‘The Art of War’: The greatest strategy book ever written | Roger Martin

Summary

The transcript discusses the relevance of 'The Art of War' in business strategy, drawing parallels between military tactics and business competition. It emphasizes the importance of understanding one's own strengths and those of competitors, and the philosophy of avoiding unnecessary conflict. The speaker highlights Sun Tzu's teachings on subduing the enemy without fighting and the concept of creating a win-win scenario. The summary also touches on treating employees well and the evolution of business strategy to include customer-centricity and design thinking.

Takeaways

• 📚 'The Art of War' is a philosophical book that can offer valuable insights to MBA students and business leaders.
• 🧠 Military strategy emphasizes understanding both one's own strengths and the enemy's, which is also crucial in business strategy.
• 🌐 The concept of strategy in business is relatively new, originating from military strategy in the late 1950s and early 1960s.
• 🤝 Business strategy is not just about numbers and analysis; it's also about understanding the human and philosophical aspects.
• 🏆 Sun Tzu's philosophy suggests that the best strategy is to win without fighting, which can be applied to avoid destructive competition in business.
• 🔄 The goal of business strategy should be sustainable outcomes, not just crushing competitors.
• 🚫 Avoid creating enemies in business by giving potential competitors other areas to focus on, thus preventing prolonged conflicts.
• 🛣️ When competing, leave an outlet for competitors to retreat to, which can lead to a more peaceful business environment.
• 💡 Treating employees like family can lead to increased loyalty, creativity, and better customer service.
• 👥 Modern business strategy now recognizes the importance of the customer, in addition to the company and competitors.
• 🎨 Design has become integral to business strategy because it focuses on understanding and serving customers well.

Q & A

What is the main comparison made between 'The Art of War' and an MBA in the transcript?

The transcript suggests that 'The Art of War' offers a broad philosophical perspective that is different from the analytical approach of an MBA. It implies that while an MBA focuses on numbers and analysis, 'The Art of War' provides strategic insights that are valuable for business.

Who are the two actors that military strategy traditionally focuses on?

Military strategy traditionally focuses on oneself (the army or country) and the competition (the enemy), analyzing their strengths and resources to decide on strategy.

How does the concept of strategy in business differ from military strategy according to the speaker?

The speaker indicates that business strategy is a relatively new field that originated from military strategy. However, unlike military strategy, business strategy has evolved to also consider the customer as a significant actor, in addition to the company and competitors.

What does Sun Tzu emphasize as the supreme art of war?

Sun Tzu emphasizes that the supreme art of war is to subdue the enemy without fighting, aiming for a sustainable outcome that avoids unnecessary destruction.

What is the advice given by Sun Tzu regarding the treatment of one's own army?

Sun Tzu advises treating one's own army as if they were one's own beloved sons, suggesting that this approach will lead to loyalty and dedication.

How does the transcript relate the concept of prolonged warfare to business strategy?

The transcript suggests that just as prolonged warfare is detrimental, so too is prolonged business competition that creates enemies. Instead, the aim should be to create a win-win situation that avoids ongoing conflict.

What is the significance of leaving an outlet free when surrounding an army, as mentioned in the transcript?

Leaving an outlet free when surrounding an army is about not pressing a desperate foe too hard, allowing them a chance to retreat or find another place to compete, which can be applied to business by creating opportunities for competitors to move to different markets or segments.

What is the importance of treating employees well in the context of business strategy?

Treating employees well is crucial as it fosters loyalty, creativity, and a customer-centric approach. The transcript suggests that treating employees like family can lead to better customer service and development of talent within the organization.

How has the role of the customer evolved in business strategy over the last 40 years?

Over the last 40 years, the customer has become a central focus in business strategy. There has been a shift from a tripartite view that includes the company, competitors, and customers, to a more customer-centric approach, recognizing the importance of understanding and serving customers better.

Why is the bond between strategy and design considered powerful in creating solutions for customers?

The bond between strategy and design is powerful because strategy provides insights into the company and competition, while design focuses on understanding customers and creating offers for them. Combining these perspectives results in solutions that are well-aligned with customer needs.

What is the role of design in modern business strategy as discussed in the transcript?

Design plays a significant role in modern business strategy because it focuses on the customer experience. It is seen as a field that has the best training in understanding customers and creating offers for them, complementing the traditionally company and competition-focused business strategy.

Outlines

00:00

📚 The Philosophy of 'The Art of War' in Business Strategy

This paragraph discusses the comparison between studying 'The Art of War' and pursuing an MBA, noting that they offer different insights. While MBA programs focus more on quantitative aspects, Sun Tzu's work offers a philosophical perspective on competition and strategy. The text explains that military strategy, which originated long before business strategy, focuses on two actors: one's own resources and the strength of the enemy. In business, this translates to a focus on the company and its competitors. Sun Tzu's ideas about avoiding conflict and achieving sustainable outcomes are emphasized, advocating for strategies that avoid prolonged, damaging wars. The ultimate goal is to win without causing unnecessary harm or fostering long-lasting resentment, thus securing a peaceful business environment.

