Business Lessons from Sun Tzu
Sun Tzu’s “The Art of War” is probably the most famous book on business and leadership. Leaders in politics and business base many of their decisions on this renowned guide. You may wonder why a book written over 2,000 years ago holds the respect of so many wise men: it is because human nature remains essentially unchanged throughout history that many of the lessons of the past still apply to the present.
Nevertheless its wealth of practical knowledge, the reader must be intelligent enough to discern what is useful from the irrelevant, meant only for ancient warfare. Not all the teachings are humane; some are barbaric, especially the use of beheadings to enforce discipline. But in extreme cases like this, you can often just use the concept and substitute more civilized methods. For example, use termination of employment instead of beheading to show the ultimate consequence of serious violations.
It will be best to read the book in its entirety, but to entice people to study this magnificent work, I will now present some of the less controversial ideas in this book that are most useful to business:
• Know yourself and know others so that you will be successful. The modern business embodiment of this principle is our SWOT (strength, weakness, opportunity, threat) analysis, which is essentially a detailed study not only of our company’s capabilities and weaknesses but also of the threat posed by competitors. This may seem obvious today, but in the past people usually relied more on their gut feel rather than careful planning. Even now, there are proponents of using intuition in making decisions; but careful thought is still the predominant method, due in part to Sun Tzu’s sayings.
• All warfare is based on deception. This does not mean to get involved in scams. In business, this means avoid being predictable when you are involved in negotiations, where certain types of bluffing are considered part of the process. For example, you must strive not to appear too eager to close the deal. If the other party perceives your eagerness, you might end up paying too much.
• Put yourself first beyond the possibility of defeat before looking for victory. In our eagerness to defeat our competitor, we may overlook weaknesses that cause us to lose. These may be little things like getting the proper insurance coverage, or more strategic moves like partnering with a stronger company in order to have more protection from potential competitors. Once you are secure in your market, then you can proceed to plan expansion.
• It is better to capture an entire army than to destroy it. This is meant to warn the entrepreneur against winning a hollow victory just to feed the ego. An example of this is engaging in price wars that will drain the resources of both you and your competitor. Ultimately you may lose more than gain. There is no point in gaining market share if you lose profitability.
• Regard your soldiers as your children and they will follow you into the deepest valley. Despite Sun Tzu’s advice, this principle of treating your employees well was ignored by most companies until worker discontent forced better treatment around the twentieth century. Although we still see many firms abusing their workers, most of the leading companies have improved working conditions and/or compensation in order to attract and retain high quality employees.
• Place your army in deadly peril and it will survive. This is true only if the leadership is good. If there is a crisis and the workers see that management is not panicking and has a viable plan, then they will be more motivated to exert extra effort. Time and again it has been shown that an emergency can be harnessed by management to unite and galvanize employees to overcome challenges.
• Spies are an important element in war because upon them depends an army’s ability to move. While this could be taken literally by some companies as engaging in industrial espionage, the legal and moral risk of employing spies far outweigh its benefits. I would prefer to utilize more marketing research to guide a company’s planning.
“The Art of War” is a classic book that deserves its place among the greatest management and leadership book ever written. Although the book has only a few pages, its applications are countless, and it becomes even more useful every time you read it. In fact, it is a required reading in many military and business colleges. Just take care not to lose your moral compass and to apply only that are ethical.
*Originally published by the Manila Bulletin. Written by Ruben Anlacan, Jr. (President, BusinessCoach, Inc.) All rights reserved. May not be reproduced or copied without express written permission of the copyright holders.
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