Book of 5 Rings for Executives

THE BOOK OF

FIVE RINGS

FOR EXECUTIVES

For my friends and fellow warriors:

Frank Raiter, Bill Keppen, Al Lindsey,

Jeff Moller, and Chang Miao.

THE BOOK OF

FIVE RINGS

FOR EXECUTIVES

MUSASHI’S CLASSIC BOOK OF

COMPETITIVE TACTICS

DONALD G. KRAUSE

N I C H O L A S B R E A L E Y

P U B L I S H I N G

L O N D O N

First published in the USA byNicholas Brealey Publishing Limited in 1999

36 John Street 1163 E. Ogden Avenue, Suite 705-229London NapervilleWC1N 2AT, UK IL 60563-8535, USATel: +44 (0)171 430 0224 Tel: (888) BREALEYFax: +44 (0)171 404 8311 Fax: (630) 428 3442

http://www.nbrealey-books.com

© Donald G. Krause 1998, 1999The right of Donald G. Krause to be identified as the author of thiswork has been asserted in accordance with the Copyright, Designs

and Patents Act 1988.Image on cover and in text © www.arttoday.com

ISBN 1-85788-134-6

Library of Congress Cataloging-in-Publication DataKrause, Donald G.

The book of five rings for executives : Musashi’s book ofcompetitive tactics / Donald G. Krause.

p. cm.ISBN 1-85788-134-6 (alk. paper)1. Executives--Psychology. 2. Competition (Psychology)

3. Swordplay. 4. Martial arts. I. Miyamoto, Musashi, 1584–1645.Gorin no sho. II. Title.HD38.2.K73 1999658.4’001’9--dc21 98-34041

CIP

All rights reserved. No part of this publication may be reproduced,stored in a retrieval system, or transmitted, in any form or by anymeans, electronic, mechanical, photocopying, recording and/or

otherwise without the prior written permission of the publishers.This book may not be lent, resold, hired out or otherwise disposed of

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Printed in Finland by Werner Söderström Oy.

CONTENTS

Preface vi

PART I INTRODUCTION 1

Chapter 1 The Importance ofThe Book of Five Rings 2

PART II THE BOOK OF FIVE RINGSFOR EXECUTIVES 31

Chapter 2 Foundation 32Chapter 3 Form 53Chapter 4 Fire 73Chapter 5 Fabric 97Chapter 6 Focus 115

PART III BATTLE TACTICS FOR BUSINESS 119

Chapter 7 Gaining Competitive Advantage 120

PREFACE

The Book of Five Rings for Executives is the third volume in acontinuing series of books about how businesspeople cancompete more effectively. The three books, taken together,present my ideas about business strategy, tactics, and man-agement. I cannot claim to have made millions (yet) withthese ideas, but I do believe that people become more pro-ductive, successful, and satisfied when they are used.

In many respects and for many reasons, this book wasthe most difficult to write. Accordingly, I needed more helpin completing the task. I particularly want to thank NickBrealey, my publisher in London, and Jeanne Fredericks,my literary agent in the United States, for their patiencewith my creative agonies. Authors are lonely, discouragedpeople at times, and often find themselves wandering in awasteland of bad ideas and frustrating dead ends.

Don KrauseNaperville, IL

July 1998

PART IINTRODUCTION

1THE IMPORTANCE OF

THE BOOK OF FIVE RINGS

Over 350 years ago, in 1643, the greatest samuraiswordsman of his day, Miyamoto Musashi, wrote TheBook of Five Rings. Musashi was a wandering duelistwho lived during Japan’s early feudal period. Born in1584, he was an accomplished swordsman and laterfounded a school to teach sword fighting. According tolegend, from age thirteen to age twenty-nine, hedefeated 60 men in face-to-face duels. Musashi retiredfrom sword fighting at the age of thirty. He spent thelast three decades of his life, reportedly unwashed andunshaven, in a cave (which you can visit even today),perfecting his philosophy of fighting.

Originally, Musashi wrote the text of The Book ofFive Rings as a five-part letter to his followers and stu-dents. The ostensible purpose of this letter was to passdown a summary of his methods for winning sword

fights. At a superficial level, the material is very mucha Zen Buddhist martial arts instruction booklet.

But the book is far more than a “how-to” text onkilling your opponent with a sword. Musashi’s work isstill studied by millions of people around the worldbecause it is a uniquely valuable resource for improv-ing competitive performance. Musashi’s ideas cangenuinely tip the competitive odds in your favor. Ifyou look beneath the surface, a powerful set of princi-ples emerges from the writing. These principles areparticularly important for business people who areinvolved in challenging situations. At a deeper level,Musashi’s compact book becomes a practical tool forcreating and enhancing competitive success. You andvirtually everyone else, regardless of job or profes-sion, face competition of some type everyday; the realquestion is whether you are prepared for it. Musashiprovides the essential preparation.

Musashi tells us that while samurai warriors (likebusiness executives) are expected to face challenges andcompetition in their lives, so too do merchants, farmers,and craftsmen. He says:

People from all walks of life face the consequences ofsuccess and failure every day, whether they are pre-pared for it or not. The difference between a warriorand an ordinary person is that the warrior intention-ally studies how to use men, materials, and weaponsto gain power, profit, and prestige. Victory and successare not left to the winds of fate nor the whims of

THE IMPORTANCE OF THE BOOK OF FIVE RINGS 3

others. This is the real importance of learning the pathof competition.

A basic tenet of the samurai warrior lies in the rootmeaning of the word “samurai.” It comes from a wordmeaning “to serve.” Samurai warriors, like Musashi,served their employers with passionate dedication.Corporate executives and professionals who competefor their companies with this level of dedication pro-duce success for everyone.

The nature of business everywhere today is suchthat you must constantly be ready to compete for cus-tomers, markets, and resources. The book you arereading, The Book of Five Rings for Executives, unlocksthe mind and spirit of the master business competitorin simple, straightforward terms. It discloses the heartand soul of success in business. It prepares you to over-come the inevitable and necessary challenges you faceall the time. Using modern terminology and conciseexamples, the book gives you a clear explanation ofhow you can win in competitive situations by employ-ing the best tactics ever developed. Understanding theprinciples revealed here will equip you with a powerfulcompetitive advantage. You can use this advantage togain profit, position, and prestige for your companyand for yourself.

Musashi’s book is about winning sword fightsbetween samurai warriors. There is nothing glam-orous about sword fights, except in the movies. Theyare very personal and very deadly. But then, there is

4 THE BOOK OF FIVE RINGS FOR EXECUTIVES

nothing glamorous about most of the challenges weface in business either. They, too, have a tendency toget very personal and very deadly (at least to your bot-tom line or your career). A few tragic miscalculationsand you may find yourself in the corporate trashdump. Just like your opponent in a sword fight, yourbusiness competitors have real names, real faces, realegos, and real personalities, even if they are partiallyhidden behind a corporate veil. And they are verymuch in the game to win. The Book of Five Rings forExecutives gives every business person immediate andcritical leverage in this intensely competitive environ-ment. You have a much better chance of succeeding inthe fast-paced, wired world of today if you understandand apply Musashi’s principles!

Whether you are matched against a salespersonfrom a rival company or a fellow employee in the nextoffice, the battle is serious, the outcome important.Business deals are made between people, not betweencompanies. Multinational competition plays itself outin face-to-face discussions and negotiations. InMusashi’s time, sword fights ended with one personalive and the other person dead or injured. In modernbusiness, winning these personal competitive battlesdetermines your ultimate level of prosperity and pres-tige. If your competitor wins, you lose. With Musashifighting alongside, you have a significantly betterchance of coming out on top.

The subject of The Book of Five Rings is using power-ful competitive tactics to overcome challenges. It is


about taking immediate and profitable advantage ofcompetitive situations. It is about winning in the hereand now. It is not about developing a personal or cor-porate strategy. Tactics are different from strategy.Strategy is a longer-term concept, while tactics aremore immediate. Strategy is, to a great extent, aca-demic and theoretical; tactics are practical. Businessesand executives can survive and prosper withoutexpressed strategies. But, if businesses do not applyeffective tactics on a daily basis, they will not survivefor very long. No amount of planning for the nextcampaign does any good if you and your forces aredestroyed in the current one. This does not mean thatlong-term strategy is not important, particularly as acontext for tactics. However, the outcome of mostcompetitive interactions in business life eventuallyboils down to which person uses the better tactics inthe present situation.

Tactics are programs and actions designed to meetparticular competitive circumstances. They are based onspecific factors and local conditions. Hence, tactics haveto do with “taking an appropriate action at an appropri-ate time,” as Musashi puts it. In a business world whichchanges constantly, selecting good tactics is essential. Asyou will see in the examples I have provided in later inthis introduction and in Part III (Battle Tactics for Busi-ness), competitive tactics that have proven effective inbringing victory on the battlefield can be adapted to giveyou an edge in business, if you understand them prop-erly, and if you apply them correctly.


For Japanese business people, Musashi is an oldfriend and trusted adviser. His material has, over thecenturies, become an important reference. Many ofthe strategies that have been used so effectively byJapanese executives for the last fifty years comedirectly from Musashi. His approach was studied andutilized by Japanese samurai warriors during cen-turies of feudal warfare. The modern Japanese busi-nessman, who can be considered (and probablyconsiders himself) the inheritor of the samurai tradi-tion in Japan, also uses Musashi’s approach every dayto analyze and resolve competitive situations.

There are many examples — automobiles, film andcameras, electronics and small appliances, officeequipment, motorcycles, and heavy equipment, toname a few — of how Japanese companies have usedMusashi’s ideas to gain economic power in the past 50years, particularly in the United States. Later in thisintroduction, I will analyze the tactics employed by theJapanese automobile manufacturers to outmaneuverAmerican car makers and seize a significant portion ofthe US car market. These tactics are based on sevenprinciples of competitive success.

THE SEVEN PRINCIPLES OF COMPETITIVE SUCCESS

I wrote this book because I wanted to make it easy tograsp Musashi’s powerful message. There are severalexcellent literal translations of The Book of Five Rings.


However, the difficulty with the literal translations liesin understanding the meaning and application of theideas to a modern reader’s situation, especially a busi-ness situation. Western business executives find thisparticularly troublesome because, more often thannot, they lack specific Japanese historical and culturalinformation. The reinterpretation in this book is muchsimpler to understand and use.

The Book of Five Rings for Executives provides thefundamentals of competitive success. More signifi-cantly, it trains you to use a competitive sword whichis capable of winning in all phases of business. But ifyou are going to use Musashi’s very effective methodsfor winning in competitive situations, you must graspthe competitive sword by the hilt. You must reach intothe heart of Musashi’s philosophy and extract itsessence. Here is how you can do that. I have divided histeachings into seven simple, straightforward tacticalprinciples. If you take a short time to learn and digestthese seven principles, you will quickly master theessence of Musashi’s philosophy for developing win-ning tactics in competitive situations.

PRINCIPLE #1: ORDERED FLEXIBILITY

The mental image I like to conjure up in connectionwith Musashi’s first principle is that of a warrior hold-ing a sword in both hands over his head. He ispatiently observing his opponent, waiting for the con-flict to begin. The warrior’s posture is neither aggres-


sive nor passive. He is the essence of what I callordered flexibility. Musashi compares the ideal attitudefor executing successful competitive tactics to thenature of water. He says:

Water is both ordered and flexible at the same time.It maintains its own identity, but conforms as neces-sary to the circumstances around it.

