rigour, validity, generalisability and applicability to real-world analysis.

Finally, their publishers have used their marketing appeal to build an audience during turnarounds and post-acquisition integrations: Gladwell and Surowiecki helped revive The New Yorker, Levitt and Dunbar's blog gained The New York Times an Internet readership, and Anderson revamped Wired after Conde Nast's acquisition.

Assaf Bernstein's The Debt (2007) portrays the breakdown of accountability during a fictional operation by Israel's Mossad agency to capture a Nazi war criminal.

The film opens with the Mossad team of Rachel Brenner (Gila Almagor, Neta Garty), Zvi and Ehud arriving home triumphantly in April 1965: a scene reminiscent of Beatles mania.  Flashforward 30 years later and Rachel explains to Israeli intelligence trainees what it was like to kill the Nazi war criminal Maximilian Rainer (Edgar Selge) in a safehouse shootout: 'I didn't think of anything, I just closed my eyes, thought of my mother and what she had been through.'  The trainees joke about the Surgeon of Burkenau as a symbol of evil.

At a launch party for her memoir My Mission we hear an account of Rachel's bravery and see her signing books like a celebrity.  As the party ends Zvi arrives with a newspaper story that will shatter the bubble: an old man in a nursing home 40 minutes outside of the Ukrainian industrial city Kiev now claims to be Rainer.  Rachel, Zvi and Ehud all know the truth that has been hidden for 30 years: Rainer escaped from the safehouse and they created the cover-story to hide the truth about the Surgeon of Burkenau's fate that would have shocked Israel. 

The team is being reactived before Mossad and the Israeli public find out the truth.  Ehud is already in Kiev whilst Zvi cannot go due to wounds from an Israeli embassy bombing 10 years earlier.  Zvi convinces Rachel to go to Kiev armed with poison to confirm Rainer's identity and to kill him.  She is unsure about the newspaper photograph.  'People change a lot in 30 years', Zvi tells her.  'We were different then, weren't we?', Rachel wonders.

The Debt's narrative cuts back and forth between the 1964 Berlin operation and Rachel's 1994 visit to Kiev.  Bernstein thus creates a cause-effect relationship between the team's initial decisions and their consequences.

Mossad tracks Rainer to Berlin in 1964 after a 15-year search.  The night before the team's operation begins Rachel examines photographs of Rainer's atrocities in Auschwitz-Birkenau.  Rainer now works as a gynecologist so Rachel poses as Mrs. Roget and gets several appointments for an infertility examination.  These scenes have a starkness similar to David Cronenberg's Dead Ringers (1988) as Rainer attempts to discover Rachel's true identity.  Eventually the team resorts to an extraction operation: Rachel injects Rainer with a serum whilst Zvi and Ehud arrive with a fake ambulance.

Holed up in a safehouse with Rainer imprisoned the team begins to fall apart.  The cover operation to use an embassy party is delayed several times.  The team starts infighting over their motives: Rachel has unrequited love for Zvi, Ehud's tough personal masks his fears and Zvi is hauned by the deaths of his entire family at Auschwitz.

Rainer emotionally manipulates Rachel and Ehud when they break Zvi's rule not to speak to their prisoner.  He offers several rationalisations: his work was done for 'scientific progress', 'hundreds of deaths' were necessary to save millions, and that 'we could do anything we wanted with the Jews'.  Rachel taunts Rainer that he will endure a public trial similar to Adolf Eichmann in Jerusalem in 1961.  Rainer explains to Rachel and Ehud that only four guards were needed to send entire families to their deaths: Jewish 'egoists' meant that individuals only thought for themselves.  'Jews only knew how to die, they didn't know how to kill,' Rainer concludes.  The exchanges are a misdirection ploy: with Ehud and Zvi now out of the room Rainer attacks the sleeping Rachel with a razor that she has dropped and escapes.  'It took 15 years to find him, we aren't going to find him in 10 minutes,' Ehud and Zvi argue.  The truth that happened in Berlin is not the truth that Israel must know.

30 years later Zvi, Ehud and Rachel are each haunted by their lie.  When Rachel arrives in Kiev she meets Ehud who is now an arms dealer to both sides in Sierra Leone: 'rebel against them' he explains over a double malt whiskey.  Ehud and Rachel are unable to get into the Kiev nursing home which is a high security facility for former Soviet military.  The next morning Rachel discovers that Ehud has committed suicide because he is a coward.  Zvi asks her to return but Rachel wants to finish what should have been done in Berlin.

