Military lessons for business managers


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Useful guide for Strategy formulation of all organizations. Learning Resource complied by Jayadeva de Silva and produced by Humantalents International. This is chapter from author's book "Humantalents Management"

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Military lessons for business managers

  1. 1. Military Lessons For Business Managers By Jayadeva de Silva. M.Sc, MBIM, FIPM, FITD 1
  2. 2. The Art of War by Sun Tzu is the oldest military classic known in Chinese literature; Sun Tzu’s Art of War is in fact a very short book. It contains less than 6200 characters of classical Chinese literary writing. The book has only 13 chapters with each chapter barely a page long. The fact that the original work of Sun Tzu was in literary writing has created many problems for scholars in capturing the full meanings and implications of his thoughts. This is largely attributed to the complexity of the Chinese Language. Prof. Wee of the National University of Singapore in his book has provided the closest meanings in English for the terms used in Sun Tzu’s original writings. The idea of an analogy between the world of business and that of the battlefield is not a novel one. One would hear of car wars, cola wars and such economic wars almost daily. Various studies relating to the application of military strategies to business practices have been published. For example Marketing Warfare by Rie’s and Trout (1986) has been based on the works of the German General Karl Von Clausewitz, which were written in 1832. The word strategy comes from the Greek word strategos. Originally referring to a general, the word came to refer to “The art of the general” or “What the general does”. Today, strategy refers to the art and science of directing resources to optimise the chances of victory and reduce the effects of tactical defects. The business world is like the battlefield. In fact businesses have collapsed through poor planning, resulting in the loss of capital and employment. This is no different from war, where poor planning can lead to the loss of men, equipment and the battle itself; in the case of Companies in the business world, the impact of losses can at times be felt throughout many other sectors of the economy, just as losses in war can literally tear a nation apart. Thus the challenges facing a Military Head of State and the CEO of a Company is comparable. 2
  3. 3. Please refer Table 1. Table 1: Comparison between a Military Head of State and a CEO of a Company Military Business 1. To consolidate his 1. Protect the Market Share present government of business. within a defined territory and to protect it from 2. Finding new markets whose external aggression needs might be met by the current products. 2. To expand his present territory either by conquering neighbour 3. Exploring and developing states new products for existing markets. Or 3. By embarking on more ambitious expeditions 4. Developing new businesses to far away lands and with new products in new territories. markets. Influence of the Rulers in the Government In war, people should be in perfect accord with their Ruler and be willing to accompany him in life and in death without any fear of danger. If the leader is wise and capable he will be able to gain the moral support of his subjects so much so that they will be willing to accompany him through the thick and thin of a battle and the ups and downs of the state. While this may seem unthinkable, in reality there are examples such as suicide bombers who are willing to lay 3
  4. 4. down their lives for their leader (although this may evoke some uncomfortable feelings among us). This kind of influence can be observed outside the battlefield when one examines the role governments have played in the success of industries in countries like Japan, Singapore and South Korea. For example, the Japanese Ministry of Trade and Industry (MITI) is known for charting the overall industrial policy for the country. The Japanese government will also not hesitate to support their industries in various ways such as through government guarantees and financing similarly in NICs, the governments have greatly encouraged their companies to have an outward orientation and have packaged various incentives to help them achieve such objectives. The result is that these countries are export driven. On the other hand one witnesses corrupt and weak governments that are responsible for the decay in their national economies. It is well known that many African, Asian and Latin American countries suffer economically because of incapable governments that are unable to exercise leadership. In today’s business world, many countries including Sri Lanka rely on foreign investment to stimulate economic growth. One key determinant of the inflow of foreign investment is the level of political stability, which in turn depends heavily on political leadership. An enlightened ruler will create the climate for the rise of the nation. For business a capable government will provide political stability and hence attract foreign investments and stimulate economic growth, while a corrupt government will only sow the seeds of economic decay. The first step in the strategic decision making process whether in military or business is Situation Appraisal. This involves assessing the desirability of engaging in combat. Having thoroughly appraised the situation, one would next proceed to formulation of goals and strategies. The choice of strategies has to be compatible with the goals selected and has to be appropriate to a given situation. Next would be the Evaluation of Strategies at which the strategist has to assess the effectiveness of the proposed strategies. Once they are evaluated as feasible and effective, the next stage would be Implementation. During this stage 4
