27 October 2014

Sun Zi's Art of War, WTA Final 2014 and Halep

The WTA Final in Singapore 2014 gave us a rare opportunity to show how strategy, especially of Sun Zi's Art of War could be used in winning a tennis championship. Two Art of War principles will be highlighted here. Firstly the famous 'Know Others Know Self' and the lesser know "Pick an Easy to Win Opponent" principles for winning.
For the usual tennis competitions, there is no strategy to play. The player just have to beat the opponent to rise to the top. However, for the WTA Final, due to the group round robin format, like the world cup, there is possibility of playing strategically. This happened for Simona Halep. In the final round robin match between Halep and Ivanovic, Halep has already gained the entry to the semi-final. While the win or loss does not affect Halep, it does affect the entry of the top seed Serena Williams into the semi-final. If Halep 'allowed' Ivanonic to beat her in two straight sets, the Serena is out and Ivanovic is in. Halep had the total control of the outcome of choosing her opponent in the final! She could choose to meet Williams or Ivanovic. Which opponent should Halep choose for the final? 

We know that Halep finally choose Williams by denying Ivanovic straight set win. Ivanonic won their first set at 7-6. Halep fought back in 2nd set to win it. Ivanovic finally won in the 3rd set.
Halep then defeated Radwanska to meet William who defeated Wozniacki narrowly in the other semi. William beat Halep with a 6-3 6-0 revenging her defeat of 0-6 2-6 by Halep in the round robin earlier. Halep could have won if perhaps she choose Ivanovic since the other players are closer in their ranking.

Strategy is used much in sport. Consider Formula 1 championship. In the past, they disallowed team order. But then recently, they put it back again. In a championship of many races, strategy is of utmost important. You do not want to commit the error of winning a battle and losing the war. True champion does not win by showing off and risk their chance of winning by beating their rivals with a great gap. They just need to minimize their risks, preserve their engine and car, and win by the least margin of perhaps a few seconds only. In the final race, if one only need to come in 5th to win, then there is no need to fight for any position higher than fifth and risk crashing or spoiling the car. These are some of the winning principles from Art of War - Maximizing Returns at minimum risks and costs.

Principle of Know Others Know Self 知彼知己 and Understanding Statistics
Firstly, players must know how they stand against others. Strength or weakness is measured relative to the opponent. So, is Halep a better player than S Williams? For the stats and ranking, it is obvious that S Williams is one step on top the others. Halep's win against Williams was just a statistical large deviation from normal rather than a true structural shift that Halep has become better than Williams. Stats gives us the 68-95-99.7 rule. It could be just a point in the 2 or 3 standard deviation normal distribution curve but it is not from a new population of Halep better than Williams. The abnormal win gave Halep the misguided overconfidence. You can't base you decision on a point of observation when there are many other stats that give a different conclusions. e.g. Williams never loose twice in the same tournament.

Principle of Picking an Easy to Defeat Opponent
This is a lesser known principle. The common and popular teaching on war is to win against a famous and mighty opponent and become the greatest. But that is not the objective of Art of War. Art of War is about winning with maximum net returns using minimum costs and if possible no risk of loosing at all. Here is the original Chinese text about choosing the enemy.

军形第四:Chapter 4 Formation Shape

The wise warrior of the past choose opponent that they can beat easily.

Therefore, the victory of the wise warrior, is not after glory, not known from bravery, and hence his victory is never of error.

Never of error is because his winning method is to win against someone who has defeated himself.

Hence, the wise warrior stands on indefeasible ground and miss not seizing the 'defeatability'/errors of the enemy.

The key in winning is then not about going after glory, nor reckless bravery and thereby taking on opponent that you have little chance of winning. 

Implication for Business

The successful serial entrepreneur follows in basic principle of maximizing returns and minimizing risks. For any new venture, the first identify the risks, the critical show stoppers, and then take steps to estimate their likelihood of happening, and seeing there be any options that could eliminate or minize the impact of such risks. Li Ka Shing famously said that you must have some business such that even if the sky fall down, you can still make profits. That is the objective function of Sun Zi's Art of War. See Durians, Singaporeans, Li Ka Shing and Sun Zi's Art...

For more, see Ancient Chinese Wisdom

Lim Liat (C) 27 Oct 2014

13 October 2014

Why Apple is beating Samsung, Mencius has the answer!