After several cat-and-mouse attempts Rachel disguises herself as a nurse to infiltrate the nursing home.  She sees the old man on a balcony.  A Berliner Zeitung reporter also wants to interview the old man and phones his editor in advance to claim a double-spread cover story.  In these scenes Rachel seems cautious to conduct a field operation, unsure of the old man's true identity and out-of-place in a life after espionage.  Both she and the reporter discover the truth: the old man has Alzheimers and started the story a month ago to the concern of his son.  The reporter leaves in disgust.

Only then does Rachel discover the deeper truth underneath the surface truth and by accident:  she follows the old man's grandson and his remote controlled car to discover an elderly Rainer playing cards in the dining room.  'I should never have confessed to him,' he tells Rachel, 'I should have taken this secret to my grave.'  Rachel and Rainer's bathroom knife fight leave both fatall wounded, and Rachel dies on a train platform, remembering the team's triumphant return to Israel, the black and white news footage now in colour.

The Debt explores the ethical challenges of intelligence fieldwork, coming face to face with ontological evil, and the cost of living with a lie.  However two other dimensions are only hinted at.  The team's lie is necessary to maintain Mossad's invincibility and as a counter-myth against the Nazi postwar survival myths of Adolf Hitler, Martin Bormann and the Odessa in South America.  More cryptic is Rainer's explanation to Rachel about World War II's intergenerational trauma: 'The war changed a lot of people.'

The nuclear strategist Herman Kahn coined the phrase 'thinking about the unthinkable' in a series of black comic Air Force briefings that became On Thermonuclear War (Princeton University Press, 1960).  Faced with a year-long crisis in US credit markets analysts have embraced similar imagery in their forecasts of catastrophic risk.

Several different players in the financial ecosystem rely on the forecasts for multiple payoffs, one for their target audience and the other for themselves:

• Research Analysts: (1) Provide clients with guidance and metrics to the market turbulence; (2) stand out in the pecking order of research firms and competing industry/sectoral analysts to remain relevant.
• Investment Media: (1) Catastrophes as the source of drama and headlines to keep consumers engaged; (2) Financial and operational synergies of convergent media production.
• Fund Managers: (1) An external input to valuation models for visiting potential firms to invest in; (2) A parameter for deciding on the asset classes, diversification and hedging for investment portfolios.

Some questions to ask in evaluating any catastrophic forecasts that predict the unthinkable:

• What is the source, type and timeframe of the evidence presented?  The source may be company interviews, earnings calls, investment calls and trade seminars.  The type may be firsthand observation, market rumour, financial model, computer simulation or analyst conjecture.  The timeframe may be historical simulation of past data, quarterly forecasts or a longer time horizon for capital financing, global market entry, innovation pipelines or sustainability projects.  The source enables you to filter any possible agendas, the type refers to the information structure, whilst the timeframe often has embedded assumptions about cause-effect relationships, impacts, and the actions of others.
• Why is the analyst making this forecast and could there be other agendas? Analysts have biases and personal theories that an attention economy might amplify.  At a group level this becomes self-reinforcing collective wisdom that may turn out to be flawed.  In embracing a current meme in a true believer stance analysts create a cognitive frame prevents them from considering alternative outcomes, options and possibilities.  At its most cynical this question is a reminder that forecasts are not objective or value-neutral, especially if the analyst is under pressure to generate earnings revenue or has a different private opinion to their public view.
• What is the analyst's track record in accurate forecasting?  This focuses on the analyst's patterns of thinking and rhetoric in forecasts; how their performance compares to an industry, market or sectoral baseline; and the margin of error in their past forecasts.  This can be used to construct a brains syndicate, to filter out media reports and noise, to surface hidden assumptions and how they affect performance, and as a quality assurance check.
  
• How might the catastrophic forecast be hedged? This shifts the focus from optimistic versus pessimistic views to the risk management focus on mitigative strategies and action planning.  To be effective, this requires an understanding of your risk profile and risk-return needs (risk averse, neutral or seeking), your time horizon, and the nature of the financial instruments, investment portfolio and markets to be used.
  

Leximancer is data mining software that enables you to find statistically significant text patterns in unstructured data.  The software uses a collections/processing approach to gather a cohort of documents, specify filters and rules, run a batch process, and then displays a graphical concept map with causal and statistically significant relationships.  M&A, competitive intelligence, legal and market research teams may find this approach useful for document support.

University of Queensland researchers developed Leximancer, the UniQuest incubator commercialised it, and London's Imprimatur Capital provided seed capital investment.  The team also recently launched a Customer Insight blog and portal which will explore Leximancer applications in customer experience, surveys and social media.  Its data analytics and statistics capabilities may make Leximancer the evidence-based management solution for those Technorati forecasters who suffer from optimism bias about keywords and the creation rate of new blogs.