The annual intelligence or “black” budget of the United States is estimated to be $50 billion, of which only a fraction is “HUMINT” or the people-to-people intel work we commonly associate with spying.

Mark DeSantis, RoadBotics

This is surprising given that “information…gathered from human sources” (as the CIA defines HUMINT) is often the most difficult to get, yet valuable nonetheless because it is often the most actionable. Entrepreneurs also rely on HUMINT when they do market discovery, which, even though it may not have the allure of foreign espionage, is no less challenging. However, experienced spies and entrepreneurs know the hardest part of their intel work is not gathering it, but interpreting it. How do you know what you learned is valid and, hence, worthy of action?   

Stanford professor and tech entrepreneur Steve Blank popularized the use of market discovery which, according to Blank, is all about entrepreneurs “getting out of the building” and talking 100 people to find out if their start-up ideas are actionable. Is there a problem? Is it worth solving? Will people pay to solve it? How many people have that problem? Can we (or anyone) practically solve it? Before charging out of the building maybe entrepreneurs can learn from their counterparts in the CIA, MI6 and KGB to make their efforts more worthwhile.

In his book Intelligence in War, noted historian John Keegan studied spying from past millennia to the World Wars of the 20th century. His surprising conclusion is that it doesn’t matter as much as you might think. It’s not useless, just maybe not as useful as many believe. For Keegan, there are several reasons for this. First, it is hard to tell if the intel is or is not misinformation. During World War II, the German military was convinced the Allies would invade occupied Europe at Calais (north of the actual invasion in Normandy, France) because Hitler’s most prized spy, codenamed “Garbo,” accumulated a mountain of HUMINT to that effect. The only problem was that Garbo was, in fact, a British spy who was feeding the Germans a stream of ever-more elaborate deceptions. This misinformation campaign was so successful that Garbo received the Iron Cross, one of the German military’s highest decorations, after the invasion at Normandy.

Entrepreneurs doing market discovery don’t necessarily need to worry about the dangers of deliberate deception. Nevertheless, they do come up against the experienced, high-status “expert” whose purpose is less about thoughtful, objective input into an earnest market discovery effort, but more about dispensing “we-already-tried-that-10-years-ago-and-learned-it-will-never-work” cynicism.   

A second reason Keegan devalues intel is that we hear what we want to hear or, more pointedly, to search for, interpret, favor, and/or recall information in a way that confirms preexisting beliefs or hypotheses.

Daniel Kahneman and Amos Tversky shared a Nobel Prize in economics in 2002 for proving conclusively that we all have a natural inclination – no matter how motivated, smart, credentialed or well-intentioned – toward this “confirmation bias.” Saddam Hussein’s chemical weapons program was a HUMINT “slam dunk,” according to then CIA Director George Tenet and ultimately provided the premise for the invasion of Iraq in the early 2000s. Entrepreneurs are particularly vulnerable to confirmation bias, given the huge emotional commitment they must make in abandoning lucrative jobs and girding themselves for the sacrifices ahead.    

Another reason Keegan cites for the limited value of intel is the time and effort to determine whether the HUMINT is valid, where that same energy could be better used elsewhere. A reason the HUMINT is a fraction of the total U.S. intel budget is not a reflection of its lesser importance, but more about the fact that a vast array of other non-human data sources, like communications (COMINT), electronic (ELINT), and signals intel (SIGINT), for example, are needed to enhance and/or confirm or disconfirm the HUMINT.

According to Statista, global spending for market research in 2017 will reach $45 billion, with a substantial portion going to countless focus groups. Yet according to Harvard Business School professor Gerald Zaltman in his influential book How Customers Think, 80 percent of new products or services fail within six months when they’ve been vetted through focus groups.

New products and services come far more from action than informed speculation because, as Steve Jobs knew, “A lot of times, people don’t know what they want until you show it to them.” In the end, Keegan and Jobs are not saying that rushing to action is a good idea, either. Rather, sometimes it is only when you’re actually doing a thing that you learn if that thing is really worth doing in the first place.

By Mark DeSantis, RoadBotics