How the sausage gets made

It has been my experience that it is generally better to be viewed in your workplace as a profit center than a cost center. Unfortunately, many of the roles that LIS grads typically find themselves in, at least in the private sector, are often viewed as cost centers. While I believe wholeheartedly in the value of information and knowledge management and that these services can contribute greatly to the bottom line in the private sector, it is often the case that these positions are the first to be cut when times get tough and the last to be filled when times get better.

While I don’t propose to have the ultimate solution to this unfortunate problem, I would like to talk a bit about how LIS people can perhaps position themselves a little more strategically in private sector organizations. I’ll return to this theme often in future posts, but I wanted to start exploring what it means to have “financial intelligence”. This doesn’t mean having the same level of knowledge about corporate finance as your company’s CFO, but it does mean having at least a working knowledge of how your company makes money and, more importantly, how you can contribute to this goal and be viewed as more of a profit center and less of a cost center.

Of course, there is a lot more to it than what I will cover in this post, but I’d like to get started by thinking about potential interview questions you might have for any job in any publicly traded company. These might include answering the common “what do you know about our company” types of questions as an interviewee. They might also include questions you ask the interviewer that will help you to seem more knowledgeable about the company’s operations. A little bit of financial intelligence might help you discern whether you even want to apply for the job in the first place (is the position open because the company is a sinking ship?).

I would encourage readers to pick up a copy of Berman and Knight’s “Financial Intelligence: a manager’s guide to knowing what the numbers really mean”. This book was revised in 2013, but in keeping with my low-cost pledge for this site, I will be discussing the 2006 edition. As of this writing, a new copy of this 2006 edition can be found on Amazon for about five dollars and the used copies start at one penny.

I also talked, in an earlier post, about looking at a company’s 10-Ks (annual earnings reports) and 10-Qs (quarterly earnings reports) to help prepare for an interview. Now, I’d like to start discussing how you can also use a company’s 10-Ks and 10-Qs to get an overview of where a company stands financially without having extensive knowledge of corporate finance.

For the uninitiated, the income statement portion of the 10-K or  10-Q may not necessarily be labeled as such. It might be titled “profit and loss statement” or “P&L statement”, “operating statement” or “statement of operation”, or “statement of earnings” or “earnings statement”. Whatever the title, the income statement portion of the earnings report will typically show the following basic entries (intermixed with dozens of other entries that are well beyond the scope what I am trying to accomplish at this point):

  • Revenues: dollar value of all products and services provided during a period of time
  • Cost of goods sold: all costs directly involved in producing a product or delivering a service
  • Gross profit: (sales minus cost of goods sold) what is left after paying the direct costs of producing a product or service
  • Expenses: self-explanatory
  • Taxes: self-explanatory
  • Net profit: what is left after all costs and expenses are subtracted from revenue

In general, sales or revenues are always at the top, costs and expenses are in the middle and profit is at the bottom. As Berman and Knight state, the most important thing to remember about the income statement is that all of the numerical entries are based on estimates and assumptions. This is an entirely different discussion, but one I would like to revisit in future posts as it may be of interest to LIS grads in that making these assumptions requires a great deal of description and categorization.

Now, if you are like me, you might assume, as I did until recently, that the income statement would tell me the most about a company’s performance as it seems to reflect the bottom line. After all, the income statement is much easier to understand and, intuitively, it seems a lot like a monthly household budget. However, as Berman and Knight point out, it is actually the balance sheet portion of the earnings report that reveals the most about where a business really stands in financial terms. The balance sheet is, essentially, “a statement of what a business owns and what it owes at a particular point in time”. A few of the most important entries on the balance sheet are:

  • Assets
    1. Cash and cash equivalents: liquid assets that are immediately available as cash
    2. A/R (accounts receivable): money owed to the company
    3. Inventory: companies generally try to keep this low as inventory represents cash that is tied up and cannot be used for other purposes
    4. PPE (property, plant, and equipment): total purchase prices of all physical assets owned by the company
  • Liabilities and equity
    1. Debts, loans, accounts payable, and other liabilities
    2. Owner’s equity: what’s left after subtracting liabilities from assets

So, why do they call it a balance sheet? Because it balances. Assets should always equal liabilities plus owner’s equity.

At the end of the day, there is a great deal more to analyzing financial reports than what I’ve covered here. But, if you are preparing for an interview and you would like to be able to also consider a company’s general financial position, keep a few questions about the balance sheet in mind:

  • Are the company’s assets greater than its liabilities (solvency)?
  • Is the company able to pay its bills? (Compare current assets and cash to total liabilities.)
  • Has the company been improving its financial condition over time? (Compare the balance sheet numbers across multiple years or quarters.)

Of course, these are very basic questions, but if you compare your assessment of the financial measures covered here alongside what you know about recent company news, and the industry in general, you will be much better prepared to ask intelligent questions during the interview process. Alternately, if you are already working successfully in a good organization, understanding even these basic financial metrics will enable you to better position yourself as a profit center in your company.  Always think about how your specific position aligns (or doesn’t) with the financial metrics discussed here, and if you aren’t sure, ask. Whoever you ask will probably be impressed that you are even asking and that can carry you a long way as well. And while you’re at it, pick up a copy of Berman and Knight. This is one of those books that I will turn to many times for years to come.

