The Art of War – 1. Defeat your enemy without a fight

The Art of War

 1. – Defeat your enemy without a fight

 

“Sun Tzu said: In the practical art of war, the best thing of all is to take the enemy’s country whole and intact; to shatter and destroy it is not so good. So, too, it is better to recapture an army entire than to destroy it, to capture a regiment, a detachment or a company entire than to destroy them. Hence to fight and conquer in all your battles is not supreme excellence; supreme excellence consists in breaking the enemy’s resistance without fighting. Thus the highest form of generalship is to balk the enemy’s plans; the next best is to prevent the junction of the enemy’s forces; the next in order is to attack the enemy’s army in the field; and the worst policy of all is to besiege walled cities.” (The Art of War, Section 3 – Attack by Stratagem, Sun Tzu 5th Century BC)

 

This is probably the most famous quote from “The Art of War”. Which shows another level of understanding of the battle field and the nature of war from Sun Tzu.

In his theory, “break the opponents and destroy what they have” is the worst possible way to win a battle; the ideal victory is to defeat the enemy without a fight, take them without damaging the them. Thus, the best solution is to strategically outthink your opponent, second is to carry out diplomacy, thirdly is to attack the enemy, the worst is to siege the enemy.

In other words, Sun Tzu believes the great victory is defeating enemy with no blood shed, but with strategy and diplomacy.

 

In business, the war is in a different form. We can see the worst possible way of “attack the enemy” and “siege” as “long-lasting pricing competition or a fight to the lowest price”. A better way would be to gather information and develop an advanced strategy, such as early engagement with the customer, the second could be through diplomacy or negotiation with suppliers for sole distributorship.  

For example, in early 90’s, business computing was in rapid stage of development, there were huge profits as well as competition in the industry. Some tech companies spent time and money to develop relationships with clients to set standards based on their products and services, and also take advantage due to information asymmetry.  Over all, this worked out as required specifications were extremely beneficial to the company’s business for the future.  This was due to other products not meeting the requirements, they never got into the fight.

An example for the use of diplomacy is a strategical horizontal alliance. In most cases, two or more companies may have similar products that service varying client groups. Instead of competing in the market for their own share, with a proper alliance strategy (even with a competitor), the companies can work together to provide a complete range of products.  Companies forming a business alliance, have the opportunity to gain greater market coverage as well as a cost reduction due to shared resources.

 

Written by Conrad (Kang-Wei) Lin | 林剛維, 31/10/2018

The Art of War – 0. Introduction

The Art of War

0. – Introduction

 

“The Art of War” is the most famous ancient Chinese military treaties among all Chinese classical books. Especially in business and military world.

The book was written during the “Spring and Autumn Period” (771~476 BC) by the military strategist “Sun Tzu”. Since then, it has been reviewed and revised many times through history, later translated and published all over the world. In this series, we will adapt the first and probably most read annotated English version translated by British Sinologist, writer and philosopher: Lionel Giles (1910) for direct quote of the book, combined with more modern conception and understanding from other great authors and myself.

There is a common quote around Chinese businessman: “The field of doing business is just like the field of war.” It is not rare to apply strategy from “The Art of War” to business. The records can trace back to “Warring State” period (475~221 BC). Chinese businessman “BaiGue” has applied the philosophy to managing production. However, who really makes the book what it is today are Japanese. At 60’s, Japanese businessman started to apply “The Art of War” to business management, the most famous example is “Matsushita Kōnosuke”, founder of “Panasonic”, also known as “the god of management” in Japan. He said, learning from “The Art of War”, not only made my business success, I also learn principals on how to live as a person in this world. He specifically marked it as a book required to read for all his senior manager.

In this The Art of War series, I will bring you one Topic at a time for each post, it will consist of a direct quote from the book and an explanation and application for modern business. Hope you will enjoy it like I do!

 

Written by Conrad (Kang-Wei) Lin | 林剛維, 29/10/2018

10 FACTS about small business in Australia

10 FACTS about small business in Australia

 

  1. There are 2 million small businesses in Australia

  1. 97% of Australian businesses are small business

  1. Small business contributes 33% of the GDP

  1. The most dominating industries of small business are real estate service, construction, professional scientific and and technical services

  1. It provides 68% of national employment

  1. Small Business pay up to 12% of national tax contribution.  Medium Business 23%, Large Business 65%.

  1. Half the small businesses do not survive their first 5 years

  1. Cash flow is the most concerned management problem

  1. The majority of small businesses go bankrupt due to lack of strategic planning and poor financial management

  1. Most small businesses do not seek for professional advice

 

Statics and resources gathered from
ABS(Australian Bureau of Statistics): http://www.abs.gov.au/
ASIC(Australian Securities and Investments Commission):https://asic.gov.au/
ATO(Australian Taxation Office): https://www.ato.gov.au/
ASBFEO(australian small business and family enterprise ombudsman): https://www.asbfeo.gov.au/

Stopping Businesses from Failing

Stopping Businesses from Failing

The single most important thing to overcome business failure is the right mindset, the kind of mindset which positively embrace changes.

1. Forward thinking and vision set up

It is crucial to set up company’s vision, which will guide you through development and provide clear thoughts on decision making.

2. Frequent analysis on your business

There are many business analysis techniques. We have identified the three most popular techniques you should use for you business.

  1. SWOT Analysis
  2. A “Use Case Diagram
  3. Business process modelling

3. Planning for cash flow control

According to ATO(Australian Taxation Office), cash flow is the top concern problem for small business. Managing cash flow is critical and can be done with correct tool and strategy.

4. Be confident

Is is very common for a business to go through some hard times on occasion.  A business owner should be confident about the road they chose and learn from their failures.  Like Thomas Edison once said: “I have not failed, I’ve just found 10,000 ways that won’t work.”

5. Set up objectives

Clear and specific objectives with strategic planning will make sure the train stay on track and reaches its destination.  

6. Always think as if you are the customers

Customers drive income, no matter what kind of products or services your business offer.  Always focusing on your customers’ needs, will ensure you maintain your profit. Like the famous quote we all have heard “A satisfied customer is the best business strategy of all”.

7. Find an reliable way to resolve emotions

Running a business is hard in many ways, often you have to deal with struggles and problems which may burn you out physically and emotionally.  Finding channels to resolve the emotions will be very useful for you in the long term.

8. Be prepared for emergencies

Unexpected things happen from time to time, those who are not prepared can be destroyed in a blink of an eye.  No matter if it is natural causes, human causes or political causes, you should develop a plan and be prepared – it could save you a big time.

9. Be creative and different

Taking a creative approach could return you huge profit, although it often means taking risks. With reasonable risk analysis, in many cases, it is good to be bold and try something different.

10. Seeking professional advice

Running a business is tough, not to mention if you are running it yourself.  Seeking professional advice can provide you a thorough understanding about your business.  They will help you build a niche strategy and develop your business with their abundant experience.