Chapter 8. The Eastern Approach to Strategy

Despite being 2,500 years old The Art of War is, (at the time of writing) number 4 on Amazon’s ‘Strategy & Competition’ bestseller list. Modern strategists seek insights from the study of warfare as it shares two essential characteristics with business:

1. Competition (with rivals)
2. Uncertainty (due to not knowing the intentions of rivals and how they will act).

Yet many business strategists use Sun Tzu’s famous treatise as little than a source of pithy statements to sprinkle their presentations with. The result is that The Art of War is “often heard of and read but seldom understood in the West; despite its popularity”. What’s missing for modern readers, especially in the West, is knowledge about the Chinese philosophical tradition it’s a part of.

The Art of War’s first line states: “War is a vital matter of state” but, paradoxically, this work 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, were considered devastating as they drained resources from areas on which future prosperity depends, (infrastructure, education and culture). War therefore was to be seen as an act of last resort. However, China’s endless history also demonstrated that war was unavoidable, which meant that any leader who did not study warfare was seen as irresponsible. This pragmatism explains why “many if not most of the classical Chinese philosophical works contain lengthy treatises on military thought”. Yet the Chinese study of warfare was less about how to win on the battlefield and more about how to win without needing the battlefield and The Art of War marked 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”. Leaders today can invoke well-known “strategic principles from a millennium-old event” and feel confident colleagues will “understand the significance of [these] allusions”. For example, feeling surrounded by enemies (a hostile Soviet Union to the North and an ambitious Vietnam to the South) Mao Zedong addressed China’s peril by invoking a classical principle of “defeating the near barbarians with the assistance of the far barbarians”. The US were the ‘far barbarians’ and China’s 1972 rapprochement with them helped create the stable conditions from which the country could re-emerge as a great power. By invoking a well-known and successful stratagem from history Mao could more easily communicate and make a move that surprised many — but wouldn’t have surprised those familiar with the strategic principle. The question for modern business strategists therefore is how can they gain strategic advantage from such principles without knowing the wider philosophical tradition they emerged from? The long answer is to learn Chinese and study their classics. A more pragmatic answer is to take a closer look at one of the key principles in The Art of War and explore how it shapes the Eastern approach to strategy to this day.

Shi

Shi (勢) has been called The Art of War’s “key and defining idea” The concept doesn’t have a direct translation as Chinese is a highly-contextual language where meaning depends on the situation. To aid people’s understanding of such complex concepts Chinese philosophers used metaphors — comparing something unknown to something known, often from nature. Laozi, (a purported contemporary of Sun Tzu) used a water metaphor for shi: “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”. Here shi is like water: flexible, as it adapts to the terrain; but unchangeable as it takes no permanent shape, making it impossible to attack directly. When water accumulates sufficient potential upstream it flows downstream, creating inevitable consequences:

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

— The Art of War, chapter 5

Shi therefore may be described as the unleashing of the potential in a situation. And one gains strategic advantage from working with this potential, not against it. A noted Taoist story explains: An old man falls into a surging river and is dragged towards a dangerous waterfall. Onlookers fear for his life. Yet he re-appears downstream, unharmed. He explained: “I am an old man. The river is more powerful than I. So I do not fight it. When it pulls me under I hold my breath. When it pushes me back up I jump out. This is how I survive living next to a powerful river”. The story reveals two key concepts needed for harnessing shi:

• Awareness, seeing the potential in a situation
• Adaptiveness, the ability to adjust and respond with the potential (rather than against it).

In Chinese philosophy even highly-uncertain situations, such as warfare, unfold “according to a general pattern that can not only be anticipated, but can be manipulated to one’s advantage”. An ever-improving awareness — adaptiveness enables one to actively wait for favourable conditions in a situation to form and then exploit its potential to create beneficial consequences. It’s this concept of strategic advantage that sits at the heart of the Eastern approach to strategy.

Five Factors

In the Chinese philosophical tradition no two situations can be considered identical as “minute fluctuations can amplify into dramatic changes”. This means there can be no universal recipes. This is why commanders are encouraged to improve their awareness of situations, which are rich in information for those who can see. Recurring patterns can be detected (troops leaning on weapons is a sign they’re tired and ripe for attacking, while birds gathering in trees can reveal unoccupied positions in enemy lines that can exploited). Yet the wise commander is also aware of deception — making the enemy think you’re far when you’re near; tired when you’re rested; or ‘lining up in the same old way’ when you’re about to spring a surprise:

“Warfare is the art of deceit”.

— The Art of War, chapter 1

The uncertainty of deception is why wise commanders do not allow those far from the situation — political leaders or advisors often busy re-fighting the last war — to influence local decision-making. A wise commander must consider the potential of a situation and, knowing it to be variable, understands that it cannot be known in advance. Success therefore comes from being close to the action and seeking intelligence “directly from the specific situation”. This is how the wise commander increases “his capacity to thus control events”:

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

— The Art of War, chapter 13

Sun Tzu provided commanders a framework of ‘Five Factors’, which would enable them to ‘anticipate victory’ in advance. He was clear about its importance:

“All commanders are familiar with these five factors, 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 concerned with how well troops and the commander are aligned around a common direction or purpose.

The Second Factor is climate. This is concerned with the rotation of days and seasons.

The Third Factor is the terrain. This is concerned with the physical landscape and distances involved. It is affected by changes in the climate.

The Fourth Factor is command. This concerns decisions a commander makes (after considering tao, climate and terrain) and their “wisdom, integrity, humanity, courage, and discipline”.

The Final Factor Sun Tzu called regulations — “organisational effectiveness, a chain of command, and … logistical support”. This is concerned with how well forces can respond to different situations.

Strategic advantage is gained from a correct consideration of these Five Factors:

1. Which side has the more compelling mission
2. Which side benefits most from climate changes
3. Which side does the terrain favour more
4. Which side makes the better decisions
5. Which side has the more effective force.

The wise commander can use these factors to seek strategic advantage from the conditions:

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

Using changes in overhead conditions, such as darkness or heavy rain, the wise commander conceals the movement of forces so they can act undetected. This is seeking shi from climate.

The wise commander cultivates the morale of his troops so they fight with energy, while taking every opportunity to disturb the equilibrium of rival troops, so they are disheartened. This is seeking shi from the effectiveness of forces.

And knowing that bravery and cowardice do not come from the troops themselves, but from how wisely they’re deployed the wise commander seeks shi from better decisions:

“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

Victory doesn’t come from daring or courage but from shi. This is The Art of Strategic Advantage:

“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

Conclusion

Chinese philosophers recognised that “unforeseen circumstances may arise” in any situation, meaning “it is not always possible to draw up a plan in advance”. Therefore they encouraged leaders to develop superior awareness-adaptiveness in order to exploit the potential in situations (shi). Wise commanders could also tip the scales in their direction by using deception to hinder their rivals’ awareness-adaptiveness. Creating a mis-match between reality and a rivals perception of it is how the wise commander shapes the potential of the situation favourably. Any moves the wise commander then makes can confuse rivals, who starts guessing what is going to happen next as they lack situational awareness. At that moment the wise commander can launch an attack — unleashing forces like a raging torrent crashing down a gorge, making them impossible to resist:

“… 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”.

Chapter 1 Forget Strategic Plans!

Chapter 2 Adapt or Die

Chapter 3 Pal’chinskii’s Principles

Chapter 4 Ashby’s Law of Requisite Variety

Chapter 5 FujiFilm: Variety

Chapter 6 Honda: Survivability

Chapter 7 Honda-Yamaha War: Natural Selection