The release of Apple iPhone 6 that caused big profit pressure the successful Samsung shows the applicability of Ancient Chinese Wisdom of Mencius who said that "Timing looses to Terrain Advantage and Terrain Advantages looses to People's Support".
The major business news on 6-7 Oct 2014 was "Samsung Electronics has forecast a 60% fall in quarterly operating profit from a year ago because of slowing Galaxy smartphone sales." Practically all reports gave the reasons for the fall as the release of Apple iPhone 6 for the high end smart-phone market and increasing competitions from the low-end smart phone from Xiaomi, Huawei of China and Micromax of India. The fall was not due to lack of effort from Samsung during this time. On the contrary, Samsung has anticipated iPhone 6 release and have introduced many new products like S5, Note 4 and many low end models as well. Why then are they not successful? What can we learn from this? What should Samsung do win back? I think Mencius 孟子, a Confucian Master, about 2000 + years ago has the answer.

《孟子 ‧ 公孫丑》 The Book of Mencius, Chapter Gong Sun Chou 
  1. 齊人有言曰:「雖有智能,不如乘勢;雖有鎡基,不如待時。」
    The Qi people has a saying," Having wisdom and capability is not as good have riding the advantage of momentum; Have the farming equipment is not as good as waiting for the right time and season".

    This saying highlight the importance of Momentum due to the shape of the terrain and the seaonal timimg. Just having the resources of wisdom and equipment are not sufficient to ensure succcess.
  2. 孟子曰:「天時不如地利,地利不如人和。」
    Mencius said, " Having the right season and time is worse than having the terrain advantage. Yet having the terrain advantage is worse than having the harmonious support of people."

    This saying rank the 3 key factors of Seasonal Time, Terrain Advantage and People Support with People Support as most important, then Terrain Advantage with Seasonal Timing last.
1. Apple iPhone Set the New Wave - Got the Right Timing. 得天时

When iPhone was first released in June 2007, there was no competitor. Nokia and others were still producing PDA-phones. (Smartphone is a misnomer. iPhone is actually a cloud-device, for connecting to the cloud of knowledge and social network of people. Nokia PDA phone is for managing the personal things of calendar, contacts, and data). The Android partnership that include HTC, Sony and Samsung was only formed in Nov 2007. The first commercially available smartphone running Android was the HTC Dream, released on October 22, 2008. Apple iPhone has a lead of at least a few years. Many consumers were just finding out the difference that iPhone brought to them.

2. Samsung Got the Terrain Advantage - 得地利 
Though the Android phone missed being first, but many of them working together, they are able to produce products with many more features and released them faster and earlier than Apple once they caught up with Apple (may be 2 - 3 years after iPhone 1st release). The eco-systems and supply chain of the Android camp are perhaps more efficient than Apple. However, I had the suspicion that it was not Apple's inability to add features as fast as the Androids but rather, Apple wanted to skretch the life of its products and make as much profits as possible. We known that only Samsung made good profits but LG, HTC, Sony etc were not doing well despite the rise of Android phones due to various reassons. Android phones took the largest share, pushing Apple to 2nd but the victims were Nokia, Rim's Blackberries, the WebOS phones and the WindowCE phones.

3. Apple is the People's Choice Brand - 得人和
It is amazing that Apple only did less well in the times of the rapid growth of Samsung. They continued to make good profits. Apple could take their time in releasing the market demand for larger screen phones, the 5-6 inch ones. Once Apple release the larger screen iPhone 6, the order for the phone broke all records. It even caused the profit pressure on Samsung. It revealed that Apple customers are willing to stick and wait for Apple. How could it be so? It is because Apple does not just make products, but rather make products that touch the heart and desire of the its customers. See for example the mission statement of Apple in What and Who has the Best Mission Statement?
I summarized it as "we simplify and perfect our offering to enable people to have delight, surprise, love and connection." Consider Samsung's philosophy of "to devote our talent and technology to creating superior products and services that contribute to a better global society and to have the power to enrich lives." It sounds great but is very vague.  Which one can you relate to better?

The company that has the heart of the people is able to out do those only address the rational needs of the people.  If you only address the rational value and not the emotional and identity value of your offerings, then you get involved only in the price sensitive for features war. This is exactly where Samsung got into trouble. Its low end products are out competed by the China and Indian brands and its high ends are cornered out by Apple. Apple is selling style, class, fashion, elegance and ease of use. Samsung is still in the features war! Apple should never sell cheaps because cheapness is against the identity of Apple Brand and People's true desires.

See also:

  1. Understand Innovation's Value and Behavioral Econm...
  2. The Twelve Truths of Innovation
  3. Understanding The Smartphone Battle – Rise of Apple...

Lim Liat (c) 12 Oct 14