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Six Strategic Principles for Managers

Based on Mark McNeillys book Sun Tzu and the Art of Business 1) Capture Your Market Without Destroying It Generally in war, the best policy is to take a state intact; to ruin it is inferior to this....For to win one hundred victories in one hundred battles is not the acme of skill. To subdue the enemy without fighting is the acme of skill. --Sun Tzu Sun Tzu calls this the need to win-all-without-fighting. Since the goal of your business is to survive and prosper, you must capture your market. However, you must do so in such a way that your market is not destroyed in the process. A company can do this in several ways, such as attacking parts of the market that are under-served or by using subtle, indirect, and low-key approach that will not draw a competitor's attention or response. What should be avoided at all costs is a price-war. Research has shown that price attacks draw the quickest and most aggressive responses from competitors, as well as leaving the market drained of profits. 2) Avoid your competitor's strength, and attack their weakness An army may be likened to water, for just as flowing water avoids the heights and hastens to the lowlands, so an army avoids strength and strikes weakness. --Sun Tzu The Western approach to warfare has spilled over into business competition, leading many companies to launch head-on, direct attacks against their competitor's strongest point. This approach to business strategy leads to battles of attrition, which end up being very costly for everyone involved. Instead, you should focus on the competition's weakness, which maximizes your gains while minimizing the use of resources. This, by definition, increases profits. 3) Use foreknowledge & deception to maximize the power of business intelligence. Know the enemy and know yourself; in a hundred battles you will never be in peril --Sun Tzu

To find and exploit your competitor's weakness requires a deep understanding of their executives' strategy, capabilities, thoughts and desires, as well as similar depth of knowledge of your own strengths and weaknesses. It is also important to understand the overall competitive and industry trends occurring around you in order to have a feel for the terrain on which you will do battle. Conversely, to keep your competitor from utilizing this strategy against you, it is critical to mask your plans and keep them secret. 4) Use speed and preparation to swiftly overcome the competition. To rely on rustics and not prepare is the greatest of crimes; to be prepared beforehand for any contingency is the greatest of virtues. --Sun Tzu To fully exploit foreknowledge and deception, Sun Tzu states that you must be able to act with blinding speed. To move with speed does not mean that you do things hastily. In reality, speed requires much preparation. Reducing the time it takes your company to make decisions, develop products and service customers is critical. To think through and understand potential competitive reactions to your attacks is essential as well. 5) Use alliances and strategic control points in the industry to shape your opponents and make them conform to your will. Therefore, those skilled in war bring the enemy to the field of battle and are not brought there by him. --Sun Tzu Shaping you competition means changing the rules of contest and making the competition conform to your desires and your actions. It means taking control of the situation away from your competitor and putting it in your own hands. One way of doing so is through the skillful use of alliances. By building a strong web of alliances, the moves of your competitors can be limited. Also, by controlling key strategic points in your industry, you will be able to call the tune to which your competitors dance. 6) Develop your character as a leader to maximize the potential of your employees. When one treats people with benevolence, justice and righteousness, and reposes confidence in them, the army will be united in mind and all will be happy to serve their

leaders. --Sun Tzu It takes a special kind of leader to implement these strategic concepts and maximize the tremendous potential of employees. Sun Tzu describes the many traits of the preferred type of leader. The leader should be wise, sincere, humane, courageous, and strict. Leaders must also always be first in the toils and fatigues of the army, putting their needs behind those of their troops. It is leaders with character that get the most out of their employees. These principles have been utilized throughout time in both the military arena and the business world to build creative strategies and achieve lasting success. If you use them properly, they will bring you success as well.

