There have been many great strategists that have lived throughout history that we can learn from. From the Ancient strategists, we can learn these 5 principles today.
1. Any area in life that is dominated by thoughtless effort can be transformed through innovative tactics. Pagondas taught us about forward defense or striking an enemy that is a long-term threat. During one battle, the Athenians marched near Delium expecting their reinforcements to arrive but they never did. The Athenians then began to flee but Pagondas ordered the Thebans to attack them. Pagondas also innovated by changing the commander’s position from the front lines to one in which he could survey the whole battlefield. This innovation won him many battles. The lesson here is to think on ways you can innovate on how things are normally done to gain an advantage.
2. All plans are temporary and must change in response to changing realities. Sun Tzu taught us to view all of our plans as temporary and open to revision. This is at the heart of strategic thinking as the opposite of this would simply be static thinking. Does the strategic plan you created, even a short time ago still apply today?
3. Preparation is the heart of strategic capability. We prepare through training, discipline, hard work, and sound planning which are our strategic reserves. No preparation means no reserves. Vegetius wrote that strategy encompasses three elements: intentions, capabilities, and resources. He emphasized the importance of preparing in advance through training, discipline and hard work.
4. You must know your opponents. Knowing their strengths and weaknesses lets you avoid fighting losing battles and allows you to concentrate your resources on weak points. From Hannibal we learn that superior strategy can defeat superior force. Hannibal defeated the Romans by using their habits and weaknesses against them. In contrast, Thucydides used his superior force to overwhelm his enemies. In his famous Melian dialogue he argued that the Athenians superior might was all that was required to force compliance and ignored concepts like justice, reason or fairness.
5. Be bold and beat fortune into submission by having a bias towards action. Machiavelli offered us these two principles.
From the modern strategists Napoleon, Jomini, Clausewitz and Forrest we learn the following principles:
1. Napoleon: From Napoleon we learn three principles: The central position, concentration of force and the indirect approach. Napoleon was often outnumbered so he would maneuver his army to a central position between two opposing armies and drive a wedge between them. He would then battle one and distract the other with a masking force. He would also concentrate overwhelming force at the right time and place which meant victory even with a smaller force. Napoleon would also position a small force to draw out the enemy army and then march his main force to the enemy’s flank to gain an advantage in what is called the indirect approach.
2. Jomini: From Jomini we learn more about the concentration of force strategy. Jomini suggested that you should maneuver the bulk of your forces to the decisive point on the battlefield and overwhelm the enemy quickly so that your whole force fights only part of the enemy’s force.
3. Clausewitz: Clausewitz said that conflict is a function of three variables: violence, chance, and political aims. The strategist must balance these three elements to achieve victory.
4. Nathan Bedford Forrest was a southern General who summed it up nicely: “Get there first with the most.” General Heinz Guderian led Hitler’s panzers across Belgium and France following the same principle as Forrest: applying overwhelming force at a single point and then pursuing an enemy relentlessly.
The British General John F.C. Fuller articulated the principles of war that are still in use today by many militaries and form the core of strategic planning. These principles are designed to ensure that you control the battlefield, pressure the opponent and resist the enemy’s plan to defeat you. The principles of war include:
1.) Objective: Direct every military operation toward a clearly defined, decisive, and attainable objective. The objective must be clear for everybody who has anything to do with execution of it. The army uses a METT-T framework that stands for Mission, Enemy, Troops, Terrain and Time Available to help with the objective. You must know your goal, your resources, the enemy’s resources, the terrain and timeline.
2.) Offensive: Seize, retain, and exploit the initiative. Offensive action is the best way to accomplish the objective and we only play defense temporarily until we can seize the initiative again. The side that retains the initiative through offensive action forces opponents to react rather than allowing them to act.
3.) Mass: Mass the effects of overwhelming combat power at the decisive place and time. This is the concentration of force principle advocated by Jomini.
4.) Economy of force: Employ all combat power available in the most effective way possible; allocate minimum essential combat power to secondary efforts. All of our resources should be deployed so that no part is not working towards the objective. We must be efficient with our resources at not deploy too many to secondary goals.
5.) Maneuver: Place the enemy in a position of disadvantage through the flexible application of combat power. Maneuvering means moving our resources in relation to an enemy’s to gain advantage. Maneuvering lets us decide where and when to engage and to set the terms of the battle in our favor.
6.) Unity of command: For every objective, seek unity of command and unity of effort. All forces are controlled by a single commander. Unity of effort means all forces coordinate when they are not part of the same command structure.
7.) Security: Never permit the enemy to acquire unexpected advantage. We must anticipate and plan for how our competitors will attack us. We must know our own weak points that need to be strengthened
and we must have up to date intelligence on enemy movements.
8.) Surprise: Strike the enemy at a time or place or in a manner for which it is unprepared. Surprise is a force multiplier and essential for good strategy. There are 6 types of surprise: speed, intelligence, deception, application of unexpected force, operations security and tactical methods.
