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Sun Tzu: the Art of War in business: Scott Graham teaches the wisdom of applying ancient Chinese strategic thinking to modern Western business tactics.

In ancient China General Tian Ji was a high official in the state of Qi, when horse racing was a favourite pastime between the king and the aristocrats. However, Tian Ji was losing each race to the king.

Both Tian Ji and the king had three horses in different classes; regular, plus, and super. The rule was to have three rounds in a match and each of the horses must be used in one round.

Being China's most powerful man, the king had such great horses that in each class his horse was superior. Sun Tzu also observed that in each race the speed difference between the King and Tian Ji's horses was rather small.

True to the ethos of The Art of War, Sun Tzu showed Tian Ji how to turn apparent disadvantage to advantage, defeat into victory, by turning your opponents' apparent strengths against them. He helped Tian Ji win his first race against the king.

Tian Ji used his regular-class horse to race, and lose, against the king's super-class horse. But then his plus-horse beat the king's regular-horse, and his super-horse beat the king's plus-horse.

From West Point to Sandhurst, from Duntroon to Whampoa, The Art of War is mandatory study in military academies. But we've also seen it applied to other competitive environments, including sport and business.

In Rod Macqueen's book One Step Ahead Sun Tzu was attributed to helping McQueen coach Australia to win the 1999 Rugby World Cup--using tactics like "launching an attack at the opponent's strongest point then, using a secondary force, to strike numbers at a point of weakness." He quotes Sun Tzu's "attacking like water through a valley." Macqueen explains that by using sequence plays he would sometimes run a move four to five phases after their initial set play, saying "we always made a point of having several options so that we could change at the last moment, depending on the reaction of the opponent." What Macqueen understood is that your actions are often dependent upon what your competitors do. Therefore The Art of War is not purely a book on strategy but a guide to tactics.

Business strategy

Billionaire and Oracle owner Larry Ellison is famous for his admiration of The Art of War. Ellison is a master of applying Sun Tzu's precepts to the modern-day battleground of business competition. One basic tenet of Sun Tzu notes a smaller force can beat a larger one by causing its rival to respond before thinking. These tactics were revealed in the bitter battle between Oracle and SAP.

"Larry consistently executes The Art of War better than any CEO," said CEO Marc Benioff in an interview. "SAP never should have reacted to Oracle's statements because it makes customers and investors view Oracle as a peer to SAP, when they aren't."

Using Sun Tzu's strategies in business is nothing new. The existence of more than 100 Japanese translations of The Art of War indicates it has served as a source of strategic thinking for many Japanese managers.

Harvard professor Micheal Porter quoted Sun Tzu when he lectured National Football League (NFL) owners on how they could defeat the now defunct US Football League. Venture Capitalist Asher Edelman made The Art of War required reading for admission to his course on entrepreneurship at Columbia University.

The fundamental principles of strategy are the same for all competitive environments; it is only the tactics that change. Strategy can be defined as doing the right thing, while tactics is doing things right.

The Art of Warts a relatively small book of only 13 small chapters. The difficulty for some is that it is a somewhat obscure read and requires the reader to stop and reflect on each passage--it's not a simple manual of 'how to'.

Chapter one, 'Estimates', opens with "War is a matter of vital importance to the state; the province of life and death; the road to survival or ruin. It is mandatory that it be thoroughly studied." Replace 'War' with 'Business' and the opening paragraph makes perfect sense. The ramifications of a failed business to the families of the owners, workers, suppliers and the community at large cannot be under estimated.

Gathering information based on The 'Five Fundamental Factors' is the foundation of the book and all other chapters feed back into it (like wheel spokes).

Five Fundamental Factors

The Five Fundamental Factors are Moral Influence, Weather, Terrain, Leadership and Doctrine.

1. Moral Influence

"By moral influence I mean that which causes the people to be in harmony with their leaders, so that they will accompany them in life and unto death without fear of mortal peril." Business interpretation: Selection and maintenance of an aim that encapsulates the future state of the organisation. Providing a sense of purpose that unites and surpasses that of an individual.

2. Weather

"By weather I mean the interaction of the natural forces; the effects of the winter's cold and summer's heat and the conduct of military operations in accordance with the seasons." Business interpretation: An environmental analysis enables you to detect, monitor, and analyse current and potential trends that will create opportunities or threats to a firm. Systematically assessing their impact and immediacy allows you to evaluate probabilities and create scenarios.

3. Terrain

"By terrain I mean distances, whether the ground is traversed with ease or difficulty, whether it is open or constricted, and the chances of life and death."

Business interpretation^ market can be broken down into quantitative factors like: the dimensions, actual to potential size, growth and profitability, cost structures, distribution systems, trends and developments.

4. Leadership

"Wisdom, Trustworthiness, Benevolence, Courage and Discipline." Business interpretation: Leaders inspire a shared vision of the future and they passionately believe they can make a difference. They enlist others who breathe further life into their vision, excited about the possibilities. They show wisdom with a combination of knowledge and experience to know how best to use this knowledge. Trustworthiness is building collaboration by understanding that an atmosphere of mutual trust and respect sustains extraordinary efforts.

5. Doctrine

"By doctrine I mean organisation, control, and assignment of the appropriate ranks to officers, regulation of the supply routes, and the provision of the principal items used by the army."

Business interpretation: Operations management can be defined as organisational structure--as the lines of authority, communication and the mechanism by which organisational tasks and programmes are accomplished.

Sun Tzu introduces benchmarking around the '7 elements,' of competitive advantage, with his final topic in chapter one centered on 'Deception' --stating "All warfare is based on deception." Whilst Western philosophy tends to view deception as underhanded, in the East it is merely about keeping competitors off balance. Measures--such as entering into confidentiality agreements with employees, suppliers, contractors and/or partners, limiting access to information, as well as introducing internal policies on the access, handling and destruction of documents--are some of the prerogatives of the companies to safeguard their rights over their trade secrets.

Counter Intelligence (CI) needs deep consideration as the 13th and final chapter, 'Spies', is about how you extract competitive information. As I explained to one MBA class, you may not like some of the tactics advocated in The Art of War, but you need to be aware that someone may be using them against you.

Scott Graham owns Tactical Media --a boutique media-centric strategy company. He teaches 'Sun Tzu, The Art of War for Managers' at The University of Auckland and speaks both locally and internationally on applying Sun Tzu tactics to business.

For more information, phone 0224 532-209.
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Title Annotation:HELP DESK
Publication:NZ Business
Date:May 1, 2014
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