Strategic Creativity
Sun Tzu's Art of War states, "Therefore, when I have won a victory I do not repeat my tactics but respond to circumstances in an infinite variety of ways." This quote aptly points out the need to be creative when developing strategies and tactics. One example of creativity was that of Wheaties. During Superbowl XXXI in 1997 the Wheaties marketing team carried two boxes of Wheaties to the game; one representing the New England Patriots winning and the other the Green Bay Packers being victorious. As the game progressed, it became clear that the Green Bay Packers would beat the Patriots. With this in mind the Wheaties team went up to the broadcast booth, taking their box with Packer star quarterback Brett Favre's picture on it. The announcers, thinking it would be a great prop, took the box and showed it to the huge worldwide audience. By doing so they gave Wheaties millions of dollars of free advertising. The major pharmaceutical company Johnson & Johnson has also displayed great creativity in marketing. Knowing that most people would not be drawn to their web site to learn about their medicines on a regular basis, J&J decided that perhaps events could help them create awareness for their products. With this thinking J&J runs banner ads for their headache reliever on e-broker sites whenever the markets drop significantly. Thus they reach consumers when those people are most interested in their products. Consultants often point to the Gillette razor business model as an example of creativity. What most people don't know is how long ago that business model was developed and what the catalyst was behind it. All the way back in 1895 King Camp Gillette (yes, that was his real name) took his inspiration from a former employee who had made millions selling disposable bottle-tops. Using the idea that disposable razor heads, like disposable bottle-tops, were something that would need constant replacement, Gillette received a patent for his invention in 1901 and had sold 12 million blades by 1903. That same business model still works a century later. Creativity is not something that belongs only to a few people who are born with it. John Kao, a well-known author of books on creativity (such as "Jamming") supports this view, stating, "Creativity must go beyond generation of new ideas; it must become an ongoing process." Roger von Oech, author of "A Whack on the Side of the Head" and many other books on creativity provides many exercises one can do foster it. Examples

include being illogical, breaking the rules, and dealing with ambiguity. With these and other exercises one can be more creative and thus be more competitive. As Sun Tzu said, "The flavors are only five in number but their blends are so various one cannot taste them all."

Turning Strengths Into Weaknesses

A key tenet of Sun Tzu's strategic philosophy is to attack the opposing side's weaknesses. "Now an army may be likened to water, for just as flowing water avoid the heights and hastens to the lowlands, so an army avoids strength and strikes weakness." However, sometimes competitors seem invincible and few weaknesses are discernible. So another approach is to find ways to turn their strengths into weaknesses. For example, Coca-Cola's strength in the soft drink market was that it was the classic cola. With its long history as the favorite American drink, supported by decades of advertising, its position seemed unassailable. So Pepsi needed to find an approach that would work. It did so by turning Coke's strength into a weakness by coming out with the "Pepsi Generation" theme. This approach positioned Pepsi as the drink for the next generation of cola-drinkers, the youth market. It also positioned Coke as the drink for the older (and by implication, the old-fashioned) generation. With America's love affair with everything young Pepsi turned Coke's reputation as America's traditional drink from a strength to a weakness

Work/Life Balance
With the pace of business accelerating every day it's harder and harder to maintain a balance between one's work and personal lives. So here are some thoughts from famous people that I've used to put things in perspective. For starters, time has always been at a premium. Back in the early 19th century Napoleon said, "Go sir, gallop and don't forget that the world was made in six days. You can ask me for anything you like, except time." Thus, what becomes important is to ensure that you spend time on what's important. As Thoreau said, "our life is frittered away with detail....simplify, simplify" (of course, if he really meant that he would of just said "simplify" once!). This also means setting aside time to work on top priorities and in parallel, not signing up for things that are not important. To quote Nancy Reagan (albeit in a different context); "Just say 'No'". One further point; you need not overwork yourself but instead should spend your time in a focused manner. As E.W. Elmore said, It is not half as important to burn the midnight oil as it is to be awake in the daytime." One must also take risks. Without taking risks, both personal and professional, you cannot attain your full potential. As the Scottish hero William Wallace says in the movie "Braveheart", "All men die. Not every man really lives." And finally, one needs to take time to enjoy life. All of us have hobbies. As a boater I identify with this famous quote from Grahame, "Believe me, my young friends, there is nothing, absolutely nothing, half so much worth doing as simply messing about in boats." Whatever you like to "mess about" doing, make sure you set aside time to do so.

I'm Dying to Know...

Does it frustrate you when someone on your team, perhaps a manager or another team member, asks you a question for which they know the answer but they know you don't? Often these are trick questions, in which the answer is not obvious. Things like, "do you know what new technology is coming that will change the future of our industry?" Or "do you know what percent of our customers buy product X from our competitor?" Lots of times these questions are asked in front of others, making it even more frustrating. So what should be your response? Rather than guess or fumble around for an answer simply say, "I'm dying to know." This shows that you're interested in the answer and at the same time keeps you from playing the person's question game. So next time someone asks you a question for which they know the answer but they know you don't just say, "I'm dying to know."

