An outside the box strategic discussion by Ted S Galpin
You don’t know Sun Tzu
Well, actually maybe you do. But Probably not the same way I do.
I’ve been working long days on the strategy book, and Sun Tzu certainly takes some time to internalize. There’s a saying — “there’s nothing new under the sun.” That’s true in science, especially strategy. Today we are talking about what the military calls “net assessment.” It happens to be the first chapter in Sun Tzu’s “Art of War.” You’ll probably recognize these ideas from business theories out there, it’s a common and often poorly executed concept in strategy and intelligence.
Assessment is the details of “Know your self and know your enemy, and you will win a thousand battles.” If nothing else, you need to have a holistic assessment of where you are and what you face; or what you don’t know will likely end you.
Sun Tzu has the best method for assessment I’ve found (though I have found many adaptations or reinventions). There’s nothing new under the sun.
And sorry it’s a little late, had some technical problems to remedy. Hopefully this is worth the wait.
Sun Tzu Bing Fa?
The problem with Sun Tzu
Tao —Purpose & Values
Tian — The Environment
Di – Situation & Position
Jiang — Ability of Decision Makers
Fa — Methods & Technology
Balance of advantage
The take away
Statue of Sun Tzu in Yurihama, Tottori, Japan (compliments of Wikipedia).
Sun Tzu Bing Fa?
You’ve probably heard of it as Sun Tzu’s Art of War, the Chinese classic now ingrained in popular culture. Most have no intention of reading it, and those of us who try get headaches. However it is well regarded across the globe as the oldest and most authoritative work on strategy. So in strategic science we work through the headaches to try and unlock the enigma.
The Art of War is the English title as translated by Lionel Giles, the first authoritative English translation made in Britain 100 years ago, dedicated as a gift to his brother, a military officer at the time.
The Chinese title is “Sun Tzu Bing Fa.” The literal translation can be made as “Master Sun’s Competitive Methods” or more appropriately “Master Sun’s Strategy.” The “Art of War” however is a far more romantic and poetic title, that reflects the martial nature of the text (and likely a choice influenced by Machiavelli’s work of the same name).
The problem with Sun Tzu
Is understanding what he left behind.
Is largely ancient Chinese feudal kingdom survival, around the warring states period. The Strategic theory is married to the military science, and rooted in Taoist philosophy. So many dismiss the book as military science or Chinese philosophy; rather than general strategy (It’s actually all three). Scholars often stress that the idioms are largely Taoist and easily misleading to western readers.
Is hard for fluent scholars. And literally ancient. Any given character in the text has multiple meanings, some of which don’t directly translate well to English concepts. Just skimming the chapter title translations on the Wikipedia page shows the difficulty of precise translation for simple 1 or 2 character chapter titles. It was written poetically on bamboo strips, reputably with mathematical logical relationships that don’t really translate to English text (especially considering most translators are linguists and historians, not mathematicians versed in translating Chinese formula into western mathematical symbols. And who buys a math book on Sun Tzu? I’ll bet there is a small audience for:
(Though personally I really miss the proofs we did in topology and abstract algebra, and enjoy that sort of exercise.)
The Thomas Cleary and Gary Gagliadri translations very carefully admonish that without a knowledge of Chinese language, cultural idioms, the historical context, Taoism, and the structure of the original text, understanding even a very good English translation is challenging.
So that leaves me spending a few weeks with several different copies of The Art of War, Gary Gagliardi’s handy transliteration of the Taiwanese Military’s complete version of Bing Fa, and my dog eared copies of Tao Te Ching and Tao of Pooh, and hundreds of online searches to try and make up for my western education.
Starting with the original Chinese Characters, in true strategic science fashion the exercise here is to find the general core concepts in Bing Fa and present them in precise simple language.
Master Sun’s 5 Principles of strategic assessment
Tao — Purpose & Values
Tao translates to “Way” or “Path.” Seeing that Taoism is a subject onto itself, we will tread lightly. For strategic assessment, in the context of measuring an organizations competitive advantage, Tao is the organization’s purpose and values.
This is important in terms of both strategic alignment of action, and achieving maximum compliance from your people. People fight harder for a cause they believe in. And in both eastern and western thought there is often a moral advantage considered in a higher purpose. You can make similar arguments using incentive based game theory and rational choice on the advantage of a motivating purpose and shared values.
