Of course, you are familiar with General Sun Tzu's Art
of War- you know, the classic Chinese work on military
strategy? I assume any warrior in your position would be
intimately acquainted with such an important book.
-Yoshikawa Eiji, Musashi

The Way of Strategy is the art and science of managing
organizations in competitive situations.

Something has gone wrong with American business. Automobile imports have displaced thousands of auto workers. The Japanese supply most of our consumer electronics and optics. Manufacturing, or adding value to physical products, has declined. Skilled manufacturing jobs are disappearing. Their replacements are low-skill service jobs. This phenomenon has produced the euphamism, "downward mobility." At the end of 1992, we are in the midst of a recession. What happened? More importantly, what can we do to effect a turnaround?

Many books promise new ideas and easy solutions. This book looks at some very old solutions. The answers have existed for thousands of years. Most of today's competitive improvements are rediscoveries of the ancient Way of Strategy. The Way of Strategy is the art and science of managing organizations in
competitive environments.

People, Organizations, and Management Systems

Physical technology alone does not win wars and it cannot win in business. The Austrian victory at Lissa (1866) proved that iron men in wooden ships can beat wooden men in iron ships. The Italians had more ships and more modern guns. They had twelve ironclads to the Austro-Hungarians' seven. Rear Admiral Wilhelm von Tegetthoff correctly believed his sailors were better. He also knew the Italian admiral was indecisive. He accepted battle. Tegetthoff's flagship Ferdinand Max sank two Italian ironclads, one by ramming. The Italians fled, although they still outnumbered the Austrians. [Preston, pp. 24-26] As long as the difference in technology is not too disparate, a good organization will beat a mediocre one. However, we do not discount technology. Iron men in iron ships can beat anybody.

Quality Comes from People and Systems

CRITERIA FOR MALCOLM BALDRIGE AWARD [Dooley, 1990] Points (1990)

• Leadership 100
• Information and Analysis 60
• Strategic Quality Planning 90
• Human Resource Utilization 150
• Quality Assurance 150
• Quality Results 150
• Customer Satisfaction 300

People, organizations, and management systems produce high-quality products and services. They use technology and statistical methods. Tribus writes, "The CEO and all the managers understand that the workers work in a system and that the job of a manager is to work on the system, to improve it with their help." [Tribus, p. 30] We will now consider our basic premise. Business, like war, is a competition between organizations and systems.

Premise: Business is War

"Weapons" need not be destructive devices. Long ago, the words for "weapons" also meant "tools." A weapon is any physical, mental, or organizational instrument of competition. War drove the development of techniques for leadership, organization, and competition.

Nations and armies (organizations) have fought wars for thousands of years. War was the only competition between large organizations. Until a couple of hundred years ago, the typical business was a trade under the direction of a master craftsman. An entrepreneur might own a merchant ship. There was little need to manage or lead large organizations in business competition. Instead of developing new principles for Business, we can apply War's long experience.

This book will cite organizational and managerial characteristics that produced military victories. We need the same attributes for success in business. This book cites some famous generals and military victories. However, it does not deeply examine the mechanical aspects of the victories. For example, we mention the naval manoeuvre of "crossing the T." Few business managers care about winning battles with sailing ships. They can relate to the manoeuvre's dependence on a well-trained and disciplined crew. Frederick the Great was a tactical and strategic genius. However, attrition of his experienced veterans prevented him from realizing tactical masterpieces later in his career. Corporate Napoleons also need good people to achieve outstanding results.

Today's Crisis- Danger and Opportunity

Thriving on Chaos begins, "There are no excellent companies." [Ch. 1] It continues, "In 1987, and for the foreseeable future, there is no such thing as a solid, or even substantial, lead over one's competitors. --- Moreover, the 'champ to chump' cycles are growing ever shorter-- " Corporate leaders must pilot their organizations through this storm of chaos. We cannot say, "to safe harbor," for there is none. There is no finish line, only today's front-runner. There is no peace treaty and no Armistice Day. There is only today's King of the Hill. We will see that organic and adaptive organizations can thrive in this environment. Mechanistic bureaucracies cannot survive.

Meeting the Challenge: The Day of the Warrior

"Therefore, when those experienced in war move they make no mistakes; when they act, their resources are limitless." [Sun Tzu, Ch. XI] "Anciently, the skillful warriors first made themselves invincible and awaited the enemy's moment of vulnerability." [Ch. IV] Sun Tzu's warrior does not gain renown by killing a dozen enemies singlehandedly. He does not seek victory through a flash of steel and a clash of blades. Nor does he earn fame by winning battle after battle. He may actually remain very obscure.

One version of The Art of War begins with an interview with a physician. This doctor is famous for curing seriously ill patients. He tells of his oldest brother, who detects and stops illnesses in their infancy. This brother's name never goes beyond the house. His second brother cures diseases in their early stages. This brother's name does not get out of the village. The third brother cures serious diseases, so he is famous throughout the land. [Sun Tzu, Cleary trans., 1989] The famous doctor is the Conan or Rambo who fixes problems that come from lack of planning and foresight. The elder brother who forestalls the problems is a master of the art of war.

