Sun Zi's Art of War for Business Transformation in a Precarious World
By: Lim Liat
8-9-2022
Introduction
Sun
Zi's Art of War is not just about warfare. It is, rather, the winners' mindset.
It is about how the ordinary can do the extraordinary, of defeating giants and
becoming winners. It is about how to strategize to win and execute with
leadership, a cool head yet a passionate heart, watchfulness, learning, and
adaptability. It is a humble and growth mindset.
Winners
Plan First
[The
Art of War Chapter 4 形篇]: 是故胜兵先胜而后求战，败兵先战而后求胜。
Winners
plan first to win and then start a fight. Losers fight first and then try to
win.
The
secret of "hundred battles and a hundred victories" is simply
choosing to fight only the wars you can win after careful planning. For
business, we need to plan and derive the right strategies first. Always start
with a plan and only do it when it is sure to be profitable even in the worst
possible scenario.
Planning
with Five Factors
How
then, can we plan first? How can we know we can win? Sun Zi proposed five
factors:
[Chapter
1 始计】故经之以五事，校之以计而索其情：一曰道，二曰天，三曰地，四曰将，五曰法。
Hence,
manage with the five factors. Measure and compare them to obtain the truth. The
first factor is “Philosophy”, then “Heaven”, “Terrain”,” Commanders”, and
lastly “Methods”.
Sun
Zi explained that Dao is the thing that unites the people from the bottom to
the top such that they are willing to live and die for it, regardless of danger.
It is the religion or the philosophy that they believe in. In business, that
will be the “Mission, Vision, and Values”
of the business. It is also the behavior and values represented in the culture
of the organization.
2 天
Heaven, Weather, the Seasons, Trends, or Timing
Sun
Zi explained that ‘Heaven’ is night and day, cold and hot, the cyclical
seasons. It is the weather of the environment that one is in. In business, such
environmental factors will be the PESTEL (Political, Economic, Social,
Technology, Environmental, and Legal) factors and the desires of customers. The
key is to learn to read the trends and directions, making sure we ride the trend
rather than going against the trend.
3
地 Terrain and Paths
The
terrain is about distance, slope, width, throughway or dead end, and a place for
living or death. In business, terrain will be your marketplace. It will
include your market positioning, your path, and your distance to reach your
customers. How big is your market? How fast and scalable can you grow your
business to be the leader? How easy can your customers buy from you? Customer
experience with you is a journey from knowing, buying, delivering, installing,
using, enjoying, fixing when spoiled, and upgrading. You can change any of the
above in the journey to serve your customers better.
4 将
Commanders - Their qualities and capabilities.
This
represents the leadership of your company. Sun Zi tells us that good leaders need to
have five attributes in balance. The five are wisdom, trustworthiness, love,
boldness, and discipline. Sun Zi tells us that if we love our men like our
children, then they will be committed to dying for us. But if we overlove them
to spoil them so that they cannot be commanded, then they could be employed
in war. If we love them too much to not punish them, then they will be
ill-disciplined and disorganized. Without the wisdom of not knowing the enemy
and thereby resulting in loss and death, it is the most unloving thing. Boldness
is not recklessness but being able to stay calm in a crisis and to make the
right decision quickly. We can see that the attributes need to be in balance.
Wisdom alone is a Cheat; Trust alone is a Fool; Love alone is a Weakling;
Bravery alone is Impulsive; Discipline alone is Cruelty.
More
specifically, it is the organization structure, know-how, processes,
procedures, company laws and policies, command, control, and communications.
All should be in alignment for the use of the management to achieve their
mission and vision.
How
can we know we are stronger? It can only be done by measuring and comparing.
So, Sun Zi proposed seven measures as follows:
【1
始计】故校之以计索其情，曰：主孰有道？将孰有能？天地孰得？法令孰行？兵众孰强？士卒孰练？赏罚孰明？吾以此知胜负矣。
Does
the top leadership have the right mission, vision, and values? Most
organizations today have mission, vision, and values statements. But they are
too abstract and vague to be behavioral, and so be observable, copyable, and
promotable. So the actual behavior of the staff, the real culture, is very
different from what they stated. Worse is when the senior management does not live
out those values. They think that the values are for their staff and not
themselves. This will create a real culture that conflicts with the desired
philosophy of the business.
Do
our leaders have the five attributes mentioned earlier? Are they in balance?
Sun Zi tells us to always”审时度势” Read the Time & Assess the Situational Configuration.