How hard do I work on unpaid overtime that only keeps my boss happy and earns some faceless executive a bonus? By comparison, how hard do I commit myself when I’m helping my friends or family? That’s why volunteers defending their homes often enjoy significantly higher combat compliance then invading professional mercenaries. Protecting your family and home is a much stronger motivation than following orders, plunder, or fear of punishment. Like wise how many of you know executives that bad mouth the company’s mission statement, core values or code of ethics? Why would you trust or risk yourself for leadership that does that?
The first assessment is who has the most advantage from the effectiveness and alignment of the their organization’s purpose and values?
Tian — The Environment
Tian translates to “heaven” or “divine providence.” It’s like asking who’s side nature is on. When Master Sun recommends to discuss heaven he means what are the advantages and disadvantages that no one controls. These are external conditions of the climate, season, or environment like weather, the economy, regulations, laws, and commodity prices. Trying to find business financing in 2007 is very different than 2009. Seasons may change, but they are also beyond your control.
So which organization enjoys more competitive advantages from the nature of the environment? The classic example is the strategic military advantage that Russia enjoys in the winter. Hitler and Napoleon both failed to invade Russia because they failed to consider the harsh Russian winter. On the other hand, the long Russian winter ices over ports, complicates logistics and working conditions, and creates an economic disadvantage.
Current environmental business factors are the economy, poor availability of financing, still relatively cheap energy and the potential of environmental regulation of energy. But if you’re hiring there is a plentiful and well motivated labor pool for most skill sets. So a growing company, if it can find capital, would enjoy cheaper growth costs and better staffing today than say 5 years ago in a different climate.
The second assessment is the natural environmental factors and who gains an advantage or disadvantage from them. Timing is everything.
Di — Situation & Position
Di translates to “Ground,” “Place,” “Situation,” or “Position.” Or as the cliche’ goes “Location, Location, Location!” These are the external conditions that can be chosen or controlled. You may not be able to control the weather, but you can choose the time, place, and position of your battles. This can be fighting downhill or locating your factories near cheap foreign labor. The Red Barron’s dog fighting positioning based on the Dicta Boelcke is great example — if possible keep the sun to your back, and attack targets from above and behind.
Michael Porter’s Five Forces analysis is a popular technique for assessing a business market position. It considers the positions of your suppliers, customers, existing competitors, new competitors, and substitute products; and can be used to determine how to position yourself to succeed.
You can choose when, how, and where you compete. Is the position close or distant? Do you have room to maneuver? Is the position easy or difficult to obtain and control? Find a position where you cannot lose.
Obviously positions change. A west facing hill side is a great uphill advantage until the sun sets in your face and blinds you. Or you can simply be unable to maintain you position and lose it. Competition is often about fighting over advantageous position.
The third assessment is who enjoys the most situational or positional advantages.
Jiang — Ability of Decision Makers
Jiang means the “general” or “leadership.” Master Sun uses it to mean the ability of decision makers. Assess the decision makers’:
Intelligence. Are they knowledgeable and possess good judgment? Can they make quick decisions? Do they have the right skills?
Trust. Do they inspire trust? Can they be trusted? Do they trust their subordinates?
Love. Do they take care of their people and care about the cost of victory?
Bravery. Are they willing to take the right risks and stand up to their fears? Do they inspire bravery in others? Are people willing to fight for them?
Discipline. Are the able to do the right thing at the right time consistently without oversight? Do they maintain consistent discipline, incentives and expectations in the organization?
Now this may be the most subjective part of the assessment, but typically speaking, human resources and customer satisfaction benchmarks alone may speak volumes. Here the trick is not to judge by reputation, rather by evidence to the above criteria.
The fourth assessment is the ability of the decision makers.
Fa — Methods & Technology
Fa translates to methods, skills, practices, techniques, or doctrine. For the purpose of strategic assessment it means skill level and effectiveness of your methods, and the effectiveness of the technology used. This is how good your organization is at what it does, and the quality of it’s tools and weapons. How strong, how fast, how effective are your processes, logistics, and end products? How well trained are your people?
As John Keegan wisely argues in his book “Intelligence in War” even when good intelligence is available, you can’t win a battle if you don’t know how to fight. When competition gets fierce, the stronger competitor always enjoys that advantage.
