China Apprentice

I’m excited to take part in this year’s Lingnan Sun Yat-sen INDUSTRAT competition. Though the course may be an elective and I’ve already taken the required number of MBA elective courses (actually well over the required three), I was compelled to sign up. I’m interested to see what a “capstone” course for an MBA could be all about. I’m also a little scared to think that this intense four-day simulation could test all the things we’ve learned in this MBA over the past year and a half. A guest professor in from Hong Kong coupled with a famous simulation program developed by the great minds at one of the world’s best business schools, INSEAD, makes me more than a little curious about the 2007 Business Strategy Simulation.

I remember it was a mad rush to register for the class when it came available. A new online registration system at Lingnan like any new online system, didn’t work when it was supposed to let us sign up for the course. With suspense building, when the course finally was released to the Lingnan masses, it was a swift dash to find an open cable port for the student’s laptops and log in to the system. I slipped in the course just two people from the course limit.

And I’m glad I made it. It was enough to pique my interest when I first received the preparatory course materials for this course – 孙子兵法 or The Art of War by Sun Tzu (full text translation). A longtime enthusiast of Chinese philosophical thought, I was delighted to learn this strategy course wouldn’t be all about western ideas but would focus on possible the father of all strategic thought, Sun Tzu.

I’ve advocated before that I think Lingnan should focus more on some of the decidedly Chinese contributions to management theory and practice. The emphasis these days in MBA programs is so much focused on the ideas of a bunch of gray-haired white guys. The world is waking up slowly to the fact that China has a lot more to offer to the greater education community. This course is just one example.

The professor, 赵越 Oliver Yue, got me interested the minute he walked in the room and started to introduce himself. I was particularly inspired by what he claims is a theme in his life stemming from the repetition of a particular Chinese radical in his name, 走 which means to go or walk or otherwise indicate movement. Whether inherited from birth or motivated by the aspirations of his parents, Dr. Yue, makes a point to live his life reflecting a common Chinese proverb, 读万卷书，行万里路 or read 10,000 books, travel 10,000 miles. I don’t know about the books (though a PhD probably gets close), but he’s certainly made his round of travels. He’s been to all seven continents and snapped some fantastic photos along the way. Now, a man who lives by such mantra, enjoys the art of photography AND studies the application of ancient Chinese philosophy to modern business is a man of interest in my book.

In fact, not only do a frequently quote the same Chinese proverb and take gazillions of travel photos, but it was just yesterday that I gave a very similar final presentation in my Strategic Management class on the management interpretation of The Art of War. I was surprised to learn that the Dr. Yue’s lesson preparing us for the first day of simulation drew some very familiar connections in strategy with Sun Tzu.

In many ways I agree that a war’s battlefield can be much like the business environment （孙子管理思想？）. Perhaps Sun Tzu’s most famous line 知彼知已者，百战不殆 epitomizes the importance of having valuable information both about your own company and your competitors (to include customers, users, key actors, suppliers, etc.). To evaluate yourself, your enemy and the environment, Sun Tzu tells us凡此五者，将莫不闻，知之者胜，不知者不胜.

There is no general who has not heard of these five factors. Yet it is he who masters them that wins and he who does not that loses. When assessing the outcome of a war, compare the two sides in terms of these factors and appraise the situation accordingly.

The five factors he refers to are now often quoted in business strategy texts. 故经之以五事，校之以计而索其情：一曰道 – The Way, 二曰天 – Heaven, 三曰地 – Earth, 四曰将 – Command, and 五曰法 – Doctrine.

Modern theorists (relatively modern that is compared to 300 BC) have developed strategy frameworks that conveniently match some of The Art of War’s basic ideas. 天者，阴阳，寒暑，时制也. Dr. Yue highlights the relationship between Master Sun’s factor of “heaven” and David Baron’s market and non-market environment summarized in the acronym PEST – political, economic, social, technological not to mention the public and the media. Not only do these aspects affect the “business climate” represented by the heaven factor but we can also consider Michael Porter’s 5 Forces - Suppliers, Buyers, New entrants, Substitute Products, and Competition.

Modern theory coincides even more with Sun Tzu’s famous work. Henry Mintzberg’s Five P’s, Perspective, Position, Ploy, Pattern, and Plan match almost perfectly with Sun’s 5 factors, respectively. 道者，令民与上同意也。故可以与之死，可以之生，而不畏危. The Way can be compared to modern corporations’ core competencies and social responsibility. 地者，远近，险易，广狭，死生也. The idea of Earth representing distance, terrain, land, and place can be related to the company through internal analysis of resources, labor, capital, transportation, etc. Jay Barney uses such a resourced-based view to evaluate a firm’s financial, physical, human, and organizational capital thereby helping companies capitalize on resources with value, rarity, imitability, and organization. 将者，智，信，仁，勇，严也. Command, on the other hand, is the ability of the company leadership to implement strategy using the five characteristics of a general that also apply to any organization’s leaders:

Wisdom – recognize changing circumstances, active involvement in planning process
Sincerity – towards employees for soliciting their feedback and input
Benevolence – incentive system
Courage – no hesitation to make decisions which capitalize on an opportunity
Strictness – discipline for self and others

法者，曲制，官道，主用也. The last of the five factors, doctrine, is modifying the structure of the organization to facilitate strategy. This must happen at all levels of the organization: corporate, business, and functional. Though Sun likely didn’t have common business-level strategies in mind when he penned his words, concepts of specialization, diversification, integration, outsourcing, and strategic alliance are found in cryptic form throughout the text. Gary Hamel’s idea of Business Concept Innovation (BCI) is but one way to create a unique strategy that creates competitive advantage over competitors.

Sun Tzu tells Generals to evaluate the competition with the five factors by asking a series of questions. These questions can be directly related to key business strategy concepts:

Vision/Core competencies - Which sovereign possesses more moral influence?
Leadership - Which general is more capable?
Market/Resources - Which side has the advantages of heaven and earth?
Organization/Structure - Which army is better disciplined?
Competitive advantage/training - Whose troops are better armed and trained?
Incentives/Vision - Which command is more impartial to meting out rewards and punishments?

Even though we may evaluate our company today based on these questions and factors and then create an ideal strategy, tomorrow the environment could change. 夫兵形象水. 水因地而制流，兵因故变化而取胜. As the water changes its course in accordance with the contours of the terrain, so a warrior changes his tactics in accordance with the enemy’s changing situation. A business must have similar flexibility to realize strategy is fluid and ever-changing.

It’s amazing a text from over 2000 years ago still holds such significance in world affairs. The interpretations and applications of this little book are very practical for any business, small, medium, or large. I look forward to analyzing this simulation more and finding inspiration in this ancient wisdom.