TL/DR: When looking to drive change, corporate CI units need to stay focused on providing high quality intelligence. To provide high quality intelligence CI units need to be able to determine the Highest and Best use for each of their resources. This is particularly important when CI units are managing/working with contracted lower value activities like data collection and analysis.
The concept of highest and best use comes from how local governments tax land and buildings. The tax is based on an assessment of the property value, which is depends on two factors:
- How the land is used
- How the land is zoned
Under this system, a property in one town zone is assessed at a different rate than a similar property in a different zone and the assessed value in the most restrictive zone is much lower than in the least restrictive zone. Thus, vacant land in a forest zone will have a lower rate than vacant land in an industrial zone. This practice is called “Highest and Best Use” and it creates an incentive for the landowner to maximize the use of the land while maximizing the town’s tax revenue.
The concept of highest and best use applies to many other areas of life, including CI. A CI unit has tangible value to the company, and the highest value for the CI unit is to drive change while efficiently using company resources. Since budget used for CI cannot be used for other purposes, it is imperative for the CI unit to operate where it is of most value. This is the highest and best use.
In the case of CI, Highest and Best use is based on CI activities that can be categorized into different zones. Typical CI unit activities range from pure data collection to strategic decision making. Each CI activity has an inherent value based on how that activity contributes to a company’s operations. The value of a CI activity is based where it falls on the CI continuum, from raw data collection through analysis to information to intelligence and ending at action recommendations.
If we compare the CI continuum to any other production chain the similarities are evident.
The lowest value in any part of a production chain is the unfiltered raw material. Whether it is iron ore or collecting shopper data, the end result is a low value product. For CI, the raw data is a news feed, a data set, an interview, or any other form of unfiltered data.
Cleaning and crushing the ore and filtering the data into broad categories moves up the value chain, a reflection of the labor and capital inputs. For CI, this process can be as simple as removing duplicate or irrelevant data and stripping out noise or undesired data.
Further refining, either by smelting the ore into iron or putting data into classifications, groups, similar improvement, produces a more useful and valuable product. In the CI world, this can be sorting data by characteristics, or by using specific sources.
At this point, value starts to increase at a faster rate, and product uses grow. As value increases, the skills needed to work the product also tend to increase.
Going back to the value chain and the examples of metal and data, smelted iron is graded, a process that opens the door for mixing with other metals to create alloys. With data, it is analyzed to produce information such as geographies where shoppers prefer one competitor’s product over another or where a product sells better. In CI, this could be the point where the CI data is analyzed to find competitive features, correlations between data points, and similar factors.
An alloy or analyzed data is not a true finished part. Both need further processing to become useful. Just as alloys are shaped to fit a use, such as a wrench, so is analysis shaped to address a specific CI need. Analysis is not Intelligence any more than an alloy is a finished product.
This brings us to the point of highest value. Once an alloy is shaped into a wrench, the real value of the wrench is in its use to tighten a nut. In the case of data analysis, its value is to inform and drive a decision. The true value of any product is based on how it is used, not what it is. The same is true of CI. The highest value of CI is not the intelligence, it is how the intelligence is used to drive action.
If we look at the CI Continuum on a value and cost scale, there is an inverse relationship: the activities with the lowest per unit cost also have the least value. At the same time, the highest value actions also have the highest cost.
When we apply the theory of highest and best use to the world of CI and follow the value chain, it becomes apparent that the lowest part of the CI value chain is raw data, which is both the most plentiful and accessible to all competitors. As data moves up the CI value chain, more skill is needed to process that data and make it useful for the next step. What also is apparent is that the most valuable activity of a CI unit is to drive action based on intelligence produced through data analysis.
Within the CI vendor ecosystem, there are companies that operate all across the continuum. Some can take on complete CI assignments from gathering data to producing recommendations for action. Others are specialist firms that collect raw data, that sift and clean data, or that refine data and produce data sets. Many firms in the vendor ecosystem use filtered and refined data for analysis, while others use analysis produced at earlier stages in the continuum to generate intelligence. Vendors cannot drive action within an end user company. That task, which is the highest and best value of CI, can only be completed from inside the company.
Corporate CI practitioners can operate at any point in the continuum from gathering data to driving change. The ready availability of vendor resources creates ample opportunities for the corporate CI practitioner to outsource the lower value activities and focus on higher value actions. For most corporate CI practitioners, their highest and best use is to drive decisions informed by timely, accurate, and effective Intelligence. A company CI professional who spends most of their time gathering data, filtering data, or even analyzing date, is not leveraging their position to its highest and best use.
Which brings in the final consideration: Is your CI unit operating at its highest and best use?
Author: Erik Glitman, CEO Fletcher/CSI