Saturday, April 4, 2009

Te ofrezco mi mundo ...

Te ofrezco mi mundo
Tal vez no es perfecto
Lo habita un corazón
Que se alimenta de la fe que lleva dentro

Yo te ofrezco mi vida
Mi parte escondida
Igual que tu yo también
Busco un alma que comulgue con la mía

Lo se, no es fácil afrontar esta aventura
Y más cuando la vida ha sido dura
Y más cuando se agrieta el corazón
Lo se, igual que tu también comparto el miedo
El miedo que se esconde en el silencio
El miedo a equivocarme en el amor

Te ofrezco mi vida
Mi parte escondida
Igual que tu yo también
Busco el alma que comulgue con la mía

Lo se, no es fácil afrontar esta aventura
Y más cuando la vida ha sido dura
Y más cuando se agrieta el corazón
Lo se, igual que tu también comparto el miedo
El miedo que se esconde en el silencio
El miedo a equivocarme en el amor

Te ofrezco mi mundo…

Klauzewitz and business!

Business is War, and War is Business....

Late eighteenthcentury Europe experienced a dramatic change in the rules of war. Previously, most European troops were mercenaries whose allegiance was to compensation rather than commander or country. Outfitted in brightly colored uniforms to prevent desertion, they fought ritualized battles with no clear victor. Then Napoleon introduced two new elements to the military scene: spirited, patriotic troops and a determination to fight battles to their conclusion. As a result, mercenaries were quickly annihilated, taking along with them an outdated approach to war. No longer were armies slightly bruised and allowed to escape to fight again.

An analogous scenario has developed on the business front over the past forty years. Just as eighteenth-century European wars became ritualized with little bloodshed and inconclusive endings, so too did competition in many industries become constrained. Ries and Trout, in Marketing Warfare (1986), pointed out the problems with limited competition. Ritualistic competition that allowed everyone to have "a piece of the pie" was institutionalized. Like Napoleon, Japanese competitors changed the rules of battle. They brought to the international marketplace dedicated work forces and cravings for perfection and ultimate customer satisfaction. They also possessed a ruthless drive for market share gains.

The key to survival, as in the case of Napoleon's enemies, may be to adopt a similar plan of attack. Classical military strategy offers guidelines for marketing strategists as they face this "new" competition.

CONTRIBUTIONS OF MILITARY STRATEGY

The metaphor of battle is useful in understanding the art of winning market share. Just as in war, the reality of market share battles is that the success of the victor depends on the failure of the loser. The lessons are timeless. The ways of war reflect common sense that can be found in any number of sources reaching back for centuries. Credit Rameses II, in about 1270 BC, with the first recorded flanking strategy. This same strategy was used by allied forces during the recent Gulf War. Examples such as these show that the key to success is not to learn difficult and sophisticated strategies but to execute simple ones flawlessly.

Perhaps the most renowned military strategist of all was the Prussian Karl von Clausewitz (1780-1831). In his famous treatise On War, which towers over other works in the field, he delineated a number of principles of military strategy. These principles provide a comprehensive set of guidelines for success on the battlefield, both in the military and in business. As Colonel Maude states in his 1908 introduction, business is a "form of human competition greatly resembling war." Consequently, Clausewitz can provide prescriptions for contemporary marketing strategy and attaining market share success. However, long-term success requires the simultaneous consideration of these principles, not merely the consideration of any single principle.

CLAUSEWITZ'S PRINCIPLES OF SOUND STRATEGY

Clausewitz's principles for successful warfare include simplicity and energy, strength and concentration, surprise, stratagem, retreat, luck, and fighting the battle to its conclusion. We shall discuss the relevance to business of each of these principles.

Simplicity and Energy

Above all, Clausewitz stressed the need for simple plans and simple actions, carried out with great energy:

The rule which we have been seeking to set forth is... that all forces which are available and destined for a strategic object should be simultaneously applied to it; and this application will be so much more complete the more everything is compressed into one act and into one movement ....

