7. The Eastern Approach to Strategy

This is a draft from a forthcoming book ‘Out-Think, Out-Move: Real-Time Strategy & Execution in an Uncertain World’. It focuses on business in Russia but the insights should be applicable to a much wider audience. Feedback and comments are welcome (marcus@powermaps.net). Earlier sections are here:

  1. Forget Strategic Plans!
  2. Adapt or Die
  3. Pal’chinskii’s Principles
  4. Ashby’s Law of Requisite Diversity
  5. Surviving collapse in your core market: the FujiFilm case
  6. Natural selection: the case of Honda

Despite being 2,500 years old Sun Tzu’s The Art of War is currently number 4 on Amazon’s bestseller list for ‘Strategy & Competition’ books. Why is this?

It seems modern strategists are seeking insights from warfare because it shares two key characteristics with the business world:

  1. Competition (with rivals)
  2. Uncertainty (not knowing how rivals will act).

In The Art of War modern business strategists can find a rich store of maxims — short statements expressing general truths — to sprinkle their presentations with. But many people, especially in the West, lack knowledge of the Chinese philosophical tradition behind The Art of War and thus end up, ultimately, finding the work “both impractical and incomprehensible”. This is why Sun Tzu’s great work today is “often heard of and read but seldom understood in the West; despite its popularity”.

“War is a vital matter of state” declares the first line of The Art of War. Yet, paradoxically, this military treatise emerged out of “a culture in which warfare is neither celebrated nor glorified, and in which military heroism is a rather undeveloped idea”. All wars, even victorious ones, are devastating. They bring uncertainty, which increases anxiety amongst the people who are not sure what will happen next. War drains valuable resources from areas on which future prosperity depends, such as infrastructure, education and culture. Therefore, in the Chinese philosophical tradition, war was considered an act only of last resort. Yet China’s endless history also taught them that war, even as a last resort, was unavoidable. It meant that any leader who did not study war was considered irresponsible. This explains why “many if not most of the classical Chinese philosophical works contain lengthy treatises on military thought” despite the low regard in which it was held. Yet these works are less focused on how to win on the battlefield and more on how to win before getting to the battlefield. This is more The Art of Strategy and Sun Tzu’s work was a high-point of this tradition:

“To win a hundred victories in a hundred battles is not the highest excellence; the highest excellence is to subdue the enemy’s army without fighting at all

The Art of War, chapter 3

As the world’s longest continuous civilisation China retains an “intimate link to its ancient past and classical principles of strategy”. Current Chinese leaders can invoke battle-tested “strategic principles from a millennium-old event” and be confident colleagues will “understand the significance of [these] allusions”. When Mao Zedong felt surrounded by enemies, (including a hostile Soviet Union on China’s northern border) he addressed this “peril by returning to a classical Chinese stratagem … enlisting faraway enemies against those nearby”. This principle would have made immediate sense to those around him. China’s rapprochement with the US in the 1970s (which helped create the conditions for China’s re-emergence under Deng Xiaoping) underlines the strategic advantage such ‘intimate links’ provide. Therefore, the question for modern strategists is: how can we also develop strategic advantage from these classical principles of strategy?


“The key and defining idea” in The Art of War is the concept of shi (勢). A direct translation is not easy as Chinese is a highly-contextual language where meaning depends on the situation. Yet shi is rooted in pragmatism.

War does not take place in an unchanging landscape. It is shaped by a wide-range of external forces: political decisions, social norms, changing technology, and the unexpected moves of rivals, which are constantly evolving and changing. These unpredictable forces interact with one another to create fluid situations of high-uncertainty. Yet, in the Chinese philosophical tradition, these situations change “according to a general pattern that can not only be anticipated, but can be manipulated to one’s advantage advantage”. An ancient Taoist story tells of an old man falling into some rapids, which drag him towards a dangerous waterfall. Onlookers fear for his life but, miraculously, he re-appears unharmed further downstream. When asked how he survived the old man replied: “I know the river is more powerful than I, so I do not fight it. I allow myself to be shaped by the flow of the water. When it pulls me under I hold my breath. When it pushes me back up again I use the moment to escape. This is how I have survived so long living next to such a dangerous river”.

This ancient story reveals two key aspects of shi:

  • Awareness: your ability to see opportunities and threats in a situation
  • Adaptability: your ability to respond effectively.

The greater your ability to adapt to the situation, in other words the longer you can survive, the more options the situation will present you. And the clearer your awareness the more you’ll work with the flow of events rather than fighting against forces more powerful than you. Awareness — adaptability is therefore is the basis of real strategic advantage, allowing one to identify and exploit the potential in a situation. This is how we may define shi.

Such concepts are not easy to grasp. To aid understanding Chinese philosophers used metaphors. They explained new ideas by comparing them to known things, often from nature. Water metaphors were popular for describing shi. Laozi — a contemporary of Sun Tzu — wrote: “Nothing in the world is more flexible and yielding than water. Yet when it attacks the firm and the strong, none can withstand it, because they have no way to change it”. The paradox — of water being flexible, yet there being no way to change it — describes the power of shi. Therefore, one who understands the terrain (awareness) and can flow with it — like water (adaptable) — presents no discernible shape an enemy can attack, but is capable of attacking with overwhelming force, making the result inevitable:

“A victorious army … launching its men into battle, can be likened to the cascading of pent-up waters thundering through a steep gorge …

The Art of War, chapter 4

“… the velocity of cascading water can send boulders bobbing about is due to its strategic advantage

The Art of War, chapter 5

Five Factors

The Art of War provides no universal recipes for success in competitive situations. In the Chinese philosophical tradition no two situations are identical as “minute fluctuations can amplify into dramatic changes”. Consequently, a commander must treat each situation as unique and seek to increase awareness of current conditions. Familiar patterns should be considered (troops leaning on their weapons is a sign they’re tired and ripe for attack, while birds gathering in trees reveal unoccupied positions in the enemy’s lines that can exploited). But a wise commander must also consider the possibility of deception. Only foolish commanders attack in the same way twice, as this makes them predictable and an easier target. However, a wise commander may appear foolish as a ruse to trick the enemy into a premature attack or appear strong to prevent an attack his forces are not ready for. There are no universal recipes because:

“Warfare is the art of deceit”.

