The best form of attack advocated by Sun Tzu, is to preempt your rivals strategies.
The ability to subdue the enemy without battle is a reflection of the ultimate supreme strategy. The supreme is to attack enemies’ strategies and plans, by thwarting them. Next is to attack the enemies’ strategic alliances with other nations. The next option is to attack enemy troops. The worst option is to attack the cities. (Chapter 3, Sun Tzu Art of War)
So how do we preempt our rival’s strategies? In the context of war, firstly, you must be able to anticipate the moves of your enemy. Secondly, the reason behind all these moves and thirdly, coming up with a strategy to counter these moves with the least amount of resources. All these generally need a lot of intelligence to carry out.
1) Anticipating your enemy’s moves.
Just by looking step one, we have an idea how difficult it is going to be. You need to have immense first-hand knowledge of your enemy’s advisory group and the dynamics of the group too. Each strategist has its specialty and specific liking on employing certain strategy, some would always look to use fire and some would always prefer to destroy everything and so on. The reason why the dynamics of the group need to be understood is each ruler or general has his favorite strategist and it could change with time. Like Liu Bei in the Three Kingdom Era, he would prefer to listen to Zhuge Liang and Cao Cao, also from the Three Kingdom Era, in his early days, prefer to listen to Guo Jia. So you need to have all these knowledge at your fingertips so that you can anticipate, to a reasonable extent, the moves that will be taken by your enemy. This is why intelligence work is very important in the old days. This importance is seen by the fact that Sun Tzu devoted one whole chapter on espionage alone (Chapter 13).
2) Knowing the motives behind each enemy’s moves.
Step two is you need to know the reason why these moves are adopted. This is because you can then better understand why these moves are carried out and if there are changes in movement or direction in the enemy’s camp, you can still anticipate to some extent, what they are doing. And also you would have a better grasp of which is the weakest link in their plans. If you thwarted their plans at the weakest link, you would stop the momentum or the success execution of their plan.
3) Coming up with a counter strategy that can be executed within constraints.
Step three is a matter of working within constraints. Most of us have work under constraints before, for example not enough time, money or sleep. So you would understand what a strategist is going through having to come up with a strategy that must have a high chance of counter the enemy’s move and does not cost the nation.
All in all, as mentioned above, it is a battle of wits. The intelligent one will always prevail. And if you are able to thwart your enemy’s plan quite often, chances are you would be able to subdue him without going into battle because they know it is useless to go against you since you can ‘attack’ their strategies so well.
So how do we apply all these to business?
Making reference to the book, Wharton on Dynamic Competitive Strategy Ed.by George S. Day & David J. Reibstein on Chapter 11.
In the chapter, the writer Jerry Wind from Wharton School, Dept of Marketing, wrote that preemption is risky because if you anticipate the wrong move, it could prove costly to you. Like seizing the wrong potential market that never materializes may cost you a lot in expanding capacity and so on.
The first step to formulating out your preemption strategy is to firstly, have knowledge of the trends in the markets. The technology, consumer preferences, demographic or social trends are some information we can look at before formulating our preemption strategies. Once we have information on all these, we can then figure out what are the new potential markets we can move into before our business rival does.
For example, Sony anticipated growth in the 3.5 inch disk in 1984, so it announced a fivefold increase in production capacity. It made this move even before IBM announced its intention for the next generation of personal computers would be. As such Sony was able discouraged would-be rivals from setting up their own plants since Sony could manufacture in big bulks due to its extensive capacity.
Searching for signs of movement from business rival’s
So after determining the trends, the next or concurrent task (depending on your objective) would be to determine also how your competitors will react. Now you may say that information like this are hard to get, but if you look carefully, there may be some hints or signals that tells you of their intentions.
a) Competitive signals – Do a patent search and see what type of patent your rivals have filed, you would then have a general idea what technology they are currently developing on. Look out for news of planned strategic alliances. You would be able to anticipate which area they are moving into.
b) Competitive Analysis – Look at how your competitors react in the past and also their strength and weaknesses. In this way, you would have an idea how your competitors would react to your next move. (Please refer to point 1 & 2 above)
c) Distribution Channels – Look at all the available distribution channels, what are their strengths and weaknesses. Match them with the information you have on your competitors and you may be able to anticipate what type of distribution channels your competitors may used to attack the potential market.
d) Environmental Analysis – Have an understanding of the changes in forces of the environment, like socio-economic, political, cultural and technology forces. These forces would be useful in formulating your preemption strategy because as mentioned in the later chapters of Sun Zi Art of War, a general can use environmental or external forces to generate a strong momentum to aid his troops in attack or defense.
With all these information, you are able to formulate out what moves your competitors are likely to adopt. Make a list of the moves your competitors may adopt. Using this list, you can then create specific preemption strategies for each expected or potential competitors’ move.
Factors that affect formulation of preemption strategy
Please note here that when you create each specific preemption strategy, there are several factors you need to look at.
a) Your current objectives – Is the strategy you formulated aligned with your company’s current objectives? But even if the objectives are not met, you could continue to carry out your preemption strategy unless it takes your company far astray from your path. Do you need to give up your niche market for a while when carrying out the preemptive strategy?
c) External and Internal Environment – Does the current trends that exist in the industry and market you are operating in helps your implementation by giving momentum or provides hindrance to your implementation? What are the risk of these trends changing? Is the corporate structure suitable for the implementation of strategy? Any blurring of roles and responsibilities would create confusion.
b) Magnitude and duration – You need to look at the magnitude and duration of your competitors and your own preemption strategy. Will it be temporary or permanent?
c) Costs – Carrying out each strategy has its costs. So you have to look at the costs together with magnitude and duration of rival’s and your strategy. Is there a need to shift resources from one point to another? Do you have the resources to preempt or does it take a long time to find the resources? In measuring costs and resources, try to look for a partner or ally to leverage on, and he too can leverage on you as well to, maybe to stop a bigger rival.
e) Risk Level – Any implementation of strategy involves a certain level of risks. Is your company able to bear that risk during implementation? Do you have a cushion of safety? Have you assessed your risk level accurately? People say many cooks spoil the broth. Does implementation of your strategy involves a lot of people, which bring me to the next point.
d) Efficiency and Effective Implementation – You have the resources but is your company able to execute it well, for example, the capabilities of your employees and managers or the CEO’s skills like timing and judgement. How well designed and well-run is your communication and coordination systems?
Once you have come up with the preemption strategies, you again have to do the whole cycle again, because like I said before, what you can do to others, others can do unto you. So you have to again anticipate how your rival will react to your preemption strategies and from there formulate the next level of preemption strategies. After several cycles, the best series of strategies and the ultimate impact of it would become clear.
The next part would be executing them well and have back-up plans ready, wherever possible.