05:00

🤝 Treating Employees Like Family for Long-Term Success

This paragraph explores the importance of leadership in both military and business contexts, emphasizing that actions speak louder than words. Using Sun Tzu's principle of treating soldiers as beloved sons, the text draws a parallel to business, suggesting that employees should be treated like family. Disengagement and dissatisfaction among employees often stem from leadership's failure to follow through on promises of care and loyalty. Authentic leadership fosters creativity, customer satisfaction, and the development of others. The text also notes the growing importance of customer-centric strategies in business, highlighting the role of design thinking as a way to better understand and serve customers. The merging of business strategy with design thinking is presented as a powerful approach for creating winning solutions.

Keywords

💡The Art of War

The Art of War is a classic Chinese military treatise written by Sun Tzu. It is a philosophical work that covers the principles of war and military strategy. In the context of the video, it is suggested that business students should read it for its broader philosophical insights that can be applied to business strategy. The speaker argues that the book's principles are timeless and can provide a unique perspective on competition and strategy.

💡MBA

MBA stands for Master of Business Administration, a postgraduate degree that involves learning about business management. The video script contrasts MBA education with reading 'The Art of War,' suggesting that while MBA focuses on modern business practices, 'The Art of War' offers a more philosophical approach to strategy that complements MBA learning.

💡Strategy

In the video, strategy refers to the long-term planning and actions taken to achieve a particular goal. It is highlighted that business strategy is relatively new compared to military strategy, and that it originated from military tactics. The speaker emphasizes the importance of understanding one's own strengths and those of the competition to formulate effective strategies.

💡Sun Tzu

Sun Tzu was a Chinese general and philosopher who wrote 'The Art of War.' He is mentioned in the script as an influential figure in military strategy and philosophy. His ideas are used to illustrate the importance of understanding the deeper philosophical aspects of competition, which remain constant despite changing times and technologies.

💡Philosophy

Philosophy, in the context of the video, refers to the fundamental beliefs and values that guide actions and decisions. The speaker suggests that the philosophical underpinnings of military strategy, as discussed by Sun Tzu, are still relevant in business strategy, emphasizing the importance of understanding these principles.

💡Competition

Competition is a central theme in the video, referring to the rivalry between different parties, such as businesses or armies. The speaker discusses how both military and business strategies involve assessing one's own and the competitor's strengths and resources to determine the best course of action.

💡Sustainable Outcome

A sustainable outcome is one that can be maintained over time without causing long-term harm or damage. The video script uses this concept to argue that the goal of strategy should be to achieve a sustainable result, rather than a destructive victory that breeds ongoing conflict or resentment.

💡Customer

The customer is identified as a crucial actor in business strategy, alongside the company and its competitors. The video emphasizes the importance of understanding and serving customers better, which has become an integral part of modern business strategy. The speaker also discusses the importance of design in understanding customer needs.

💡Design

Design is mentioned as a field that focuses on understanding customers and creating offers for them. The speaker suggests that combining business strategy with design thinking can lead to powerful solutions that meet customer needs effectively. Design is highlighted as a discipline that complements business strategy by providing insights into customer perspectives.

💡Disengagement

Disengagement refers to a lack of connection or commitment, often used in the context of employee satisfaction and loyalty. The video script points out that high disengagement scores in businesses may be due to senior managers not treating employees with the care and respect they deserve, as suggested by Sun Tzu's philosophy.

💡Family

In the video, the concept of 'family' is used metaphorically to describe how a company should treat its employees. The speaker argues that treating employees like family members can lead to increased loyalty, creativity, and better customer service, aligning with Sun Tzu's advice to treat soldiers as one would treat one's own sons.

Highlights

Reading 'The Art of War' is compared to doing an MBA, suggesting they are different but complementary approaches.

The Art of War is recommended for MBA students to gain a broader perspective on business strategy.

Great military strategists like Sun Tzu and von Clausewitz emphasized the importance of understanding competition between forces.

The best result of military strategy is to avoid war altogether, which is a concept applicable to business strategy.

Business strategy emerged in the late 50s and early 60s as an offshoot of military strategy.

Strategy involves understanding both one's own strength and that of the competition.

Sun Tzu's philosophy in 'The Art of War' is timeless and still relevant today.

The supreme art of war is to subdue the enemy without fighting, a principle that can be applied to business to avoid unnecessary destruction.

The goal of war and business should be sustainable outcomes, not crushing opponents.

Business strategy should aim to avoid prolonged 'wars' that create lasting enemies.

Companies should ask what unique value they can provide to customers to deter competition.

When competing, leave an outlet for the competition to move to a different market segment.

Treating employees like family members can lead to loyalty and better performance.

Modern corporations often struggle with treating employees as more than just pawns in a game.

Actions speak louder than words when it comes to leadership and employee treatment.

The importance of the customer in business strategy has grown significantly over the last 40 years.