Know Thy Industry

I recently posted about preparing for interviews with large, publicly traded companies and the wealth of information one can find in the filings these companies make with the Securities and Exchange Commission. I’ll revisit this topic again in the future, but I also want to talk about an aspect of preparing for interviews, and finding success, with a company of any size. Certainly, one should look for any news articles pertaining to the company, but these are often few and far between for small, privately funded companies.

Of course, you not only want to learn as much as you can about the prospective company to improve your chances during the interview process, you also want to use this knowledge as a scaffold upon which you can learn the job after you are hired. In situations where there is little publically available information (and even cases where there is a great deal), it is a tremendous advantage to have significant knowledge of the industry landscape in which the company operates. I’ll discuss and expand upon all of these topics in future posts, but for now a few things to think about are:

  • Larger competitors that are publically traded and commonly covered in business news publications
  • The supply chain and value chain
  • Major industry regulations and regulatory agencies
  • How companies in the industry make money
  • Major trends and issues in the industry

There are a vast array of resources that provide information on all of these topics for pretty much any industry you can imagine. However, I’ve found that think tank publications are one of the most useful, and most commonly overlooked, resources out there. Also known as research institutes or policy institutes, think tanks frequently publish some of the most informative and cutting-edge research and policy papers available.

But aren’t most think tanks politically biased? Yes, a lot of them are, but many are not. Regardless of whether a think tank conducts their work based upon a particular set of philosophical assumptions, learning an industry is about understanding these competing philosophies and how that plays out in terms of policy, regulation, and economic incentives. I’m only human and, as such, I have my own views about things, but when studying my own industry (healthcare) I really want to understand the philosophical basis, and supporting facts, behind all viewpoints and positions.

There are a couple of great resources out there that make think tank publications a lot more findable.

  • Find The Best publishes a searchable and sortable think tank list on the InsideGov site. You can easily filter the think tank entries by political affiliation, area of research, asset amount, and founding year. The entries are also sortable by their Go To Think Tank ranking as provided by the Global Go To Think Tank Index.
  • The Global Go To Think Tank Index is a ranking of more than 6,500 think tanks by over 1,950 scholars, donors, policy makers and journalists. The Index is published by the Think Tanks and Civil Societies Program (TTCSP) at the Lauder Institute, University of Pennsylvania. The 2013 Index (the most recently published) ranks think tanks globally, by region, by area of research and by special achievement. For industry research purposes, the report ranks think tanks in the areas of defense and national security, domestic economic policy, education policy, energy and resource policy, environment, foreign policy and international affairs, health policy, international development, economic policy, science and technology, social policy, and transparency and good governance.

Granted, neither of these resources provides a searchable database of think tank publications, but once you go through the initial process of identifying the top 3-5 think tanks that publish research on your industry, it is generally a simple matter of following these organizations. To keep perspective on the information you find in their publications, be sure to do a bit of research on each one to understand how they are funded and their organizational affiliations. The TTCSP also maintains a list of articles specifically about think tanks that may further inform your background knowledge on these resources.

I have found most of the reports published by these institutions to be well-written, very informative, and fascinating to read. Don’t expect them to give you specific information about specific companies, except in some cases, but look to them for deeper industry knowledge. For myself, I’m not trying to become a healthcare economist or legal scholar, but being conversant in these areas makes my own work a lot more satisfying when I can see the value of my role within the larger industry.

An LIS Grad and a No Pay MBA walk into a bar…

Since making the commitment to pursue a career in business I’ve frequently wrestled with the idea of going back to school for an MBA. I think I’ve finally won this contest. All things considered, I just don’t think I can justify it in terms of the cost, time, and effort. If nothing else, I just don’t think I can stomach trying to find parking on a college campus ever again.

This recent article on Bloomberg has helped to solidify my decision. Anyway you cut it there is going to be a definite financial cost to pursuing an MBA. Either a direct cost in the form of a tuition bill or an opportunity cost in the form of time and energy not devoted to gainful employment. As this article explains, the financial benefit of getting an MBA starts to decline significantly once a person is 30 years old. I am a bit older than 30, so I suspect any financial gain I would receive might be substantially less than a 30-year-old’s. Granted, there are some other considerations around the percent change in salary of older students who are already making more money than a 22-year-old. But still, it is one more reason why I’m just not feeling it when it comes to pursuing an MBA.

I’ve also contrasted this observation about my potential earnings with an MBA to another recent analysis of high-paying tech jobs that don’t require a STEM degree. It is likely that not all of these are reasonable career pursuits for an LIS grad (without a serious retooling of one’s career), but a few of them are:

  1. User Experience Designer (median pay: $96,000)
  2. Business Insight and Analytics Manager (median pay: $96,700)
  3. Senior Contracts Manager (median pay: $96,300)

I have a decent amount of experience in contracts and proposals, and currently work in this area, so I’m going to choose door number 3.

While I don’t need an MBA to advance in my career track in contracts and proposals, I definitely need to increase my business acumen and skills (hence this blog). In addition, the need for LIS skills such as information and knowledge management, data analysis, and operational research are very high, and getting higher, in my field.

