Strategic Intelligence: The Cognitive Capability to Anticipate Competitor Behavior

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Why is it important?

Why do some entrepreneurs outperform others? How can companies succeed against tough competition? Certainly, some benefit from unique resources, such as patents, and others can winnow competition, as through mergers. But some have entered highly competitive markets, lacking obvious resources, yet managed to achieve impressive success: think Under Armour, Wal-Mart or Home Depot. Here we test how advantage can stem from managerial cognition. We measure two kinds of cognitive skill in market participants, and then let them vie for cash in intensely competitive markets. Some end up with far more profit than others. Tracing the root of high performance, we find it is predicted by a combination of analytic skills, the ability to solve abstract problems, and strategic intelligence—ability to anticipate competitors' behavior and preempt it.