Ooda Loops
The competitive environment has not gotten any easier and change occurs in the business world at an ever-increasing pace. That is why it has become essential to a company's survival and success to be able to respond faster to those changes as well as move quickly to execute its own strategy. As Sun Tzu said, "Speed is the essence of war. Take advantage of the enemy's unpreparedness; travel by unexpected routes and strike him where he has taken no precautions."" There are several ways to achieve speed; many companies have focused on reducing cycle times in manufacturing, logistics, distribution and product development. These actions all make sense; however, one area that is often overlooked is reducing the decision-making cycle time. One method of doing so is the concept of OODA Loops. The OODA Loop theory was developed by US Air Force Colonel John Boyd. Colonel Boyd, a jet fighter pilot, military theorist and maverick, developed the OODA Loop concept as a result of his experiences as a pilot in Korea and his later studies of warfare throughout history. First applied to warfare, the OODA Loop concept is also very applicable to business.

"OODA" stands for -Observation: Sensing and understanding the positions of your company and the competition, as well as the key factors in the environment. -Orientation: Putting those observations in context and developing courses of action. -Decision: Deciding on the proper course of action to take. -Act: Executing your decision. As this is a loop, after one acts then one must observe the results and go through the cycle again. Obviously, the faster a firm's leadership can observe, orient, decide and act and make good decisions, the more competitive the company will be. The goal is to move through this process at much higher speeds than the competition, thus forcing them to react to your plans and actions. Therefore, to shorten one's decision-making cycle time one should analyze each step of your own company's current OODA Loop and see where time can be reduced and the quality of information and decision-making improved. Intelligent use of the OODA Loop concept allows one to win at either a tactical or strategic level. You can learn more about Colonel Boyd and the OODA Loop concept by reading The Mind of War by Grant Hammond or Boyd, The Fighter Pilot who changed the Art of War by Robert Coram.

Treating People the Same May Not Work

Western society is built on the principle of treating everyone fairly. From a personnel and human resources standpoint this makes a lot of sense; salary plans, benefits and hiring practices need to be implemented consistently. However, at the first-line manager level it's important to recognize that people are individuals and need to be treated in a manner that will elicit their highest performance. This means managers need to know what motivates each employee and use that knowledge to get results. At the end of each game the famous Green Bay Packer coach Vince Lombardi would give each of his players feedback on their performance. The ratings he would give Jerry Kramer, a very conscientious player, would range between the mid-90s and 100, the top score. However, the ratings he gave Paul Hornung, his playboy running back would range anywhere from the 60's on up. Lombardi gave different scores to communicate essentially the same message; however, he knew he could never give Jerry Kramer a

score below the mid-90s because it would devastate him mentally. But he also knew if he didn't give Hornung a wide range of scores then Paul would not be motivated to make up for poor performances. Beyond performance evaluations another method of treating people differently is by what has become know as "job sculpting." Job sculpting is about finding what an employee is interested in and likes doing, then "sculpting" the job description to meet those interests as much as feasible given the department mission and company goals. Those tasks unwanted by that employee may then be given to others on the team who would find them enjoyable. The final result is a more motivated and productive team. The key lesson here is that managers need to see each individual as just that, an individual, and tailor an appropriate motivational approach for each person on the team.

Learning From Waves

The Chinese often look to nature to learn how the world works and be more effective in accomplishing one's goals. For instance, both Taoism and Tai Chi use nature as an example to communicate their specific philosophies. One natural phenomenon we can learn from is waves, especially when thinking of creating change in organizations and the marketplace. Waves have often stood for change; for example, people often talk about creating a "sea change" when speaking about how they want to significantly move or shift their organization. So if we want to understand how to create our own sea change, it makes sense to try and understand how waves are formed and work. Typically, waves are formed by the wind as it blows across the surface of the water. Wave size will increase as wind speed and power increase, the time the wind blows lengthens and as the size of the body of water grows. Thus, when hurricanes drive across the ocean they can form waves one hundred feet or higher, waves so big they can change land formations. Learning from waves, then, it is clear that to make major change one must do the following; make one's argument powerfully, implement it with impact, reinforce it consistently over a long period of time, and enlist as many people to help as possible. Thus, by following nature's principles one can then create a sea change in one's own world.