This brings me to an excellent resource that I plan to use to accomplish this goal. While Laurie Pickard started her No Pay MBA project in late 2013, I’ve only recently discovered it. And, even though our ultimate goals are not the same, I think she has a brilliant idea and I suspect her site will be a fantastic resource for me for the foreseeable future. In a nutshell, Laurie is designing her own MBA program completely out of low-cost or free MOOCs. She is also sharing her experience via her website and offering a vast array of resources for those that want to follow suit.

Though it is only about a year and a half old, Laurie’s site is already chock full of fantastic information and resources. I won’t try to outline it here but I will direct your attention to a couple of her early posts that really struck a chord with me as I began thinking about a direction for this blog.

In this early post, she lays out a number of reasons for being a good MOOC MBA candidate. I’ve added a little context around each one to help think through how each one applies to me as a person with an LIS master’s degree:

  1. I already have a master’s degree: While I’m sure I could get into the MBA program at the local cow college, I doubt this credential is going to add much to my resume at this point. Plus, am I really going to jump through all the hoops (the reference letters, multiple attempts at the GMAT, the interviews, etc.) to try to get into a more prestigious program? No.
  2. I don’t need the B-school network: I already do about as much networking as I can through SCIP, SLA, and Toastmasters memberships. That, and not eating lunch at my desk at work.
  3. I don’t want to stop working: For a person without an MBA or undergraduate business degree, actual business experience is probably going to carry a lot more weight in terms of leveraging future career opportunities. Like Laurie, I’m trying to keep this project as low-cost as possible and the opportunity cost would be massive to quit working.
  4. I have the discipline: If you finished an LIS degree, you probably do.
  5. I have a particular field of interest that isn’t part of most business schools’ curricula: This is probably the biggest one for me. Most of the jobs I’m interested in for the future do not require an MBA and I want to continue my informal LIS studies. Pursuing business studies is not a replacement for my LIS degree, it is a way to augment and expand these skills.

I’d also like to draw your attention to another early post on the site. This may put a few more specifics around how I plan to utilize this resource. Of the business topics Laurie lists in her curriculum, I plan to pursue the following:

  1. Corporate finance: At this point, I don’t need to be able to produce my own financial reports, but I would like to be able to read them with enough proficiency that I can more accurately assess competing companies.
  2. Marketing: I’d like to get a better understanding of statistical market research and how products are brought to market.
  3. Microeconomics: I want a better understanding of individual economic decisions. Plus, this gives me a chance to delve into game theory a bit further.
  4. Supply chain management: I saw a fascinating presentation at SCIP 2014 on the relationship between the information sciences and supply chain management. I’m planning another post exclusively on this topic.

Full disclosure: I haven’t yet enrolled in any MOOCs and don’t have any immediate plans to do so. This is for a couple of reasons. First, I’ve got a big pile of business-related books sitting on my bookshelf that I need to attend to. Secondly, I would like to know more about what I don’t know before I enroll in a MOOC. Though logistically easier, to complete a MOOC still requires a good investment of time and energy and I want to make sure that any course I take keeps me moving in the right direction. That said, I do plan to utilize the reading lists for MOOCs to further augment my business reading in the meantime. Once I get to a point where I can design my own “MOOC-based graduate certificate in business”, I will devote the time and energy to completing entire courses in a similar manner.



What do you know about our company?

I’ve seen a lot of articles over the last few years that emphasize the importance of hiring for soft skills and emotional intelligence and I just couldn’t agree more. Especially on the emotional intelligence issue. The first time I read “The No Asshole Rule”, I had one of those rare experiences where you feel like something you’ve long thought or suspected is finally validated.

Of course, a lot of these articles have lists of soft skills and I’m usually relieved when I get to the bottom of these lists and can say to myself, “Yep, my liberal arts educations trained me to do all of these things.” It’s a nice feeling.

One that sticks out in my mind, though, might best be phrased as “understanding a company’s business environment well enough to articulate the challenges the company is facing and the opportunities for the company in the marketplace”. In terms of the list in the article I linked to above, this would fall under the “initiative” skill. I think we’ve all worked with those people that, yes, are good at their tiny bucket of tasks, but really don’t have any idea how their work fits into the bigger picture and don’t seem to have much desire to learn about it either. I don’t think most managers want to hire somebody that comes to work every day with this kind of attitude.

Hence the common interview question: “What do you know about our company?” Now, certainly, anybody with half a brain is going to take at least a cursory look at their prospective employer’s website, maybe memorize the CEO’s name, and take a look at the “news” section. But, I don’t believe that interviewers are hoping that a candidate will respond to this question by listing a few memorized factoids about the company. That approach is certainly not indicative of “initiative” or any real understanding of where the company sits amidst its competitive landscape. This may seem obvious to a lot of readers, but in talking with a vast array of managers, and assisting with the interview process myself from time to time, I’ve come to the conclusion that candidates give these canned responses a lot more frequently than you might believe.

On the other hand, properly preparing for an interview can be a fairly labor-intensive and time-consuming process. You’ve got the all-important behavioral questions to focus on to establish cultural fit, and then there’s the task of convincing the interviewer that you have the relevant skills and experience to actually do the job. So, impressing the interviewers with your knowledge of the company may not appear to be the highest priority. However, I’ve encountered a variety of instances where a candidate had these first two bases covered but didn’t really seem to have any understanding of how the company made money, the major competitive threats the company is facing, or how major changes in regulations or laws might have tremendous impact on the company. I don’t think this helped the candidate’s cause at all.