Let’s learn from Jeff Bezos, founder of Amazon:
“What we need to do is always lean into the future; when the world changes around you and when it changes against you – what used to be a tailwind is now a headwind – you have to lean into that and figure out what to do because complaining is not a strategy.” – Jeff Bezos, Founder of Amazon.
We take the advice from Steve Jobs, founder of Apple, Next, Pixar, who said,” I skate to where the puck is going to be, not to where it has been”.
What
makes for a disorganized and chaotic organization? How can a large number of
people work together smoothly? Do the staff know what the right or wrong
things to do? Values must be made into policies to guide behaviors. Staff
should be promoted or fired based on those policies. Sun Zi emphasized this
importance by stating the seventh measure shown below.
Do
the staff have the right skills (according to the needs of your strategies)?
What is the level of proficiency of their skills relative to your competitors?
What is the size relative to your competitors?
Do they practice often so that the execution is fast and smooth when triggered? Having the right skill but lacking frequent practice is insufficient for winning. Sun Zi tells us that the impact, the power, is the stored energy through frequent practices, released in the shortest possible time. This is thousands of years before Newton’s formula of Power = Energy/Time!
7 赏罚孰明？Are the rewards & punishments fair & transparent?
There
is no use in having policies and laws when enforcement of rewards and
punishments is not done. The impact of such negligence is best described by
Sima Guang, historian and senior official of the Song Dynasty, “If goodness is not rewarded and evil is not
punished, then the good ones will be lazy and the evil ones diligent.” The
most common error committed is that the rewards and punishments are for openly and
fairly done, causing suspicion and distrust.
We
can use the seven measures to appraise our own company. It is like a health
check. When we use them to compare against the enemies, we can arrive at a conclusion on the
probability of winning.
1
Consider your company's mission and vision, are they meaningful and motivating?
Are they communicated clearly and frequently from top to bottom?
2. What values are key to accomplishing your mission?
Most companies' values are basic moral values such as honesty, passion,
professionalism, etc. They are minimal but not sufficient for your success. If
you are in the Food & Beverage business, then the key values should be
cleanliness, hygiene, healthiness, and contamination prevention. In a high-tech
business, the value should be innovations, learning, experimentation, critical
thinking, etc.
3
Are those values described in observable, behavioral terms, be
institutionalized into policies?
Most companies like to put “Customer First” as a value. But what does it mean?
Different people have different concepts of customer-first. It is best to look
up how Amazon and Netflix define those values into behavior, observable, and
copyable terms.
4
Do you have corresponding incentives and discipline systems to enforce those
key values?
5
Are your offerings leading, riding, following, or outdated by the market
trends?
6
Is your offering positioned well in the eyes of the customers?
7
Have you worked out your strategies to achieve your visions? How can you tell
if they are good or bad strategies? Can you tell which are the strategic jobs?
8
Do you have the right people in those key jobs?
9
Are those key jobs given the right authorities to make those key decisions?
10
How are you well organized and staff well disciplined?
Chapter 10 地形篇: “知彼知己, 胜乃不殆, 知天知地, 胜乃可全"
The
most common error in quoting Sun Zi is “知己知彼 百战百胜“, “Knowing self and
knowing others will give you a hundred battles with a hundred victories”. Such
wording is not found in the text of the Art of War. Firstly, the order is
wrong. It is knowing others first to know yourself. You may have a hundred
engineers and think you are strong. But the reality is that whether you are
strong or weak depends on the competitor you pick to fight. If he has only ten engineers, then your hundred is
strong. But if your competitor has a thousand engineers, then your hundred
engineers' strength is weak. Our tendency to look at the world from
ourselves is very dangerous. Our inside-out view will cause us to look for
things and evidence that support our opinions, but fail to see the things that
we should have seen; things that could cause our failure.
Consider
the failure of Nokia and Microsoft smartphones. They wrongly project their
subjective view that the smartphone market will be just like the PC world, where
Apple was the niche and Microsoft was the majority. They failed to see that the
iPhone was not just a phone connecting people but rather a cloud device that
connects people to the cloud of social networks, knowledge, and commerce
applications.
So,
the right way to do your strategic planning is to invert the SWOT (Strengths, Weaknesses, Opportunities, Threats) into TOWS.
Take the outside-in approach to look at the threats first. Your strength or
weakness should be judged accordingly to the demand of the outside environment.
Strengths are those you have to overcome the threats. Weaknesses are those that
cause you to be overcome by threats. You can decide how to employ your strength
to overcome the threats and how to compensate for the weaknesses to survive the
threats. These become your strategic initiatives. Only when you can survive the
threats can you then exploit the opportunities. As with the threats, we can now
work out the strategic initiatives to exploit the opportunities. Consolidating
the initiatives will give us the strategies to ride on the external trends.
