The Complete Sun Tzu for Business Success

Use the Classic Rules of The Art of War to Win the Battle for Customers and Conquer the Competition

Gerald A Michaelson, Steven W Michaelson

• Publisher: Adams Media
• Year: 2011
• ISBN:
  9781440528934
• Topic: Business
• Subtopic: Gestione
• Index: Business

Business today is war. As you and your company fight your way back from the recession, you need to take the high ground and make a stand. You need to know how to recapture customers, boost your profit margins, rally your workforce, and identify the competition's weakness to gain an advantage.More than twenty-five centuries ago, the brilliant Chinese military theorist Sun Tzu explained how to accomplish these things. True, he was talking about warfare. But as you'll see in this comprehensive survey, his strategies apply equally well to today's business scene.With the help of Gerald and Steven Michaelson, two of the greatest experts in applying Sun Tzu to today's business climate, you'll learn how to use ancient wisdom to manage your workforce, execute your policies, and find success in both business and your personal life.Use this book to map a battle plan for victory!

PART ONE

Sun Tzu

THE ART of WAR
FOR
MANAGERS

Chapter 1

Preparing for the Battle is Essential to Winning

LAYING PLANS

Management Rules

• Thoroughly Assess Conditions

• Compare Attributes

• Look for Strategic Turns

The vision of what the organization wants to be must be planned with an awareness of reality. That is why this chapter focuses on assessment.

The vision components articulate purpose, mission, guiding values, and a vivid image of the organization’s future. From the vision, leaders can determine the strategy, set strategic initiatives, and align the organization.

The more sophisticated the planning process becomes the harder it is to introduce the flexibility to accommodate changes in the situation. In rigid systems, planning and obedience to the plan are regarded as the key to victory. Carefully laid plans rigorously implemented without deviation are regarded as the way to overcome the inevitable confusion. As ever-increasing time and attention are focused on “the process of planning,” the successful execution of the plan can become secondary. However, any football coach can tell you that rigidity does not win games. Every coach has plans that allow for flexibility in formations to adapt to reality. It follows that it is not strategists who cause changes in the plan—it is reality.

A common mistake is to consider planning as only a mental process, an idea in our head that simply looks at the past and adjusts for the future. If your plan is not in writing, you do not have a plan at all. Instead, you have only a dream, a vision, or perhaps even a nightmare. The simple written plan works best.

Clearly define the problem before seeking a solution. Do not limit your planning horizon to what can be accomplished with existing tools. If the only tool you have is a hammer, everything will look like a nail.

THOROUGHLY ASSESS CONDITIONS—TRANSLATION

Sun Tzu says:

War is a matter of vital importance to the state; a matter of life and death, the road either to survival or to ruin. Hence, it is imperative that it be thoroughly studied.

Therefore, to make assessment of the outcome of a war, one must compare the various conditions of the antagonistic sides in terms of the five constant factors:

1. Moral influence

2. Weather

3. Terrain

4. Commander

5. Doctrine

These five constant factors should be familiar to every general. He who masters them wins; he who does not is defeated.

Business Parallels to Five Constant Factors

1. Moral influence means a “spirit of mission.”m The strength of belief that the purpose is morally sound rallies a fighting spirit and generates a firestorm of commitment.

2. Weather equates to “outside forces.” Industry consolidation is an outside force, as is the emergence of world competition and the influence of environmentalism.

3. Terrain is the “marketplace.” As the general must know the terrain, so the strategist must consider the scene of action—people, place, product, promotion, price, etc.

4. Commander has an equivalent in “leadership.” The names keep changing, but the principles of leadership remain the same.

5. Doctrine is comparable to “guiding principles.” Understand and apply the fundamental principles that determine success.

THOROUGHLY ASSESS CONDITIONS—MANAGER’S COMMENTARY

Good assessment is the foundation of a successful operation.

When the management of a major pharmaceutical company found that product development activity was decreasing, an assessment revealed the reason. Although senior managers claimed development was a team effort, analysis of their twenty-five most profitable drugs revealed that two people initiated ten of them. The reason product development declined was because both people had moved to positions where they were no longer in the development stream.