To gain a working understanding of these issues is a pretty tall order, but I am convinced that it doesn’t have to require many hours of research to be able to answer this question intelligently and to have a relaxed, comfortable conversation about how your role with the prospective employer fits into the bigger picture. I can personally think of several job interviews where I believe I gained a distinctive edge by demonstrating a deeper understanding of the issues and opportunities facing the company. I even got bonus points a few times when I was able to tell the interviewer, casually of course, a few things about their company and competition that they, themselves, were not aware of.

If the company you are interviewing with is publically traded, this prep work will be significantly easier. Though, there are strategies applying to private companies as well and I’ll discuss these in a future post. For now, here are some tricks of the trade I’ve discovered that will make you sound like a whiz kid when asked “what you know about our company.”

Annual reports and 10Qs: All publically traded companies are required to file both quarterly and annual reports with the Securities and Exchange Commission (SEC). The most authoritative source for these annual reports (10Ks) and 10Qs (quarterly reports) is the EDGAR database administered by the SEC. However, unless you are looking for older reports or SEC documents beyond the 10K and 10Q, it is generally easier to simply locate them on the company’s website. These are usually found in the “Investor Relations” or similar section on their website. I normally download the most recent 10K and the two most recent 10Qs. These are usually quite lengthy documents, but fortunately, you are only looking for a few key sections. (Note: The titles of these sections may vary, but this is the general format you will encounter.)

  • Business overview: Usually positioned near the front of the report, the business overview section will normally give you basic information on what the company does, the basic business model, how they make money, the major products and services offered by the company, and their major subsidiaries. This section usually includes some good figures on factors such as number of customers, rough revenue figures, and market positioning.
  • Government regulation: This section will give you a background on the federal, state, and international laws and regulations that impact the company’s business. It generally includes basic information on the major regulatory bodies and federal agencies as well as the specific laws and policies administered by these organizations that affect the company.
  • Competition: This section should include not only a list of the types of companies that compete with your target company, but should also name specific companies that do so. Keep in mind that this is generally just the tip of the iceberg in terms of competitors. The companies named specifically are generally just the “enterprise competitors”, meaning that they are the primary threats to the organization at a broader level. A larger company with numerous subsidiaries will have dozens, if not hundreds, of smaller competitors that compete directly with just a particular line of business.
  • Employees: Should indicate the general size of the company by number of employees.
  • Executive officers: Here you’ll find the names, ages, and positions of the company’s senior leadership. This section generally includes short bios on each individual, so you can get some indication of professional and industry backgrounds of each person.
  • Cautionary statements: Here the company will identify major threats to their business model and this usually adds color to the section on government regulations as well as providing a market landscape view of threatening factors.
  • Financial information: I’ll have to save this aspect for a future post as it is too broad a topic to cover in this post.

Quarterly report transcripts: Sometimes the transcripts of these quarterly earnings are made available by the company alongside their quarterly reports. However, if you can’t find them there, look for them on Seeking Alpha. These transcripts usually present the same information in a more conversational, and readable, manner. However, if you don’t read any other part of the transcript, at least scroll down to the end where the session is usually opened up for questions by major financial analysts. The questions that are asked, and the way they are answered (or not) by the executives can be a great indicator of the real issues the company is facing. I’ll return to a further discussion of Seeking Alpha at a future time for more info on analyst reports.

Investor conference presentations: Aside from these SEC documents, you should also look for presentations that the company has given at recent investor conferences. These, too, are generally found in the investor relations part of the company website. Keep in mind that these presentations are specifically developed to attract investors. As such, these presentations are usually fully of easy-to-remember stats related to market drivers, the company’s performance, market share, business model, and growth areas. These presentations generally do not contain a lot of information not already present in the 10Ks or 10Qs, but this information is usually presented graphically and may be easier to digest and remember.

Newsroom: Of course, you should at least peruse the company’s news section on their site. Keep in mind, though, that the contents of this part of the site are usually written by the company’s PR department. These are the news items they want to discuss, they want the public to discuss, and they want to be known for. Nothing wrong with that at all. It is a great way to gather information on the company positives, the big news, and the social initiatives the company is working on. I like to be able to talk about these things in an interview as well, but I think if you want to appear really knowledgeable about the company you’ll need to spend a little time on the sections I’ve mentioned above.

Just a final thought on all of this. It may seem like a lot of work (it really isn’t) to prepare for just one interview question. I would submit, though, that by doing this you aren’t just prepping for a single interview question. You are actually accomplishing a number of things:

  1. By researching the company a bit more in-depth, you can develop a better idea of what your future might look like at this company, or whether you even want to work there in the first place. (Did you run across a lot things you might consider ethical concerns?) Employment is a two-way street and you deserve to work somewhere where it is a good fit for both you and employer.
  2. To me, the best interviews are a bit more conversational in tone. By having a little more than just a memorized answer in your back pocket, you’ll be able to speak intelligently, and ask intelligent questions, about the company no matter what direction the conversation takes.
  3. If you are hired, these conversations will hopefully continue. The more informed you are upon starting a job about all of the issues I’ve discussed above, the more quickly you will be able to learn your job and carve out your role in the organization.