Ordered flexibility is the fundamental philosophicaltenet of Musashi’s entire approach to winning in con-flicts. It embodies preparation, observation, poise, tim-ing, and readiness to act. That is, in this position, thewarrior is prepared to do whatever is necessary giventhe actual situation. He is grounded in the reality ofthe moment, observant and poised. Yet, he can easilyrespond to changing circumstances. He does not makeup his mind to act until the appropriate time; but,when he does act, he moves decisively.

Musashi makes this observation:

The ideal of ordered flexibility is summed up in theconcept of “positioning without position.” As soonas your opponent recognizes your tactical approach,he can defeat it. Therefore, excessive order and struc-ture lead to brittleness and defeat. On the other hand,if you have no order whatsoever, you cannot concen-trate your resources nor time your actions effec-tively. This also leads to defeat. Balance order withflexibility. Flow like water around obstacles. Move


slowly when conditions are unfavorable; move pow-erfully when the right course opens up. Everyoneknows that water in a stream seeks the sea (water isordered in its objectives), but who can tell how it willget there (water is flexible in its approach)? Think ofwinning, not of position.

The objective of ordered flexibility is to allow the war-rior to determine the most appropriate opportunity orresponse in a fight. Or, in other words, if the warrior isordered and flexible in his approach, he is more likelyto focus his tactics on probable areas of success. Focusis like the blade of the sword. It determines the cuttingedge of competitive tactics. A sharp focus is a criticalaspect of success in competitive situations. No personor company has enough resources to exploit everyopportunity or fight every battle. Musashi says:

The ability to focus is your greatest asset in a com-petitive situation. When you appreciate the power offocus, you will feel the rhythm of your opponent andmaintain control of his actions. You will understandhis approach and effortlessly defeat him by naturallyconcentrating your attack in an appropriate place atan appropriate time.

Highly effective business executives use ordered flexi-bility to focus on markets and battles that their com-panies can win – and win big. The ideal approach in asword fight, according to Musashi, is to direct your


strongest attacks on your competitor’s weakest spots.The idea in business is to direct high-output resourcesinto opportunities which produce the greatest profitfor the longest time.

PRINCIPLE #2: EXECUTION

Ordered flexibility is a necessary precedent to effectiveexecution. Execution, that is action, is the one thingthat produces results. Execution creates profit. Execu-tion wins victories. Effective execution consists of tak-ing an appropriate action at an appropriate time. (Note:I use the word “appropriate” rather than “right.” Theword “right” implies that you can know what the out-comes of your actions will be. There is no way to tell, inthe heat of battle, whether the actions you are takingare the “right” actions. General George S. Patton oncesaid: “It is the historians that make generals intogeniuses. In the midst of a battle, with all theunknowns and uncertainty present, a general can onlydo his best based on the information he has at themoment.” He also said, “A good idea executed promptlytoday is worth a dozen perfect ideas executed nextweek.” This statement sums up the essential differencebetween strategic planning and tactical action.)

The foundation for execution and effective action istraining. Musashi says:

Be prepared to act when the opportunity arises. Thisrequires both courage and patience, order and


flexibility. The ability to perceive and benefit from themoment of advantage is developed through constantstudy and practice.

The main themes associated with taking action aresummarized in the next five principles: resources,environment, attitude, concentration, and timing. Thefirst letters of these themes form the acronym REACT.Hence, the five REACT principles are the componentsof an effective action program for managing difficultor challenging circumstances.

PRINCIPLE #3: RESOURCES

Resources are those assets and skills which each sidebrings to the conflict. They are the raw material of tac-tics. In business, resources can include people, plantand equipment, finances, and reputation. In all com-petitive situations, however, the most critical resourceis timely and accurate information.

Musashi advises:

Gather information from every possible source.Leave no stone unturned. Use spies, consultants,informants. Perceiving the enemy’s strategy allowsyou to defeat it. Knowing the enemy’s position andmovement prevents unpleasant surprises.Information is the fabric of tactics. You can neverknow too much about your enemy, yourself, or thesituation.


PRINCIPLE #4: ENVIRONMENT

In a sword fight or other face-to-face combat, theenvironment would be the physical surroundings,the terrain, and the weather. In business, environ-ment includes, to mention a few, market trends andstructure, economic and political climate, technol-ogy, and public opinion. Resources and environ-ment work together to provide the general settingin which a competitive situation arises and isresolved.

Musashi makes this comment about the purpose ofcareful analysis of the environment:

Determining an initial approach depends on yourassessment of environment. Relative strength is amatter of fact. Approach derives from circum-stances. Ask yourself this: Given the resources, envi-ronment, and attitudes involved in the competitivesituation, is it better for me to adopt an offensive,defensive, or neutral approach to the conflict? Noapproach is better than another except in light ofspecific resource and environmental conditions.

PRINCIPLE #5: ATTITUDE

The attitude you bring to the conflict will be the atti-tude you have practiced in your training. You must besharply aware of the reality of the moment. You must


be confident and competent, aware and ready, neitherafraid nor careless. Musashi teaches:

During competitive situations, your mind will be asyou have conditioned it. In every moment, trainyourself to be calm, expectant, observant. See thingsas they are. Do not be taken by surprise. Let yoursenses be open, your mind relaxed, your spirit bal-anced. Meet every challenge with a firm, yet flexible,attitude, centering your attention on determiningreality.

The essence of attitude is summed up in the code of thesamurai warrior which underlies Musashi’s feudal cul-ture. The code instructs you to think only of winning inthe situation you find yourself. If you fear the conse-quences of failure, you will begin to adjust your deci-sions and actions to take into account the possibility offailure. Failure must not be an option. Musashi says:

Even an otherwise useless person becomes valuable ifhe will not consider the possibility of failure andmoves resolutely toward objectives.

According to the samurai code, fear is the greatestenemy you face, far greater than any physical oppo-nent. Your own fears magnify danger and obscurereality. But, fear exists only within your emotions andyour perception. It does not have objective reality out-side your mind. Whether you are afraid or not is a


choice you make. And the choice you make does notchange the facts of the situation.

Therefore, to win a battle, Musashi advises that youevaluate the situation and act with confidence. If youhave practiced the REACT principles for executing tac-tics, you will be well prepared for whatever happens.Neither imagined fear nor false optimism, he says, canchange your real position and circumstances. He adds:

If you face a tiger in the competitive jungle, it is infact a tiger, neither something greater nor somethingless. You stand a far better chance with your eyesopen and your spirit calm.

PRINCIPLE #6: CONCENTRATION

In every situation, there are tactics which will workand tactics which will not work. According to Musashi:

Effective tactics are based on the principle of concen-trating strength against weakness or resources intoopportunity. Every opponent, every challenge youface, whether it is another human being, anothercompany, or even change and innovation withinyour own company, has a weakness or opportunityyou can exploit with the proper attention.

Concentration utilizes your resources most effectivelyagainst the weakness or opportunity contained in aspecific situation or threat.


PRINCIPLE #7: TIMING

After studying the history of competition in war, busi-ness, and politics, I have concluded that the timing ofcompetitive actions is most often the critical factor insuccess.

Musashi constantly emphasizes the importance oftiming and rhythm. Acting at the appropriate momentassures the best opportunity. He says:

When you engage in competition, you should neithermove too quickly nor too slowly. It is not speed initself, but rhythm and timing, which are critical. Theappropriate moment is that point in time when thescales are tipped in favor of the tactics you have cho-sen. Concentration and timing work together. If youdo not concentrate both thought and resources at theappropriate moment, your tactics will probably fail.

These seven principles represent the core principles ofMusashi’s philosophy, the heart of his message, thehilt of the competitive sword. They are your frame-work for organizing the various themes whichMusashi brings out in his text. Keep the principles inmind as you read the text. They are your ladder tounderstanding.

The true value of Musashi’s principles is found inusing them to win in competition. Business and mili-tary history are filled with examples of how successful


executives and generals used Musashi’s principles inorder to succeed. In Part III of this book, Battle Tacticsfor Business, I discuss a number of master competitorswho have succeeded by applying Musashi’s concepts.In order to link tactics of master competitors clearly toMusashi’s ideas, I will use the seven principles asguideposts. At this point, let’s examine how Japaneseauto companies employed these seven principles tosucceed in penetrating the American car market.

JAPAN’S TACTICS FOR MARKET DOMINATION

The success of Japanese executives during the coun-try’s reconstruction period after World War II under-scores my strong belief that understanding Musashi’stactical concepts provides a strong foundation forcompetitive success. Since Japan must import most ofits raw materials, it could survive and prosper only bybecoming a major and profitable exporter of manufac-tured goods and technology. Hence, building a globallycompetitive manufacturing base and improvingmanufacturing methods to world-class quality levelswas a matter of life or death for Japanese companies.

Japanese business executives did not shrink fromthe task. When W. Edwards Deming, Shigeo Shingo,and others began teaching their highly effective meth-ods for improving manufacturing operations andorganization management through quantitative andstatistical analysis, Japanese executives realized they


had been handed a kind of “competitive sword” whichthey could wield successfully in world markets. Amer-ican management was, at the time, ignoring the powerof statistical analysis to improve design, productiontechniques, and quality for manufactured products.Applying Musashi’s philosophy, Japanese executivesperfected their ability to use this sword to beat theircompetition. And they are winning the battle.

Historically, there are three phases involved in mostcampaigns undertaken by Japanese industry. Eachphase involves the application of ordered flexibilityand critical attention to execution, resources, environ-ment, attitude, concentration, and timing.

PHASE 1: COPY TECHNOLOGY AND TRAIN PEOPLE

The principle of ordered flexibility strongly influencestactics in the first phase of the campaign. The Japan-ese initially enter a market in an organized manner,seeking information about industrial technology andcustomer attitude. They observe; they study; theyexperiment; they learn. This is the heart of orderedflexibility in business. Once reliable information hasbeen obtained, they move in the most profitabledirection. Musashi teaches:

Set up your organization so it approaches competi-tive challenges in an organized, disciplined manner(order), but is not limited in its choice of maneuvers(flexibility). The overall situation is easy to discern;


the critical details are not. Hence, the competitiveexecutive gathers together small pieces of informa-tion to create winning tactics. True and accurateassessment of circumstances is essential to winning.just like building a large statue from a small model.Practice day and night. Training is essential tosuccess.

Japanese companies carefully consider factors relatedto execution (resources, environment, attitude, con-centration, and timing) before and during a campaign.Musashi says:

The goal of your analysis of information is to pro-vide focus. You cannot do everything, you cannot beeverywhere. Proper focus allows you to allocateresources effectively to develop promising opportuni-ties or to counter dangerous threats.

At the end of World War II, Japanese industrial pro-duction was actually in quite good shape. Althoughmost of the cities had been destroyed by Allied bomb-ing raids, the industrial base in the countryside wasstill very effective. The Japanese automobile and truckmanufacturing industry was intact and operating. All itneeded was raw materials and retooling to convert itsproduction lines to manufacturing consumer, ratherthan military, vehicles. During this phase of the cam-paign, Japan was in a seriously weak resource position.Its main asset was its human capital, but it lacked most


others, including important new technology that the UShad developed during the war.