Does this apply to 20th Century business? Tom Peters [1987, Ch. I-1] quotes Dr. Lee Rivers, Director of Corporate Planning at Allied-Signal. "You can't get the CEO of a $5 billion company excited about a $100,000 market like ceramic scissor blades or razor blades. We shoot right from the start for the ceramic [auto] engine. We don't want to go through the learning process in smaller markets." The Japanese are making ceramic scissor and razor blades. They are selling ceramic-tip pens. They are gaining experience in making and selling ceramic products. One day the ceramic auto engine will arrive. Americans might even invent the technology. However, the Japanese will not meet American automakers on a level playing field. They will defeat opponents who have already lost.

The Timex success story is another example. Swiss watchmakers sold high-quality watches through jewelers. Instead of challenging the Swiss, Timex began to sell watches through drugstores. It took a while for the Swiss to even notice the competing products. By the time they did, Timex had entrenched itself in the market. [Porter, 1985, p. 533]

The Way of the Warrior

Facing the Crisis

Thunderclouds do not fear lightning. Hurricanes do not fear wind. To prosper in a turbulent, chaotic marketplace, become the storm.

Takeda Shingen (1521-1573) had a famous banner that carried the words, "Swift as the wind, silent as a forest, fierce as fire, immovable as a mountain." This is part of a passage from Sun Tzu's Art of War. [Ch. VII] Here is the full passage.

When campaigning, be swift as the wind; in leisurely march, majestic as a forest; in raiding and plundering, like fire; in standing, firm as the mountains. As unfathomable as the clouds, move like a thunderbolt

Principles and values are as reliable and steady as a mountain. Like Shakespeare's Julius Caesar, they are "constant as the Northern Star." They are Stephen Covey's organizational "compass." [1991] The organization does not compromise on basic principles and beliefs. It does not skimp on product quality to meet a quota or save money.

Thunderclouds swirl through the sky on changing winds. No one can predict their shape or course. "The ultimate in disposing one's troops is to be without ascertainable shape." [Sun Tzu, Ch. VI] The organization alters its camp sites and marches by devious routes. Opponents cannot predict its intentions. [Sun Tzu, Ch. X] Only an organization with discipline and commitment can feign disorder. [Sun Tzu, Ch. V] Such discipline and commitment do not come from rules and laws. They must come from adherence to immovable principles by all organizational members.

Thunderheads contain potential energy. "His potential is that of a fully drawn crossbow; his timing, the release of the trigger." [Sun Tzu, Ch. V] "--- the fog must thicken and form a dark and menacing cloud out of which a bolt of lightning may strike at any time." [Clausewitz, Book 6, Ch. 26] An agile, flexible organization is like this- a whirling, but purposeful, thunderstorm.

The warrior adapts to changing circumstances and does not use rigid strategies. Sun Tzu wrote that water adapts to its surroundings. In war, conditions are always changing. Water changes its shape and flow to match the conditions. The able commander wins by shaping his tactics to the enemy and the situation. [Sun Tzu, Ch. VI] This does not mean letting the flow of events sweep us away. Instead, we become the river that rises in flood. We flow into distribution channels and market niches. Our products conform to the needs of the marketplace. Fluidity, adaptability, and flexibility are the keys to victory.

The warrior uses large and small weapons, or large and small forces. Tom Peters warns that large businesses cannot adapt quickly. [Thriving on Chaos, Ch. I] Small companies are often more innovative and more responsive to customer needs. Sun Tzu wrote, "He who knows how to use both large and small forces will be victorious." [Ch. III] Musashi noted that a large group of men cannot change direction quickly. However, a single man can easily change his mind. The advantages of large and small units depend on the circumstances. A master of strategy recognizes these circumstances and acts accordingly.

About This Book

During the past hundred years, we have surrounded these ideas with scientific details. Business students devote years to their study. They spend many hours learning their many names. This exercise is useful if one gains understanding of the underlying principles. It can be especially enlightening if the student reads classical and ancient books on the art of war. Even ancient myths and legends about gods and magic take on new, practical meanings. These myths and legends point to ideas and concepts that have ridden the human mind from antiquity to the present.

Simple Solutions, Not Easy Solutions

A figure skater, ballerina, sword dancer, acrobat, or juggler makes their art look easy. We know how much talent and practice it takes to excel in these arts. Peters' and Waterman's In Search of Excellence describes corporate success stories. The excellent companies make success look easy. However, application of the basic concepts requires effort and commitment from management. Leaders must have the strength of character and firmness of mind to follow through with the plans. They must persevere despite thousands of diversions. [Clausewitz, Book 3, Ch. 1, p. 178]

However, even mere knowledge of the elemental principles of the Way of Strategy is immensely valuable. Companies and nations have shown complete ignorance of these principles throughout history. The organizational and human bodies of the fallen litter millennia of history. Vietnam was just one example.

No Cookbook Recipies

Recipies cannot replace thinking. Principles and concepts are valuable guides for independent thinkers.

Sun Tzu warned that those who do not heed his guidance suffer defeat. Yet he added the following in the same paragraph. "While heeding the profit of my counsel, avail yourself also of any helpful circumstances over and beyond the ordinary rules and modify your plans accordingly." [Sun Tzu, Ch. I, Clavell trans.] Sun Tzu eschewed mechanistic rules, and saw his book as a guide. We will use this approach.

(C) 1994 ASQC Quality Press: may not be reproduced without permission from the publisher
except as "fair use," as permitted by U.S. Copyright Law