What’s going to happen and what do we do?

When gathering Competitive Intelligence, there is often more than one path we can go down.

To help us decide the best path, we use a tool called Analysis of Competing Hypotheses, or ACH to keep things simple.

Analysis of Competing Hypotheses

Created in the 70s by the CIA, to reduce limitations in its analysis, ACH is proven and effective, and we find it to be a great tool. At the same time, there is a lot of conflicting information out there about how it works. We’ve found it has often been explained in a way that makes it sound more complicated than it actually is.

In short, ACH works as a 7 step tool to test all the options open to us. It then judges which path is best for our clients.

Step 1

Collect the information surrounding the problem, and start to think about what is going on and what you are going to do about it.

List all the things that could be going on. No silly answers excluded or criticised.

Step 2

Find the evidence, assumptions and deductions for and against each theory found in Step 1.

Step 3

Put the theories where you have found evidence into a matrix to enable you to compare and contracts with each other. Try your hardest to disprove each hypothesis.

Each hypothesis is given a number to rank them between -2 and 2 to test the evidence, assumptions and deductions against the hypothesis. The higher the number, the more likely that evidence supports the theory.

ACH Matrix

Some try and put words to the numbers describe the likelihood of proving the hypothesis, but we believe words can be subjective, while numbers are not.

Tot up the numbers at the bottom.

Step 4

Write down all the findings from Step 3 and for any gaps in the evidence which proves or disproves what could be going on.

Step 5

Remove all theories which are wrong and inconsistent.

Step 6

Then test your conclusions using sensitivity analysis, which weighs how the outcome would be affected if crucial evidence or arguments were wrong, misleading, or interpreted differently. The critical evidence and the consistency of important arguments are double-checked to make sure the conclusions are sound.

Step 7

Write down your conclusion and why you have come to your decision. Include the alternatives and back it up with the evidence which made you reject them.

To be clear, the words — evidence, assumptions and deductions mean:

Evidence — verified source of information which proves something is known to exist or had occurred.

Assumptions — What you take for granted and may blind you with your industry experience.

Deductions — The process of reaching the answer by thinking about the known facts.

For instance. The Russians will support the Syrian regime because they want to maintain their influence in the Middle East and have a Mediterranean seaboard.

Octopus Intelligence

We are Octopus, the Global Competitive Intelligence Agency. Get the better of your competitors and market.

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If you would like a pdf version of this, please feel free to email us on hello@octopusintelligence.co.uk

We help you beat your competitors, increase revenue, protect equity investments, reduce uncertainty and risk with Competitive Intelligence & Due Diligence

We help you beat your competitors, increase revenue, protect equity investments, reduce uncertainty and risk with Competitive Intelligence & Due Diligence