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