Therefore, far from making it our aim to gain upon the enemy by complicated plans, we must rather seek to be beforehand with him by greater simplicity in our designs .... Whoever reads history with a mind free from prejudice cannot fail to arrive at a conviction that of all military virtues, energy in the conduct of operations has always contributed the most to the glory and success of arms.

When Jack Stack, CEO of Springfield Remanufacturing, faced drastic cuts in product orders, he had few options from which to choose--the least attractive being massive retrenchment. An important goal, however, was to avoid the seemingly imminent personnel layoffs. Springfield selected the more difficult and risky strategy: to replace the lost volume by generating new business within weeks. Selecting this strategy was a company-wide decision, so all of Springfield Remanufacturing's energy was focused on a single effort within a short period.

Complacency and stagnation may be the converse of Clausewitz's first principle. It is often said, "Only wet babies like change." Business is no exception. "Business as usual" is a pernicious, chronic, and ultimately deadly disease that must be fought constantly. Even when we fight it with single-mindedness and determination, it is never completely defeated, for it lurks everywhere waiting for us to relax or become arrogant.

Though strength may be perceived by some as preparation and not strategy, it has an important place both in the preparation for war competition and in the competition itself.

The best Strategy is always to be very strong, first generally, then at the decisive point Therefore, apart from the energy which creates the Army, a work which is not always done by the General, there is no more imperative and no simpler law for Strategy than to keep the forces concentrated. No portion is to be separated from the main body unless called away by some urgent necessity. On this maxim we stand firm, and look upon it as a guide to be depended upon. ... If the concentration of the whole force is acknowledged as the norm and every division and separation as an exception which must be justified, then not only will that folly be completely avoided, but also many an erroneous ground for separating troops will be barred admission.

Clausewitz's advice, applied to business, clearly warns against the actions of companies that split effort and begin diversifying when they have not won the battle for the main market. In business, as in war, the secret is to maximize one's strengths while minimizing one's weaknesses and, likewise, to minimize the enemy's strengths while exploiting its weaknesses In other writings, Clausewitz refers to some of these characteristics as the principle of concentration.

Les Schwab Tires, a regional tire, battery, and accessory retail chain, created positions of strength on two important fronts: geographic concentration and economies of scale. It has come to dominate category sales in the Northwest region of the United States through a saturation strategy. Competitors attempting to make inroads in this region face a fierce battle from an entrenched competitor. Furthermore, dominance of the northwest region has also enabled Les Schwab to become one of the largest retail tire accounts in the United States.

Conversely, Chrysler Corporation has a long history of dissipating its success by splitting its forces and wasting its winnings on losers. In the 1950s and 1960s it acquired second-rate vehicle manufacturers in Europe despite its lagging position in the U.S. market. Chrysler was forced to dispose of its European holdings in the 1970s as it faced bankruptcy. Had it learned its lesson? Apparently not, because it took its meager winnings from a nascent turnaround and purchased Gulfstream Aerospace, E.F. Hutton Credit Corporation, and Finance America in 1985. None of these purchases was central to its fragile automotive business. By 1990, after Chrysler had been in trouble for neglecting its core business, it sold Gulfstream Aerospace. American Motors (purchased by Chrysler in 1987) had an equally long history of starving its winners (Jeeps) to feed its losers (sedans). But before that, the lesson should have been learned from Studebaker Corporation, which teamed up with Packard to produce a complete line of vehicles that compete with General Motors--which at that time controlled more than 50 percent of the market. This foolish strategy occurred despite Studebaker's average market share of less than 2 percent.

Waging a new battle before the present objective has been achieved reduces one's forces before the decisive point of the battle is reached. This weakened state leaves the firm vulnerable to the competitor's counterattack, possibly reversing any gains achieved up to this point. The firm, therefore, should continue to channel its efforts until the specified goal is achieved, whether it is disabling an existing competitor or discouraging potential competition from entering.