Design has become integral to business strategy due to its focus on understanding and serving customers.

Combining business strategy and design can create powerful solutions for customers.

Transcripts

- Some people, when I wax eloquent about "The Art of War"

say reading that is not as good as doing an MBA.

And I would say, it's a bit of apples and oranges.

I think it's this broad philosophical book that MBA students

would be well advised to take on

and read in business school

and say, "If I step back from that,

could I get a better perspective on how to use this?"

The great military strategists,

the Sun Tzus and the von Clausewitzs,

head away of conceptualizing

the competition between forces.

They saw the best result

of military strategy is not having a war.

Strategy in business is a relatively new enterprise.

It really only came into existence

in the late 50s, early 60s,

and it was an offshoot of military strategy.

People think business and war is all about the numbers,

and analyzing everything,

and quantifying everything-

and it's not.

In military strategy,

they're really two actors that attention was paid to:

One is ourselves.

How strong is our army?

What resources do we have to to fight?

And then competition, our enemy.

How strong are they?

What resources do they have?

And so, we'll decide strategy on the basis of the company,

or in that case, the country.

But in business,

the company and the competitor.

Sun Tzu, a Chinese general/philosopher

who wrote one of the most influential books

on war called "The Art of War"-

he wanted to get in behind the mechanics of war

to talk more about the philosophy.

And I think that's why it's had the staying power it has

because nothing about the world really has changed

from that deeper philosophical sense.

Even though the world has evolved,

the equipment used in war,

but the philosophy, I think, behind it

has remained constant for the many centuries.

One thing Sun Tzu said was:

"The supreme art of war

is to subdue the enemy without fighting."

Having the unnecessary carnage in war,

the actual killing of people

or in business, the unnecessary destruction

of kind of monetary assets

in people's lives and careers-

that's not the object of war.

The object of war should be to try

and make sure that you have an outcome

that is sustainable.

If the object of war is to crush somebody else

in a way that makes them hate you forever,

guess what they'll do?

They will hate you forever.

So you express your business strategy

in a way that causes potential competitors to say,

"I'm gonna compete elsewhere,"

and hopefully they'll succeed elsewhere, right?

That's the perfect strategy,

so that you won't get into wars,

they won't attack you.

"There's no instance of a nation benefiting

from prolonged warfare."

On what playing field

or if you like military strategy, battlefield,

are you going to play and where not?

And then on that playing field,

how are you going to be the best?

How are you going to win?

You only want to engage

in competitions where you can create a win

without creating a loser

who will keep on attacking you.

Ask yourself, "What can I uniquely do

for a particular set of customers?"

"Would-be competitors will choose to do something else

because I do that thing better."

That is not a prolonged war.

If you do it right, it's a prolonged peace.

"When you surround an army,

leave an outlet free.

Do not press a desperate foe too hard."

You either have to absolutely eliminate,

entirely, a competitor,

or give it a chance to find another place to play.

You can create for them an escape road

to a different part of the market,

a different segment.

But you've shown them that

in your target customer set,

you are the best,

and they can't just come

into that place

and do whatever they want.

"Treat your men as you would your own beloved sons.

And they will follow you into the deepest valley."

A challenge in the modern corporation, right?

'Cause many of them get very big.

And you can think

of your employees as pawns in a bigger game,

and if you lose a few, so be it.

A challenge for anybody who's a military commander

or a business leader

is that they pay very little attention

to what you say.

They pay attention like a hawk to what you do.

So if you say,

"Oh, we're a family,

you're like my son,"

and "Oh, we have too many of you,

and we're gonna lay off

a couple thousand of you."

Say, "Oh, so that's what you do with family members?

You fire them?"

That's why the disengagement scores in business

these days are dreadful.

They're terrible!

And I believe it's because senior managers are not listening

to Sun Tzu and saying,

"Each of my employees, I need to treat

as if they were members of your family."

And they will be creative for you.

They will treat the customer exactly the way you

wished they treated them.

They'll develop the people underneath them.

They'll do all of these things that are done for love,

not because somebody commanded them to do it.

In due course,

what was recognized in the world of business

strategy is that there's a third super important actor-

and that is the customer.

And so you had to have a tripartite view,

which is there's things

that are important about the company,

there's things that are important about our competitors,

and there's things that are important about customers-

and that was a problem with early business strategy.

It didn't pay much attention to the customer,

but over the last 40 years,

getting more and more intimate

and knowledgeable about customers,

and really finding ways to serve them better

has become a more integral part of strategy.

And that's one of the reasons why in the world

of business now,

design has become very important

because design is a field that focuses

very much on the customer.

And that's why I've spent

some of my time in forging a bond

between the world of strategy and the world of design,

because the world of design has the best training

in understanding customers

and creating offers for them.

It's really weak

in understanding the company and competition;

it doesn't pay attention to that.

That's more the world of business strategy, historically.

And so if you meld those two together,

business strategy and design,

you get absolutely the most powerful way

of creating fantastic, winning solutions for customers.

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