Japan could produce some goods; the problem,however, was selling them. Given the negative opin-ions of the Japanese in the US, the largest and mostprofitable market in the world was not immediatelyavailable. Time would blunt negative opinion, particu-larly if there was no additional provocation. The polit-ical environment of the world community wouldallow only passive and subtle maneuvers by the Japan-ese. The timing was wrong to push outwards on anyfront.

The attitude of the Japanese in response was one ofpatience and preparation. A great strength of theJapanese culture is the ability to copy and improve thecreations of other countries. To use this strength,Japanese car companies quietly began buying Ameri-can cars and disassembling them into their compo-nent parts (a process now called reverse engineering).This threatened no one at the time. Over a period of10–15 years after the war, Japanese auto executivesconcentrated their actions on an organized programto learn how to build cars to American standards.They trained their engineers and assembly workers inthe details of American automobile design and manu-facturing by copying American cars. Armed with inti-mate knowledge of American automobile technologyand the competitive sword of better manufacturingmethods from Deming and others (at this point, Amer-ican companies were not afraid to share technology


with Japanese companies because they did not fearthem as business competitors), the Japanese enteredthe next phase of tactics.

PHASE 2: RECOMBINE ELEMENTS AND WIDENMARKET ACCEPTANCE

The second phase of the campaign involves concen-tration and timing. Musashi says:

After you have perfected your methods, you will gaina uniquely valuable freedom of action, a spontaneousability to operate successfully even under most ardu-ous conditions, an ability to overcome the most diffi-cult challenges. Your reactions in competition shouldbe natural and precise, governed by an intellectsharpened through daily practice. A skilled jugglercan manage a large number of flying objects withoutconcentrating on any one of them. He feels therhythm in the movement of the objects as a whole.He adjusts his hands and feet in response to thatrhythm without dropping anything. Constant prac-tice allows him to concentrate without fixation.

Careful preparation allowed the Japanese to exploit theinattention of US car makers. Through concentrationand timing, they were able to gain a toehold in themarketplace. The first Japanese automobile brandintroduced into the American market was Toyota. TheJapanese auto industry started with one car brand in


order to minimize American reaction and maintain alow profile. A low profile would reduce the chances of apreemptive retaliatory strike by competitors in the US.

The Toyota vehicle built for the American marketwas small and plain. In the beginning, it was not takenseriously because it was underpowered compared toAmerican cars. The general wisdom was that Japaneseproducts were inferior. Toyota concentrated its effortson experimenting with different products and optionsuntil it discovered combinations which began to gainacceptance in California and other West Coast markets.

When the time was right, other Japanese carmanufacturers (Honda and Nissan) entered the US.Toyota had established a beachhead, now reinforce-ments were coming. Japanese autos began spreadingacross the country and taking significant marketshare from US companies. This is because the Japanesecar had slowly, but firmly, established a reputation forbeing reliable, affordable transportation. The oil crisisof the 1970s also helped this process. With threemajor Japanese car companies successfully establishedin the United States, the stage was set to begin phase 3of the tactics.

PHASE 3: INCREASE QUALITY/PRICE RATIO ANDDOMINATE MARKET

In the third phase, which is still going on, Japaneseauto makers have switched from defensive to offensivetactics. Offensive tactics succeed best when they focus


strength on weakness and take advantage of opportu-nities presented by opponents. Musashi says:

Maintain unyielding determination. Constantly tryto get the upper hand. Follow up every opportunityvigorously and thoroughly. Be relentless and con-stant. Allow the enemy no rest. The idea is to causethe competition to collapse. All things collapse whentheir time comes and their rhythm is destroyed. It isimportant to sense your opponent’s rhythm. Whenhis rhythm begins to deteriorate, he becomes vulner-able. If he recovers his rhythm, he can attack youagain. In every conflict, there is an opportunity foryou to win. A loss of momentum or poise in theopponent’s stance will signal your chance. Be readyto strike at this moment.

You must focus all of your energy on strikingthe enemy at his moment of vulnerability. Makeyour attack direct and powerful. Cut the enemy downso that he is completely unable to recover or con-tinue. Remember, when you fight, fight to win. Donot allow your enemy a chance to beat you by beingcareless, sloppy, or foolish.

Japanese car manufacturers are constantly increasingthe quality/price ratio by offering innovative featuresand options on their vehicles. American cars either donot have these features and options, or they are avail-able only on higher-priced models. The relative pricefor a Japanese car, given certain reliability levels and


features, is lower than American cars. The Japanesemake use of two obvious strengths: first, their prod-ucts are generally better made than American prod-ucts; and second, they keep weakening the Japaneseyen with respect to the dollar in foreign exchange mar-kets so the price of Japanese products is relativelylower. These strengths are aligned against exploitableAmerican weaknesses.

Until Lexus (another Toyota product) was intro-duced, Japanese car models competed with mid-rangeAmerican cars in price. Lexus opened up the luxury carmarket. It was quickly followed by Acura and Infinity.Market dominance is possible with this combination.The Japanese luxury car can be favorably compared toany lower-priced luxury car in the world, includingMercedes. It is certainly positioned to outclass Americanhigh-end vehicles, which can compete only on price.

This phase of tactics will continue into the future.American car makers are responding, with some suc-cess. At least they do not appear to be losing marketshare as quickly. But given the strength of the Ameri-can dollar against the Japanese yen in 1998 due to theAsian economic crisis, the Japanese car is becomingcheaper than the American car for a given level ofquality and features. I would expect Japanese car mak-ers to push their advantage at this time. Indeed, thefirst quarter 1998 trade balance for the United Statesis $13 billion in the red, the largest negative trade bal-ance in history. This is due primarily to the impact ofapparent economic weakness in the Asian market.


Up until very recently, the Japanese auto industryeffectively out-manufactured every other country inthe world, on a per capita basis, in both quality andprofitability. The discipline and structure of Musashi’sapproach to competition using the competitive swordof superior manufacturing quality and continuousprocess innovation, coupled with aggressive currencyvalue management, gave Japan the strength and focusto rise from the ashes of defeat and become one of theworld’s greatest economies. It seems to me that itmakes good sense to learn as much as possible aboutthis approach and use it to your own advantage.

In Part III, I discuss a variety of examples of theapplications of Musashi’s principles to both modernbusiness and military situations. Here are the exam-ples I have chosen from modern business:

Howard Schultz (Starbucks)

The best example of the impact of competitive attitudein a large, successful business is Howard Schultz andStarbucks Coffee.

Warren Buffett

Buffett has made billions for himself and others byusing creative, but fundamentally sound, analysis ofresources and environment coupled with superbtiming.


Andy Grove (Intel) and Bill Gates (Microsoft)

The stories of Andy Grove and Bill Gates show theimmense power of sharply focused business thinkingand concentrated tactics.

Donald Trump

“The Donald” is a master of timing and rhythm. In thereal-estate business, timing is everything. Trump hasbuilt a fortune on doing the appropriate thing at theappropriate time in the appropriate rhythm.

Military history is another rich source of examples ofhow to apply Musashi’s principles. I analyze four his-torical military situations in Part III. These situationswill help you generalize, from another perspective,Musashi’s principles for use in your own business andcareer.

The four situations are:

General Robert E. Lee and the Battles of Chancellorsvilleand Gettysburg

Lee’s greatest success and (arguably) greatest failureare textbook examples of proper and improper use ofordered flexibility, focus, and execution.


General George Washington and the Battle of Trenton

Washington’s analysis of the situation and executionwere the keys to winning this pivotal battle in Ameri-can history.

Lawrence of Arabia and Guerrilla Warfare in Arabia

Lawrence really understood the meaning of focus.

The Battle of Rorke’s Drift in the Zulu War in Africa

This small, but ferocious, battle teaches the benefits oftraining, practice, and discipline coupled with soundassessment of the competitive situation and concen-tration of resources, particularly when one is caughtin some very bad circumstances.

SOME WORDS ABOUT THE TEXT

Musashi wrote his material in a cave by the light of anoil lamp using crude pens, paper, and ink. It was com-posed over a period of several weeks or months. I sus-pect there have been a number of additions, rewrites,and reorganizations done by well-meaning scribes andstudents over the intervening centuries.

The writing is filled with admonitions about study-ing hard and practicing often. This is, of course, whatone would expect when a teacher is writing to his


disciples. As a result, the text is disorganized, tends towander and repeat itself, and is generally unclear andconfusing. The title of the original work is obscure initself. The word “rings” means “aspects,” “view-points,” or “ways.” The real subject of the book, swordfighting, is not explicitly mentioned in the title. IfMusashi were writing this book for the popular busi-ness market today, the title would probably be some-thing like Five Sure Ways to Win a Sword Fight EveryTime Using Zen Philosophy, which is neither short normemorable.

Musashi’s writing style was greatly influenced byZen philosophy. His writing, like many Zen masters, isdeliberately vague. I think it was Confucius who said:“If a student cannot complete a figure after I havedrawn the first stroke, he is not worth teaching.” Zenmasters seem to follow Confucius’s instructionalmethod. Hence, Zen writing tends to be indirect andobscure, laying the burden of understanding on thereader. This may be a good idea in teaching esotericoriental philosophy, but it is not necessarily a practicalone for learning competitive business methods.

In accordance with the original text, I have dividedthe material into five chapters (chapters are called“books” by Musashi); each chapter covers an identifi-able business subject. Musashi named his five chapters— Earth, Water, Fire, Wind, and Void — after the fiveelements of nature. The original chapter titles werenot closely related to the content and each chapteroverlapped others to a greater or lesser degree.


Chapter titles used in this reinterpretation — Foun-dation, Form, Fire, Fabric, and Focus — are more rep-resentative of the content. I restructured the materialsomewhat to allow ideas to be developed logically,rather than simply asserted and repeated. In addition,where possible, I have substituted modern businesslanguage for medieval Japanese military terminologyto make the application of ideas and methods clear.

Remember that the original text is not well groupedaccording to topic. Although there is some overallorganization to the work, it tends to meander frompoint to point. Musashi often jumps from one subjectto another and back again without transition. Tocounter his lack of consistency, I have inserted sub-headings in each chapter to give you a general idea ofwhat he intends to cover in a particular section. I can-not, however, eliminate the confusion entirely unless Iarbitrarily reorder the whole text and subsequentlydestroy the originality and flavor of this literary clas-sic. That is why you need to keep the seven principlesin mind. If you do, the material will quickly makesense.


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PART IITHE BOOK OFFIVE RINGS FOR

EXECUTIVES

2FOUNDATION

Becoming a master competitor and winning in com-petition should be the goals of a business executive’sactions. This is the only path to power, profit, andprestige. Every successful executive must walk thepath of competition for himself, on a personal level,and for his company, on an organizational level. Noserious executive can afford to ignore this subject ortreat it lightly.

OVERVIEW OF THE FIVE RINGS

In order to explain the principles of becoming a mastercompetitor, I have divided this text into five “rings,”that is, five aspects or topics. Each aspect has its ownchapter. These five chapters are called Foundation,Form, Fire, Fabric, and Focus.

The Foundation chapter is an overview of my phi-losophy of competition, whether at a face-to-face levelor at the organization-to-organization level. Trueunderstanding of the path of competition cannot begained through mimicking the techniques of others.Techniques are superficial. You must learn to observeand assess a situation, comprehending both overallimplications and critical details. Because a solid begin-ning leads to strong success, I call the first chapterFoundation.