  5. 5. the tactical & operational aspects of effective implementation is considered. Finally to ensure success, there must be Controls with Feedback Mechanisms. The Principle of Detailed Planning Strategic Management must begin with detailed planning. Focus is not whether a Company or an army plan or does not plan, rather it is how detailed the planning is. This would encompass consideration of facts, which are micro as well as macro, controllable as well as uncontrollable, internal as well as external, static as well as dynamic, human as well as non-human, tangible as well as intangible. In short, detailed planning has to be exhaustive in coverage and consideration. Detailed planning cannot be carried out on the basis of intuition, gut feeling, calculated guesses or other subjective means. It must be based on intelligence, which can be obtained by men who have knowledge of the enemy or the competitive situation. Thus there is a need to actively collect, store, analyse and utilise information for the development of more effective strategies. The successful acquisition and utilisation of information for strategic purposes is an important factor, which determines the competitiveness of a country or a business. Mission In the days before radio and other forms of modern communication, ancient armies solved the problem of keeping the combat unit together and moving forward with a ‘standard’ or ‘ensign’. This device was simply a tall pole with a flag or other symbol representing the combat unit that could be seen above the dust and confusion of the battle. Soldiers used this standard as a rallying point, giving them a focus and helping to ensure unified efforts in combat. The mission and mission statement, we believe, serve the same function for the modern enterprise – to provide a sense of 5
  6. 6. guidance, orientation, and direction in the complexity and occasional flurry of the enterprises day-to-day existence. In an era of discontinuous change, the Mission Statement takes on even more importance as the single statement that provides long-term focus for the efforts of the enterprise. Thus it should have a vision component, describing what the enterprise needs to accomplish, what business it is in (or intends to be in) and what significant contribution it expects to make. Then the mission statement should have a ‘theme’ component describing how the enterprise intends to achieve its objectives. This theme component helps to distinguish the enterprise from others by defining its unique characteristics. Values Like in the battlefield, in business too people have to operate under tremendous strains. It may be the ‘religious faith’ or ‘faith in their ruler’ which provides the support and guidance for the military general in the battlefront. Similarly, in business management, we need to believe in something. It has to be a belief in something more important and immortal than ourselves that will give us a will to succeed and a kind of serenity in stress. What we mean here is a set of values which communicates itself to those are who are being lead, and helps sustain their determination to be successful. This is extremely important in difficult situations, because people who are so inspired and motivated really can do the apparently impossible. Choice of Battle Ground In military combat as well as in business one of the important factors to ensure success is to choose battlegrounds carefully. Choosing the right battleground enables the army and the Company to exhibit its strengths better and camouflage its weaknesses. In addition it will also enable the firm to exploit opportunities in the market – for example 6
  7. 7. through niching strategies one could cushion the effects of threats in the environment. In choosing a battleground to compete, a Company should opt for one in which it has distinct advantages over its competitors. It can also look for areas ignored by the competitors. An understanding and appreciation of the characteristics of different battlegrounds will help decide the appropriateness of a given strategy. Let us examine the different types of battlegrounds. Dispersive Ground This is a battle situation in which the army is fighting in its own territory. For example, one of Israels’ military strategies has always been to avoid fighting a war within her own territory. Its occupation of the West bank, Golan Heights and Gaza Strip typify her resolve not to fight in her own territory. In the business world one observes that the United States is facing a problem of exports from Japan, South Korea, Taiwan, Hong Kong and Singapore. The US has chosen passive and defensive strategies by trying to fight on its own soil, rather than concentrate on a more aggressive and offensive export drive (which would be analogus to fighting beyond one’s territory). On the other hand a Firm competing with two many brands in the same market could be in a dispersive battleground. In such cases, Company has to ensure the unit of purpose among all personnel involved. Accessible Ground This is a ground that is open and equally accessible to the enemy and yourself. In such grounds ancient war strategy was to prevent the enemy from entering your territory. In the business world one finds businesses where the market entry and exit are very easy. There is then the need to protect market share by building up strong defences through improvement of the total system that include production, marketing, advertising and promotion, inventory control, planning and distribution 7
  8. 8. outlets – so much so that the walls become thick and impenetrable. Frontier Ground When the army has made only a shallow penetration into the enemy’s territory the ground is considered frontier in nature. Military strategy would be not to stop in frontier ground and to keep the forces closely linked. In the area of foreign market entry, the Japanese can be hailed as gurus of this strategy of never stopping at frontier ground. With the coordinated efforts needed in a frontier ground situation, without rushing into foreign markets simultaneously, Toyota entered the US market followed by other Japanese Automobile Companies. Entrapping Ground One in which it is easy to get in but difficult to get out. It is a type of ground that is filled with booby traps. Businesses with low capital but high operating costs can be entrapping too. This is especially so where there are strong labour unions or labour laws that prevent management from retrenching workers. At times the unions may even obstruct any modernization or mechanization efforts. Constricted Ground In essence, a constricted ground is one in which the access route is narrow and retreat route is tortuous. It is the type of ground that is difficult to get into and at the same time difficult to get out. To survive in a constricted environment, resourcefulness is required in the design of strategies. This is because the competitive advantage enjoyed is often very narrow and at the same time this advantage is vulnerable to attacks. If technology is the competitive advantage it becomes very important to build on this strength and defend it as much as possible through continuous upgrading. 8
