The Art of War and Business Strategy

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November 15, 2016 at 4:40 pm

Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat.” – Sun Tzu

Written over two thousand years ago, Sun Tzu’s The Art of War still captures the attention of leaders today, providing what is seen by many as a fundamental guide for the management of people, places and things.

The clear tone of Sun Tzu’s offering is direct and aggressive, and – moving beyond a mere mortal-combat interpretation – one with powerful underlying implications for tactical manoeuvres and management strategy.

You can almost hear a cacophony of war drums (or perhaps more likely, a cacophony of credit cards being swiped) as you traverse through each of the thirteen books.

Sun Tzu’s tactics, while illuminating, are not generalizable to all situations, nor all businesses. Some guidelines are outdated and inapplicable in the current age. Certain recommendations – like those of deception or subterfuge – would fare ineffectually in a modern age where information is spread like wildfire on a global scale, and corporations are called out on such tactics publicly, and unsympathetically.

Moreover, there are certain tactics that aren’t endorsed by Sun Tzu – a proponent of defensive war – that may provide vantage points. His dismissal of the more Machiavellian-endorsed attrition warfare for one is a tactic that may not be as fluid in developed markets, but nonetheless still holds a place in businesses with large economies of scale, where resources can stamp out the competition.

However, despite some omissions – and a somewhat archaic slant to his interpretation – The Art of War provides key understandings that – with a grain of salt – are invaluable (in my opinion) to every corporation, large and small, and every burgeoning leader.

With the overarching theme advanced as conflict being “essential to the development and growth of man and society”, one realises that to strategize, one must learn to dust off their sword and…wait. Wrong century. Well, dust off their laptops – and get strategic about it.

I’ve syphoned through each chapter armed with my sharpest pen, and have gleaned ten key learnings that can provide crucial insights for each warlord (or the nascent consultant, CEO, or Tony Soprano fan, as may be the case):

 

TEN KEY INSIGHTS FROM THE ART OF WAR

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1:  STRATEGICALLY FOCUS YOUR EFFORTS

“It is always best to let the enemy kill himself” – Sun Tzu

When approaching your positioning against a competitor, keep them on the move. Position intelligently and with strength, in a way that will require the least effort – but maximum effect. By doing so, you’ll: catch the enemy by surprise. With an effective positioning strategy against the competitor, “An overpowering force may not be able to maintain its organisation and speed”.

 

Case in point –

Within a mere handful of years, Uber has demonstrated how the right positioning strategy against their yellow competition has created a furore in the transport industry. While capturing a smaller 1 million (or around 5% market share) at the minute, the rapid adoption amongst the younger age bracket has left Uber climbing swiftly, and taxi’s rushing to pick up their slack.

Muhammad Ali re-worded Sun Tzu’s sentiments the best –  “Float like a butterfly, sting like a bee. His hands can’t hit what his eyes can’t see. Now you see me, now you don’t”

 

 

2: PREPARE WELL, KNOW YOUR LIMITATIONS AND IF IT’S THE RIGHT TIME TO ATTACK

“Trying to determine an easy way to accomplish your goals will, in time, cause you to be defeated” – Sun Tzu

Correct preparation will facilitate a successful campaign. Do you have alternative plans, are you properly staffed, do you have enough supplies? Failure to prepare for long-term outcomes will (unless you’re a proponent of the ‘luck’ camp) most likely result in a loss.

 

Case in point –

Wanting to create their donut-shaped imprint upon the mass consumer, Krispy Kreme mismanaged a hasty expansion approach in a bid to challenge competitors such as Dunkin’ Donuts. 2010 saw rapid franchise and distribution growth (also expanding into service stations and kiosks). This resulted in dilution of the original freshly-made delicacy appeal, oversaturation of the market and cannibalisation of sales between stores located too close to one another.

Bouncing back since then Krispy Kreme is still with us so that doughnut lovers can breathe a glaze-filled sigh of relief. Nonetheless, this serves as an important cautionary tale into attacking too soon with insufficient preparation. One should “not fight a battle if you cannot foresee winning the war”.

 

 

3: RECRUIT CAREFULLY AND STRATEGICALLY

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As my psychology-laden background has drilled into me, you are a product of your environment. Along the same vein, those you choose in your team will influence your strategy-planning abilities, knowledge, and ultimate execution. Choosing an employee or a fellow strategist with care will involve selectively considering who is the right fit for the position; culturally and in terms of skill-set. Allocate people to positions where their skills and interests lie: “Everyone should be content with their given tasks and in that manner, they will perform admirably”. Treat all around you with respect and with equality of voice, reward them and give them recognition, and show them each task has value for the big picture.

