• People, organizations, and management systems
• Quality comes from people and systems
• Premise: Business is War
• Today's Crisis: Danger and Opportunity
• Meeting the Challenge: the Day of the Warrior
• The Way of the Warrior (Bushido, Kshatriya Dharma)
• Facing the Crisis
• About this Book
• The Keystone of Victory
• Evolution of words and ideas: Indo-European dher ("hold firmly, support") ==> dharma, affirm, throne, Darius, jemadar. Indo-European ksei ("to rule") ==> kshatriya, Shah, satrap, Xerxes

• Comparisons: polarity (win-lose), risk and uncertainty, friction, danger and exertion, the competitive environment
• Organizations
• Organizational culture
• Practical applications of myths, legends, stories, and parables as windows into the organization's culture
• Predictability of behavior

• The Way of the Warrior
• The warrior as a product of a lifetime of training
• Ongoing professional development: continual improvement (kaizen)
• The Mind of the Warrior
• personal detachment
• avoiding the Peter Principle (the sword of the intellect). Miyamoto Musashi anticipated the Myers-Briggs type indicators (thinking, feeling, intuition, sensing) in 1645.
• Adapt to the situation
• Acceptance of change and new ideas
• Openmindedness, avoidance of preconceptions
• Self-reliance, internal locus of control
• "If the god sides with the enemy, the Nabeshima vanguard should cut him in two!" (Hagakure, "Hidden Leaves")
• Vitality (Machiavelli's virtu)

• Commitment (mutual loyalty, psychological contract)
• Leadership
• Managing an organization is like riding a horse. "Throw your heart over the fence, the horse will follow."
• Performance Measurement"Be careful what you wish, you might get it."
• The Workforce
• Motivation and Productivity: Intrinsic and extrinsic motivation. Quality Improvement Teams
• Effect of Organizational Structure
• Mechanistic and organic systems
• Benefits of small units: agility and responsiveness
• The decision process
• Managing Change
• Recognizing the need for change: Tarot card, the tower struck by lightning. A frog will jump out of a pot of boiling water, but will stay in the pot if you heat the water slowly.
• Obstacles to change
• Strategies for change
• Evaluating Culture and Morale
• Communications

• Comparison to military units
• Light troops: small, entrepreneureal business units
• Elite troops: skilled workers
• Artillery: automation (too much is bad, since we pay for it whether or not we use it. Clausewitz said the same thing about horse-drawn artillery.)
• Militia and reservists (part-time workers. We pay them only when we use them.)
• Auxiliaries and mercenaries (external dependencies)
• Partisans and guerrillas (people who know a local market or market segment)

"Know the enemy and yourself, and your victory will never be in danger. Know the ground and the weather, and your victory is certain." (Sun Tzu)
• Marketing topography (Ground)
• Linguistic and cultural considerations
• Entry and exit barriers. Don't rely on passive market barriers!
• Marketing environment (Weather): technological change

• Be first on the battlefield (marketplace)
• Be where the enemy isn't (market niches, guerrilla marketing)
• Attacking established market shares
• Avoid marketing Vietnams (mature and declining markets)
• Shorten the distribution chain. Get rid of unnecessary middlemen.
• External relationships: customers and suppliers
• Beware of letting a supplier do for you what you should do yourself.

Here is a venture for an innovative car manufacturer that likes the Just-In-Time (JIT) philosophy. The idea is to make cars to order instead of making inventories. The current practice is to make cars and put them on dealer lots. The manufacturer usually floor plans the cars. This means loaning the dealer money to carry the inventory. Interest on the loans adds to the customer's cost. The dealer also must earn a profit on each sale. Most of us know about some shady tactics car dealers use to do this.
General Motors' recent problems include plant closings and layoffs. We contend that General Motors is laying off the wrong people. They are trying to cut costs by severing productive assets like factories and autoworkers. They need to ask the following questions. How much value does a car factory create for the customer? How much value does a car dealership create for the customer? Maybe GM should lay off its dealerships. The obvious objection is that dealers sell the cars. This is how traditional "push" marketing works. We make a product and pay someone to peddle it. If no one wants the product, we are out of luck. This is why there are so many incentives and rebates at the end of a car's model year.
Why do automakers need a showroom to sell cars? Any reputable service station can provide the warranty service. Consider the following arrangement. To keep the production line running, the manufacturer makes subassemblies like engines, bodies, and transmissions. Instead of showrooms, the manufacturer has retail outlets that take orders. Authorized service stations could perform this function. Customers could specify their cars on minicomputers. For example, a CD-ROM (Compact Disk, Read-Only Memory) could contain every car, and every option. The customer also could get descriptions of each option, and its price, from the computer. The computer also shows each body and upholstery color. A representative would be available to answer technical questions. When the customer finishes his or her selections, the computer generates an order. The customer signs a contract and makes a down payment.
Now the factory puts the subassemblies together to make the car. The customer gets exactly the options and colors he or she wants. The manufacturer does not have to store inventories of complete cars. (Ideally, a steady stream of orders will keep the subassembly stocks low.) Look at the competitive advantages the manufacturer gains.

(1) It cuts out the salesman's commission and salary. The only sales cost is the cost of processing the order.
(2) It cuts out the expensive showroom (fixed asset). The service station can warehouse one of each model for test drives. Compare this to a parking lot-full of inventory.
(3) It avoids ending the model year with inventories of cars with colors and options no one wanted. Every car that leaves the factory has a buyer.
(4) The customer gets exactly what he or she wants, not what the dealer wants to push off his lot.

Adopting this JIT strategy could give an automaker a decisive advantage over its competitors. By selling directly to the customer, the manufacturer can offer a lower price and earn a larger gross margin. This money doesn't come from nowhere. It was the middleman's share. General Motors, Ford, and Chrysler should pay attention and consider the following line from the musical comedy Pippin. [King Charlemagne, discussing war plans] "[If the plan works] We won't have just a victory, we'll have ourselves a massacre." [Hirson, 1975]

Levinson (ed.), Leading the Way to Competitive Excellence: The Harris Mountaintop Case Study (1998, ASQC Quality Press), page 296

Update, 11/11/98:  H. William Dettmer, Breaking the Constraints to World-Class Performance (1998, ASQ Quality Press), page 42

Update, 12/07/99: Holstein, William J. "Kicking a Virtual Tire," U.S. News and World Report, October 25, 1999

The TV remote control has changed the effectiveness of television advertising. (This is an example of the impact of changing technology on business.) We must seriously consider buying only ad slots that immediately follow or precede the program. Our ad must be either first or last in the series. The first slot is probably better. We assume no one is watching the ones in between. When the first ad appears, they reach for the remote control. When they think the program is ready to return, they switch back. They are likely to see part of the last ad, but we can't count on this. The message, "Our show will return in a few minutes---" is the kiss of death for the next ad. ZAP! goes the remote control.
We have a couple of seconds from when the program stops to when the viewer pushes the button. Get the brand name on the screen immediately. Now, even if they "zap" it, we at least have name recognition. Make the first few seconds interesting and fun, and they may watch the rest. We want no more than 15 seconds unless we're sure they'll watch the whole ad.

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