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Turn Noise into Insight

How to achieve an Information Edge

The world is drowning in information to the point where managers have reached

cognitive overload. Information has less value, so marketers of information

services have begun calling it intelligence whatever they mean by that. Because

of the abundance of information, an “information edge” can be realized only in

what is not known by the market. What the market does not know must be

inferred.

Inference: In Investment Contexts

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Inference is a process of “reading into” or

concluding from circumstantial evidence. An

inference closes a gap in understanding.

Assumptions are inferences that are based on

probabilistic contexts, and when people infer

incorrectly, they assume. When people infer

correctly, they create insight.

When an analyst infers, he or she is creating a

meaning by synthesizing. Synthesis means to

bring disparate parts together. Although

analysis is formally taught in academia,

inference by synthesis is not. Yet inference is

a powerful business tool that closes the gap in

understanding business situations.

With today’s information overload, decisions

have become harder, not easier. Analysts

struggle to find pieces of information that are

meaningful and market-moving. Careful

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reading of situations, contexts, and pieces of

information is a lost art. When analysts “read”

a situation, they either draw a conclusion or

make an inference. An investment thesis is a

narrative developed from evidence; the

conclusion is an inference based on what’s

known and given. What in the “read” makes it

worth reading this narrative?

In the fall of 2014, the price of oil dropped

precipitously. Analysts who have been closely

tracking the oil industry are reading the

situation so differently that, as of February

2015, the disparity in their reads of the oil

market varies by $20 per barrel or more. The

variance indicates a need for training in how to

infer correctly and when it is appropriate to

infer. Turning Noise Into Insight trains analysts

the disciplined process of inference.

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The Red Team

Red Team Your Investment Decisions

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The mismatch in applications of inference and

analysis is most acute in investment analysis

where seeing strategic foreground and

information edge are tactics for competitive

advantage. In the United States intelligence

community (military and civilian), a Red Team

is an independent group that challenges an

organization to improve its effectiveness. Red

teams explore alternative futures and write

articles as if they were foreign world leaders.

It is designed to challenge prevailing

assumptions and improve interpretations. Red

teaming the assumptions of investment

professionals and how they have composed

their investment thesis is a way to improve

win-loss ratios in investment portfolios. The

Red Team workshop offers a methodology that

predictably generates insights in business

contexts. The workshop walks through the

various steps in the process to produce an

insight in a variety of different settings and

purposes.

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Key questions the Turning Noise into Insight

workshop answers:

• Are you concerned that you are

potentially missing market opportunities

because the research your team produces is

not insightful as your competitors’ research?

• Are you concerned that what you

have is written banal?

• Do you think there is room for

improving your discovery processes?

• Has your team “looked over” what

has been researched and written and not

found the piece of information that can change

your client’s perspective?

• Are you confident that your read, your

inferences, is appropriate for the information

present in the market?

Turning Noise Into Insight is a two-hour

workshop designed to train investment

professionals on the discipline of the inference

process. The workshop includes the

presentations and a workbook of examples on

how to infer in investment contexts.

Red Team is a supplementary custom research

program that challenges the assumptions or

validates the inferences of a specific read on

the market. Red Team attempts to identify

bias by letting the information reveal what the

insight is.

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About Inference Partners:

Inference Partners, LLC is a research and

consulting firm specializing in seeing

unintended messages and alerting clients to

change in markets or competitors before

they disrupt business plans or diminish

opportunity share. Alerting clients can take

two forms: a workshop entitled Turning Noise

Into Insight and its companion service Red

Team. Turning Noise Into Insight trains

investment professionals on inference. Red

Team is a service that challenges

assumptions or validates inferences an

investment professional makes. In addition,

Inference Partners also generates industry

landscapes and corporate profiles.

Inference Partners has worked with public &

private companies, foundations, hedge funds

and governments.

About Andrew Schenkel:

A former strategic intelligence analyst,

Andrew Schenkel founded Inference

Partners, LLC, a research and consulting firm

specializing in analyzing competitive

behavior and offering its clients insights into

the structure of competition in an industry.

Mr. Schenkel works with the Academy of

Competitive Intelligence Onsite War Games

programs. A graduate of Hamilton College,

Mr. Schenkel was also a panelist at the Mid-

Atlantic Hedge Fund Association’s 10th

Annual Conference.

“Andrew is possibly the best business researcher I

ever worked with. I used him in several war games,

and his intelligence briefs were superb. The guy

understands the difference between useless minutia

and strategic view, which is the highest compliment

I can give any research professional.”

Dr. Ben Gilad, President The Academy of

Competitive Intelligence

For more information:

Email: InferencePartners@gmail.com

Telephone: +1 610-247-4977