Strength also includes strategic assets and skills. Employees intensively trained to a high degree of readiness can have more value per person than the competition and can lead to higher success rates. From a military perspective, Colonel Dupuy (1977) showed that man for man, German soldiers were equal to 1.5 English, French, or American soldiers and 3.8 Russian soldiers in World War I. A business today gains a comparable advantage from a dedicated and well-trained work force. As Napoleon demonstrated, bringing troops to a high degree of training is enhanced if the troops are motivated to believe that they are fighting for more than just pay. Mercenaries, both in war and in business, are less likely to give superior performance than equally trained soldiers who are committed to a cause. Similarly, employees who feel they have a stake in the firm they represent will work harder for its success. This is the logic behind empowerment, employee ownership, profit sharing, and performance-based compensation programs.

Given a superior work force, effectiveness can be further enhanced by providing workers with superior "weapons" to use against competitors. These might include low cost advantages, financial strength, superior product quality and customer service, a favorable reputation, loyal marketing channels, or patents.

The Surprise Attack

While modern business writers speak of "timebased competition" and related topics as if they were a new discovery, military leaders have known for centuries the value of rapid deployment and the secrecy that gives it value. Clausewitz says:

. . . [in] the general endeavor to attain a relative superiority, there follows another endeavor which must consequently be just as general in its nature: this is the surprise of the enemy. It lies more or less at the foundation of all undertakings, for without it the preponderance at the decisive point is not properly conceivable . . . The surprise is, therefore, not only the means to attainment of numerical superiority; but it is also to be regarded as a substantive principle in itself, on account of its moral effect .... We say surprise lies at the foundation of all undertakings without exception, only in very different degrees according to the nature of the undertaking and other circumstances.

The business literature has long recognized the benefits of early and rapid entry into new markets or introduction of new product lines. The "spoils" obtained by early entry are referred to as the "first mover advantage" (Kerin, Varadarajan, and Peterson 1992) Clausewitz's principle of surprise contains the warning that an aware opponent is doubly dangerous A wise company does not attack prepared positions or superior forces, because such maneuvers often result in needless carnage. In particular, frontal attacks, which are difficult to conceal, increase the likelihood of meeting staunch resistance.

aker Airways and People's Express took initial successes in niche markets and converted them into financial disasters by launching direct attacks on vigilant and much stronger market leaders. Those leaders might have been willing to concede some niche markets to the upstarts, but they waged albout war when these firms threatened their major markets.

In additonn to gaining the upper hand in a physical sense, the element of surprise also conveys considerable psychological benefits. Destroying the enemy's will to resist or its belief in its ability to win represents a pivotal point in battle. Emotional destruction may be more decisive than the destruction of armament and personnel, because it breaks the opponents momentum and leaves it vulnerable to attack. Recent research suggests that General Custer's force, far from yielding to a superior force in a valiant last defensive stand, probably went from offensive movements to disintegration in a matter of minutes because it was met unexpectedly by a superior force

Stratagem

Sometimes secrecy is not enough. When this is the case, it becomes important to put out misleading information and to imply that which we do not expect to come true. According to Clausewitz:

Stratagem implies a concealed intention, and... has, therefore, nothing in common with means of persuasion, selfinterest, or force, but a great deal to do with deceit, because that likewise conceals its object .... But still it differs from what is commonly called deceit, in the respect that there is no direct breach of word. The deceiver by stratagem leaves it to the person . . . he is deceiving to commit the errors of understanding which at last, flowing into one result, suddenly changes the nature of things in his eyes .... Strategy knows no other activity than the regulating of combat with the measures which relate to it. It has no concern, like ordinary life, with transactions which consist merely of words--that is, in expressions, declarations, etc. But these, which are very inexpensive, are chiefly the means with which the wily one takes in those he practices upon.

In the computer industry, our most advanced in the use of this strategy, the art of deflecting an opponent's momentum by the announcement of new products, whether or not they exist, has earned the sobriquet "vaporware."

The Retreat

Perhaps the first and best-known way of fighting is simply to refuse battle. Even though it may be embarrassing, the "cowardly" way often reflects the best strategy. Declining battle has a long and honorable history as a way to avoid warfare under unfavorable conditions. Hideyoshi, a Japanese general of the sixteenth century, was famous for always counting the relative strengths of his army and those of the enemy. If outnumbered, he would enter into negotiations. While negotiating, he would scour the country for additional troops, then when his forces were much stronger, he would break off the talks and attack. At one point, when he ended negotiations, his strength had swelled to more than 300,000 versus his opponent's 40,000.