Every assessment must include a thorough analysis of how to increase business with existing customers. As proof, an Ogilvy & Mather analysis showed that the return on the marketing investment to existing customers can be many times greater than to prospective customers. The greatest source of increased sales and profits is from those who know you and are already purchasing your products.

In today’s business world, the assessment before the plan is often ignored in the rush to action. When action is taken without a thorough assessment of the situation, too often people begin working on the wrong things. In these circumstances, the result will be a lot of effort expended with no gain.

Assessments are simply methodologies for gathering data in a structured process designed to elicit facts or perceptions. Assessments can be internal or external and they can be conducted by one or more
individuals. Assessments can be surveys distributed to everyone or interviews conducted across a vertical slice of the organization.

Good assessments go beyond the current situation. They dig into underlying causes and search for new and better ways to achieve success. To achieve good results, ask questions in pairs so the first question determines the perception of the current status and the second reveals opportunities. For example, the first question might ask for a definition of an objective, while the second would ask for ideas about how the objective should be achieved.

When assessments are conducted by an external organization, respondents usually feel they have a better chance of giving anonymous input, which provides more accurate data. Internally, the assessment provides information on strengths and weaknesses that can energize and direct self-renewal. Externally, the assessment reveals threats and opportunities.

COMPARE ATTRIBUTES—TRANSLATION

Sun Tzu continues:

Therefore, to forecast the outcome of a war the attributes of the antagonistic sides should be analyzed by making the following seven comparisons:

1. Which sovereign possesses greater moral influence?

2. Which commander is more capable?

3. Which side holds more favorable conditions in weather and terrain?

4. On which side are decrees better implemented?

5. Which side is superior in arms?

6. On which side are officers and men better trained?

7. Which side is stricter and more impartial in meting out rewards and punishments?

By means of these seven elements, I can forecast victory or defeat.

If the sovereign heeds these stratagems of mine and acts upon them, he will surely win the war, and I shall, therefore, stay with him. If the sovereign neither heeds nor acts upon them, he will certainly suffer defeat, and I shall leave.

A STRATEGIC MORAL

Following the success of the Prussian army in the Franco-Prussian War, the British General Staff sent a team of aristocrats to find out the secret of success. They reported the Prussian troops were all clean-shaven with short-cropped hair. The British Army copied this; it remains a law to this day.

The moral of the story is: Don’t copy the wrong thing! (Or, don’t send aristocrats to do competitive studies.)

COMPARE ATTRIBUTES—MANAGER’S COMMENTARY

Compare competitive strengths and weaknesses.

When Coke and Pepsi engage in competitive battles, or when P&G determines how to increase market share, these organizations use competitive marketing research as an input ingredient. When Xerox determined it wanted to be a world-class competitor, it benchmarked every process to determine how to make that process the best in its class.

Comparisons of attributes can be made by either a direct competitive comparison of strengths and weaknesses or benchmarking that studies comparable processes in any other organization. Benchmarking is a learning experience that “steals shamelessly” from friend and foe alike. When Ford benchmarked six other well-run companies, it found the following key attributes: executives spent time outside their offices communicating with employees; people and their skills were a competitive advantage; trust replaced controls; cross-functional teams developed cutting-edge products and services; bureaucracy was out and teams were in; authority was delegated; training was readily available; and each benchmarked company said it was customer driven.

As people on a benchmarking team observe successful new practices elsewhere, they become enthusiastic champions of change. For example, when an international electronics company benchmarked its plants by function, benchmarking teams found several plants had extremely efficient manufacturing processes. The people involved in the benchmarking activity championed the rapid acceptance of the more efficient processes throughout the organization.

A Fortune 500 company benchmarked attributes that other large organizations considered key to success. The best companies listed processes that achieved results as the keys to success, while less successful ones ignored processes and simply listed the results—as though each was unaware of the fact that process performance determines results.