 

Case in point –

Lego spearheads the recruitment process, with ‘culture fit’ being crucial in their selection. Candidates not only must possess the relevant skills and qualifications, but also be more interested in ‘LEGO’ not ‘EGO’, as Lego’s head of recruitment stresses .With this in mind, Lego’s recruitment testing comprises a ‘top secret activity’ involving Lego bricks, with the aim to evaluate collaboration and thinking outside the box; ensuring their recruits are the ideal Lego fit (yes, pun intended).

 

 

4: THE IMPORTANCE OF STRONG LEADERSHIP

 “Do they believe in you as a leader? Do YOU believe in yourself as a leader?” – Sun Tzu

A leader will not always make decisions that are accepted by the many. To succeed, you must have conviction in yourself, and be committed to what it is you wish to achieve. Avoid indecisiveness, and continue along your path despite a potential lack of support from others. It is through belief in yourself that you will finally “attain greatness”. Leaders around the globe have often pioneered ideas thought to be inexplicable, or unpopular, but resulting in their success.

 

Case in point –

In 1903, strong suggestions arose that Henry Ford should not be invested in because “The horse is here to stay, but the automobile is only a novelty, a fad.” I think over 100 years later and with one parked in my family driveway –  it’s probably more than a fad.

 

 

5: DON’T UNDERESTIMATE YOUR ENEMY

 Don’t let your guard down, ‘The true warlord never lets his sword be out of reach”. – Sun Tzu

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The optimal way to predicting forthcoming attacks from your competitor is to know them. Don’t underestimate what they may be capable of – your competitor may have resources or strategies you are unaware of, and failing to prospectively speculate on these possibilities may lead to your losses. As we are instructed, the good warlord “knows the enemy and himself to avoid peril”. Much like the adorable hippo (who doesn’t like Madagascar?) what is on the surface a cute squishy grey blob, is capable of ferociousness.

 

Case in point –

Poised with a long-term growth strategy, Lululemon gave Nike a (literal) run for their money when they first came on the scene in the late 90’s. Differentiating themselves by almost championing the ‘athleisure’ trend that is still holding strong (stylish and comfortable spandex to sit in during lectures I hear you confirm). It wasn’t long before Lululemon began dominating the activewear scene, with Nike struggling to keep up with both Lulu’s high quality and stylish product, and the mindset it pushes: “There’s a bit of this empowerment — that mindset of being able to crack through the ceiling, that you can do it, and…that’s to me, the Lululemon position.”  Everyone loves an underdog, right – especially one that facilitates you practising downward dog…namaste, Lulu.

 

 

6: PLAN OUT YOUR SUPPLY AND DISTRIBUTION

“It is bad policy to have to call for supplies when involved with tactical manoeuvres. Even worse is to discover that the supplies being requested are not available” – Sun Tzu 

Supply chains will impact a business’s overall efficiency and profitability, accelerating both its success or failure. One must tactically focus efforts to allow as little depletion of resources as possible. It’s important to account for potential fluctuations in demand, without the undesirable result of oversupplying (can’t you just picture Adam Smith nodding in agreement?). The impact of sourcing supplies are doubly important when expanding internationally – local suppliers, for instance, are not always the cheapest route.

 

Case in point –

Zara is an icon of supply chain management, with an impressive 7000+ stores, and continually strong profits. Zara’s ability to forecast demand is impressive, with data from each consumer transaction immediately imputed into a system (surely one called the Oracle?) that produces consumer preferences and trends. They control most of their manufacturing processes, giving them efficiency on the supply side of things. Their ability to hone in on speed and responsiveness to emerging trends and consumer demand gives them a competitive edge, unparalleled by other fashion retailers.

 

 

7: GO INTO BATTLE WITH AN ATTITUDE OF VICTORY AND A BEHAVIOUR OF COMMUNICATION

“You must attack with ferocity and fanatical enthusiasm if you are to succeed” – Sun Tzu

When developing and pursuing a strategy, ensure you both are confident in your mindset, and communicate your strategy to all in your team. Be ballsy, keeping an attitude of attack apparent to your team to maintain high levels of morale. Concentrate your force blitzkrieg-style and hit the competitor where it counts. Make sure that in your hunger-driven fervour for victory, you don’t lose sight of the direction of the group as a whole (don’t be a Dictator). Ensure you have open lines of communication through your organisation, as well as clear vision and strategy, so that the whole organisation can work towards this purpose in unison.