For a transformational change, we need to find out the current rules of the business and then change them such that our abilities become the needed strength and others become irrelevant or weak. This is because the current rules of the game are dominated by the giants.
Story of the Apple iPodIs iPod just an mp3 player? The mp3 player giants then, such as Creative Technology and Samsung, thought so. But it's actually a rules-changing device. It changed the rules of the sales and distribution of music and songs. It is about searching and paying for a dollar for a song that you like and being able to immediately enjoy it on the move, rather than being forced to pay for a CD at $20 containing many songs that you don't care for. Sun Zi's 5 factors tell us not to look just at the surface of what and how, but to go deeper into the why, the Dao, and work out the what and how. That is where you discover the rules and then change them to suit you, so that you may become the new champion.
Sun
Zi stresses a lot on planning before action. Planning should be based on facts,
situations, and intelligence about the enemy, and then figure out how to gain
advantages over the enemy. Sun Zi gives us many tactics that were later
expanded to the famous 36 Stratagems for warfare. Early probing and careful
planning with decisive, committed action at the right time and place to gain a
win in the shortest possible time is the mindset of the winners. The posturing
of Power 势(accumulation of
strength) and then a decisive control 节
release at the right time is the key to early success. Lack of power or
releasing too early or late is bad.
Business
is commonly misunderstood as warfare. The fact is, business is actually a love
affair between you and your customers. However, your customers will use your
competitors to judge how 'loving' you are to them. So, which do you focus your
attention on first? Jeff Bezos, founder of Amazon.com, in HBR Oct 2007 said,
"Be afraid of our customers because those are the folks who have the
money. Our competitors are never going to send us money.” In business, the
customer is the judge who decides who wins by casting his money. So focus on
your customers first and address competitors as needed when the customers bring
them up. If we focus just on the competitors, we will just be playing catch-up
games. Nevertheless, if you are new to a business, then learn from the market
leaders. It will help you understand the customers' desires and the current
rules of the game.
Business
today is not just the competition of products or services. It is also about the
competition of supply chains. In the case of the Apple iPhone, it is iPhone
supply chains versus the Android supply chains. Apple had chosen the
proprietary route. Android is based on more open standards. Android's supply
chain has many more partners than Apple’s, resulting in better economies of
scale. It is the key reason for Android becoming the market share leader, even
though it started 2 years after the Apple iPhone. Android’s success is all
about how Google is able to form an alliance, the Open Handset Alliance, against
Apple.
With Sun Zi, we know how to compete. But we also need to know how to form an alliance. Such know-how is the wisdom of Gui Gu Zi, the Father of Diplomacy. While Sun Zi's 4 levels of winning strategy, alliances, fighting in the field, and attacking a fortified castle, did mention alliances, he did not cover them in much detail. Such work on influencing human hearts is in Gui Gu Zi’s book “Open and Close” and should be a subsequent read after Sun Zi.
ConclusionChapter 11〔九地〕将军之事，静以幽，正以治。
The affairs of commanders are keeping calm and quiet to plan deep and wide, considering all the forces at play in depth. With righteousness and fairness, manage and engage the people for a fighting fit orderly force.
The first half is about strategizing and the second half is about execution with speed and order and thereby achieving your mission and vision. How to strategize to win is best depicted in the diagram below. There is no one right strategy or a fixed pattern for all situations. The KEY is to be agile, flexible, and adaptable to exploit the situations.
Success
depends on staying relevant to your customers, the markets, and the external
PESTEL situation. Please stay humble and take an outside-in approach. Need to
engage your staff to be united and committed to executing the derived
strategies with ever-learning and adaptation to the changes. Hope you can take
Sun Zi’s Art of War thinking mindset to review your business to achieve greater
success.
A shorter and edited version of this can be found at Key Takeaways from Sun Zi’s Art of War for Business Success | CareersCompass by MyCareersFuture
A Conversation Version produced with NotebookLM can be heard here.
Sun
Tzu's Business Transformation Framework: Key Lessons
1. Winners Plan First
"Victorious warriors win first, then go to
war."
- Action: Only commit resources
after confirming victory is probable (via the Five Factors and Seven
Measures).
2. Five Success Factors (Diagnose Foundations)
|
3. Seven Measures (Gauge Competitive Strength)
Assess: Leadership philosophy, commander capability, trend/terrain
exploitation, policy enforcement, staff skill, training rigor, fair
rewards/punishments.
- Critical Insight: Strength is relative
to competitors (outside-in perspective).
