0:14 hello and welcome to business lessons from the military I'm your host Kevin demel and we're here every Tuesday at 11:00 a.m. Pacific Time 2: p.m. eastern time and for those of you who watch the show you hear that every week don't you so I'm wearing my khaki green shirt because it's business lessons from the military my daughter complimented me on on my outfit this morning so I'm a I'm a proud dad um so as I mentioned in last week's show we're starting on a new topic and this is actually going to be
0:49 our final Topic in Marine Corps Warf fighting Doctrine as we apply it to the civilian business world and we're going to be talking about intelligence and as I joked um yesterday um not intelligence as in smarts but intelligence as in you know spy versus spy gathering information and that sort of thing you know for all of you who are fans of Mad Magazine like me when I was a kid you know so um we're gonna we're going to be um covering this topic over the next several weeks um so we're g to do a little bit of an introduction today and
1:26 and talk about why this is an important uh sub subject to deal with and then we'll get into more about the the house and and and and all of that um in subsequent show so let's go ahead and bring up our oops wait a minute let's start over again or let's try to start over again okay uh there we go okay now now we should be able to share it indeed we can
2:01 okay so get this up and bring this over here all right so business lessons from the military um you know for those of you familiar with the show you've seen this lots of times now and um we have the three pillars of attainment this is the basis for all of the shows and um today um as we always do in this show we're going to be in the Pursuits pillar in the finances uh M um and uh we're not really going to be delving into the other Realms uh I think uh today um but
2:37 we may in in subsequent uh EP subsequent shows on this topic so um as I said we're going to be talking about intelligence and today we're going to be talking about the objective and the purposes of intelligence okay so there are essentially the purposes of intelligence break down down into two okay the first is to reduce uncertainty and the second is protection protection of our of of our business
3:12 so um let's talk about reduce uncertainty first of all the reality of the business world is we're never going to know with certainty how things are going to go okay whereas I think a lot of the a lot of the motivation for starting a business is to reduce our uncertainty I i' I've I've said this in in previous shows although I think not recently um the the difference between working for someone and having your own business
3:48 especially these days is when you work for someone you have one client uh you know unless you have two jobs um when you work for yourself when you have your own business um oh here we go got someone joining um when you work for yourself um oops what are we doing here hang on there oops wrong one let's uh pin okay and there we go okay
4:27 so um and I think we need to mute there we go okay so uh sorry about that so um when we um when we have our own business so we have multiple clients and that actually reduces some of the uncertainty because instead of one person in essence or one organization holding the keys to our finances when we have let's say a business with
5:02 10 clients so we have essentially 10 people who um hold the keys to the finances of our business and if for whatever reason we might we lose one of them we're not going to lose 100% of our income maybe we're going to lose 10% if they're all roughly equal maybe less than that if it's a small client or maybe we choose to drop a small client because that piece of business is no longer profitable for us so um our own business is inherently un less uncertain than
5:38 working for someone else however there is no way to remove the uncertainty completely okay we're never going to have perfect knowledge we're never going to um be able to um you know have deep enough insight into the marketplace into our competitor okay so the best we can do is reduce uncertainty make it Le have make it have less of an impact and by the way there will be times when we think we have reduced uncertainty and yet it's it
6:15 turns out that our perceptions of the marketplace were wrong or there was a there was an unanticipated competitor or maybe there was competition coming from a quarter that it we didn't even think about okay that's just the nature of life it's the nature of business but proper Gathering and use of intelligence can help us lessen the impact of of those types of issues okay and then the other one is um protecting our our business
6:51 so if if we again we cannot be 100% protected okay however if if we're um diligent about spreading our um or or how how shall I put this um in in our gathering of intelligence we can do a better job of protecting our business our Enterprise um from things that competitors may do from potentially from from internal threats Okay so um I I
7:31 let's let's take an example of this okay um if you're following the news you're you're probably aware the business news that is you're probably aware that the United Auto Workers are on strike against the the big three automakers GM Ford and stellantis which is the owner of um of uh Chrysler Jeep Etc okay so um they have the UA W has a new president I believe his name is Shan Fain and he has taken a much different
8:07 Tech in dealing with negotiating for a new contract for for the for the members of his Union okay and um I suspect I don't know this for a fact but just keeping up on this this topic I suspect that the heads of the three large auto companies I don't think they had very good Intelligence on Shan feain and and what he planned to do um and one of the reasons I say that is um he's he's been very successful in