The Art of War, chapter 1

Complex and unpredictable situations, such as those found in war, are rich in information. This is why those who allow themselves to be influenced by those far from the action — political leaders or advisors fighting the last war — are foolish. A wise commander gets close to the action, seeing conditions first-hand and seeking timely information:

“Intelligence is of the essence in warfare — it is what the armies depend upon in their every move”.

The Art of War, chapter 13

To guide commanders in the type of intelligence they need to seek Sun Tzu provided “five factors” which he claimed to be the “way of anticipating victory”. This is a framework for increasing awareness — adaptability and is of the greatest practical value in The Art of War. Sun Tzu was clear about it’s importance:

“All commanders are familiar with these five criteria, yet it is he who masters them who takes the victory, while he who does not will not prevail”.

The Art of War, chapter 1

The first factor is what Sun Tzu called tao — or the way. This is a common direction aligning the troops with their commander.

The second factor is climate — the rotation of days and seasons, which affects the third factor.

The terrain — the physical landscape and the distances involved.

The fourth factor is command itself — the decisions a commander makes and their “wisdom, integrity, humanity, courage, and discipline”.

And the final factor is what Sun Tzu called regulations — “organisational effectiveness, a chain of command, and … logistical support”.

The wise commander considers who these five factors favour to determine who has superior shi — or strategic advantage:

  1. The side with the more compelling mission
  2. The side who will benefit most from climate changes
  3. The side who the terrain favour mores
  4. The side who makes better decisions
  5. The side who has the more effective troops.

The wise commander uses knowledge of the five factors to create the conditions for victory:

Facing a numerically superior army, he manoeuvres forces to where the terrain is narrow, so it can be defended with few men. This is seeking shi from the terrain.

Using darkness to conceal movement and knowing when overhead conditions make underfoot conditions more or less favourable. This is seeking shi from climate.

Cultivating troop morale while, simultaneously, taking every opportunity to disturb the equilibrium of rival troops. For troops with superior morale fight with energy, while troops lacking morale become disheartened easily. The wise commander knows that bravery and cowardice do not come from the troops but from how wisely they are deployed. This is seeking shi from alignment:

“the expert at battle [is one who] seeks his victory from strategic advantage (shi) and does not demand it from his men”.

The Art of War, chapter 5

Sun Tzu’s five factors are a guide for taking victory with minimal effort. Mastering the five factors increases a commander’s awareness of the terrain, how it’s changing and where conditions are favourable. Seeking “intelligence acquired directly from the specific situation” increases “his capacity to thus control events”. Control also depends on the adaptivity of his forces — their capacity to respond effectively. This must be cultivated ahead of time through training, logistics and clear channels of communication. This is how superior awareness-adaptivity determines victory:

“… the victorious army only enters battle after having first won the victory, while the defeated army only seeks victory after having first entered the fray”.

The Art of War, chapter 4

Wise commanders do not rely on daring or courage for victory. They master shiThe Art of Strategic Advantage — and the consequences become inevitable:

“Thus the battle of the expert is never an exceptional victory, nor does it win him reputation for wisdom or credit for courage. His victories in battle are unerring. Unerring means that he acts where victory is certain, and conquers an enemy that has already lost”.

The Art of War, chapter 4


The Art of War is a guide for gaining strategic advantage (shi) by mastering Sun Tzu’s five factors. In this eastern approach to strategy is the recognition that “as unforeseen circumstances may arise it is not always possible to draw up a plan in advance”. Instead of a plan, one develops superior awareness — adaptability and waits patiently for good options to appear. But this is active patience. One must continually increase awareness of the situation, whilst simultaneously disrupting the awareness of rivals through deception. One is continually improving the adaptiveness of one’s forces in advance so their movements become imperceptible to rivals, dis-orientating them. From this a mis-match starts to appear between the two. The wise commander then acts in accordance with the current situation, anticipating how it’s changing and manipulating conditions to his favour. The foolish commander — lacking awareness of conditions — starts to feel overwhelmed by change and uncertainty and is reduced to guessing what to do next. When the final attack comes it’s like a raging torrent crashing down a gorge, taking him by surprise and leaving him powerless to resist it:

“… the strategist mastering shi is akin to water flowing downhill, automatically finding the swiftest and easiest course. A successful commander waits before charging headlong into battle. He shies away from an enemy’s strength; he spends his time observing and cultivating changes in the strategic landscape. He studies the enemy’s preparations and his morale, husbands resources and defines them carefully, and plays on his opponent’s psychological weaknesses — until at last he perceives the opportune moment to strike the enemy at his weakest point. He then deploys his resources swiftly and suddenly, rushing “downhill” along the path of least resistance, in an assertion of superiority that careful timing and preparation have rendered a fait accompli”.

Govern the state by being straight-forward; wage war by being crafty. — Laozi