The second chapter is called Form. The ideal com-petitive form follows the nature of water. When youthink about the nature of water, think about bothorder and flexibility. Water is ordered in its objectives,but flexible in its approach. Water takes on the shapeof the container which holds it, whether square orround. Water can be strong and powerful; water canbe calm and pleasant. Water can be a drop or it can bean ocean. Water can be clear or it can be opaque.Water can kill or it can give life. Water can be heated tosteam or frozen to ice; but, when left alone, it returnsto its original liquid state. I model the ideal competitiveform on the nature of water. I will call the form ofwater “ordered flexibility.”

After you have mastered the principles of orderedflexibility, you will realize that the requirements ofwinning in a competitive situation are the samewhether you face a single man or an entire industry.You can win every time because you understand thespirit of winning.

FOUNDATION 33

The competitive executive gathers together smallpieces of information to create winning tactics. Justlike building a large statue from a small model, he canunderstand ten thousand things from knowing justone simple process. It is difficult to write about this indetail. The principles of ordered flexibility areexplained more fully in the Form chapter.

The third chapter is Fire. This chapter is specificallyabout competitive tactics in fights between individualsor small groups, such as face-to-face conflict or nego-tiating. The nature of fire is intense, whether the fire issmall or large. It is the same thing with face-to-facecompetitive situations. The spirit of face-to-face com-petition is the same whether you are competingagainst just one person or striving against a team froma giant corporation. You must carefully understandthe overall situation, while at the same time payingattention to the smallest detail.

The overall situation is easy to discern; the criticaldetails are not. Think a moment about how soldiersmove about during a skirmish. Once a large body ofmen begins to move in a certain direction, it takes timeto change direction. So it is possible to predict wherethey are headed. One man, on the other hand, canchange direction in an instant. His movements cannotbe anticipated so easily.

Factors can change rapidly in the heat of competi-tion. To keep up with this kind of rapid change, youmust practice the principles of competition every dayin your normal life. The steps in assessing situations


and maintaining ordered flexibility should be as ordi-nary to you as breathing. Your spirit should remainunchanged, even under pressure. I write more aboutthe nature of face-to-face competitive situations in theFire chapter.

The fourth chapter is called Fabric. This chapter ismore concerned with applying ordered flexibility tothe challenges of managing people in organizationsand meeting intense competition on a corporate level.Many philosophies and techniques of corporate man-agement exist in the world. But all corporate manage-ment techniques are intended to support andfacilitate corporate decisions and activities. The fab-rics we wear are likewise intended to support andfacilitate our lives. Adopting a certain fabric for yourclothing determines how you will look, how warm orcool you will be, whether you get damp in the rain orwhether you stay dry. You must understand the char-acteristics of fabrics before you can make a goodchoice. The characteristics of effective fabrics are sim-plicity, adaptability, durability. These same character-istics apply to choosing effective techniques forcorporate management.

Simplicity facilitates understanding. Even if peoplepractice a technique every day, if they do not under-stand the purpose of the technique and how to apply itunder different competitive circumstances, they willnot be able to use it when a difficult situation arises.

Adaptability fosters innovation. If people have mas-tered the details of a given technique through intense

FOUNDATION 35

effort, but they do not understand the philosophybehind the technique and cannot adapt that philoso-phy to a specific situation, it will do little good in a cri-sis. Even a small misunderstanding can result in majorerrors in application.

Durability encourages profitability. Buying a newwardrobe each year requires great expenditures oftime and money. The time and money spent to selectand acquire clothing is taken away from other valu-able activities. Changing management techniques fre-quently increases cost and diverts people’s attentionaway from the main objective of business — generat-ing wealth for business owners and employees.

It seems at times in the business world that execu-tives under competitive stress are convinced that theycan reduce managing competitive operations to sometrick or technique and that this will provide an answerto their problems. Seeking a quick and simple solutionis human nature, but it is the wrong approach. I havecommented on aspects of selecting management tech-niques in the Fabric chapter so you can understandhow to choose an effective technique for organizingpeople in challenging situations.

Fifth is the chapter on Focus. The ability to focus isyour greatest asset in a competitive situation. Whenyou appreciate the power of focus, you will feel therhythm of your opponent and maintain control of hisactions. You will understand his approach and effort-lessly defeat him by naturally concentrating yourattack in an appropriate place at an appropriate time.


You become a master competitor when you under-stand rhythm, timing, and control.

Extreme focus, however, creates dangerous weak-ness. If you allow it, your opponent can exploit yourfocus by emphasizing the competitive details whichfavor his objectives. In this way he tries to manipulateyour perceptions and lead you where he wants you togo. Attaining the way of the master competitor meansseeing the implications of details, but not allowing themto control you; it means understanding the nature of asituation and the rhythm of competitive activities. Itmeans operating at a level beyond conscious thought. Iwill show you this in the Focus chapter.

COMPETITIVE BASICS

People can choose from several possible directions in life.Ministers, priests, and rabbis help people achieve per-sonal salvation. Scholars and scientists seek answers tothe riddles of the universe. Poets and artists raise thelevel of culture. Physicians save lives. Each person selectsa direction according to personal taste and talent. Ambi-tious executives should have a taste for competition andthe desire to learn the art of competitive success.

Walking the path of competition requires a balanceof technical competence and individual confidence.Even if an executive lacks natural ability in one ofthese areas, he should do his best to constantlyimprove himself.

FOUNDATION 37

As a rule, even ordinary people understand thatexecutives must readily accept the consequenceswhich arise from success or failure, winning or losing,in competitive situations. But people from all walks oflife also face the consequences of success and failureevery day, whether they are prepared for it or not. Thedifference between a serious executive and an ordi-nary person is that the serious executive purposefullystudies how to use men, materials, and money to gainpower, profit, and prestige. Success is not left to thewinds of fate nor the whims of others. This is the realbenefit of learning the path of competition.

Even though most people face situations in whichtheir actions can cause gain or loss, there are still somewho believe that studying the path of competition willnot benefit them. When one looks at life realistically,however, one can see that competition on a personaland organizational level is present in most human sit-uations. This is particularly true in business, wherepeople are always trying to gain an advantage. Thepath of competition is truly useful because its lessonscan be applied at all times in all things.

Over the entire world, masters of the path of com-petition win fame and fortune. All executives muststudy these principles if they wish to excel. The field ofmanagement, however, is filled with showmen, char-latans, and pirates. These people are concerned onlywith quick profit and apparent gains. They care noth-ing for true wisdom or excellence. Employing theirmethods is a major cause of loss and confusion.


These phony prophets make a living by teachingbuzzword management. They call themselves “wizardsof competition,” but in reality they preach only the lat-est fad or fantasy. In recent times especially, one sirensong after another has gained popularity. “Buzzwordmanagement” always looks attractive and soundseasy; its proponents are smooth and slick on the sur-face. Those fronting the latest fad would have youthink that their ideas were transmitted from the gods.But, if you scratch the surface, the ideas soondissipate.

If you observe the world of business today, you cansee executives trying in vain to use these popular tech-niques for managing groups and organizations.Unpracticed executives sometimes believe that tech-niques alone can substitute for wisdom and training.But techniques tend to ignore people. People are oftenviewed as commodities to be exploited and discarded.Under this way of thinking, impressions are more valu-able than substance. People become disposable plasticimplements, molded for a specific purpose, used up, andthen disposed of when they are no longer needed.

True success in competitive situations does notdepend on the fad or technique being used. Sinceancient times, it has been known that it is the disci-pline and skill of the individual using the techniquewhich determine success or failure. It goes withoutsaying that people who are purveyors of buzzwordsalone cannot prevail against people who are practicedmasters of the art of competition.

FOUNDATION 39

EXECUTIVE FUNCTIONS

In operating businesses, executives perform differentfunctions. For instance, they can work in marketing,in finance, in operations. But, whatever the specificarea, a serious executive must train his thinking to abroader and deeper than level that of a mere func-tional technician.

In the marketing function, practitioners use vari-ous statistics to determine market parameters. Theymay spend years cultivating a new product so it will beprofitable. Marketers pay attention to people’s tastesand behaviors. They must aggressively seek new waysto serve their customers. This is the way of marketing.

In the finance function, workers control the uses offunds and track the inflows and outflows of capital.Workers in this function must be precise in their think-ing and conservative in their outlook. This is the wayof finance.

In operations, people make goods and deliver serv-ices. They must efficiently apply technology to createtheir products at the lowest possible cost within agiven range of quality. Operations people are orderly;they must pay attention to details of designs, sched-ules, and materials. They must time their actions prop-erly. This is the way of operations.


THE MASTER ORGANIZER

In organizing the various functional areas to worksmoothly in a business, a serious executive uses thesame methods that a master carpenter uses in con-structing a building. If you want to learn the art ofbuilding a competitive organization, read this materialcarefully and think about it deeply. The teacher is theneedle, while the student is the thread.

A master carpenter must practice his trade in orderto compete. It is essential for the carpenter to continu-ously improve his level of skill. He maintains thesharpness of his tools and has them ready to use at alltimes. He follows the directions of his employer; hismeasurements are precise; his actions are efficient; hisresults are superior.

The goal is to fashion beautiful and useful objects,to become recognized as a consummate craftsman.When the carpenter assembles a cabinet, it must notbe warped; the joints must be correctly aligned; thesurfaces must be sanded smooth; the finish must bedeep and even; there must be no obvious defects.

The master carpenter is an expert in the use oftools, materials, and people. He must be able to developprecise plans based on the overall requirements of hisemployer. He must measure dimensions accuratelyand perform his job according to the plan. The mastercarpenter earns his living by assuring that each job iscompleted on time and within budget.

FOUNDATION 41

The master carpenter understands how differenttypes of structures are constructed. He studies plansand purposes to decide what kinds of subcontractorshe needs to employ in order to create the desired result.Because the master carpenter is the chief supervisor ofthe subcontractors working on a project, it is also hisresponsibility to know the building codes and regula-tions for the locality where the structure is being built.He must know the desires, attitudes, and peculiaritiesof his client. He must follow the rules of his ownprofession.

Before starting construction, the master carpentersorts the lumber. When building a house, for instance,he uses strong, straight, and attractive pieces of wood,without knots, for the entry columns. He uses straightpieces with only small defects for less obvious columns.He uses wood that is not quite as strong, but is beauti-ful to look at, for stairs, door frames, and window sills.He carefully uses wood that is strong, but contains vis-ible defects, within the structure to provide long-lasting strength without detracting from overallappearance. He even uses wood that is weak and defec-tive for scaffolding to help during construction. Laterhe cuts up the scaffolding for firewood.

The master carpenter watches his workers care-fully, leaving nothing to chance. To assure continuousprogress towards his goal, he makes it his business toknow the limitations of each individual. He does notassign work that is either too easy or too hard. Thus,he walks among his workers and talks to them. He


watches morale and attitudes closely. When someoneneeds encouragement, he provides it. He is quick topraise achievement, but just as quick to correctweakness.

The master carpenter assigns jobs to people basedon their level of skill. Those who work can workquickly and carefully are given greater, more inde-pendent, responsibility. Those who lack ability, train-ing, or desire are assigned less important work andare supervised closely. If the master carpenter putsthe right person in the right job, the work will con-tinue without mistakes or interruption until it iscompleted.