I’ll return later with another post concerning how to prep for this question when interviewing with a private company.




LIS Festivus: For the Rest of Us

120px-Festivus_PoleWhen I was going through my MSIS program (“Master of Science in Information Studies” is how the iSchool at UT Austin refers to their ALA-accredited library and information science program), it struck me that there were basically three types of students there. First, there were the students pursuing a career in some form of traditional librarianship (academic, school, public, or archivist). Aside from a few of the core courses, I really didn’t interact with these folks too much and can’t speak intelligently about their career opportunities. Second, there were the techies who seemed to walk in on day one with advanced programming and technical skills and were really there to study HCI, information architecture, and other more technical topics. I probably aligned more closely with this second group, but I knew from the beginning that I simply wasn’t going to be able to compete directly with them in job market after graduation. Frankly, I was just thankful to have one of these folks on my team to do the heavy technical lifting for all those iSchool group projects. And, finally, there was the group I refer to as “The Rest of Us”. Most of The Rest of Us had a liberal arts background, a fascination with the concept of using information to better humanity (or at least make someone’s job easier), and technical interest but not a great deal of technical skill, but no real desire to work in either a traditional library setting or to be a programmer. I think most of The Rest of Us found our fit in the business world after graduation.

I lucked out. My program offered two courses in business research and competitive intelligence. I lucked out again in that I got into the first business research course during my first semester. Admittedly, I wasn’t instantly star struck by this course (as I am now embarrassed to admit that I was one of those people that eschewed business-related courses during my undergraduate years). But, it did put me on a business track in my program and all of my subsequent coursework had some relation to working in the business world.

By the time graduation came, I had been around the block enough times with various non-library professional jobs that I had seen first-hand the extraordinary need for information organization, knowledge management, research skills, and so on across business organizations in both the public and private sectors. Everywhere I looked, I saw a need for the information sciences to curb waste, increase efficiency, and produce better products and services. I was, and still am, heartened by the need I see in the world for the skills that we LIS-educated folks have. What disheartens me at times, is the seeming reluctance by organizations to hire people like us to do what we are trained to do. I don’t see a lot of job postings that effectively say “please come in and help us to get organized, better manage our information, and fix our business processes.”

And I’m OK with that. Now. It was frustrating coming out of LIS school with all of these highly useful skills and struggling to find a place to apply them. But, over time I’ve come to understand that by taking an indirect, almost mercenary, approach to applying LIS in business, the world is pretty much my oyster. I’ve yet to see a job in the business world that I don’t think I could be at least moderately successful at. And I think that primarily stems from my LIS training in how to find, organize, and communicate information for efficient use. This is a “soft skill” that, frankly, a great many people in the business world are sorely lacking.

As an LIS colleague of mine (working in market research) recently said to me as we were discussing this very topic, “That’s the thing people don’t realize about this degree. We can pretty much do anything.” The only thing I would add to this is that it really helps when you are willing to do pretty much anything. For myself, it was a process of letting go. Letting go of only pursuing jobs that are traditionally done by those with an LIS degree or that have the word “information” in the title. Granted, I want to use my skills, but by casting my net much more broadly, showing myself and my employers how useful my LIS skills are in just about any job, and approaching my career trajectory with a more open mind, I have found that I am starting to get a lot more satisfaction out of my work and I am a lot more successful at whatever I choose to do.

I meet quite a few people with LIS degrees that are either a bit frustrated with their lack of professional opportunities or are burned out working in traditional LIS jobs and would like to try their hand at something else. A lot has been written over the last few years about alternative professions for the LIS degree. Here’s a good example. And while I would encourage these individuals to look even farther afield for career opportunities and professional satisfaction, I think lists like these are a great start.

In summary, I’ve started to look at my LIS degree as another liberal arts degree, rather than as a professional degree. As most people with a liberal arts education understand, it can be difficult to get started professionally as you are not specifically trained on the technical aspects of any particular profession. But, I am taking this viewpoint because of two primary trends occurring in the workplace. Jobs are becoming more and more information-driven and many of the “top jobs” of the future do not even currently exist. So, I intend to put my LIS training to work doing what we do best: researching and organizing information to support life-long learning.

So, fellow LIS holders, LIS Festivus is here. The airing of grievances is over. Now is the time for feats of strength.



Describing an organization in terms of “information ecology”

davenport information ecology

If you have ever had a job, you have undoubtedly experienced situations and instances where information and knowledge were not shared as freely as they might have been. While there are a lot of poorly designed information systems out there, I think we can all relate to the idea that our real frustration with these systems is the fact that information has not been captured correctly, consistently, or concisely. So, an “information ecology” is just an holistic view of the utilization of information within an organization with the emphasis on the way humans utilize information rather than the way it is managed with technology.

Thomas Davenport talks about how managers and executives simply throw technology at their information management (IM) problems: “They throw technology at information problems; and whatever the problems – many of which result from ignoring how people and information relate to each other, not software glitches or idiot end users – this ‘machine engineering’ approach continues to dominate us all”. (From the book “Information Ecology”. Looks like you can get a used copy on Amazon for $0.01 as of right now. Sticking with my low cost pledge.)