 

Case in point –

Burberry gets a gold star for commanding this approach – overhauling their entire organisation with newly appointed CEO Ahrendts in 2006. From a flailing brand in the luxury sector with licensing issues at play, little employee engagement, and an unfocused value proposition, Ahrendts pivoted Burberry’s direction to clarity and success. Operations and product were streamlined and made consistent on a global level; a focus was given to the brand – ‘the trench’; an innovative digital format was produced for the millennial target consumer it was vying for; and most importantly – clear lines of communication across the entire business were enforced, spreading what Burberry was doing, how they were doing it, why, and where they were going.

 

 

8: KNOW THE TERRITORY OF THE BATTLE, AND ATTACK QUICKLY AND ACCURATELY

“The place of fighting must be thoroughly researched before he can attack with authority” – Sun Tzu 

Whether it’s expanding a product line, or moving into a new country – the area in question must be researched and understood in the business’ context before action can be taken. Without full comprehension of the area you’re seeking to venture into, attacks against competitors will likely be slow, confused, or potentially disastrous (Napoleon’s invasion of Russia, anyone?).

 

Cases in point –

Colgate dinner meals…sounds enticing, doesn’t it? Not really – I mean, it reminds me of toothpaste? Which is exactly why their expansion into frozen meals using the same branding failed dismally. The lack of understanding of the frozen meal market and how the consumer would react to their positioning resulted in the aforementioned slow, confused and disastrous result.

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Melbournians will know and embrace the term ‘coffee snobbery’, making Starbucks’ international expansion here another sad example of a poorly planned strategy. One must first do primary and secondary research: “send scouts ahead to learn the conditions of the country that he is invading. He never enters a foreign country without as much information as he can get”. Even I, who can (just barely) tell the difference between a 7-11 coffee and one from Duke’s, wouldn’t bother entering Starbucks with the knowledge that so many higher quality options are available to me. Clearly Starbuck’s never actually asked a Melburnian firsthand about their coffee consumption habits…shame it cost them over $100 million.

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9: HOW TO HANDLE THE ENEMY AND THEIR WARRIORS FOLLOWING DEFEAT

“Ever so intelligently, and with compassion, bring the enemy warriors into your own fold” – Sun Tzu

If victorious following a battle/merger/acquisition/advertising campaign – be mindful of the treatment of those that have not been successful. Ensure you cover all your bases – think about the reactions of those you aren’t considering in your ultimate plan so that it doesn’t open room for enemies in the future. Remember the sentiment, be careful how you treat people on your way up because you might meet them again on your way down.

For instance, if completing a merger or acquisition – something commonplace amongst large corporations this day and age – consideration of the employees of the additional company is vital, especially when redundancies or restructuring is in question.

 

Case in point –

PwC’s acquisition of Booz & Co resulted in the addition of Booz’s employees to PwC’s framework. The strategic and well thought-out ‘Strategy &’ creation was intended as an amalgamation of PwC’s pool of resources and scale, and Booz & Co’s need for greater client access. This absorption resulted in a positive value-add for both sides, better positioning PwC against its big four counterparts in the consulting arena.

 

 

10: LOOK AHEAD, AND LEAD WITH INSIGHT

“Be a warlord with vision” – Sun Tzu

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Last but not least – looking ahead, and leading with insight. As is my personal mantra when approaching any problem, lead with insight-led strategy. Gain as much knowledge and research as possible to make the best predictions and scout the best solutions. Lead your chosen strategy in a way that will allow flexibility and adjustments to meet the changing needs of the time, and diversify your tactics to test competitors: “A clever warlord never repeats his successful actions in the same manner. Variations in the universe are infinite, and so are the methods to be used in any actions”.

 

Case in point –

Innovative companies that can continually manoeuvre their tactics have a high likelihood of staying relevant, and keeping success. Uber is looking forward innovatively with self-driving cars; Apple stays relevant by the constant re-emergence of new products that answer consumer wants and meet both aesthetic and functional needs (although a tad frustrating for us to grapple with the subsequent planned obsolescence); and Tesla, of course, is number 1 on the list of innovators (according to Forbes at the very least), transforming the auto industry.

 

 

ARE YOU READY TO RUMBLE?

As US heavyweight boxing champion Joe Lewis once said, “Everyone has a plan until they’ve been hit”. So while The Art of War is not – by any means – a definitive guide to the optimal strategic response in every situation, it is a certainly a useful framework for a strategic approach. Indeed, some view Sun Tzu’s ‘art’ application as a blueprint for their business stratagems, while others see it as more of a Jackson Pollock painting. However, it still warrants a look.

Most importantly, I believe, is the need to have a “ferocity of purpose” at all times – no matter what approach you choose to take. Ultimately, whether you follow the old script or deviate from its path, make like a honey badger and be ferocious about it.