Refusing battle does not necessarily mean defeat. Washington eluded the British Hessian troops for months before decisively defeating them at Trenton on December 25, 1776. Likewise, for years the only successful computer competitors of IBM avoided the mainframe market and instead concentrated on minicomputers and microcomputers, wisely refusing battle when they were outnumbered. Today PC manufacturers and their suppliers are just about the only healthy computer hardware firms.

Many firms, having become overextended while searching for new markets and products, have reassessed their positions. Finding themselves with few or no strengths, the smart ones retreat from these areas before coming under attack from strong opponents. In most cases the lure to abandon one's core business should be avoided. Only when the entire industry is doomed to major retrenchment or extinction should a business abandon its industry. Smith & Hawken, the company made famous by its gardening catalog, expanded into clothing and flower bulbs. After disappointing results, Smith & Hawken closed its new ventures and retreated to its core business of mail-order garden supplies. Though the core business was saved, it ultimately was sold to an outside party. Boise Cascade retreated from its ill-advised adventures into recreational land development in the 1960s and early 1970s to rededicate itself to its core businesses in forest products.

A changing environment, or one that has been misinterpreted, may result in an unexpected scenario that reveals an insurmountable opponent. The best course of action would be to avoid the confrontation. This may involve pursuing different markets, limiting efforts to one's core market (as Coca-Cola has recently done), or postponing the attack until sufficient resources are acquired. The retreat, much like a defensive strategy, is not a passive, wait-and-see alternative. The goal should be to move the firm to a stronger, more defensible position. Contingency plans enable the firm to maintain a high level of preparedness. In addition, alternative plans for alternative environments greatly reduce the firm's response time when environmental change occurs. This may facilitate the element of surprise and aid in the achievement of "first mover advantages."

Luck

Like the diamond cutter who is paid to know where and how to strike, competent generals know how to order and engage an army. But for the competent leader, luck can at times create the appearance of true genius. For example, Nero (the general, not the emperor) was finally able to defeat both Hasdrubal and Hannibal because of a fortuitous event. Nero held a position opposite Hannibal's army in southern Italy when his men intercepted a message from Hasdrubal to Hannibal. Leaving a minimum force opposing Hannibal, Nero's army traveled on forced marches to meet Hasdrubal. Nero attacked with stronger forces, defeating the two armies separately and sequentially. If the opposing armies had been combined, he would have faced a far larger, almost unbeatable enemy.

From a business perspective, serendipity played a major role in the phenomenal success of 3M's Post-it brand note pads. Starting out as a failed attempt to develop an improved adhesive, the less-than-effective sticking power provided the basis for a product that has become a standard item in homes and offices throughout the world. In spite of this seemingly fortuitous event, 3M must be given its due. Someone once defined luck as where preparation and opportunity meet. Without 3M's considerable and ongoing research and development efforts, the Post-it note would not exist.

Fighting a Battle to its Conclusion

Wars are fought for a purpose. The objective may be to gain control of strategic resources, end or avoid oppression, or increase land holdings. Besides attaining the objective, victors also wish to eliminate future threats to maintaining their victorious status. The logical conclusion of battle, therefore, is to defeat the foe and eliminate its base of power. Clausewitz maintains:

War [is] the exercise of force for the attainment of a political object, unrestrained by any law save that of expediency .... [M]oderation in war is an absurdity.

.... [During the eighteenth century] wars of this period were limited in scope and were fought for limited objectives. Napoleon changed the nature of war permanently by fighting battles to a conclusion.

Napoleon realized the necessity of fighting a battle to its conclusion. Unlike the practices of inconclusive war during the eighteenth century, when Napoleon fought, the losers really lost! The advantages of fighting a war to its conclusion are manifested in the World War II experience; the disadvantages of not doing so are manifest in the 1991 Gulf War. An army that has been destroyed cannot represent a threat in the near future.