To learn the way of the master organizer, study themethods of the master carpenter. Practice them inyour life at all times.

PERSONAL POWER

On a personal level, the power used by executives incompetitive operations is generated from two mainsources: power can be derived from competence (i.e.,technical skill, education, experience, and manage-ment talent) and from confidence (i.e., interpersonalskills, personality, character, and spirit). Thesesources of personal power must be used in balance.An overemphasis on either competence or confidencecan result in defeat. Great strength and great weak-ness are two faces of the same coin. The advantage

FOUNDATION 43

goes to those who use competence and confidencetogether.

Competence and confidence are complementaryaspects of executive power. When one understands thesituation, one can use the appropriate tool accordingto the specific time, place, and circumstances.

An executive may possess attributes such as animposing presence, important connections, or impres-sive surroundings, but these attributes are not essen-tial. They can be used as tools by those with skill. Butthey will not, in themselves, win a battle if either com-petence or confidence is lacking.

Serious executives who want to master the art ofcompetition should practice with the understandingthat both competence and confidence are required.When you are in a fight, it is unwise to leave some ofyour weapons unused. It is stupid to lose if you havenot tried everything. When a person has overly devel-oped either his competence or his confidence, he willfind it difficult to win in a situation which is unsuitedto his strength. Hence, I strongly advocate a balancedapproach in order to ensure you have the best chancein all types of situations.

Confidence is best used in situations where youhave close contact with other people in direct supervi-sion, face-to-face competition, or negotiation. Compe-tence, on the other hand, can be used in situationswhere there is an organizational or geographical dis-tance between parties. A reputation for great compe-tence inspires awe in our associates and our


competitors. When combined with appropriate confi-dence, competence is difficult to overcome even at adistance. But, between two executives of equal compe-tence, the one with greater confidence will win.

Being overly competent, but lacking in confidenceand other people skills, is like trying to fight with along, heavy sword held in both hands. This tacticworks well if you are standing still on level ground,facing your enemy, and your enemy is willing toattack you from the front. But a long, heavy sword isawkward if you must fight on horseback, if you mustrun away down a rocky or uneven path, if you mustwade through a swamp, or if you face a group of peo-ple who are coming at you from several differentdirections.

When you are fighting many battles or competitorsat once, it is a better tactic to have several weapons. Tobe effective in difficult competitive situations, youmust be able to use whatever power is needed, when itis needed. You cannot be completely dependent on oneapproach, but rather must be able to appropriatelymeld together the strengths of many approaches. Ifyou try to defeat your enemies with competence alone,you will fail as often as you succeed. If you try to defeatyour enemies with confidence alone, they will eventu-ally expose your weakness.

When you can defeat an enemy with only oneapproach, do so. It should not be that difficult, in nor-mal situations, if you have experience and expertise.But you should always practice using both

FOUNDATION 45

competence and confidence together in order to bal-ance your attack and defense.

Different or unusual situations may require empha-sis on one competitive aspect or another. In managinggroups and organizations, the power of competence isemphasized because competence can be effectivelytransferred through organizational levels. In face-to-face competition and negotiation, the power of confi-dence can be more important. But, no matter whattype of competition is involved, competence and confi-dence are powers which are complementary and rein-force one another.

The specific competitive situation determines whichaspects and tactics will be more effective. Preciseapproaches and combinations cannot be stipulated inadvance. The way of the master competitor is to winno matter what the circumstances by understandingthe situation and using an appropriate approach at anappropriate time.

When we have developed our strength in one areawe tend to rely on that strength. Acquiring and usingother strengths can be difficult at first. All things, atfirst, are uncomfortable and difficult to use. When youbecome used to both competence and confidence, youwill gain the power of the master competitor. Many ofthese ideas cannot be explained in detail. Learn theprinciples; they can be applied in ten thousandsituations.

The proper use of executive power cannot belearned in a classroom. Classroom training is often


overly concerned with fine details which, in practice,are not important. One must be able to adapt the prin-ciples of competition to diverse circumstances undergreat stress. If you become narrowly focused in yourapproach, you will have difficulty in evolving yourtechniques to meet changing conditions.

When you have attained mastery of competenceand confidence, you will have the power to defeat tenothers by yourself. If it is possible for one person todefeat ten, then it is possible for ten to defeat one hun-dred, or for one thousand to defeat ten thousand.Whether you face one opponent or ten thousand, theprinciples are the same.

STANDARD APPROACHES

Beware of dependence on standard approaches incompetitive situations. Standard approaches are pre-dictable. In every standard approach, there is a weak-ness which can be exploited by the competition.

If you become predictable, you will be defeated.The unexpected cannot be predicted. Innovativeimprovisation based on sound principles leads tovictory.

Too much emphasis on impressions and notenough emphasis on substance makes one vulnerablein critical situations.

No particular tactic is preferable to another all thetime. It is the circumstances which determine which

FOUNDATION 47

approach will succeed. Do not become rigid; if you do,you will break once the battle starts.

Observe the impact of your actions. Watch yourcompetitor’s reactions. This is essential to success. It isnot enough to execute an action. You must also trackthe effect of that action. One virtue of using a bow incombat is that you can follow the flight of an arrowand make adjustments to your aim.

To take full advantage of the path of competition,you must also learn something about other paths.Priests, musicians, teachers, and artisans follow differ-ent paths. Nevertheless, a basic knowledge of manyactivities will help you apply your path to a wide rangeof situations. Learning other ways will add polish andvariety to your tactics.

USING PEOPLE

The people you depend on to execute your tacticsshould have good stamina and even temperaments.As a rule, dedicated and hard-working associates arebest.

In general, to win a battle, your close associatesshould be strong and capable. They should stand upwell to intense pressure. People should be chosen fordependability rather than decoration.

In using people, as in using tools, one should notchoose the same person every time. Use the mostappropriate person for the task. This means you must


become familiar with the strengths and habits of yourentire cadre. It is bad for executives to play favorites incompetitive situations. Becoming too dependent oncertain individuals fosters weakness. Learn to beobjective and practical.

TIMING

When you engage in competition, you should neithermove too quickly nor too slowly. It is not speed in itselfbut rhythm and timing which are critical.

All tactical success is based on correctly under-standing rhythm and timing. This is particularly truein competition. In every contest, there are momentswhich favor victory. Practice so you can understandthese moments.

Musicians and dancers depend on timing. Perfor-mances are enjoyable only if players are in rhythm.Rhythm is also present in competitive activities,although it is not as obvious. If you can discern therhythm of your competitor’s actions, you canalways defeat him. During an executive’s career,there are rhythms of advancement and rhythms ofdecline; rhythms of prosperity and rhythms ofscarcity; rhythms of success and rhythms offailure.

Timing is particularly important when decidingwhen to move and when to stand still. The timing ofthe rhythms determines whether we grow wealthy or

FOUNDATION 49

become impoverished. Rising and falling rhythmsoccur in every activity. Your success depends on yourability to tell the difference.

There are many other rhythms in competitive situ-ations. You must understand all the rhythms present— the great ones, the small ones, the slow ones, thefast ones, the ones in the forefront, and the ones in thebackground. Understand which rhythms can over-turn your plans and which can be used to overturnyour competition. You will not become a master com-petitor unless you can read your opponent’s rhythmand understand how to disrupt it without becomingconfused yourself.

Success in competition comes from sensing yourcompetitor’s timing and striking him in a rhythm thathe does not expect. You must manage advances andretreats with precise timing. All five chapters in thisbook concern themselves with timing. Train yourselfto recognize it and to use it.

RULES FOR MASTER COMPETITORS

For those who wish to become master competitors,here is a summary of the rules of conduct which willmake it easier:


1. Do what is right. Study what is correct. 2. Sense the rhythm and timing in everyday

situations.3. Broaden your knowledge of the practice of

management.4. Study other arts and professions.5. Distinguish between profitable and unprofitable

matters.6. See reality under all circumstances.7. Look for that which is not obvious.8. Concentrate on critical details.9. Eliminate useless activity.

If you work every day with these rules in mind, youwill eventually learn how to win in competition. Lookat things broadly so you can adapt the rules to manysituations. An executive who attains complete under-standing will not lose even against great odds.

Most importantly, devote yourself to winning byusing the way of the master competitor. Very soon,you will be able to beat most opponents on an individ-ual level since you will have trained your mind to seehow to win at any time. If you develop your skill, youwill have a powerful psychological advantage, no mat-ter where you are. If you always have the advantage,how can any person defeat you?

On a larger scale, the serious executive will win bykeeping good employees with him, organizing activi-ties well, bearing himself correctly, increasing profits,and generating wealth. The key to managing people is

FOUNDATION 51

developing competence and confidence, creatingwithin yourself a competitive spirit which will notallow defeat. This will strengthen you in adversity andbring you ultimate success. This is the way of themaster competitor.


3FORM

ORDERED FLEXIBILITY

The essence of my method of tactical thinking is basedon the nature of water which is, at the same time, bothordered and flexible. I call this chapter “Form” becauseyour competitive form and structure must be based onordered flexibility, so you can adapt your methods todifferent situations to achieve your goals.

The ideal of ordered flexibility is summed up in theconcept of “positioning without position.” As soon asyour opponent recognizes your tactical approach, hecan defeat it. Therefore, excessive order and structurelead to brittleness and defeat. On the other hand, ifyou have no order whatsoever, you cannot concen-trate your resources nor time your actions effectively.This also leads to defeat. Balance order with flexibility.

Flow like water around obstacles. Move carefully whenconditions are unfavorable; move powerfully when theright course opens up. Everyone knows that water in astream seeks the sea (water is ordered in its objectives),but who can tell how it will get there (water is flexiblein its approach)? Think of winning, not of position.

Ordered flexibility is the key to winning. Contentyourself with reality. Seek it, understand it, mold youractions to it. Achieve what you must in response toyour opponent. Wait for your opportunities. They willsurely come. But make no mistakes yourself becauseyour opponent is watching you.

A casual reading of my explanation of competitivethinking will not allow you to apply it when you are inthe midst of a crisis. Every word must be carefully con-sidered beforehand. Superficial understanding willlead to costly errors.

To illustrate the principles of competitive success, Iuse examples of combat between individuals andgroups. This is not because I value combat for itself.Combat is costly, destructive, and dangerous. Any-thing can happen in combat. Most things that do hap-pen are undesirable and expensive. View the examplesbroadly so that you can attain understanding at a levelwhich allows you to apply the principles quickly andcorrectly in your specific situation. Combat is a con-venient metaphor. Use these ideas to win withoutfighting if you can.

Competitive situations are different from otheraspects of life. There are important issues at stake in


competitive situations. The rewards and penalties areserious. If you intend to succeed in competitive situa-tions, you cannot afford to become even a little bit con-fused or bewildered. If you misapply these principlesonly slightly, you will be defeated.

Mastering the art of competition is not just a mat-ter of reading these words. One cannot learn thesecrets of winning tactics in an afternoon. These prin-ciples must be absorbed so thoroughly that they comeforth automatically. The true path of victory is moreaccurately recognized at an instinctive level; the bestapplication of these ideas comes from within you andis shaped in the moment of need. Competitive geniusgrows in the spirit, but the seed is planted throughunremitting study. Prepare constantly.