Davenport lists additional erroneous beliefs that lead to this same vein of illogical thinking about IM:

  • information is the same thing as data and this is easily stored on computers
  • modeling computer databases is the only way to master information complexity
  • information must be common throughout an organization
  • technology change alone will improve the information environment

I think this last one is the most insidious of them all.

Davenport continues: “our fascination with technology has made us forget the key purpose of information: to inform people. All the computers in the world won’t help if users aren’t interested in the information generated.”

And: “information and knowledge are quintessentially human creations, and we will never be good at managing them unless we give people a primary role.”

Davenport concludes that continuing to belief these IM myths leads to a “technocratic utopia” wherein it is assumed that technology can solve any and all IM problems and that IM begins and ends with the successful installation of computer software. Opposing this machine engineering view of IM, Davenport discusses the idea of an information ecology that puts “how people create, distribute, understand, and use information at its center.”

So, a healthy information ecology sounds like it would be a highly desirable state of affairs for any organization. Unfortunately, the concept of information politics sums up quite well the various reasons that this is not always the case. Managers are dis-incentivized to critically examine, much less change, the information politics within their organization because they believe that to do so may undermine the organization’s existing hierarchy. Davenport describes several models of information politics that are often encountered within organizations. Some aspects of any of these models might be desirable in certain organizations, in certain circumstances. I’ll try to define them as Davenport does from generally least desirable to most desirable.

Information anarchy, in which every individual fends solely for themselves, usually occurs when individuals are able to utilize their personal computer exclusively for their own information needs and senior management does not realize the importance of IM to the overall success of the organization. Unfortunately, information anarchy tends to take root in organizations where there is an especially high proportion of knowledge workers.

Information feudalism, similar in principle to information anarchy except that it occurs on the level of the individual department or business unit. Under this model, departments or business units develop their own miniature IM systems (as crude as they may be sometimes) with virtually no desire or attempt to coordinate these systems with the other organizational departments. Individual departments in this model generally view the sharing of information as relinquishment of power and influence on the organization as a whole. This model is regarded as slightly better than information anarchy because, presumably, there are at least a few individuals across the organization practicing IM within their own departments.

Information monarchy, arises when there is one individual in charge of all IM. While this model does have the advantage of their being at least one individual with general oversight of an organization’s IM strategy, it is noted to rarely be successful as there is likely little connection between the monarchy and the primary consumers and producers of information.

Information federalism, most ideal for many organizations, this model is described by Davenport as “representative democracy, a weak central government, and a high level of local autonomy”. This model relies on a high level of delegation from managers, but it does benefit both senior management and individual departments in that it requires a continuous two-way conversation regarding how information will be managed throughout the organization.

I plan to do more research on what steps might be taken transform the information politics of an organization. For now, I think this is a very good framework for the thinking and talking about the general information culture of an organization and how it might be improved. I want to look much more closely at how these specific types of information politics impact the CI internal data collection and internal data dissemination processes.

Intellectual humility, CI, and zombies


If you’ve seen the film World War Z, you may remember the scene in Israel where the Israeli character is driving the jeep and telling his passenger, the Brad Pitt character, about the Tenth Man Strategy used by the Israeli military and intelligence agencies. The basic idea is that if 9 decision makers agree on a course of action, then it is the duty of the 10th person to take the opposing point of view as a safeguard against groupthink. This was my second favorite example in the film of a social engineering strategy that could aid a society in surviving a zombie apocalypse. (My first favorite was the mass scale North Korean tooth extraction campaign. Barbaric but simple, effective, and brilliant.) If you are not familiar, there are a vast array articles and blog posts out there explaining the whole scenario. Here’s a good one.

A very interesting report from The Brookings Institution talks more broadly about how this concept was systematized in the Israeli intelligence agencies. While this report is definitely worth reading in its entirety, here is a taste:

“The devil’s advocate office ensures that AMAN’s (Israel’s Directorate of Military Intelligence) intelligence assessments are creative and do not fall prey to group think. The office regularly criticizes products coming from the analysis and production divisions, and writes opinion papers that counter these departments’ assessments. The staff in the devil’s advocate office is made up of extremely experienced and talented officers who are known to have a creative, “outside the box” way of thinking. … The devil’s advocate office also proactively combats groupthink and conventional wisdom by writing papers that examine the possibility of a radical and negative change occurring within the security environment. This is done even when the defense establishment does not think that such a development is likely, precisely to explore alternative assumptions and worst-case scenarios.”

I think anybody that does any type of research for any reason should always maintain a healthy fear of having made a mistake in their research and analysis, having missed something, or having completely misinterpreted something based on their own biases. If they don’t, they should. So, I’ve been thinking about this Tenth Man concept quite a bit and how to incorporate that idea into my own thought and work processes. I think a good analyst has to have confidence in their results, but they also need to maintain a keen awareness of the caveats that come with those results. Minor caveats at one point in time may become a major cause for re-analysis as new information comes in.

Which brings me back to intellectual humility. This is tough. In a knowledge economy, those of us that are knowledge workers are expected to actually know stuff. Knowledge is a highly coveted form of power in most organizations and it is often jealously guarded to the general detriment of the organization as a whole. Raises and promotions are often based on a person’s knowledge level, real or perceived, of their organization’s business operations. There are a lot of incentives to both hoard knowledge and appear more knowledgeable than one’s colleagues. To combat the internal intellectual biases we all experience, and to produce higher quality competitive analyses, I’d like to challenge everyone to join me in practicing intellectual humility as much as possible in their work and daily lives. This idea provides a lot of the inspiration for me to write this blog. I expect that by sharing my learning process here, I will get even more out of the experience.

