| Business |
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13 August, 2000 |
| Business |
|
13 August, 2000 |
By ASIFF HUSSEIN
The idea that business is a war and the business world a battlefield is not a novel one. In fact, the Japanese who have traditionally excelled in the art of war have not been averse to applying military tactics to business practices, a strategy which has considerably helped them succeed on the economic front.
Top management expert and Director, Human Resources, Browns Group, Jayadeva De Silva, who spoke to the Sunday Observer on 'Military Lessons for Business Managers' contends that Japanese business practices are largely based on the oldest Chinese military strategies embodied in such classic works as the Art of war by Sun Tzu.
The Japanese, he avers, have been known for their skills in perfecting the efforts of others and it is only logical that they should have looked to China for acquiring the military skills which they continue to apply to their management and business strategy. Among the military concepts that have found application in the Japanese corporate wars against the west and especially the USA, are detailed planning, marketing intelligence, choice of battle grounds, adaptability in manoeuvres, swiftness in execution of plans and the creation of strategic advantages through deception, he pointed out.
"The business world is like a battlefield. Businesses have collapsed through poor planning, resulting in the loss of capital and employment. This is no different from war, where poor planning can lead to the loss of personnel, equipment and the battle itself. In the case of companies in the business world, the impact of losses can at times be felt throughout many other sectors of the economy, just as losses in war can literally tear a nation apart. Thus the challenges facing a military head of state and the chief executive officer of a company are comparable" he stressed.
While military leaders aim at consolidating their government within its defined territory and protecting it from external aggression, so do business leaders who do their utmost to protect the market shares of their businesses. Similarly, while military leaders look to expanding their present territories either by conquering neighbouring states or by embarking on more ambitious expeditions to far away lands and territories, so do business leaders who are constantly seen developing new products for existing markets as well as exploring new markets with a view to capturing them, he pointed out.
Strategic management, contends De Silva, must begin with detailed planning. "The focus is not on whether an army or a company plans or does not plan. Rather it is how detailed the planning is. Detailed planning has to be exhaustive in coverage and consideration. It cannot be carried out on the basis of intuition, gut feeling, calculated guesses or other subjective means. It must be based on intelligence, which can be obtained by those who have knowledge of the enemy or the competitive situation", he stressed "Thus there is a need to actively collect, store, analyse and utilise information for the development of more effective strategies. The successful acquisition and utilisation of information for strategic purposes is an important factor which determines the competitiveness of a country or a business".
Another important factor in determining success whether in military combat or in business is the choice of battle ground, pointed out De Silva. "In choosing a battle ground to compete, a company should opt for one in which it has distinct advantages over its competitors. It can also look for areas ignored by the competitors. It is also important to identify the characteristics of different battle grounds which will help decide the appropriateness of a given strategy", he stressed.
Dispersive ground
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One such ground is what is known as 'Dispersive Ground' where the army fights the battle in its own territory, which should be avoided at all costs. "In the business world, one observes that the United States is facing a problem of exports from Japan, South Korea, Taiwan, Hong Kong and Singapore. The US has chosen passive and defensive strategies by trying to fight on its own soil, rather than concentrate on a more aggressive and offensive export drive which would mean fighting beyond one's territory", he pointed out.
Frontier ground is a situation where the army has made only a shallow penetration into enemy territory. Military strategy would be not to stop in frontier ground but to proceed on. " In the area of foreign market entry, the Japanese can be hailed as gurus of this strategy of never stopping at frontier ground. With the coordinated efforts needed in a frontier ground situation, Toyota entered the US market followed by other Japanese automobile companies, without rushing into foreign markets simultaneously", explained De Silva.
Another type of ground, 'Key Ground', is one which is equally advantageous to the enemy and yourself. "Owing to its importance, it is highly contentious and the forces of both sides are likely to contest bitterly for it. For example, with the opening of China, many multinational companies view the Chinese market as a key market owing to the vast business potential. It is therefore not surprising to witness many companies rushing into Chinese markets. If one were to apply military strategies, one should avoid attacking the enemy on key ground. Rather, it is important to improve your supporting skills - rush up all your rear forces and elements. The way the Japanese have handled the Americans and Europeans in the world markets is a good example", he pointed out.
Focal ground
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"Another type of ground is 'Focal Ground', noted De Silva. "When a state is surrounded by three other states, its ground is considered focal. In such a ground, the enclosed state forms the key to the other three states in that the one who captures it can have a commanding situation over other states. Thus it can be expected that the focal ground is always under threat of siege. The strategy here is to befriend neighbouring states and to strengthen ties with allies. The small producers in an oligopolistic market structure are on focal ground.
"If you are the small producer, it is very important not to agitate the larger competitors. It is better to follow the leader than to lead them. To survive in such a business situation, there is a need to strengthen ties with allies. These allies would include the suppliers, customers, bankers, labour unions and government bodies. One remembers how the strong support received by Chrysler from allies prevented it from going bankrupt or squeezed out by much larger companies like General Motors and Ford", he pointed out.
'Distant Ground' is a situation where both sides are away from home base and are equally matched in forces. "It is in the best interests of both sides to avoid direct battles which would confer little advantage to either side. "The Japanese penetration of foreign markets again provides a very good example of this avoidance of direct battle in distant ground", he explained.
Yet another type of ground, 'Desolate Ground' constitutes ground that was originally captured and deemed valuable, but which loses its appeal and becomes less crucial to the subsequent conduct of the war as the battle progresses. One should not linger on such ground. De Silva cited as a case in point those Japanese companies which abandoned labour intensive industries such as textiles, once they realised that the other developing countries were able to operate more cheaply than them.
Treacherous ground
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Another kind of ground is 'Treacherous Ground', explained De Silva. " When the army is travelling in mountain forests, marshy swamps, dangerous passes or other difficult terrain, it is on treacherous ground. In such a situation, the army should not encamp but should move swiftly", he stressed "Similarly, the market is saturated with all kinds of competitive products in the mature state of the product life cycle. It is therefore important not to stay too long in matured markets".
Finally, we have the 'Death Ground' noted De Silva. " This is a situation in which the army can only survive if it fights with the courage of desperation, where the only way to survive is to fight. Chrysler Corporation was on the verge of bankruptcy between 1978 and 1982. Lee Iacocca made it abundantly clear to his employees that the only way to survive was to fight. His efforts resulted in a drastic change in the behaviour and loyalty of the workers towards management", he pointed out.
De Silva also stressed on the need to swiftly execute the plan once it is developed based on the information gathered through intelligence and the battleground chosen. "Swiftness includes perfect timing since it catches others off ground and hence minimises opposition, the maintenance of momentum and the avoidance of protracted campaigns", he explained.
There is also a need to employ Deceptiveness in Actions and Strategies since all warfare is based on the principle of deception, he stressed. "In order to achieve distinct advantage in combat, one must choose the battleground that is more advantageous to oneself than the enemy and bring the enemy to where you want to fight through the use of baits and deception. Although the term 'deceptive tactics' seems unethical, the truth is that baits are used in the business world too", said De Silva.
"One of the commonly used methods for less developing countries to attract foreign investment is the offer of incentives such as exemption from taxes through pioneer status etc. Even among developed countries, baits have been used for economic and political reasons", he added.
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