8:43 constating them and and and their their response back has has frankly been pretty feeble I mean it just has and this sort of the the tactic he's used of striking all three automakers at the same time which has never been done before and not striking across the board which would have you know used up the the funds that the union has to pay the Striking workers so they could kind of hang on while this is worked out rather than
9:18 doing that he has um done targeted strikes on various plants to sort of Ratchet up the heat on the different automob manufacturing companies right so there somewhere along the line I suspect that the intelligence that they that the car companies gathered about um about the UAW was not very good and certainly they were not um creative enough in in in how they looked at a
9:55 potential strike to take into account what what's going on it it it it it seems right um and and in a way that hasn't happened before um the three car companies are really operating sort of against each other um and in competition with each other than than have hap than has happened in past strikes so and I'm not saying by the way that that a lack of proper intelligence is is the only um issue in the um Auto worker structure but I think it's a part of it and
10:32 perhaps part that was not overlooked especially since the automobile companies haven't had to deal with something like this well they they've never had to deal with a strike against all three of them the same time but they haven't really dealed with dealt with this sort of level of labor unrest in a long long time right so so that that is causing them I think as I said a great deal of consternation so the bot bottom line objective then to go back to um our discussion here is if these are our two purposes then the bottom line objective
11:08 of intelligence is to support decision making because in the end okay as people who own businesses as people who are leaders in businesses that that's our job is to make the best decisions we can so the better the better the int Ence we have the better the decisions we can make so that then is the fundamental objective of OB of of intelligence it's to support I might have put sound
11:43 decisionmaking although we're not always going to make sound decisions it's to support um decisionmaking that hopefully we will be as as sound as good as we can make it okay now to go back to something for just a moment before before we move on we're never going to have perfect intelligence we're never going to have perfect market knowledge so we're always going to be have to be operating in a little bit at least a little bit of sort of the fog of business now you probably heard this term the fog of War right war is is even more chaotic than business
12:19 the battlefield is very very chaotic right um no no military commander is ever going to really know all of what's going on on and if he takes the time to do that events in the battle are going to overtake him and almost for sure he's going to lose okay and to a certain extent although the the the pace and the stakes are not as high in business nonetheless trying to gain you know perfect knowledge perfect information for most businesses today if not all
12:55 that's a losing strategy because you're G to get past you're going to get um yeah passed by by your competitors while you're still sitting there analyzing the data Gathering more data reanalyzing the data and all of that so the objective of intelligence is to help us make um it helps support decision making at a pace that allows us to remain competitive okay that's really the goal all right so let's let's move on now so there are four
13:30 tasks I don't know why this thing's going backwards I'm okay I'm not going to touch the not going to touch the mouse anymore there are four tasks that need to be performed in order to support the objective of intelligence okay and we see them here evaluate existing conditions and capabilities of the competition estimate the competition's possible courses of action identify the competition's vulnerabilities and then develop and evaluate courses of action okay okay so let let's let's talk about each one of these first of all evaluate existing conditions and capabilities of
14:06 the competition okay what what state are they in so let's take a different example now let's take um retail drug stores okay so there's there's there's really three major drugstore chains these days there's um Walgreens there's CVS oops and I went up on the third one what's the third one Walgreens CVS Right Aid okay Walgreens CVS and R Aid okay so of the three probably Walgreens is the
14:44 strongest um and R Aid I is it Right Aid so I think CVS is the next strongest and I think R Aid recently filed for bankruptcy protection check chapter chapter 11 protection okay so if if you are involved in the retail um Pharmacy business the retail drugstore business right what the the existing comp the existing conditions of your competitors okay one of them is in pretty bad shape it's you know it's in
15:20 Bank it's in bankruptcy reorganizing um another is not in particularly fantastic shape either and Walgreens is you know probably the best of the lot but even Walgreens is not in great shape okay one of the things is more and more people are buying their prescriptions online through the mail right it's generally cheaper um there's a lot of there's a lot of um competition for pharmacists um and and so that makes running a a retail drugstore difficult so so you know evaluating the existing
15:57 condition um of your competitors that's that's your first task in gathering intelligence knowing what the competition what the state of the competition is and what its capabilities are okay so um for example the the the retail drug company that's in um that that's in bankruptcy one of the things it's doing is it's shrinking its um its array of services that it offers okay so it's its capabilities are actually becoming lesser if you will okay so as
