December 2004

No. 036

"Transforming the Cheng and Ch'i Into Finished Products"

When you know what you need to collect, openly or secretly, you are then able to figure out what it means. This key step in the intelligence process requires the raw information go through a transformation into finished analytical products. The result is the most highly intelligent reporting available being filtered by the best minds - their judgments, intuitions, conclusions, and projections. This is the work of analysts.

Transforming the Cheng (orthodox, expected) and Ch'i (unorthodox, surprising) into finished intelligence is a step-by-step process. The analyst studies the raw information, argues, debates, and reflects what the material means within the context of what needs to be known. Colleagues check and recheck the facts, resolve the inevitable inconsistencies or irreconcilable differences in the data, question the assumptions, assure that as many acknowledged experts as possible, time and money permitting, have been consulted, develop some tentative hypotheses into theses, and then test and retest these theories time and again until confident that the theses are valid and reliable. All must be done in a timely manner.

As can imagine, all this is a tedious, time-consuming, frustrating, highly contentious business. Even agreement that a particular fact is true lends to knowing there is seldom agreement as to what it means. By intention or design, the challenging or competitive nature of the team contributes to greater refinement and checks and balances. Each expert will express their own consensus and no two will agree exactly the same; nor, is it necessary to sharpen the result. Now put into the mix some helium of officers to the expansion and the range of opinions will usually continue expansion until the balloon bursts. This is very healthy for the process and necessary to draw from the field as well as from the library. Thus in this shoes and slippers scenario, it is a ferocious pain in the neck for everyone, yet it grinds so substantially fine.

Market intelligence applies to business just as well as it does to geopolitics. Like the OODA Loop cycle (Observe, Orient, Decide, Act), there is an intelligence difference in business with customers, competitors, and suppliers, but no enemy to destroy. Business is win-win; war is win-loose. The nature of war is to destroy the enemy. The nature of market intelligence in business is to help shape our market.

For example, defect-free quality is what customers expect (Cheng). Quality is meeting or exceeding the customer's expectation. In the 1950's and 1960's Cheng, some might have associated Japanese products with what adjectives - cheap, poor quality, etc? In today's Ch'i, some might associate Japanese products with what adjectives - highest quality, world-class, etc? Nothing remains stagnate or the same, and neither should we.

So furthermore, what makes an intelligence team great? The answer is cooperation (Cheng). What then could be missing (Ch'i)? It is the intelligence team swimming upstream dealing with failure. Performance plus repeat performance leads to certainty. The more experts the fewer the errors. It is tough to argue with fact based on decision-making. The greatest danger is making a decision not based on the facts.

Fact finding tells us what we thought was the problem, may not be the problem. Does the decision have to be acceptable to the group or to only an individual? Here is where the analyst must decide.

The intelligence analyst must decide well - by deciding which experts to back or whether to ignore them all, by resolving internal differences or not, and by sending forward to policymakers a series of judgments, intuitions, conclusions, and projections that will, in the end, prove valid. How the differences are resolved, and how the choices are made, marks the differences between a good intelligence team and a poor intelligence team. After all, there is no question so contentious or controversial that you cannot reach an agreement about it by simply processing down to the lowest common denominator. For example, if the question is what China's economic growth rate will be a year from now, and half the experts say "higher" while the other half say "lower", you can always get all the experts to agree that a year from now China's growth rate will "change" (Cheng). So what, that judgment may be accurate, but it is useless to policymakers.

The secret for an intelligence team is to resolve differences in a way that is useful to the policymakers. Very often the best way that an intelligence team can do this and protect itself but to help policymakers make the best decisions is to build differences of opinion into the finished products. Each intelligence team member should outline their own judgments and also present to policymakers that on this particular issue, expert opinion is divided. In addition, they should outline what the differences are, and then explain whether these differences are based on a dispute over the raw facts themselves or over the meaning of agreed-upon facts (Ch'i). Excellent intelligence analysts should never be hesitant to include dissenting judgments along with their own.

Indeed, it is a disservice to policymakers not to let them know that on a particular question a wide range of opinion exist. And when there is general agreement on a particular question or issue, which does happen sometime, it is important that policymakers know this too. Policymakers should take note, except in rare exceptions, when all experts agree about something, they are almost always wrong.

The last step in transforming the Cheng (orthodox, expected) and Ch'i (unorthodox, surprising) into finished intelligence is the actual production of the report itself. When the turf wars are over and brilliance has overcome, the results must be written clearly and concisely. No matter how complex or contentious the question or issue, the report must be written so that policymakers can grasp its essentials easily and quickly, without struggle or mental contortions. This is writing pure and simple. Obviously, not all analysts are good writers. So, the best intelligence teams have at least one or two excellent writers to accomplish this most critical task. The analyst writer is vital to the production of excellent intelligence reports. The transforming of the Cheng (orthodox, expected) and Ch'i (unorthodox, surprising) into a finished intelligence report par excellence is not effective unless its essence can be can be quickly consumed by an often brilliant but exhausted policymaker.

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