9.) Simplicity: Prepare clear, uncomplicated plans and concise orders to ensure thorough understanding.
10.) Morale Maintenance: The will to fight and win must be maintained.
Gary Hamel and C. K. Prahalad coined the term “strategic intent” in 1989 in the Harvard Business Review. Strategic intent is the big idea, dream or vision that you are working towards. Strategies need to have an inspirational vision at their core in order to fuel the work necessary to achieve them. You need to articulate a long-term vision that goes beyond your current capacities and forces you to develop and accumulate resources to achieve. If you tailor your goal to your current capabilities this will simply maintain the status quo.
The Mythologist Joseph Campbell identified the archetypal story of the “hero’s journey” that has inspired every known society throughout history. Examples of this story include Prometheus stealing fire, Ulysses returning home after the Trojan War or the Quest for the Holy Grail. The Hero’s journey is a good example of setting goals that outmatch your current capacity and necessitate growth.
Famous examples of grand strategy include John F. Kennedy and Martin Luther King Jr. JFK said: “We choose to go to the moon in this decade….” and then this was achieved less than 10 years later. Similarly, MLK realized His dream of racial equality through non-violent civil disobedience.
Strategy without intent is just soulless technique. Work without vision is simply drudgery so without vision we begin to atrophy and perish. Be bold and courageous in setting your goals and don’t settle for anything that doesn’t animate and excite you.
The Core of Strategic Planning
Strategic planning is facilitated by a founding myth and a mission statement. The founding myth is a story about how the company was founded that exemplifies the goals and values of the organization. Apple computer’s founding myth is the story of two young men who started the computer revolution in a California garage. The mission statement anchors strategy and forms the basis for our strategic intent. It should be a bold and inspiring statement and not vague or routine. Coca Cola’s is: “To refresh the world; to inspire moments of optimism and happiness; to create value and make a difference.”
According to Michael Porter, strategic plans should take a decade or more to accomplish. A single fiscal year or planning cycle is usually not enough. Planning can’t be reduced to a budget exercise: Do not reduce strategic planning to setting budgets or making financial forecasts. There are three planning fallacies to avoid when developing your strategy that include:
1. The Fallacy of Predetermination: This occurs when we are overconfident in our ability to predict the future. This leads us to developing rigid plans based on a single line of thought.
2. The Fallacy of Detachment: This occurs when planners remove themselves from the front lines. This is strategic formulation detached from implementation.
3. The Fallacy of Formalization: This occurs when strategic plans become too formal and abstract and just become binders on the shelf.
Strategic Planning can be broken down into 6 steps:
Step 1 Mission: Define your mission statement and purpose for existing.
Step 2: Objectives: Create clear, concise, achievable and measurable mid range objectives to accomplish your goal.
Step 3: Situation Analysis: Evaluate the internal and external environment within which you will operate.
Step 4 Strategy Formulation: Decide on what you will actually do to get from where you are to where you want to go. Allocate resources and decide who will implement parts of the plan.
Step 5: Strategy Implementation: Supervise how the strategy is going and revise as needed.
Step 6: Control: Develop a quality control mechanism to measure if the plan is working. Make adjustments as needed.
Organizations that Last – Jim Collins
In his book “Built to Last” Jim Collins examines what separates companies that have staying power from those that are here today and gone tomorrow. According to Collins, visionary companies are the best companies in the world that have a long history of having positive impacts on the world. He uses the analogy of time telling vs. clock building to show what separates companies that last from temporary companies. Someone who can tell the time by looking at the sun is not as useful as someone who can build a clock for anyone to tell time. Charismatic leaders are like “time tellers” and when they leave you lose the function they provided. Companies that last engage in “clock building” that outlives the charisma of the leader.
Visionary companies concentrate first on the organization’s systems and values, then on products. HP and Sony both started with no specific product in mind. Merck lived up to their value statement when they gave away a drug they spent millions to develop: “We try never to forget that medicine is for people. It’s not for the profits. The profits follow . . .” Like Merck, visionary companies tend to be more ideologically driven than profit-driven. Profit is like oxygen which is necessary for life but not the point of life. Look to your internal compass for guidance, not the standards, trends, or fads of the outside world. Don’t ask,
“Is this practice good?” Ask, “Is this practice appropriate for us?”
Visionary companies have core ideologies which are basic precepts that say: “This is who we are; this is what we stand for; this is what we’re all about.” Procter & Gamble’s is to: “Product excellence, continuous self-improvement, honesty, and respect and concern for the individual.” Wal-Mart’s is: “To provide value to customers, to buck conventional wisdom, to work with passion and commitment, to run lean, and to pursue ever-higher goals.”
An ideology consists of two ingredients: core values and purpose.
1. Core values are the organization’s enduring tenets and guiding principles which can never be sacrificed for financial gain. A value should be expressed as a simple statement.
2. Purposes are your organizations reasons for existing beyond making a profit and are more broad and enduring. For example, Robert W. Johnson founded Johnson & Johnson “to alleviate pain and suffering.” A purpose is bigger than a specific product and service and can be discovered by asking: “What is our reason for being? What would be lost if we ceased to be?”