  9. 9. Key Ground Is one which is equally advantageous to the enemy and yourself. Owing to its importance, it is highly contentious and the forces of both sides are likely to contest bitterly for it. For example, with the opening of China many multinational Companies view the Chinese market as a key market owing to the vast business potential. It is therefore, not surprising to witness many Companies rushing into Chinese markets. If one were to apply military strategies one should avoid attacking the enemy on key ground. Rather, it is important to improve your supporting skills – rush up all your rear forces and elements. The way the Japanese have handled the Americans and Europeans in the world markets is a good example. Focal Ground When a state is surrounded by three other states, its ground is considered focal. In such a ground the enclosed state forms the key to the other three states in that the one who captures it can have a commanding situation over other states. Thus it can be expected that the focal ground be always under threat of siege. The strategy here is to be-friend neighbouring states and to strengthen ties with the allies. The small producers in an oligopolistic market structure are in focal grounds. If you are the small producer, it is very important not to agitate the larger competitors. It is better to follow the leader than to lead them. To survive in such a business situation, there is a need to also strengthen ties with allies. These allies would include the suppliers, customers, bankers, labour unions and government bodies. One remembers how the strong support received by Chryslers allies prevented it from going bankrupt or being squeezed out by much larger Companies like General Motors and Ford. 9
  10. 10. Indifferent Ground Indifferent or indecisive ground is a situation that is dis-advantageous to both the enemy and yourself. In such situations, there is absolutely no advantage in making the first move. When China first opened up, many Companies were hesitant to go in as they were uncertain about the Chinese Policy. Many Companies sidelined themselves and preferred to gain from the experiences of the early entrants. In the same way Japanese concentrated on applied R & D and Production Technology of American and European Firms. Treacherous Ground When the Army is travelling in mountain forests, dangerous passes, marshy swamps or other difficult terrain it is in treacherous ground. In such a situation the Army does not encamp but should move swiftly. In the mature state of the product life cycle, the market is saturated with all kinds of competitive products. It is therefore, important not to stay too long in matured markets. Desolate Ground In war, as the battle progresses, grounds that were originally captured and deemed valuable might lose their appeal as they become less crucial to the subsequent conduct of war. One should not linger on that ground. Much the same way Companies should not stay in declining markets. Japanese Companies abandoned labour intensive industries such as textiles, once they realised that the other developing Countries are able to operate more cheaply than them. Distant Ground 10
  11. 11. In distant ground both sides are away from home base and are equally matched in forces. It is to the best interest of both sides to avoid direct battles which would confer little advantage to either side. The Japanese penetration of foreign markets again provides a very good example of this avoidance of direct battle in distant ground. Serious Ground It is one on which the army has penetrated deep into the enemy territory and has left behind many of the enemies fortified cities and towns. In this case the army normally plunders the resources of the enemy but protect its supply routes to ensure a continuous flow of provisions. In the same way, a Company operating in a foreign market should seriously consider relying as much as possible on local resources, which include all factors of production like labour, capital, technology, management, raw materials and other supplies. Death Ground This is a situation in which the army can only survive if it fights with the courage of desperation, where the only way to survive is fight. Chrysler Corporation of United States was on the verge of bankruptcy between 1978 and 1982. Lee Iaococca made it abundantly clear to his employees that the only way to survive was to fight. His efforts resulted in a drastic change in the behaviour and loyalty of the workers towards management. The Principle of Concentration of Forces & the Need to Attack This means economising of forces; In other words application of minimum of strength to a point other than the decisive one in order to pave the way for the application of mass force at the point of decision. The idea is to use one’s limited available force to strike at the enemy’s weakest point where victory can 11