During competitive situations, your mind will be asyou have conditioned it. In every moment, train your-self to be calm, expectant, observant. See things asthey are. Do not be taken by surprise. Let your sensesbe open, your mind relaxed, your spirit balanced. Meetevery challenge with a firm, yet flexible, attitude, cen-tering your attention on determining reality.

When your body is relaxed, keep your mind alert.When your body is hurried, keep your mind calm. Donot allow your mind to control your body, nor yourbody to control your mind. In this way, you will actappropriately. Do not allow others to read yourthoughts. Pay attention to reality; do not let yourjudgment be subverted by emotion. If you are weak ina certain situation, you must be able to think as if you

FORM 55

were strong; if you are strong, you must be able tothink as if you were weak. See things from your oppo-nent’s point of view. True and accurate assessment ofcircumstances is essential to winning.

Let your spirit be fluid, flexible, and free. Look atthings broadly. Grow in wisdom and education.Sharpen your mind. When you can distinguishbetween what is right and what is wrong, what is realand what is false, what is substance and what is illu-sion, you will have the competence to compete.When you are unmoved by the threat of loss or thepromise of gain, you will attain the confidence towin.

STEADINESS

There is a special strength in mastering the art of com-petition, particularly face-to-face negotiation or con-flict. Even in the heat of battle, you will remain calm.Nothing upsets your competitors and inspires yourcompanions like steadiness under pressure.

In face-to-face negotiation or conflict, physicalbearing is important. Hold yourself erect. Keep yourface composed. Do not wrinkle or distort your features.Do not register emotion with your eyes. Do not unin-tentionally make distracting motions or noises. This isa sign of nervousness.

As with the mind, your natural bearing should notchange in competitive situations. Your combat bearing


and your ordinary bearing should be the same. Thinkcarefully about why this is so.

An important aspect of winning in competition isknowing your opponent’s capabilities. Do not bedeceived or unbalanced by obvious distractions or mis-leading actions. This takes discipline and confidence.

See and understand the activity around you. Lookinto the heart of the matter. Sort out significant move-ments from insignificant movements. Perceive every-thing, not just those things your opponent intends foryou to perceive. The ability to understand events thatare far away by observing events that are close and theability to keep events that are close from overwhelm-ing your judgment are the roots of competitivesuccess.

PERSPECTIVE

It is necessary to think things through before enteringcompetition. You should consider both the large viewand the narrow view. The rules of winning are thesame whether the battle is between two people or twoarmies.

Keep your perspective. Do not look at one thing andforget about another. Maintaining perspective andconfidence under pressure are skills that are learnedover time.

In using my method of thinking in competitive sit-uations, you must apply the principles naturally. If you

FORM 57

are overly tense, you will make mistakes. If you areinattentive or careless, you will miss important details.Be aware and ready, neither too tense nor too loose,neither too ordered nor too flexible. The concept ofordered flexibility is designed to help you respondquickly and effectively. If you use the concept properly,you will not fail to consider all relevant issues, both foryourself and for your opponent. What could be moreuseful for a person who is serious about winning?

Recognize the significance of what is written here.Practice using the techniques of success in every situ-ation, every day. Do not deviate from the truth underany circumstances. The way you train is the way youperform. Train hard.

EXECUTION AND COMPETITIVE ANALYSIS (REACT)

Execution is the action you take to achieve your objec-tives. Excellent execution is critical to success. Excellentexecution consists of two equally important elements:first, appropriate tactics; second, appropriate timing. Inother words, to win in competition, you must take anappropriate action at an appropriate time. You mustnot, and cannot, insist on perfection in your actions.Perfection takes too long. And who can control everyvariable in a situation? Even an imperfect stroke willdestroy an enemy who is unprepared for it.

Analysis based on the REACT principles (resources,environment, attitude, concentration, timing) will


help you assess and deal with specific situations andaccomplish your objectives through appropriate oper-ational tactics. Use REACT to determine appropriateactions and appropriate times.

When you are engaged in competition, evaluate thefollowing. First, resources: resources are those assetsand skills which each side brings to the conflict.Resources are the raw material of tactics. In business,resources can include people, plant and equipment,finances, and reputation. In all competitive situations,however, the most critical resource is timely and accu-rate information.

Second, environment. In a sword fight or face-to-face confrontation, the environment would be thephysical surroundings, the terrain, and the weather.In business, environment includes market trends andstructure, economic and political climate, technology,and public opinion. Resources and environment worktogether to provide the general setting in which a com-petitive situation arises and is resolved.

Third, control your attitude. The attitude you bringto the conflict is the attitude you have practiced inyour training. You must focus on the reality of themoment. You must be confident and competent, awareand ready, neither afraid nor careless.

The essence of attitude is summed up in the code ofthe samurai warrior. Think only of winning in the sit-uation you find yourself. If you either fear failure oranticipate success, you will begin to adjust your deci-sions and actions to take the expected outcome into

FORM 59

account. Neither the consequences of failure nor thebenefits of success must be considered during thefight. Even an otherwise useless person becomes valu-able if he will not consider either failure or success andmoves resolutely toward objectives.

Fear is the greatest enemy you face, far greater thanany physical opponent. Your own fears magnify dan-ger and obscure reality. But fear exists only withinyourself. It does not have reality outside your mind.Whether you are afraid or not is a choice you make.And the choice you make does not change the facts ofthe situation.

The belief that success is certain, on the other hand,makes one careless. If you cannot lose, why take thetime to carefully evaluate the situation? If I were yourenemy, this is exactly the way I would want you to feel.

Therefore, evaluate the situation carefully and thenact with confidence. If you have lived and practiced mymethod of competitive thinking, you will be well pre-pared. Neither imagined fear nor false optimism canchange your real position and circumstances. If youface a tiger, it is in fact a tiger, neither somethinggreater nor something less. You stand a far betterchance with your eyes open and your spirit calm.

Fourth, concentration. Concentrate resources tocreate advantage. In order to concentrate yourresources effectively, you must be aware of everything,the larger picture and the smaller details. In every sit-uation, there are tactics which work and tactics whichdo not work. Winning tactics are based on the princi-


ple of concentrating strength against weakness. Everyopponent, every challenge you face, whether it isanother human being or another company, has aweakness you can exploit. In every battle, there is anapproach which can win. Concentration utilizes yourresources best against a specific threat or challenge.

And fifth, timing. Time your movements. Afterstudying the history of competition in war, business,and politics, I have noted that the timing of competi-tive actions is most often the critical factor in success.Acting at the appropriate moment ensures the bestopportunity to win. The appropriate moment is thatpoint when the scales are tipped in favor of the tacticsyou have chosen. Concentration and timing worktogether. If you do not concentrate both thought andresources at the appropriate moment with the bestpeople in charge, your tactics will probably fail.

POSITION

Be on guard at the beginning of the competition. Assessyour position with respect to your competitor’s positionalong two dimensions: relative strength and initial pos-ture. In terms of relative strength, you are eitherstronger than your opponent, weaker than your oppo-nent, or your strengths are balanced. In terms of initialposture, you may take an offensive stance, a defensivestance, or you may be neutral. Assessing strength andposture provides a basis for selecting tactics.

FORM 61

Whether you adopt an offensive, defensive, or neu-tral initial posture depends on the situation. Chooseyour posture according to what is advantageous in thecircumstances.

Determining an initial posture depends on yourassessment of resources, environment, and attitude.Relative strength is always a matter of fact at a givenmoment. Posture, though, derives from circum-stances. Ask yourself this: Given the resources, envi-ronment, and attitudes involved in the immediatecompetitive situation, is it better for me to adopt anoffensive, defensive, or neutral posture? No posture isbetter than another except in the light of specificconditions.

No matter what your beginning position, your onlyobjective should be winning. If your goal is to tie, ornot to be defeated, you will eventually lose. Think onlyof how to win.

MAINTAINING BALANCE

The essence of success in competition is understand-ing balance. As long as your strength and posture arebalanced relative to your opponent, given the environ-ment of the competition, you can compete effectively.For instance, if you are weaker in resources, you canbalance with superior attitude, speed, timing, andclever tactics. This was the secret of General Robert E.Lee’s success in the American Civil War. (For more dis-


cussion of General Lee, see Battle Tactics for Business,Part III.) Remember, no matter whether you arestronger or weaker than your opponent, you canalways win if you are confident and competent, andyou control the time and place of the competition. Youmust take this to heart.

Knowing the path of competition requires completemastery of these principles. Using ordered flexibilitymust be as natural as breathing.

DELIBERATE SPEED

When faced with a crisis, if you try to act quickly whenyou are not adequately prepared, it will be hard to avoidmistakes. Facing a crisis successfully means actingcalmly and moving deliberately at an appropriate speed.

Moving too quickly throws you off balance, therebyreducing your ability to respond effectively. You canwin most often when you move at the right speed, nei-ther too fast nor too slow.

When you respond to a challenge, it is essential thatyou do an appropriate thing at an appropriate time.Doing the first thing that comes to mind, doing whatyou did last year, or doing what your opponent wantsyou to do only leads to difficulty. When you havelearned ordered flexibility, you will meet challengeswith your eyes and your mind open to reality and pos-sibility. Work at this.

FORM 63

REALITY AND INFORMATION

Ordered flexibility guides your selection of operationaltactics. It matters less which initial posture you choosethan how well you are able to use the moves of youropponent to your own advantage. You must win in thesituation you find yourself.

To remain flexible, know the enemy’s capabilities,plans, and rhythms before the battle. Devise strategiesto defeat the enemy’s plans so you can win withoutcombat if possible. Understanding the enemy is key tosuccess.

Gather information from every possible source.Leave no stone unturned. Use spies, consultants,informants. Perceiving the enemy’s strategy allowsyou to defeat it. Knowing the enemy’s position andmovement prevents unpleasant surprises.

Information is the fabric of tactics. You can neverknow too much about your enemy, yourself, or thesituation.

The goal of your analysis of information is to pro-vide focus. You cannot do everything, you cannot beeverywhere. Proper focus allows you to allocateresources effectively to develop promising opportuni-ties or to counter dangerous threats.

Every tactic, approach, or idea you have has bothadvantages and disadvantages. Any appropriate set oftactics can win; all tactics can lose. It is only withrespect to specific situations that tactics succeed or


fail. Every conflict contains opportunities to win andto lose. Respect your opponent. Understand his meth-ods. This is the path of victory.

PERFORMANCE AND TRUST

Executing tactics based on ordered flexibility alsodepends on the ability and willingness of people to per-form in critical situations. Executives must trust, andbe trusted by, their subordinates and associates. Onlywith trust can people be counted on to exert maxi-mum effort during a crisis.

Give incentives to those employees who are ambi-tious and competent. Instruct those who are ignorant.Remove those who repeatedly fail. In this way, ambi-tious, competent employees will be motivated tosucceed; lazy, careless employees will fear failure.

Trust is developed through training and practice.Employees who are well trained, strictly but fairly dis-ciplined, and treated with respect will perform well ina crisis.

SITUATIONS AND TACTICS

Different situations give rise to different responses.Consider the following points carefully. To understandthe essence of ordered flexibility, think a momentabout engaging an opponent in a fight. Which initial

FORM 65

position do you adopt? What choices do you have? Isthere any advantage to a given initial position? Forinstance, whether you are in fact weaker or strongerthan your opponent, is there any advantage to appear-ing either weaker or stronger at the outset? Is it betterto be aggressive or passive? The answers to these ques-tions lie in knowledge of your opponent and hismotivations.