The effectiveness of your methods and skill at executing them is one of the single most important advantages you can have.
Technology cannot be dismissed. In 480 and 490 BC invasions of Greece, the Greeks technological advantage over the Persians was simply the Hoplite heavier armor and weapons. Greeks used longer spears, and metal shields; Persian spears were shorter, their shields were wicker. Nobody realized the advantage of stealth technology and modern American air power until tested against the world’s 4th largest military during Desert Storm in 1991.
However, new technologies that complicate processes and require significant training are often a competitive disadvantage. A wonderful example is BYD who figured out how to make superior products with inexpensive Chinese engineers and labor intensive manufacturing methods; beating out competitors using exotic processes and industrialized robotic manufacturing.
The subtle context of this is training. Superior technology and methods only work if the people have the training to use them to an advantage.
Methods and technology may be difficult to measure directly; like leadership you may have to measure them through indirect means, or simply test their effectiveness through direct competition. But you can figure out who’s got the advantage and what it is.
The fifth assessment is who’s methods, technology and training give greater advantage?
Balance of advantage
Master sun then advises you add up all the advantages and disadvantages found in the assessment, and you will see who has the overall advantage. If your measurement of assessment is accurate, you can predict the winner.
For example, In WWII the Nazi’s enjoyed home field defensive advantage, more experience, more sophisticated methods and best of breed technology in most categories; but superior technology, a more experienced army, and home field advantage did not make up for poor purpose and values, not to mention intentionally disorganized overlapping leadership that could not execute an effective strategic decision without Hitler’s micromanaging approval.
The final assessment is the net assessment. Add up the advantages and disadvantages on each side, and you’ll have great insight into who will win, who will lose, and why.
The whole point of net assessment is to holistically understand everyone’s strengths and weaknesses, so you can maneuver your strengths against your competitor’s weaknesses.
The take away
As I said at the beginning — probably nothing there that hasn’t been said in a dozen business management books. Sun Tzu just nicely brings in all together in a couple of pages.
Once you’ve made the five assessments, Master Sun challenges the net assessment:
Which political leadership holds the right purpose and values?
Which management posses superior skill?
What season and position provide superior advantage?
Which method of command and control works best?
Which force is stronger?
Which people have better training?
Which incentives and discipline are most consistent and clear?
These tell you who will win and who will lose. If you want to win, You need to develop an organization that is competitive on every above point, e.g. the five assessments and the net assessment questions. If you are assessing strategy for competition, this is how you identify the key strengths and weaknesses.
This net assessment should make it obvious what you need to do to win. And just as importantly, what won’t work (please, never again try competitive entry into Russia during the winter).
Now here’s the trick. Assessment of your internal business is probably handled by finance, business analysts and business intelligence. The assessment of business competitors is probably done by either market research, competitive intelligence, or lacking that, a couple of proactive leaders.
That should show an obvious disconnect. If your internal analysts and external analysts are different departments, with different goals, methods, and values… Then your business is probably incapable of making a valid net assessment.
If, and only if you can coordinate and combine internal and external scopes of business to align, measure, compare, and contrast your internal assessments with your external assessments; then, and only then have you legitimately completed the step so fundamental to strategy that Sun Tzu put it on the first page of The Art of War.
If you don’t have a strategic assessment, or worse, your strategic assessment is patched together from unaligned work products from different groups — then your strategy won’t be based on the relevant facts; and will likely fail when those facts determine competitive advantage.
If you’re looking for something useful for the competitive intelligence folks to do? Have them do a net assessment, and have them start on your internal assessment first. That will provide the template for external assessments.
But how do you use that everyday? What does this actually mean for you as an individual?
Well, if you want to enjoy personal competitive advantage. Consider your purpose and values. Are they working to your strategic advantage? Think about your environment, what is the timing good for? Where can you position yourself? How do you rate on the 5 abilities of decision makers? Can you improve your abilities? What methods and technology do you have available? Can you improve them? Simply understanding these principles for yourself, your family, and the groups you work with will allow you to be better at anything you want to do.
If you ever find yourself in a competitive environment, you can then make the comparative net assessment of your opponents and obstacles to best align what you have, to the opportunities for success that your competitors provide you with.
Thanks for reading,
Your humble strategist,
Ted S Galpin