4. Power Dynamics (势):
The Winning Engine
- Internal Power (蓄势):
Stored energy via training, processes, and resource accumulation.
→ Release: Decisive action at the perfect moment (e.g., Apple's iPod launch). - External Power (乘势):
Leverage trends (Heaven) and terrain (Earth) to multiply impact.
→ Examples: Tesla riding climate policies, Amazon exploiting e-commerce growth. - Fusion Principle:
"Internal discipline amplifies external advantages; external momentum accelerates internal energy."
5. Mindset Shifts
- Outside-In Strategy
(TOWS > SWOT):
Start with Threats/Opportunities, then align
Strengths/Weaknesses.
- Change the Rules: Make competitors'
strengths irrelevant (e.g., iPod’s "$1 song" vs. CD bundles).
- Business ≠ Warfare: Focus on customers
first ("They hold the money" - Bezos).
6. Execution Principles
- Pre-Plan Actions: Intelligence →
Strategy → Decisive strike (avoid GIGO).
- Agility: Adapt strategies as
Heaven/Earth shift (e.g., Netflix’s DVD-to-streaming pivot).
7. Self-Assessment (10 Questions)
(Key additions integrated): See
Ultimate
Takeaway
"Transform by fusing internal
discipline (蓄势) with external
momentum (乘势).
- Align Dao
with Heaven/Earth.
- Train commanders to release
power at the tipping point.
- Win through agility,
not brute force."
Action Step:
Audit your business using the Five Factors
while asking:
- Where are we storing
energy (蓄势)
but not releasing it?
- Which trends/terrain
(乘势)
are we underutilizing?
This integrates all key concepts—internal/external
power dynamics, leadership's role as the catalyst, and the fusion principle—into
the core framework.
------
10-Question Self-Assessment Tool
Sun Tzu Business Health Scan
(Score each 1-10; ≤4 = Critical Gap)
|
# |
Question |
Sun Tzu Anchor |
Key Focus |
|
1 |
Are your core values (道) defined as observable
behaviors (e.g., "customer-first = respond to complaints in
2hrs")? |
道 Dao |
Culture → 蓄势 (Stored Energy) |
|
2 |
Do rewards/punishments visibly enforce these
values? (e.g., promote/fire based on behavioral metrics) |
法 Methods |
Discipline = 蓄势 |
|
3 |
Are you exploiting 3+ major trends (天)?
(e.g., AI regulation, Gen Z values, supply chain shifts) |
天 Heaven/Trends |
乘势 (Riding
Momentum) |
|
4 |
Does your market position (地)force
competitors into weak terrain? (e.g., Apple’s ecosystem lock-in) |
地 Terrain |
乘势 (Terrain
Advantage) |
|
5 |
Do leaders (将)
spend ≥30% time externally (trend-watching, customers) and balance bold
action with process discipline? |
将 Commander |
Catalyst for 势 Fusion |
|
6 |
Are training/resources aligned with future market
needs (地),
not current? (e.g., upskilling for AI) |
法 Method + 地 Terrain |
蓄势 for
Future Terrain |
|
7 |
Do strategies fuse stored energy (蓄势) (e.g.,
cash reserves) + external momentum (乘势) (e.g., new
regulations)? |
势 Synergy |
Power Multiplier |
|
8 |
What industry rule did you change to
make giants irrelevant? (e.g., iPod’s "$1 song" vs. CDs) |
道 Dao+ 地 Terrain |
Rules Warfare |
|
9 |
When planning, do you start with Threats (TOWS), not Strengths
(SWOT)? |
Outside-In |
Survival First |
|
10 |
Are customers the judge of all decisions?
(e.g., "Will this strengthen their loyalty?") |
天 Trends + 地 Position |
True North |
Scoring & Imbalance Detection
- ≤4
in ANY question: Immediate action required.
- 蓄势 Imbalance (Low
Q1/Q2/Q6): Chaotic execution. Fix: Lock values →
discipline → training.
- 乘势 Imbalance (Low
Q3/Q4): Wasted opportunities. Fix: Map trends → attack
weak terrain.
- 势 Fusion
Gap (Low Q5/Q7): Efforts feel "hard." Fix: Leaders
must bridge internal/external.
"Victory requires stored energy (蓄势)
ignited by momentum (乘势).
Leaders (将) are
the spark."
Next Step:
- Score
all 10 questions.
- Attack
your weakest 蓄势 and weakest 乘势 item
first.
- Re-scan
quarterly as Heaven (trends) and Earth (market) evolve.
This tool transforms Sun Tzu’s 2,500-year-old wisdom into
actionable boardroom diagnostics.
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