In the absence of specific knowledge, the best posi-tion to take at the outset of a competition is the middleposition, neither weaker nor stronger, neither passivenor aggressive. If you have an advantage in a fight,position your resources where the advantage can ben-efit you. An intelligent enemy (and who can afford toassume the enemy is stupid?) will be aware of his ownweaknesses and will try to maneuver you into a posi-tion where your advantage is minimized.

If you are at a disadvantage, narrow the field ofcompetition. Find weak spots in the enemy’s front andconcentrate strength on weakness. Do the unex-pected. Keep the enemy off balance.

Fighting a battle on familiar territory gives one adefensive advantage. But it is only by taking the battleto the enemy that one can win. Taking the battle to theenemy is a matter of information and timing.

Deceiving the enemy is essential to winning. If theenemy knows your strength and your plans, even ifyou are stronger, he can defeat you. Therefore, if youknow you are strong, appear weak. Then move swiftlywhen the enemy exposes his own weakness.


In face-to-face confrontation, an arrogant enemy isa careless enemy. Observe carefully. Speak softly. Makeobvious, intentional mistakes. Bumble a little. If youropponent underestimates you, you have a great oppor-tunity to win. Confuse the enemy with unpredictablemovement and sudden noise. Appear distracted.Watch your enemy’s response. This will expose histhoughts and his weaknesses.

Create strategic alliances to gain strength. Developmutually beneficial relationships with valuable allies.Make sure those who are important to your successbenefit from it.

Be prepared to act when the opportunity arises.This requires both courage and patience, order andflexibility. The ability to perceive and benefit from themoment of advantage is developed through constantstudy and practice.

You are particularly vulnerable when you arechanging your position. Be prepared for ambush.

If possible, destroy your opponent’s sources of capitaland people. Without money and talent, he is helpless.

If you are moving into unfamiliar territory, be sureyou employ local guides and consultants. Study thebattleground carefully. Make the enemy come to you.A strong position, combined with good timing, guar-antees success.

Do not attack an enemy who has a strong defensiveposition. Wait for an opportunity. Better to delay anattack than to fail. If you cannot win, wait. Defendyourself carefully. Conserve your strength.

FORM 67

When you are facing a clever enemy and cannotput yourself in a position where you have a clearadvantage, pull back and wait for a better time. Sur-prise is your most effective weapon against a well-managed opponent.

Attack a disordered enemy quickly, providing yourtroops are trained and disciplined. But do not pursue aretreating enemy too vigorously. You may be caught ina trap.

A well-ordered enemy formation should bewatched, but not challenged. Be alert and ready. Firstweaken their morale and wear down their diligence.When they are tired and discouraged, then attack.

At times, direct attack cannot be avoided. Engage ina direct attack with well-trained, well-rested, and well-supplied soldiers. A direct attack on an opponent ofequal strength can only succeed through deceptionand improvisation. Fooling the enemy is generallymore profitable than directly attacking him.

Keep your head in a crisis. When emotions are run-ning high, reality can become distorted. If you arecalm and observant, you will see how to win. Practicefacing a crisis each day in your mind. Thus, when thecrisis finally arrives, you will act as you do on anyother day. This will inspire your followers to be stableand have courage. Those who are prepared to besteady under pressure will survive in difficultsituations.

Lure your opponent into carelessness with thepromise of easy gains. Greed destroys perception. Do


not let it destroy your own! Do not allow yourself to beprovoked or coerced into rashness. When the enemyreveals an apparent advantage, before rushing inheadlong, make sure you understand the enemy’sstrategy and his strength. If the advantage is real, seizeit. But remember, most of the time the enemy willcover his weaknesses carefully. Watch for deceptionsand traps.

Fight the enemy when he is short on supplies andmanpower. If the enemy is confused, attack quickly.

Control the time and place of battle. Force theenemy to come to you. Do not put yourself in aposition where the enemy can choose the time andplace of battle. Retain the initiative.

Enemies become more dangerous after they havebeen defeated in a battle. Losers want to be winners.They will attack again if given the opportunity. Be alert.

On the other hand, when you have been defeated,do not lose heart. Salvage what you can, regroup andwatch for your chance. The enemy may relax if hethinks you are not dangerous.

Take your time to make sure preparations for battleare thorough and complete. But when it comes time tofight, seek a quick victory. Anything can happen in afight. The longer you are exposed to the risks of com-bat, the greater your chances for defeat from unfore-seen elements. Battlefield conditions change rapidly.Maintain flexibility in attitude and in formation.

Appropriate concentration and dispersion ofresources are essential to success. Focus strength on

FORM 69

weakness; faster on slower; greater on lesser. If youcan win, concentrate your forces and gain victory; ifyou cannot win, disperse your forces and avoid defeat.

High morale is critical to success in difficult situa-tions. Give your troops good reasons for believing inthemselves. Give your troops valuable rewards if theysucceed.

If you attack something the enemy considers nec-essary, he must defend himself. If you defend some-thing the enemy cannot attack, you are not in danger.

Leave your enemy an avenue of escape. When hebecomes discouraged or frightened, he will run away.Be especially careful when an enemy who is underpressure begins to negotiate. He is trying to gain time.

When you are facing an opponent in serious con-flict, think always of stabbing him in the eye, his pointof greatest vulnerability. When you strike at the oppo-nent’s eye, he will try to protect himself and becomevulnerable in other areas. In the midst of a battle, assoon as your opponent tries to defend himself or to getout of the way, you can find a way to win.

THE ESSENCE OF VICTORY

In order to obtain victory over others in competition,you must first learn to apply ordered flexibility com-pletely. Understand the spirit of competing and theskills necessary to win. Then, you and your group willact with one coordinated mind, able to naturally com-


prehend which tactics are best for the situation youare in. This is the way you achieve victory over others.You cannot learn how to win by just reading a book.You must practice constantly. You must always thinkof how to respond to challenges. The ordered flexibil-ity method of thinking described in this book give youthe means to succeed in all competitive situations.

You can win every time if you see the essence of thesituation. Hone your ability to discern the motives andtactics of others at a glance. Do not wait for a crisisbefore learning how to apply ordered flexibility. If youtrain diligently, success will come from the heart. Youwill not have to decide how to respond to a threat; youwill already know. There is a time in every conflictwhen victory can be won. Ordered flexibility will allowyou to seize the moment.

Walk down the path towards mastery of competi-tion with patience, one step at a time, keeping the prin-ciples of victory in your mind and heart.

The master competitor wins over himself first. Donot allow your attention to wander. Be consistent andsteady in your approach. You can gain intuitive under-standing of situations if you challenge yourself inpractice.

Once you master yourself, you can master others.Pay attention to the details presented in this book andyou will eventually be able to master all those aroundyou.

FORM 71

4FIRE

In organization-to-organization or face-to-face con-flict, competitive tactics can be viewed like fire. Firecan be a friend or an enemy, an offensive force or adefensive shield. Competitive tactics likewise can bringvictory or cause defeat. Fire must be handled withcare. Competitive tactics must be executed effectively.The nature of fire is an intense combination of ele-ments. Competitive situations are the same. This Firechapter discusses the elements of victory and defeat inconflict.

Some people think about competitive tactics in anarrow sense. They try to win battles by concentratingon learning insignificant or clever maneuvers. Thesepeople can be compared to someone who is accus-tomed to killing flies with a fly swatter. Against a fly,you may gain victory by flicking your weapon a littlefaster. In truth, you can probably kill more flies by

practicing deft movements of your wrist and trainingyourself in trifles. But, against a tiger in the jungle, afly swatter is useless, no matter how refined and per-fected your movements.

Looking at the history of competition through theages, in situation after situation where lives and for-tunes have been at stake, the winners were masters ofthe art of competition. They used ordered flexibility todetermine the strengths and weaknesses of their oppo-nents and to assess their own position. They under-stand which weapons are appropriate and how towield those weapons effectively. When one is lookinginto the eyes of a tiger, one should not think of swat-ting flies.

Ordered flexibility is the only way to guarantee vic-tory when you are fighting for your life. The principlesof winning a contest are the same whether you aretalking about one person against ten opponents or onethousand against ten thousand. Consider this carefully.

Of course, in business, it is generally impossible toassemble one thousand, one hundred, or even tencompetent opponents to practice against. But you canmaster ordered flexibility by constantly training your-self in every situation you experience. If you can learnto understand your opponent’s stratagems, his reason-ing, his resources, and how to apply tactics to defeatthem, you can beat anyone at any time.

An executive who wants to attain mastery in com-petitive situations can do so only by unremitting com-mitment. Train yourself and polish your skills day and


night. After you have perfected your methods, you willgain a uniquely valuable freedom of action, a sponta-neous ability to operate successfully even under themost arduous conditions, an ability to overcome themost difficult challenges. Your associates and youropponents will believe that you can perform miracles.And perhaps you can. This is what happens when youbecome a master competitor.

COMPETITIVE POSITION

Always occupy the most powerful position available.Look down on your opponent.

In a face-to-face conflict, look around carefully.Positioning is an important aspect in gaining strength.Sit with the light to your back. If the other personmust squint, he will be unsettled.

In a closed room, make sure you are comfortableand have space to move freely. Do not allow yourself tobe crowded or pushed around. Be aware of your posi-tion. Do not allow an opponent to stand behind you.

At night, make sure you can see your opponent. Ifthe light is behind you, you can see him, but he willnot be able to see you very well. These ideas may seemtrivial or silly when they are read for the first time. Butdo not dismiss them until you have thought carefullyand tried them out. In a hard situation, sometimessmall advantages can make the difference betweensuccess and failure.

FIRE 75

OPENING MOVES AND INITIATIVE

During a negotiation, make your opponent feel awk-ward. Put obstacles in the way of his arguments orstrategies. Force him to trip over his own words. Placehim at a disadvantage any way you can.

Keep the pressure on your opponent so he is moreconcerned with defending himself than watchingwhere he is going. Do not let him see the danger he isin before he stumbles on it.

Every situation offers some kind of advantage. Usethe factors available under the immediate circum-stances to create a predominant position. Practicethinking about creating advantages from circum-stances every day. Then you will be prepared in acrisis.

When a face-to-face conflict starts, there are threeopening positions available. The first position is toattack your opponent before he attacks you (preemp-tive confrontation). Make your first move before youropponent makes his. The second position is to attackafter your opponent attacks you (reactive confronta-tion). Wait until your opponent commits himselfbefore responding. The third position is to attack at thesame time as your opponent (mutual confrontation).

The person who has the initiative in a battle, whohas momentum on his side, has the advantage. Withinitiative, it is possible to win a quick victory. Your firstmove determines whether you can gain the upper


hand at the start. Hence, the first move is of greatimportance.

Each competitive situation has its own uniquecharacter. Learn ordered flexibility so that it is secondnature to you and you can apply it instantly underpressure. Think about the particular situation youface. See the enemy’s objectives and methods. Win byconcentrating your strength and controlling the tim-ing of your actions.

To seize the initiative in preemptive confrontation,first remain calm and quiet. Attack suddenly andquickly, without warning. Attack with energy, butleave yourself some reserve. Do not use yourself up ina frenzy; keep control. Strengthen your resolve whenyou close with your opponent. Move vigorously andswiftly the moment you get near enough to strike.Think only of crushing your opponent from start tofinish. Empty your mind of everything except enthusi-asm for victory and the will to win no matter what.Preemptive confrontation works best against a weakeror less confident opponent.

