Competitiveness is the new buzzword in American business. It is typically used to underscore the need for American companies to compete more effectively with the Toyotas and Sonys of this world.
But where does the American manager go for ideas and tools to make his or her company more competitive? Most of the business writing since the early 1970s has focused on how to manage a company internally: how to foster creativity, finance growth or give employees a greater say in management decisions. So why do many otherwise well-run American companies still lag behind their Japanese competitors?
One difference is the way the two sides perceive the competition. Japanese executives see competitors as the enemy; Americans don't.
So while an American spends two years running spreadsheets to get his MBA, his Japanese equivalent studies an ancient text on military strategy. "The Art of War," written almost 2,500 years ago by the Chinese philosopher Sun Tzu, is widely quoted by Japanese businessmen and is available in several Japanese editions at any one time.
After all, they contend, why not learn from the past? Good strategy is good strategy, whether it's on the battlefield or in the marketplace.
Competition in wartime is waged between armies; in the free market, between corporations. And just as most wars are fought "to gain territory," as Karl von Clausewitz defined it, the primary objective in most businesses is to gain market share.
Companies do that by beating the enemy--and therein lies the need for good strategy.
The basic principles of military strategy apply in corporate combat as well. They include:
- Maneuver: the need for flexibility. Coca-Cola rapidly resurrected Classic Coke after the failed launch of New Coke, and has since increased its lead over Pepsi.
- Objective: defining the goal of combat or the target market. Remember the ads announcing the debut of Penthouse magazine, with Playboy's bunny insignia in a rifle's cross-hairs? The target was clear.
- Offense: the primacy of offensive strategy, even for companies that are in an essentially defensive posture because of their No. 1 status in a market. IBM is a case in point, last week unveiling new personal computers intended to beat back the challenge from Japanese and other clone makers that have cut sharply into its market.
- Surprise: keeping the competitor off balance, often through unpredictability. Cable television entrepreneur Ted Turner is a master of the art.
- Economy of force: mobilizing the fewest resources and personnel necessary to achieve the objective.
- Mass: "Concentrate your strength," Sun Tzu put it, and MCI did just that, zeroing in on regulatory and legal challenges to crash AT&T's monopoly in the long-distance telephone business.
- Unity of command: clear lines of authority extending from the chief executive.
- Simplicity: what military officers summarize with the acronym KISS--Keep It Simple, Stupid!
- Security: maintaining secrecy, e.g., "Project Harvard," which kept the Diet Coke project under wraps until it was too late for Pepsi-Cola to respond directly.
Should more American managers look to the military classics--Sun Tzu, Clausewitz, Napoleon, Helmuth von Moltke and others--for guidance in their strategic thinking? Some already do.
One top Coca-Cola executive keeps a copy of Clausewitz's "On War" on his desk. And a number of chief executives readily admit the importance of their military backgrounds in shaping their management style.
Texas billionaire H. Ross Perot openly mimicked the military in shaping the internal structure and corporate ethos at Electronic Data Systems.
Frederick W. Smith returned from combat duty in Vietnam to start up a company, Federal Express, that reflected in many ways the fighter pilot's wartime repertoire.
Even Ted Turner, an enlisted man, credits the Army for the motto he adopted long before crashing the ranks of big-time television: "Lead, follow or get out of the way."
Indeed, the language of war is now an integral part of every executive's vocabulary. Takeover attacks, price wars, merger maneuvers and a host of other expressions have become standard in business headlines.
Just look at some recent business stories: "American Express Starts a New Credit Card War," "Long-Distance Wars Get Hotter" or, to describe the new boss at a multinational corporation, "ITT's Field Marshal."
The parallel wasn't lost, either, on William C. Conner, the federal judge caught in the middle of an advertising battle between Johnson & Johnson and American Home Products over the merits of Tylenol versus Advil.
"Small nations have fought for their very survival," Conner said in his judgment, "with less resources and resourcefulness than these antagonists have brought to their epic struggle."
But there has been a lag between what American managers say and what they do.