3. Signals and Actions: Visionary companies employ a variety of signals and actions that continually reinforce the core ideology and stimulate progress.
Collins also found that successful companies create what he called “BHAGs” which is an acronym for big, hairy, audacious goals. A good BHAG is clear, compelling, and serves as a unifying focal point. A BHAG should be so clear and compelling that it requires little or no explanation. It should fall outside the comfort zone and should require immense effort to achieve. It should be so exciting that it continues to stimulate progress even when leaders leave. And finally, a BHAG should be consistent with a company’s core ideology.
Visionary companies were also found to create “cult-like” cultures that indoctrinate employees through training programs. To create a cult-like culture, Collins advises us to try doing some of the following things:
• Training programs should have ideological and practical components. For example IBM set up programs to indoctrinate new hires.
• On-the-job socializing should be encouraged.
• Promoting from within instead of from without.
• There should be penalties for breaching ideology.
• Constant emphasis on corporate values and heritage, and tales of heroic deeds in the line of duty.
Visionary companies also never rest. They don’t ask, “How well are we doing?” They ask, “How can we do better tomorrow than we did today?” They run a race with no finish line. Visionary companies consistently invest more into their companies (as a percentage of sales) than most other companies. They spend more on human capital as well. Merck, 3M, P&G, Motorola, GE, Disney, Marriott, and IBM have
all made significant investments in “universities” and education centers.
These same principles that create lasting organizations can be used to create a life of lasting meaning and purpose for individuals as well.
The Two Main Strategies
The two main strategies in business are cost-leadership and differentiation. A third strategy is to focus on a very specific market segment and then to adopt either cost-leadership or differentiation.
1. Cost-Leadership: With this strategy, you try to sell products or services at the lowest price possible and then make profits on volume. This involves trying to be more efficient with your resources than your competitors. Commodities and some other products rely on low-cost strategies because there aren’t really ways to strongly differentiate. For example, cement is cement and there’s isn’t really a way to differentiate except on price so profits are low and competition is fierce.
- In WW1 everyone was using a low-cost strategy, trying to be more efficient with the same resources and tactics. It wasn’t until the British differentiated and made tanks that the war started to change. In WW2 the allies used a low-cost and high volume approach and they defeated the Germans who had differentiated elite units. This made Americans believe the low-cost approach was best for a long time.
2. Differentiation: This strategy involves differentiating your products from competitors in ways that customer’s value. This is your unique selling proposition (USP) and should be a one-sentence description of
what you offer that few others can match. Differentiating means specializing by adding functions and features that other competitors lack. This strategy relies on establishing a great reputation as a brand known for its quality.
- During WW2 the allies won in the Pacific theater through differentiation (Atomic Bomb) so the Japanese believed this strategy was best for a long time. Be careful of being too ambiguous in an attempt to appeal to everybody because ultimately your brand will become diluted and mean nothing.
- Differentiating a Commodity: Howard Schultz, the CEO of Starbucks, chose to differentiate coffee by the way it is served. He charged more for it by choosing to serve it in a European style coffee house.
3. Focus: This strategy involves choosing a highly targeted market to focus on and then serving them through cost-leadership or differentiation. This strategy is kind of like a hyper-differentiation strategy as you want to deliver highly specialized products to very narrow market segments. An example might be an ethnic grocery store or producers of high-end cars.
A competitive advantage refers to something that makes you superior to your competitors in some way. You need to develop competitive advantages that give you the edge in a competition. Many people think that competition is about doing the same thing as everyone else more efficiently and with higher quality. This is why the use of best practices and bench-marking has become so important. However, if you do
nothing else but benchmark and copy competitors than you will never truly innovate.
A blue ocean market is one that is uncontested and one in which your firm is differentiated in a meaningful way for your market. Red ocean markets are those with many competitors fighting over small profit margins with high stress. The red ocean is meant to evoke images of people fighting in close quarters.
The value curve shows how a company is doing according to an industry’s accepted factors of competition. For example, the car market factors would be: price, prestige, gas mileage, size, comfort, performance, longevity, safety and service. Car companies try to differentiate on these factors to gain a competitive advantage over rivals.
However, some strategists argue that gaining a competitive advantage is better done through the Four Actions Framework. This model challenges the assumptions of the value curve and asks questions intent on creating new competitive factors for unexplored market segments. These questions can be thought of as 4 steps: Eliminate, Reduce, Raise, and Create.
(1) Which of the factors that the industry takes for granted should be eliminated?
(2) Which factors should be reduced well below the industry’s standard?
(3) Which factors should be raised well above the industry’s standard?
(4) Which factors should be created that the industry has never offered?
Another way of gaining a competitive advantage is through developing a personal brand. Other people will label you so you should be deliberate in creating your own personal brand and take control of the process. Your brand is your reputation and it’s what other people think of when they see you or hear your name. How can your brand give you a competitive advantage over others?