Companies that compete using customer data, employing CRM (customer relationship management) techniques, are regularly benchmarking. This very accountable branch of marketing is constantly assessing the payout of a customer offer and evaluating each offer versus other inducements. The offer with the best payback is expanded or used again. These companies are continually testing offers at a small scale to evaluate their relative effectiveness. Online retailers like Overstock.com segment their customer base and benchmark offers against different groups of customers to build more refined targeting and even better results.

LOOK FOR STRATEGIC TURNS—TRANSLATION

Sun Tzu continues:

Having paid attention to the advantages of my stratagems, the commander must create a helpful situation over and beyond the ordinary rules. By “situation” I mean he should act expediently in accordance with what is advantageous in the field and so meet any exigency.

All warfare is based on deception. Therefore, when able to attack, we must pretend to be unable; when employing our forces, we must seem inactive; when we are near, we must make the enemy believe we are far away; when far away, we must make him believe we are near.

Offer a bait to allure the enemy, when he covets small advantages; strike the enemy when he is in disorder. If he is well prepared with substantial strength, take double precautions against him. If he is powerful in action, evade him. If he is angry, seek to discourage him. If he appears humble, make him arrogant. If his forces have taken a good rest, wear them down. If his forces are united, divide them.

Launch the attack where he is unprepared; take action when it is unexpected.

These are the keys to victory for a strategist. However, it is impossible to formulate them in detail beforehand.

Now, the commander who gets many scores during the calculations in the temple before the war will have more likelihood of winning. The commander who gets few scores during the calculations in the temple before the war will have less chance of success. With many scores, one can win; with few scores, one cannot. How much less chance of victory has one who gets no scores at all! By examining the situation through these aspects, I can foresee who is likely to win or lose.

LOOK FOR STRATEGIC TURNS—MANAGER’S COMMENTARY

Develop strategies that go beyond conventional rules.

When the Minutemen faced the Redcoats on the open battlefield of Concord in the traditional frontal confrontation of the time, the minutemen lost. Then, the minutemen made a fundamental shift in their battle tactics and fired on the redcoats from behind stone fences as they returned to Boston. This shift in tactics initiated a strategic turn in combat, as the new strategy of skirmishing contributed to the success of the American Revolution.

Externally Focused Strategic Turns: Wal-Mart’s initial strategy focused on small towns. Wherever it invaded, competitive merchandising strategy was changed forever. The advent of mass merchants like Wal-Mart at one extreme of retailing, and specialty boutiques at the other, reshaped merchandising strategies across a wide variety of industries.

ESPN is an example of a cable network that heralded a new strategy in marketing. ESPN doesn’t have viewers; it has fans that make it a competitive powerhouse. Originally a network with a lot of sporting events, ESPN has reshaped itself into a network for sports junkies. It supplies sporting news and events to every single continent including Antarctica.

Internally Focused Strategic Turns: At the Tactical Air Command during six and one-half years of General Bill Creech’s leadership, dramatic improvements in combat readiness were made with no additional people or money. To achieve this awesome record, Creech changed the internal operating strategy to focus on decentralization of authority. His commanders immersed themselves periodically in operations—for example, spending a week with a night maintenance crew. Throughout his command, he applied the principles of quality management as outlined in his bestselling book The Five Pillars of TQM (product, process, organization, leadership, and commitment).

As a result, the combat capability of the Tactical Air Command doubled and billions of dollars were saved. Out-for-maintenance aircraft were reduced 71 percent, and monthly sorties increased 80 percent (the productivity bottom line). Fighter parts delivery time was reduced dramatically, and aircraft accident safety increased 275 percent.

Sometimes missed strategic turns become evident after business results deteriorate. For years, while Detroit automakers declined, Toyota grew. When the 2008 financial crisis hit and Detroit automakers tumbled, Toyota initially looked to be a beneficiary of U.S. automakers’ conti...

Table of contents

• Cover
• Title Page
• Copyright
• Contents
• Introduction
• Dedication
• Part One: Sun Tzu for Managers
• Part Two: Sun Tzu for Execution
• Part Three: Sun Tzu for Success
• Appendix: Complete Translation of The Art of War
• Index