For background, the Foundation for Critical Thinking defines intellectual humility as:

“Having a consciousness of the limits of one’s knowledge, including a sensitivity to circumstances in which one’s native egocentrism is likely to function self-deceptively; sensitivity to bias, prejudice and limitations of one’s viewpoint. Intellectual humility depends on recognizing that one should not claim more than one actually knows. It does not imply spinelessness or submissiveness. It implies the lack of intellectual pretentiousness, boastfulness, or conceit, combined with insight into the logical foundations, or lack of such foundations, of one’s beliefs.”

While I don’t think knowledge hoarding or bluffing about one’s own knowledge level are good intellectual habits for anyone, they seem to me to be especially bad habits for a competitive intelligence analyst, or any other type of information professional. I’ve been really trying to analyze myself in this regard because I don’t believe that intellectual humility is a quality that one possesses (like green eyes), it is a mental habit that must be practiced and cultivated by continuously being your own Tenth Man or Woman and asking yourself, “What if I’m wrong?”

More on the cultivation of these habits later…


Financials: Beginning overview on reading financial reports

One of my most pressing knowledge gaps right now is understanding corporate finance and being able to interpret and analyze financial information. Several of the major competitors I track at my current position are publicly traded, so once per quarter I’m faced with a new stack of 10-Qs, investor presentations, and earnings call transcripts that I feel like I can only barely scratch the surface on. It’s like reading a book written in the foreign language you took in high school but haven’t studied or used since: you recognize some of the words, but you know there’s just so much more there to be learned and understood if you could just breach the language barrier. So, a big part of this little auto-didactic expedition is probably going to focus on getting my mind around financial information for use in CI.

To this end, and sticking with my “low-cost pledge” for this website, I managed to find a copy of “Financial Intelligence:  A manager’s guide to knowing what the numbers really mean” by Karen Berman and Joe Knight for only about $8 at Half Price Books. The book pictured is the 2006 edition and it was published by the Harvard Business School Press and the Business Literacy Institute. A visit to the Business Literacy Institute’s website reveals that there is both a newer edition of this book, as well as versions for HR, IT, and Entrepreneurs. There is even a comic book version if that is your thing. And, yes, I’m serious. I haven’t dug too much further into the Business Literacy Institute’s offerings, but I would like to in the future as they seem to have some other interesting resources for education in this area.

Financial Intelligence cover

I’ve looked at a variety of other books on this topic, including textbooks for finance majors on financial analysis and reporting (way over my head and just really way beyond the scope of what I need to know for now) and a Dummies book (may dig more into that later). But one thing that immediately struck me about the Berman and Knight book was a quote from the preface regarding Karen Berman’s background:

“Her PhD dissertation focused on the question of whether information sharing and financial understanding on the part of employees and managers positively affects a company’s financial performance. (It does).”

I had lunch with some info pro colleagues earlier today and the conversation turned towards the difficulties we often experience in our respective organizations in getting people to share information and knowledge. It just seems to come with the territory for information professionals. That said, I immediately felt I was in the right place when I read the above quote, because it confirmed my own deeply held beliefs that information and knowledge sharing can only lead to a more efficient, more profitable business. I know one very positive move my current company has recently made is requiring all employees across all business functions to have at least a basic level of business acumen. We will now be evaluated on our understanding of how our company makes money and what leads to profitability. I thought this was a very smart move on the part of my company.

Back to Berman and Knight. Another quote that caught my attention:

“Finance is the language of business. Whether you like it or not, the one thing every organization has in common is numbers and how those numbers are tabulated, analyzed, and reported. You need to use the language to be taken seriously and to communicate effectively. As with any new language, you can’t expect to speak it fluently at first. Never mind – jump in and try something. You’ll gain confidence as you go.”

OK, so me “trying something” is going to be tackling reading basic 10-Qs and financial analyst reports.

The first chapter of the book “You Can’t Always Trust the Numbers” yielded a very pleasant surprise for me. The authors make the point that a lot of people get scared off from learning finance because they just see a bunch of numbers and don’t know what they mean. As a former liberal arts, social sciences, education, and information sciences major, I’m a little embarrassed to admit that I really avoided business courses as an undergraduate for this reason. I was pleasantly surprised to have someone spell it out for me that almost all the math in finance is just arithmetic.

The pleasant surprise continued when I discovered that the thought processes a corporate accountant goes through may be much closer in nature to the thought processes of an information professional than I previously imagined.

“The art of accounting and finance is the art of using limited data to come as close as possible to an accurate description of how well a company is performing. Accounting and finance are not reality, they are a reflection of reality.”

This plays out for accountants when they are attempting to make a judgment call about when to record the revenue from a sale. The general rule in accounting is that you would record it when the product or service is delivered. However, as the authors point out, this can be trickier than it sounds. For example, when a company sells a product that includes a four-year service contract, at what point in that four-year period should you record the revenue for the sale? The authors give a great example of how a company’s accountants, in order to make short-term profits look better than they really are, might be tempted to record all revenues at the moment of sale even though a lot of those revenues are only anticipated revenues (the check is in the mail…).

