More than 2,500 years ago in China, General Sun Tzu wrote “The Art of War,” a book that remains a classic on military tactics and strategy to this day.

   Even in those primitive years, Sun Tzu recognised the importance of possessing accurate intelligence to win.  He devoted an entire section of his book to the employment of spies “to gather foreknowledge” of the enemy’s condition and intentions.

   To him, this type of information could not be obtained from “spirits, gods, calculations, or comparison with past events,” it could only be obtained from sources familiar with the enemy’s situation.  He called these secret agents “The Divine Skein,” the treasure of a sovereign.

   Sun Tzu divided his secret agents into five categories:  native, inside, doubled, expendable and living.  Native agents referred to low-level penetrations of the enemy populace.  Inside agents referred to higher-level penetrations of the enemy’s government or military.  Doubled agents were enemy spies turned back against the enemy.  Expendable agents were people hired to spread fabricated information among the enemy.  Living agents were people recruited to infiltrate the enemy’s ranks and return with information. 

   Not surprisingly, Sun Tzu cherished his agents; he protected and rewarded them lavishly.

   2,500 years later, very little has changed.  Today, the CIA Clandestine Service’s main raison d’être is the recruiting and handling of foreign spies.  In modern parlance, Sun Tzu’s five agent categories are called low-level and high-level penetration agents, double agents, covert action agents, and access agents.

   After all, espionage is the second-oldest profession.  Nothing is more valuable to our national defense than a well-placed penetration of an enemy government or military.

   Defeating the Enemy:  Know Him As You Know Yourself

   Business is war.  Make no mistake about that.  It may not be as bloody, but it is still a matter of survival of the fittest.  The tactical lessons espoused by general Sun Tzu long ago are as applicable today as they were then.  (even the US Marine Corps requires all its junior officers to read “The Art of War.”)

   To survive in today’s cutthroat business environment, we must be properly armed.  One of the most important arrows in the businessman’s quiver is accurate knowledge of his competitors and business environment.

   Just think:  every major country on earth recognizes the importance of intelligence and employs an intelligence agency to collect it for them.  Over 2,500 years ago Sun Tzu wrote:  “If you know the enemy and know yourself, you need nor fear the result of a hundred battles.  If you know yourself but not the enemy, for every victory gained you will suffer a defeat.  If you know neither the enemy nor yourself, you will succumb in every battle."

   Frederick The Great also expressed his opinion on the importance of intelligence when he said:  “It is pardonable to be defeated, but never surprised.”

   In today’s highly competitive business world it is becoming increasingly important to know your competition, particularly in the international arena – your battlefield.  There are mines out there, and it is imperative that one is able to identify and avoid them.  As Sun Tzu pointed out…you can still lose even when armed with superior forces, if the terrain is against you.

   Possessing accurate intelligence is like possessing a flashlight in the dark.  It will not remove the obstacles in your path, but it will illuminate them for you. 

   The Categories of Business Intelligence

   Generally, business intelligence can be broken down into three main categories:  Risk Analysis, Targeted Collection and Counterintelligence.

   Risk Analysis is general background information that a company needs to know to operate securely and effectively in an unfamiliar environment – usually international - where economic, political, criminal, insurgent, labor or other forces could adversely affect a company’s operations.  This tends to be multi-source, analytical-type information.  It is designed to prepare a company for all eventualities, and to allow it to operate with “no surprises.”

   Targeted Collection is specific information the company can use to increase its productivity or market share.  Market analysis, due diligence, background investigations (on potential partners, employees and others), and competitor intelligence all fall into this category.

   Counterintelligence is information collected to protect a company’s assets.  For example, when proprietary information on a company’s process, patent, copyright, and product is leaked, pirated, copied or outright stolen by a competitor, there is a compelling need to plug the leak and prosecute the offending parties. 

   The purpose of counterintelligence is to collect information that will identify the spies within the company and the organization behind them, and to provide enough evidence on the culprits to convict or press a suit in a court of law.  This may sound unbelievable, but the White House estimates that the US economy loses $100 billion (that’s billion with a “b”) a year due to industrial espionage and theft of proprietary information.

   Risk Analysis in Ethiopia:  Illuminating the Obstacles

   Let me give you an illustration of this.  When I retired from the Agency in the fall of 1990, Maxus Energy’s director of Corporate Security, Mr. David Burton, contacted me.

   The Fortune 500 gas and oil exploration company, headquartered in Dallas, Texas, said its petroleum engineers and geologists had found strong indications that significant reserves of gas and oil existed in the Ogaden region of Ethiopia.  They wanted to go out there and look for themselves.  The only problem was that no one in the company knew the first thing about Ethiopia, its operating environment, or the security situation in Ogaden (a very rough place at the time).

   This is where Risk Analysis enters the picture, something that points out the general obstacles to operating securely in the country.

   The risk analysis I wrote for the company included multi-source information derived from interviews with Ethiopian sources, computer databases, news archives and wire services, State Department databases and officials, economic publications and first-hand analysis.

   The analysis covered the political situation (was the current regime stable?); economic situation (how stable was the Ethiopian birr?); insurgency (what dangers awaited the exploration teams in Ogaden?); street crime (how should residences and equipment be protected?); and a general realities brief on the Ethiopian culture and people.

   In short, the assessment provided Maxus’ executives with a flashlight to move into a dark, unfamiliar area with few surprises.  They could now weigh the anticipated risks against the possible gains if they struck oil, and make informed decisions about the venture.