“The Company” Goes Corporate

The CIA’s new business model is the world of commerce.

This fall I sat in a Harvard classroom as recruiters made their pitch to students about the wonderful life that awaited them at the CIA. They spoke of the importance of servicing accounts, of filling the needs of customers, and of meeting the insatiable demand for their product.

The agency has long borrowed from the lexicon of business—”accounts,” “assets,” “customers,” “product”—to avoid the particulars of espionage, but today the words are used quite literally, evidence of a worrisome change at Langley. Increasingly, “The Company” has become the company. When it speaks of the business of intelligence, that’s exactly what it means.

I recently asked a senior CIA official how the agency was coping with so much criticism. How, I asked, was morale at Langley? The answer was stunning: Couldn’t be better, he said. The CIA was in its glory, confident and robust. At first, I suspected that he was just putting the best face on a bad situation, but the truth is, he believed every word of it.

How could there be such a disconnect between perception and performance? On what basis is the CIA buoyant in such troubled times? At least part of the answer is that in adopting a business model (albeit a flawed one), it has focused on corporate criteria, ignoring the time-honored metrics by which it has historically been held to account. As proof of the CIA’s transformation, senior CIA officials referred me to, of all publications, Fortune magazine, which features a glowing report on the CIA cast entirely in terms of a corporate turnaround. Director of Central Intelligence George Tenet appears in a dark business suit, arms crossed triumphantly, depicted as the brilliant CEO who saved the company “by running it like a business.”

Today, the agency’s chief operating officer comes by way of investment banking. Business is booming, and to some that seems to be just about all that matters. The CIA now touts the fact that recruitment is way up—2,600 résumés pour in weekly. In one survey, MBAs rank the CIA as the premier government employer and ahead of such private-sector notables as Apple, Intel, and Pepsi.

It is a source of great pride to the agency that customer demand for product— intelligence and analysis—has nearly outstripped capacity. (It bears noting that “customer” in agency argot means the president, the secretary of defense, and the like, not necessarily the ultimate end-user, the nation.) Old customers, like the Department of Defense, can’t get enough. New customers, like the Department of Homeland Security, represent pure growth. Afghanistan and Iraq, one CIA official gleefully volunteered, are generating terrific business for Langley, speaking as if they were a welcomed stream of revenue. To hear the CIA tell it, it’s been one blowout quarter after another.

Agency insiders also celebrate the deregulation of their industry. “Agency Scrub,” which once required overseas operatives to get approval from Langley before teaming up with particularly unsavory characters, has been set aside. Midnight abductions, lethal strikes from Predator drones, and interrogations conducted with “Torture Light” all signal a new and more business-friendly environment.

How did things come to such a pass? A decade ago, with the end of the Cold War, the CIA was a bureaucracy in search of a reason for being. “Do we really need a CIA?” was more than a rhetorical question on the lips of legislators. Veteran analysts and case officers retired. Budgets shriveled. The agency’s prestige was badly tarnished, its role marginalized. It burned through five directors of central intelligence in seven years.

It was out of those dark days that the business model found fertile ground at Langley. In September of 1999, the CIA literally went into the venture capital business, creating In-Q-It (later named In-Q-Tel), a Silicon Valley-style enterprise that invested in corporations with cutting-edge technologies. Around the same time, the CIA undertook an even more radical business experiment, reorganizing its Directorate of Administration, which provided a vast array of services and support to the various agency missions, and creating the Business Process Transformation Program Office. The CIA’s administrative arm was to compete with outside enterprises, budgets were to be handed back to the various missions, and monies saved could be pocketed for future activities. The controversial experiment was ultimately canceled.

The same business model that now intoxicates Langley also allows it to block out a succession of intelligence failures, the way some high-flying corporations once deemed profits irrelevant. The litany of missteps is painfully familiar: the failure to foresee India’s nuclear tests in 1998; the U.S. bombing of a Sudanese pharmaceutical plant in 1998; the 1998 surprise launching of North Korea’s three-stage rocket; the bombing of the Chinese Embassy in Belgrade, mistaken for a Yugoslav procurement center, in 1999; the inability to discern, much less thwart, 9/11. To date, not a single weapon of mass destruction has yet to turn up in Iraq, and the anthrax killer, Saddam Hussein, and Osama Bin Laden are all free to make more mischief. This is a turnaround story?

Like most businesses, the CIA ignores critics at its own peril. Nevertheless, in September, the chairman and ranking minority member of the House Permanent Select Committee on Intelligence sent a letter to Langley pointing out the agency’s inadequacies. Tenet rejected the letter like a CEO scornful of his auditors. Internal critics fare little better. One senior agency official was utterly contemptuous of naysayers, telling me, “I suspect you are talking to a lot of old-timers who are talking to the last remnants of their generation, or people who have some agenda … some old fart who hasn’t been here in five or six years but talks to some guy over a beer or some other retiree who couldn’t get past GS14.”

But the agency may one day be forced to heed its critics. The now notorious 16 words included in Bush’s 2003 State of the Union address, words that proclaimed that Saddam was actively pursuing a nuclear weapons program, were not merely discredited when the basis for that statement—Iraq’s alleged purchase of uranium from Niger—were shown to be baseless. They also exposed a CIA that lacked the gumption to stand up to its primary customer, the president, when the claims were known to be insupportable. Tenet publicly apologized but accepted blame only in the narrowest sense. It was an apology of expedience, one that only further ingratiated him with Customer No. 1. He did not own up to the more serious dereliction the incident represented. Tenet’s longevity in the face of tragic errors and grievous miscalculations is less a testament to his skills as a turnaround expert than to his political savvy, his loyalty to the White House, and his willingness to compromise.

The CIA is not just another business. Its only true asset is credibility, its only success enhanced national security. In May, Tenet declared, “Integrity and objectivity are the hallmarks of the intelligence profession.” It was offered as a rebuke to critics, who were, to quote Tenet, “simply wrong” to suggest the agency had compromised itself.

Tenet’s words were again cited at the Harvard recruiting session amid rosy talk of accounts and customer satisfaction. The real danger of a CIA that surrenders itself to a business model is that it may come to believe, as many fear it already has, that the customer is always right. In the intelligence business, that is the one sure way to bankruptcy.