So, to track back to my earlier idea about potential similarities between the thought processes of information professionals and finance professionals, I was struck by the notion that, at the end of the day, we are both spending a lot of time attempting to group representations of ideas into “buckets” that will make sense and seem plausible to later consumers of that information. I’ll try to keep this line of reasoning going in future posts and we’ll see if it bears any additional fruit.

I’ll wrap up for today with some definitional items:

1) Income statement: “The income statement shows, revenues, expenses, and profit for a period of time, such as a month, quarter, or year. It’s also called a profit and loss statement, P&L, statement of earnings, or statement of operations. … The bottom line of the income statement is net profit, also known as net income or net earnings.”

2) Operating expenses: “… the costs that are required to keep the business going day-to-day. They include salaries, benefits, and insurance costs, among a host of other items. Operating expenses are listed on the income statement and are subtracted from revenue to determine profit.”

3) Capital expenditures: “…the purchase of an item that’s considered a long-term investment, such as computer systems and equipment. Operating expenses show up on the income statement, and thus reduce profit. Capital expenditures show up on the balance sheet.”

Final note: So far the book seems to be very well written and very much an exercise in “inserting the thin side of the wedge” on a difficult and foreboding topic.

Getting started with “Business and Competitive Analysis” by Fleisher and Bensoussan

BCA cover

Right now, the most pressing professional need I have is getting up to speed on the practical aspects of actually doing analysis. I plan, in the future, to explore a vast array of more philosophical and tangential topics, but for now I need to learn nuts and bolts CI strategies that work and that I can implement immediately in my own organization.


For this purpose, I picked up a copy of “Business and Competitive Analysis: Effective application of new and classic methods” by Craig S. Fleisher and Babette E. Bensoussan. This is not a free resource, but as of this writing either the Kindle version or a used copy can be had for less than $40 on Amazon. So, I’ll just classify this one as “low cost”. Based on the TOC, and a quick thumb-through, I think the book will prove to be a well-spent $40. And, I’ll refer to this text as “BCA” from here on out.


So, I’ll just dive right in with my learnings from the first chapter.


Strategic decisions (a focus of the book), as differentiated from tactical or operational decision, usually:

·      have a medium to long-term horizon

·      emerge from a formalized planning cycle

·      require substantial information and inputs from key people and functions within the business

·      affect the business’s direction and activities

·      become a roadmap for subsequent decision making


There is significant disagreement about the term “analysis” and the book lists a variety of working definitions from various sources. For the purposes of the BCA book, analysis is defined as: “The skilled application of scientific and non-scientific methods and processes by which individuals interpret data or information to produce insightful intelligence findings and actionable recommendations for decision makers.” This definition sounds about right to me and certainly jives with the goals of my own CI team.


And, as the authors point out, just like most things worth doing in life, analysis is both art and science. Competitive analysis relies on research methodologies similar to those used in the sciences. Meanwhile, these research methodologies bump into the giant gray area known as the “real world” and, as such, analysts may never be able to prove or disprove any of their assertions. This is where the art of analysis comes in and according to Fleisher and Bensoussan analysts are essentially tasked with answering “What?”, “So what?”, and “Now what?” questions.


Not unlike the information lifecycle that I encountered in my information sciences studies, BCA depicts an “intelligence cycle” composed of the following components:

1.    Planning to determine client needs and requirements

2.    Collecting and processing data, classifying these data, and reducing them to usable data sets

3.    Analysis (which is the true focus of the BCA book)

4.    Disseminating intelligence to the client or organization

5.    Evaluating whether the client’s needs are/were met and incorporating feedback into the next planning process


Over the course of my upcoming CI studies, I hope to delve into each of these areas to learn methods and strategies for greater efficiency and client satisfaction.


Fleisher and Bensoussan then spend a page or so talking through the ways competitive analysis interfaces with actual decision making in an organization, and the many factors that can get in the way. These are the usual suspects such as information overload, poor decision making due to a lack of analysis, the dangers of both misinformation and “paralysis by analysis”, rapid technological change, and organizational positioning versus cost or differentiation. These, as well, are topics I hope to spend more time on in the future especially as they pertain to demonstrating the ROI of a competitive intelligence program.


One important point that the authors make in this chapter that probably bears repeating is the idea that “information alone will not be useful to the consumer if it is not interpreted correctly and presented in a credible way”. I interpret this statement to be in line with a major component of my approach to this field. That being, that real analysis is virtually impossible unless the analyst in question has sufficient knowledge of the industry they are analyzing. As such, a major portion of my future studies, and blog postings, will be specific to learning the healthcare/life sciences industry.  I’m sure there are many CI analysts out there that have found professional success performing work on a vast array of industries, so I do not wish to discount that approach entirely. If it has worked for them, then more power to them. However, for myself, I have great difficulty imagining how I could perform any kind of substantial analysis on an industry as overwhelmingly complex as healthcare and life sciences without an equally substantial amount of industry knowledge. Perhaps my thinking on this topic will evolve over time, but for now my working assumption is that to properly do the kind of CI analysis I want to do, I’ve got to know my industry inside and out.


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