Running a business is like waging a war, with the competitors as the enemy. The market-share battle's reality is that one company's success depends on another's failure. Top Japanese businesses don't see their competitors as "pals." Successful businesses that follow military principles begin by facing the reality that they are in a winlose battle, and that their goal must be to win the battle for market share.

Until quite recently, fighting business wars to their conclusion was out of favor in the United States, partly because many companies had grown complacent and were incapable of all-out battle, and partly because they risked Justice Department action if they succeeded. Tough competitors fight to dominate their industries. Clausewitz says:

Perseverance in the proposed object, as long as there is no decided reason against it, is [essential] .... [O]nly an immense force of will which manifests itself in perseverance... can conduct us to our goal.

In its early mainframe years, IBM fought its mainframe battles to their conclusions but was restrained from completely decimating its opponents by fear of Justice Department action. Rubbermaid has demonstrated that its purpose is to win every battle by continuing to innovate and improve products as well as dominate shelf space in its product categories in drug and grocery stores throughout the country.

Military historians differ as to which theories are the most successful, and often draw different lessons from the same battle. Clausewitz himself advocated no single system of war: "The diversity of the nature and circumstances of war made it impossible" to do so (Clausewitz 1967). The rules of "battle" in the business arena are changing in response to competitive pressures. We can, however, follow productive American and Japanese business leaders and use particularly astute military guidance to choose successful business strategies. However, an a la carte selection of classical military principles will not suffice. By embracing Clausewitz's principles, a company can increase its opportunities for success and avoid many of the common causes of disaster. Dissipating strengths and engaging in ritualistic pseudo-competition beckons disaster in today's fiercely competitive markets.


Karl von Clausewitz

1780 - 1831

Karl von Clausewitz, born in 1780, was the son of a Prussian military officer. Denied a proper elementary education because of limited social and economic standing, he entered the military in 1792 at the age of 12. Following initial training and two years of active duty against the French Revolutionaries, he was commissioned at the age of 15. The garrison duty that followed enabled him to study and overcome his lack of formal education, and by 1801 he entered the War Academy in Berlin. Clausewitz's abilities there were recognized. Scharnhorst, the director of the academy and one of the most accomplished military strategists of his time, became his mentor.

In 1803, Clausewitz was appointed aide-de-camp to Prince August of Prussia. During the Jena catnpaign of 1806, Napoleon took control of much of Prussia by defeating the Prussian army and taking both Clausewitz and Prince Auglist prisoner. Clausewitz was released by his French captors in 1808 and returned to what was left of Prussia to become Scharnhorst's personal assistant. Together with Scharnhorst and oilier Prussian leaders, Clausewitz participated in the "great reforms" of the Prussian army.

By 1812, the Prussian army had greatly increased in size and reserves, and more far*reaching reforms were made in the moral and ethical aspects of the nation as a whole, thus realizing the goal of "the nation in arms." The year 1812 also marked another important turning point in Clausewitz's career: King Frecterick William Ill of Prussia entered into a subservient alliance with Napoleon. Unable to pledge allegiance to Napoleon, Clausewitz and a number of other military leaders left Prussia to join the Russian Army to defeat France and its allies. Following Napoteon's defeat at the hands of Russia, Clausewitz returned to Prussia to help orchestrate the Prussian uprising against Napoleon. With Wellington's British troops, the Prussians defeated Napoleon in the Waterloo campaign.

In 1818 Clausewitz was appointed major general and director of the War Academy in Berlin. He began to assemble his thoughts systematically on military strategy. Clausewitz continued his development of On War until 1830, when he was appointed chief of staff to Field Marshal Gneisenau during the Polish Insurrection of 1830. Unfortunately, both men died of cholera at the end of this conflict, first Gneisenau and then Clausewitz only a few weeks later as he returned as director of the War Academy.

The final preparation and publication of Clausewitz's On War was undertaken by his wife, the Countess Marie yon Bruhl, after his death, according to his wishes. When considering Clausewitz's seminal work, it is not surprising that much of his life was lived in a militaristic setting. The most common element of his early life became his life's focus.