16:34 you look at that market does that create then an opportunity for one of the stronger players to grow in that area where the other one is Contracting okay that's that's one of the that that would be already getting down to number four okay so as you look at the existing conditions and capabilities of competition what you're looking for is change how those things are changing and how they're um likely going on to the next one then how they're likely to continue changing in the future right so
17:10 what are so estimate the competition's possible courses of action okay now I I the word estimate comes right out of Marine Corps Warf fighting Doctrine and I think it's it's it's exactly the right word we're not going to be able to identify the competitors's possible courses of action we really have no idea I mean unless we're doing actual you know um corporate Espionage where we have someone in the company and I'm I'm not talking about Intelligence on that
17:45 basis I think that's we would agree that that's unethical um to be spying at that level um nonetheless we can take a look at the condition and capability ilities of a competitor and say okay what options do they have as they move forward okay so for example for the one that's in for the the retail drug company that's in bankruptcy what what options do they have moving forward well one of them is that they could further shrink their operation okay another is that they
18:22 could expand now the question is you know do they have the capital to expand so one of the things about the retail drugstore business these are all publicly traded companies right so their financial statements are available to the public they you know there's not they you can go on to what's called Edgar it's part of the sec's um website and you can download their 10ks and their 8ks Etc these are um documents that that um give information on the financial condition of the company so you know do they have Capital available
18:57 for expand expansion if if they don't then you know that may not be a viable course of action for for that competitor and then looking at the capital markets so interest rates are higher um uh local and Regional banks are pulling back on lending um the larger banks are still lending but you know are they lending for example to a company that's in a chapter 11 right so um these are the kinds of things that need to be estimated in order to identify possible courses of action
19:35 that the competition can take now by the way you're doing the same thing for your own company right but that's not intelligence because you're making those decisions you're you have all the information you need to make those assessments so we're not talking about you while you're going to be doing these for your company as well answering these questions questions or doing doing these tasks I should say for your company as well when when we talk about intelligence there's an aspect of uncertainty in what in what we're able to evaluate estimate identify okay all
20:14 right so having evaluated and estimated the competition task number three then is to identify the competition's vulnerabilities okay so for example I'm I'm going to stay with the retail drugstore example because I I I think this is a um it gives a lot of a lot of fodder for for investigating these different tests so they're in chapter 11 they're they're just very vulnerable overall first of all will they have the resources to successfully exit from a chapter 11 what
20:51 chapter 11 is a reorganization or are they likely to not be able to get enough what's called um um deor that's there's a particular type of financing that a company in bankruptcy gets there's a name for it it's deor in something financing I the I'm going up on the term but are they going to be able to get enough financing to be able to successfully um reorganize and exit that chapter 11 or are they going to have to convert to a chapter 7 liquidation right these are these are um
21:27 these are questions then that will identify your competitor's vulnerabilities so if it looks like that they won't have the financial resources to exit and they may have to liquidate so then that's a big vulnerability on the part of that competitor it may say hey um I've got a competitor that may be ripe for for taking over right and I can sort of risk with the marketplace of of one of my major competitors now there obviously
22:02 there's there'll be regulatory issues etc etc um but um in the retail drug business because there's only basically three big companies um but you know in your own business you know do you have a competitor that's having similar problems and and maybe you know they're vulnerable to just being taken over okay and and and and and your ability to acquire them enhance your business um give you a larger um position in the marketplace maybe bring in some kind of strategic product that you know they
22:38 have but but you don't have um so looking at their vulnerabilities and what what can you know how can those vulnerabilities um be taken advantage of all right finally develop and evaluate uh courses of action so after after you've gone through the first three tasks using all that information that you've gathered all that intelligence that you've gathered now you want to develop an and evaluate what can I do to take advantage of this
23:14 situation okay now by the way we've been talking about this since I've been using the retail drugstore um example okay and I've been talking about how can the other compe crors take advantage of the one that's in bankruptcy now at the same time let's flip this on its head the one in bankruptcy has got to be evaluating the existing conditions and capabilities of its competitors that are much stronger than it is okay and they've got to evaluate the competitor's possible courses of actions so the flip side of