In making the analogy between business and warfare the business corollary to the "enemy" is one's business competitor. To take the analogy further it is clear that the business terrain that must be won is the customer. Just as a commander must know the terrain he will fight for, the business leader must know the customer he hopes to win. The Art of War states, "When employing troops it is essential to know beforehand the conditions of the terrain. Knowing the distances, one can make use of an indirect or a direct plan. If he knows the degree of ease or difficulty of traversing the ground he can estimate the advantages of using infantry or cavalry. If one knows where the ground is constricted and where open he can calculate the size of force appropriate. If he knows where he will give battle he knows when to concentrate or divide his forces." I have personally spent many years doing market research focus groups, surveys and customer councils to learn all I can about customers. These are all valid methods of knowing the "terrain." However, one shortcoming of these methods is their reliance on customers' logic-based responses to questions. It is clear that logic may only play a small part of the customer decision process. Psychological research has shown that the emotional part of the brain (the limbic) has an important role, often being stronger than that of the logical part of the brain (the cortex). Research has also shown an even deeper part of the brain, the reptilian (which guides our survival and reproductive instincts) is even more powerful in determining why customers buy certain products. The premise is that biological drives from our evolution as a species and the strong imprints of our cultures reside in the reptilian brain and guide our buying choices. In fact, many choices are made based on instinct or emotion, with a logical "alibi" being made up to justify the decision. This method of learning about customers' deepest drives is known as archetyping discovery. I have had the pleasure of learning this methodology from a leader in the field, Dr. Clotaire Rapaille. Dr. Rapaille has used his archetyping methodology to drive the design of the PT Cruiser in the United States and the creation and marketing of many other very successful products and brands. Using a unique process that allows buyers to reveal what a product means to them at an emotional and instinctual level, archetyping unlocks the "code" in buyers' minds. Using this profound knowledge, smart marketers and designers create the right offerings and marketing strategy to set off those evolutionary and cultural hot buttons.

If you would like to learn more, I would urge you to pick up a copy of the book The Seven Secrets of Marketing by Dr. Clotaire Rapaille or visit his website at http://www.archetypediscoveriesworldwide

Following The Way

Sun Tzu stated that, "Those skilled in war cultivate the Tao and preserve the laws and are therefore able to formulate victorious policies." The Tao, or "The Way", was created by the ancient Chinese philosopher Lao Tzu and has had a major impact on China's culture. In Taoist philosophy something, say a vase, can be prized not only for it's beauty, but also for its "emptiness". For it is not the vase's beautiful outside but the empty inside that provides value by allowing itself to be filled up with water, wine or another liquid. Advertising slogans and tag lines perform the same function; as stated they communicate not only something about the company or product itself (e.g. Ford, Where Quality is Job One) but also subtly portray other companies in a poorer light with their unsaid message. In the Ford example above, the implication is that other companies don't focus on quality as much; therefore, their products may have higher failures rates. So a slogan or tag line needs to communicate both directly (the stated message) and indirectly (the unstated message) to customers. Slogans such as Campbell's "Hmm, Hmm, good" sends a clear positive message about the product while also placing in the consumer's mind a question about the competitor's product. This approach effectively makes use of both the form and the emptiness. As Sun Tzu said, "Therefore, the skillful commander takes up a position in which he cannot be defeated and misses no opportunity to master his enemy."

Lessons Learned
In my time as a Competitive Intelligence professional, I learned some lessons along the way. In the hope you may find them useful, here they are: Competitive imitation may be the highest form of flattery, but if that is all you do it is the lowest form of strategy. Know not only the competitor's products but also how the competitor will act in competitive situations. Focus on competitor's weaknesses, not just their strengths.

Offer information and knowledge (not just data) on a real-time basis. Don't just state the problem, offer recommendations. Don't just know the make good recommendations you must also know your own company and the marketplace. Don't just postulate about the future.....war game it! Get access to the CEO or business unit leader...or else it's all just an interesting exercise.

Staying in the Mud

With business booming, startups popping up all over the place and entrepreneur millionaires abounding, many of us have wondered if we should take a shot at making it big. Do the potential rewards outweigh the risks? How much do I give up? What will happen to my personal life if I take the plunge and work around-the-clock to help build a business? Obviously, your own specific personal situation is a prime determinant in this decision; how much time you're willing to devote to work, how important your family and/or friends may be to you, how much time you like to devote to hobbies or charity, and how you define success. However, the following ancient story of the wise philosopher Chuang Tzu may provide some insight for all of us. The Duke of Ch'u sent envoys to find Chuang Tzu and ask him to become the Duke's chief minister. They found him out by a river, fishing, with a contented look on his face. They interrupted his reverie by asking him to come to the capital to work for the Duke. Chuang Tzu, upon hearing their request, related a tale. "I have heard of a sacred turtle in Ch'u that died three thousand years ago. The Duke keeps it wrapped in a special cloth and guarded in a special temple. May I ask if the turtle prefers to be dead and worshipped or if the turtle wanted to be alive and crawling around in the mud, dragging its tail?" The envoys replied, "Of course, the turtle would want to be alive and crawl around in the mud!" "Then go home," said Chuang Tzu. "I also want to be alive and crawl around the mud, dragging my tail." Think about it.