Sun Tzu on dealing with rivals (part 3)

PART 3 of 4 considers the principles developed by Sun Tzu for dealing with business rivals and follows on from part one which looked at qualities of successful leaders, and part two considered the principles for organising your business affairs.

I have summarised Sun Tzu’s principles into four simple categories:

  1. Qualities of a successful leader;
  2. Organising your business affairs;
  3. Dealing with rivals; and
  4. Strategies for effective leadership.

3. Dealing with rivals

3.1 Employ experts and consultants

When operating in a foreign country it is important to seek the advice of local experts so that you can best take advantage of local laws and natural advantages. When operating in an unfamiliar industry, employ consultants to provide specialized knowledge on the industry and the competition.

Know your [competition], know yourself and you can fight a hundred battles without disaster…

3.2 Use spying, deception and bluff

Donald Krause, consultant and author of The Art of War for Executives, believes that people whose scruples do not include spying and appropriate levels of deception will not be very successful in business or politics.

Spies are a most important element in [business], because on them depends a [company]’s ability to [act].

Do not publicly release definite business plans.

The spot where we intend to fight must not be made known for then the enemy will have to prepare against a possible attack at several different points.

Release confusing, incorrect or contradictory reports to the media. Your competitors will not know what you are planning to do, and they will not be able to prepare accordingly.

All [business] is based on deception…when able to [release a new product], we must seem unable; when using [much energy], we must seem inactive…If your [competitor] is of choleric temper, seek to irritate him. Pretend to be weak, that he may grow arrogant.

3.3 Understand the motivation of your allies

We cannot enter into alliance with [other companies] until we are acquainted with their designs.

3.4 Attack your competitor’s reputation

Donald Krause, author of The Art of War for Executives, says “…personal attacks are frequently used in business situations when more logical methods might fail. The person using the personal attack tactic is usually the one operating from the weaker position. Personal attacks are particularly effective in environments where performance is subordinated to personality. … I have found that Sun Tzu’s description of the ideal circumstances for a personal attack, as I interpreted the fire attack section, work excellently in real life.”

3.5 Poach customers and employees

Poaching a highly trained senior employee from one of your competitors is equivalent to training twenty of your own. Some of your juniors will leave you, some will prove useless, and some will be unsuccessful for other reasons. You will need to train ten juniors in order to create one senior employee; your competitor must do the same.

…a wise general makes a point of foraging on the enemy. One cartload of the enemy’s provisions is equivalent to twenty of one’s own, and likewise a single picul of his provender is equivalent to twenty from one’s own store…Because twenty cartloads will be consumed in the process of transporting one cartload to the front.

Sun Tzu on organising your business affairs (part 2)

PART 2 considers the principles developed by Sun Tzu on organising your business affairs, and follows on from part one which looked at qualities of successful leaders,

I have summarised Sun Tzu’s principles into four simple categories:

  1. Qualities of a successful leader;
  2. Oranising your business affairs;
  3. Dealing with rivals; and
  4. Strategies for effective leadership.

2. Organising your business affairs

2.1 Management must be independent of owners

If you are the CEO of a company, you must not take directions from the owner or shareholders in how to run the day to day affairs of the company.

If fighting is sure to result in victory, then you must fight, even though the [owner] forbid it; if fighting will not result in victory, then you must not fight even at the [owner]’s bidding.

2.2 Make preparations

You must constantly plan, prepare and train your employees. If you do not, you will not be in a good position to take advantage of the next exciting business opportunity.

…the general who wins a battle makes many calculations in his temple ere the battle is fought. The general who loses a battle makes but few calculations beforehand.

He will win who, prepared himself, waits to take the [competitor] unprepared.

2.3 Make no mistakes

Making no mistakes is what establishes the certainty of victory, for it means conquering [a competitor] that is already defeated.

2.4 Prioritise tasks

Having limited capital and resources at his disposal, an experienced leader must prioritise tasks in order to achieve specific goals.

2.5 Choose your battles

He will win who knows when to fight and when not to fight.

2.6 Work swiftly in short bursts

The chief lesson is the paramount importance in business of rapid action and sudden rushes, “great results can thus be achieved with small forces.”

2.7 Adapt to the circumstances

In business, there are no constant conditions and you must adapt your strategies accordingly.

Do not repeat the tactics which have gained you one victory, but let your methods be regulated by the infinite variety of circumstances.

2.8 Pay attention to changing market conditions

The rising of birds in their flight is the sign of an ambuscade. “When birds that are flying along in a straight line suddenly shoot upwards, it means that soldiers are in ambush at the spot beneath.

2.9 Adapt your strategy to the size of your organisation

You must adapt your business strategy to the size of the company and its competitors. For example, a large company may be suited to producing commodities; a small company may be better suited to producing highly specialised differentiated products.

He will win who knows how to handle both superior and inferior forces.

2.10 Seize opportunities

Look for gaps in the market.

You can be sure of succeeding in your attacks if you only attack places which are undefended.

Always be ready to seize the next big opportunity, especially when you are facing business difficulties.

If…in the midst of difficulties we are always ready to seize an advantage, we may extricate ourselves from misfortune.

Those who want to make sure of succeeding in their battles and assaults must seize the favourable moments… [w]hat they must not do, and what will prove fatal, is to sit still and simply hold on to the advantages they have got.

2.11 Avoid threats

If you can establish a business that has a natural monopoly, high barriers to entry or some other competitive advantage, this will greatly reduce the competition. For example, eBay has a natural monopoly in the online auction market. Buyers and sellers are naturally drawn to eBay because so many other people already use the site. This makes it easier for sellers to find a buyer and easier for buyers to find a product that takes their fancy.

You can ensure the safety of your defence if you only hold positions that cannot be attacked.

2.12 Obey the rules until the decisive moment arrives

Walk in the path defined by rule, and accommodate yourself to the enemy until you can fight a decisive battle [then] [d]iscard hard and fast rules. Victory is the only thing that matters, and this cannot be achieved by adhering to conventional cannons.