23:52 of you know Walgreens and I'm not saying they're doing this but let's just say for the sake of of discussion Walgreens is thinking of of acquiring the its competitor that's in bankruptcy the competitor that's in bankruptcy one of one of its um one of the possible courses of actions of action that it should be evaluating or estimating Visa visits competitors is is Walgreens in a position to acquire us and what does that mean right okay identifying the competition's vulnerabilities well you know what got the one that's in bankruptcy into bankruptcy
24:28 okay and and are those vulnerabilities present in its competitors as well maybe they're just you know they just haven't been hit hard enough by it quite yet but you know next year they will be so you know these all the competitors in the marketplace should be gathering Intelligence on each other and it doesn't it doesn't matter whether one is stronger than the other both need to be gathering these so they understand the overall Marketplace in which they're operating okay um now let
25:04 me throw another one into this because I mentioned it a minute ago if there are regulatory changes okay how is that going to affect your competitors right are they in a position to be able to deal with that regulatory change do they have the capacity the capital the um intellectual the the knowledge they need to do that if not you've you've identified a a vulnerability right identify the competition's vulnerability and and then how do you
25:40 take advantage of that so maybe there's a way that you know you you um enter in some kind of Alliance whereby if you have the ability to um deal with that um uh that regulatory change effectively you you know somehow offer that service to competitors um in in a way that that makes you stronger it doesn't wipe them out um but it could put you at a competitive Advantage right that would be then develop and evaluate courses of action okay so um these are the four
26:18 tasks of of fulfilling the objective of intelligence which is just to go back to it oops support decision making okay now all of this I think I mean I didn't go through an example of how this works in in in the battlefield or you know in the military it I hopefully that's that's that's self-evident but you can see that if you know if you need to even if you're just you know a company commander and you've got a sole objective right so you're going to have to look at you know the battlefield what what is what is the
26:54 enemy capable of what is the enemy's current condition you know what kind of um um Logistics issues might they be dealing with what is the state of their personnel etc etc right all of these things have essentially a onetoone correlation into the business World okay so um while you know we're not looking to literally you know conquer by arms are competitors in the business world yet all the same issues come into play personnel Logistics um
27:30 intelligence um re resources um you know lay of the land I might not necessarily be the physical lay of the land but lay of the land could be the marketplace right um interest rates available availability of capital um the regulatory structure those sort of things so all of these are are you know literally onetoone relationships they all mesh together um and and so you know if you you I I don't know if you're a fan of of watching um um you know war movies especially old ones like from the
28:06 40s 50s um I do and and but it's fun to watch them to see how all this stuff sort of plays out and and knowing then these four tasks of of of of um pursuing the objective of of intelligence you can you can sort of watch the movies in a different way um and it's it's a fun way to develop your business umen okay well we're we're we're just about out of time here so I'm going to go ahead and stop the screen share um but um okay so um that's what I have for you today um and
28:41 next week we will continue on this subject I oh okay that's interesting no okay um anyway um so tomorrow um at 12:30 pm Pacific time is my show um people making money and we're going to be talking about um uh credit scores and uh you know as I joked yesterday there there's sort of a necessary evil in in life today um if
29:18 we're going to buy a house if we're going to buy a car pretty much anything you know any kind of lending borrowing situation I should say so a credit score is going to come up so we need to know about them we need to know how they work what kinds of things affect them Etc um and so that's what we're going to be talking about tomorrow and then next week starting on Monday at 10: am we'll be um back with trusts and Estates weekly my guest is uh Von Marie Thomas she's an accountant who specializes in trust and estate matters uh she's based in New York City the Big Apple so um
29:53 hopefully you will you'll be able to tune in to hear uh Von thoughts a very very um bright uh I guess I can say this CU I'm I'm probably like twice her age very very bright young woman um and and someone that I've been fortunate to get to know um over the last several months um and then a week from today we'll be back with the next episode of business lessons from the military so um you know before I um sign off um uh Winfred um any any
30:28 questions on on what we covered today give you an opportunity to sort of chime in here okay guess not all right well very good so that's our show for today wishing you a very good rest of the day and a a great rest of the week hopefully we'll see you tomorrow and signing off Marie darling You Are My Bell thanks so much folks