  12. 12. be better assured. What is important is relative strength and not absolute strength at the point of contact. Relative superiority can be achieved by clever choice of battleground, maintaining strict secrecy of one’s battle plan and using deception. In war, the invincibility in defence depends on one’s own efforts, while the opportunity for victory depends on the enemy. It follows that those skilled in warfare can make them invincible but cannot cause the enemy to be vulnerable. In ancient times, those skilful in warfare first made themselves invulnerable before waiting for opportunities to defeat the enemy. Even when one is playing a competitive game like football, the only way to win is to kick the ball into the opponent’s goal, as one cannot win by only defending one’s goal. Similarly in competitive business, one has to compete openly for market share, rather than defending one’s own market share. This may be specially done when the market is not growing and in times of recession. Over the last two decades, countries like Japan, Singapore, South Korea and Hong Kong had been pursuing attacking strategies in international trade. However as in war, in any corporate planning decision too, it is essential to have a contingency plan. Swiftness in Execution of Plans Once a detailed plan is developed based on information gathered through intelligence and the battleground chosen, it is important that the plan be executed swiftly. Swiftness includes perfect timing (as it catches others off guard, and hence minimizes opposition), the maintenance of momentum and the avoidance of protracted campaigns. It also demands that the co-ordination be perfect. All these are equally valid in business situations. Like in war, throughout the business one should maintain adaptability in manoeuvres. Adaptability in manoeuvres entails provision for creativity, innovation and the exercise of initiatives. To move ahead of competitors, a Company must encourage the flow of innovative ideas 12
  13. 13. on all fronts – products, service, marketing strategies etc. The company must be capable of capitalizing the opportunities as and when they arise. When large-scale integrated circuits (LSI) first appeared, western countries quickly explored them for usage for missile and space development. Whereas the Japanese saw the opportunity for the use of same in pocket calculators and watches. Price of the LSI circuit dropped, due to large-scale use in the Japanese industries, and the product quality was also stabilised. Deceptiveness in Actions & Strategies All warfare is based on deception. The enemy should not know where you intend to attack; If he does not know where you intend to attack he must defend in many places. The more places he defends the more scattered are his forces and the weaker his force at any one point. In order to achieve distinct advantage in combat, one must choose the battleground that is more advantageous to oneself than to the enemy; and bring the enemy to where you want to fight through the use of baits and deception. At the same time one should not succumb to enemy’s baits. While the term deceptive tactics seems very unethical the truth is that baits are used in the business world too. One of the commonly used methods for lesser developing countries to attract foreign investments is the offer of incentives such as exemption from taxes through pioneer status, unlimited repatriation of earnings etc. Even among developed countries, baits have been used for economic and political reasons. Anticipation of the Enemy’s Reaction and Changes in Environment It will be naive to assume that when one embarks on an offensive, the enemy will not react. In other words, 13
  14. 14. it is dangerous to assume that the enemy is not capable of strategising nor is developing effective responses. In essence, there is a need to modify a strategy that may be carefully evaluated and implemented because of the reactions of the enemy and the changes in the environment. Planning for Victory & Combat Readiness One over-riding principle for victory in war is that of unity. To win there must be unity of minds and hearts from the ruler to the subjects of the state. To make the war a successful one the appointment of the generals must be based on the ability of the skills of the candidates. Just like in the army, the way a business is structured and organised will have a serious effect on the success. This aspect includes effective policies, programmes, operating procedures, channels of communication, lines of authority and responsibility. The organisation and structure of a company is one area that must be considered in strategic Planning. What would be the best way to organise the Company to face the future. Very often the strategy is decided based on the structure. The structure should follow the strategy and not the other way. If a company wants to encourage creativity, innovation and entrepreneurial spirit, what is the best way to structure the company? The strength of an army does not depend on large forces. Army should not advance relying on sheer numbers. What is more important is the training of men and officers in the army as well as in the business. The quality of the people is definitely competitive and it is very interesting to note that the more successful companies are also those with a heavy commitment to Human Resources Development. The level of training will dictate the state of combat readiness of the firm. With well-trained personnel, the firm can engage in more activities with greater confidence. Furthermore, they are better able to handle difficult situations and yet produce superior results. Another important dimension to winning a war is discipline. Comprehensive and elaborate measures to direct human 14
  15. 15. behaviour are required to achieve organisational goals and objectives. Companies that place heavy emphasis on their reward system are normally in a stronger position. Japanese companies have a tradition of sending their executives for annual executive training camps where the training not only incorporates military style discipline but also includes doses of spiritual and social values such as learning self sacrifice, humility, hard work, suffering and tolerance. Therefore the need to be ‘combat fit’ should be the aim of every Company. Staff training and development auditing and improvement of every aspect of the corporate resources should always be part and parcel of the activities of the Company. Efficient and effective management of organisations is critical for the country’s development efforts. Increasing competition at both national and international level requires strategic managerial thinking by the business community. The idea of an analogy between the world of business and that of the battlefield was explored as some of the ancient writings on war offer valuable insights into the nature of modern business practices and help explain some of the startling economic trends in our times. • This is chapter from the book “Humantalents Management” by the author • The book is now downloadable free of charge from • Author Mr Jayadeva de Silva can be contacted by email Tel 94 77 7272295 Mr Jayadeva de Silva is available for Training Programmes 15