The second opening position is reactive confronta-tion. When your opponent attacks quickly andstrongly, stay calm and unruffled. Pretend weakness.When your opponent gets close to you, move awaysuddenly. This will cause your opponent to hesitate fora moment. In that moment of hesitation, you mustattack forcefully and grab the initiative from him. Ifyou cannot move away from your opponent, then staywith him, returning his attack forcefully enough to

FIRE 77

disrupt his timing and cause him to change hisapproach. As soon as his timing is disrupted and yousense a change in approach, move quickly to take theinitiative and seize victory. Reactive confrontation maybe appropriate when facing an overconfident or care-less opponent.

The third opening position is mutual confrontation.When an opponent attacks confidently, you attackcalmly and strongly in the same moment. Identify apoint of weakness and concentrate your strength onthat point. When your opponent begins to defend hisweakness and his attack slackens, defeat him immedi-ately. Or if your opponent attacks smoothly and qui-etly, react flexibly. Match the pattern of hismovements, then make a surprise feint. Watch hisreaction. Use his reaction to defeat him. Mutual con-frontation may be preferable when your strength isequal to your opponent or when you are uncertainabout his resources.

Conflict situations are difficult to write about indetail. Your tactics must be fashioned in a moment,considering the specific conditions involved. The par-ticular opening position you choose depends on cir-cumstances. It is not necessary to be the first to attack.But you can only win a fight by taking the initiativeaway from your opponent. Therefore, getting andmaintaining the initiative should be your first priority.

Whether you attack first or not, as soon as you havethe initiative, you can win. Judging the most effectiveway to get the initiative is a function of your ability to


assess the situation, concentrate your energy, andtime your actions. Train yourself to think accuratelyin order to achieve victory.

It is especially dangerous in face-to-face conflict toallow your opponent to grab you by the nose and pullyou wherever he wants you to go. No matter what elsehappens, to win a contest, you must gain control ofyour enemy’s actions; you must be on the offensiveand move about freely. This may not be easy. Youropponent will be thinking the same way as you are.But, if you can discern his method of attack, you canprevent him from gaining the initial advantage.

To win, you must parry your opponent’s blows, stophis thrusts, and break his grip. Regardless of whatyour opponent does, when you have mastered compet-itive thinking, you will perceive and understand hisapproach. You will know in advance what moves hewill make and defeat his attack before it begins.

The essence of the advantage conferred by orderedflexibility is to parry an opponent’s blow at the letter“b”; to stop an opponent’s thrust at the letter “t”; tobreak his grip at the letter “g”. If you stop an action asit begins, the action can never defeat you.

An important idea in applying this method of win-ning is to understand the value and purpose of youropponent’s maneuvers. Let him use up time andresources doing things that are useless. Prevent himfrom doing things that are useful. In this way you areable to preserve and concentrate your resources whilehe dissipates his own.

FIRE 79

Reacting to your opponent’s maneuvers is, how-ever, essentially a defensive approach to conflict.When you are a master competitor, you will be ableto stop an opponent’s moves before they begin. Youwill be able to lead the opponent where you wanthim to go. You will strike him at the moment whenyou are strong and he is weak. To manipulatesituations this way is a result of reflection andpractice.

SITUATIONAL THINKING

In managing a business or organization, difficult situ-ations and thorny problems occur frequently. Thesesituations can be likened to crossing a wide expanse ofocean in a small boat.

A wide expanse of ocean can be safely crossed in asmall boat if you research the currents along yourchosen route; if you know the capabilities of your boatand crew; if you have access to a reliable weather fore-cast; if you are willing to make adjustments to yourcourse based on prevailing conditions; and if you aredetermined to reach your destination whether thewinds stay favorable or you must row your boatthrough storm and waves.

To be successful, you must apply the same attitudeto solving the problems and winning the conflictswhich occur each business day. Understanding yourown resources is crucial.


Further, in business, it is important to assess cor-rectly your competitor’s resources, methods, andspirit. You must relate your own strengths to those ofyour competitor. In this way, you can cross a sea of dif-ficulties safely, just as a skilled captain pilots his boatover the ocean.

To make the journey easier, put your competitor ina weaker position. Take the initiative yourself. Bendthe situation to your purposes through unremittingstrength of character. This approach works wellwhether you are involved in a large conflict with manyparticipants or you are struggling one on one.

Once you have crossed over the sea, you can rest.But during the passage, you must constantly be alert.

Analyzing resources and environment allows youto understand the factors surrounding the conflict.From understanding the condition and intentions ofyour opponent, you can make appropriate decisionsabout deploying your own assets and your people. Youcan leverage your strength against his weakness andfight from a position of advantage. This is particularlyimportant in conflicts involving larger numbers ofparticipants.

When you are entangled in a conflict withanother person or another group, your attitude mustbe that of understanding the present reality. Have nopreconceived notions. Observe the character of yourcompetitor, learn his method of approach, discoverhis expectations, plot the rhythm of his advances andretreats. Attack him at a time when he is

FIRE 81

unprepared, when his spirit is waning. This is criticalto success.

If you stay focused on reality, you will comprehendthe state of affairs which exists. You will recognizeyour competitor’s intentions and attitudes. You willnot be fooled or diverted into useless actions. You willsee the path to victory and concentrate your efforts inthe correct direction.

Tactics develop from specific conditions in the timeand place of conflict. Only a fool assumes he will beable to follow the precise steps of a predetermined planof action once the battle starts. The opportunities ofthe battlefield dictate tactics during a fight. Further,because communication and coordination are moredifficult in situations of stress and chaos, tacticsshould be neither clever nor complicated. Straightfor-ward actions executed quickly and confidently at anappropriate moment by the best people available cre-ate success.

DUELING

Most of the time, you cannot prevent your competitionfrom striking at least one blow against you. The idea isto prevent him from striking a second. Parry the initialattack and then hold him down. In a sense, “step onhis sword” so he cannot strike again.

If your tactics are designed only to parry your oppo-nent’s thrust, the battle will turn into sparring match.


You strike at him, he strikes at you, again and again.You will achieve nothing. Your tactics must overpoweryour competitor quickly so that he cannot strike again.Drawn-out conflicts waste resources and destroymorale.

Do not limit your tactics in any way. Use every avail-able method of attack. If the competition senses yourunyielding determination to win, this will destroy hisspirit.

Unyielding determination means you are con-stantly trying to get the initiative. Follow up everyopportunity vigorously and thoroughly. Be relentlessand constant. Allow him no rest.

The idea is to cause the competition to collapse. Allthings collapse when their time comes and theirrhythm is destroyed. It is important to sense your oppo-nent’s rhythm. When his rhythm begins to deteriorate,he becomes vulnerable. Do not miss this opportunity. Ifhe recovers his rhythm, he can attack you again.

In every conflict, there is an opportunity for you towin. A loss of momentum or poise in the opponent’sstance will signal your chance. Be ready to strike inthis moment.

You must focus all of your energy on striking theenemy at his moment of vulnerability. Make yourattack direct and powerful. Cut the enemy down sothat he is completely unable to recover or continue.Remember, when you fight, fight to win. Do not allowyour enemy a chance to beat you by being careless,sloppy, or foolish.

FIRE 83

THE MIND OF THE ENEMY

See the situation from the competition’s point of view.Think as the enemy thinks. Let me give you an example.If a dangerous criminal is cornered in a building, it isnormal for the police outside the building to think ofhim as a powerful and difficult adversary. But if you lookat the conditions from the criminal’s point of view, he istrapped in a helpless position. A person hiding inside asurrounded building feels like a rabbit in a hole with nomeans of escape. People outside the building look to himlike hawks poised for the kill. Consider this closely.

In situations where you are competing with largecompanies or powerful groups, it is natural to think ofyour competitors as powerful forces which must behandled carefully. But if you have good people on yourside and carefully apply the principles of ordered flexi-bility, you will know how to beat the competition. Donot worry.

Put yourself in the mind of the enemy. Think aboutthings from his perspective for a moment. As an exer-cise, think about it this way: What if you reallybelieved your opponent were a master business com-petitor proficient in gaining advantages and a provenwinner? Under those conditions, would you think thatyour chances of winning against him were high? Onthe other hand, if your opponent believes you are themaster competitor, how much better would yourchances be?


DEADLOCKS

When a contest between competitors becomes dead-locked and neither side is able to progress, it is neces-sary to give up on the tactics you are using and trysomething else. Deadlocked situations drain away pre-cious resources. To break a deadlock, it is essential touse tactics which the competition does not expect.

Once the contest has begun to lag, you must judgethe condition and spirit of the enemy. Change youraim. Attack from a place he is not watching. Throwhim off balance with surprise.

TECHNIQUES

“Moving a shadow” refers to tactics you use when youcannot determine the enemy’s position and design. Forexample, if it is impossible to discover the enemy’s dis-position or resources, you might pretend to make astrong attack at some point on his defenses. Watchhow he maneuvers. This will tell you how he is think-ing. Once you know how your opponent thinks, youcan defeat him by devising an appropriate method.

In negotiation situations, people often give awaytheir goals and tactics if you pretend to oppose them orinterrupt their arguments with annoying or minorobjections. Pay close attention to their reactions.Observe how they move and what they say. Feel the

FIRE 85

rhythm of the contest from their point of view. Are theyanxious or confident? Chaotic or centered? Obvious orsubtle? Once you know an opponent’s state of mind,you have the advantage. Carefully time your attack todisrupt his rhythm. Do not miss your opportunity.

“Suppressing the spirit” is a tactic you can usewhen you sense that your opponent intends to attack.At the very moment the attack is to begin, emphati-cally demonstrate that you are willing and able to turnaside his advance. Overwhelm him with your enthusi-astic response. When he hesitates or changes tactics,seize the initiative and overpower him.

This is another case of correctly perceiving youropponent’s rhythm. When he attacks vigorously, ifyou can disrupt his attacking rhythm, he will bethrown off balance. As he pauses to regain his stance,time your response to take advantage of his moment ofweakness. Watch carefully for your chance.

You can manipulate people by your actions. Forinstance, it is possible to make other people sleepy byacting sleepy yourself. You can induce others to yawnby yawning yourself. In a contest, you can influence anopponent’s timing by the rhythm of your own actions.

If your competitor is excited, enthusiastic, or hur-ried, make a show of being calm and easy in yourapproach. This will influence your opponent tobecome less intense and to relax his pressure a little.

When you sense your competitor has matched yourless hurried approach, instantly speed up your actionsto catch him off guard. Let your opponent see that you


are relaxed in body and in spirit. But as soon as heresponds to your mood, attack with strength andspeed to gain victory.

There are many other states of mind which can bepassed on to your opponent. For instance, you canpass on boredom, carelessness, and timidity. Thinkabout how you can use this in a fight.

It is also possible to upset the balance of your com-petition by using various tactics. One way is to put thecompetition under time pressure. Another is to createthe impression of impending disaster or imminentdanger. Another is to hint at the possibility ofunknown or unexpected consequences.

Upsetting the other side is essential to victory. Comeat your opponent, strongly and firmly, at a place ortime or from a direction he is not expecting. Catch himunprepared and unaware. You will have the advantagewhile he is unsettled from your surprise attack. Usethis moment to achieve your success.

A good way to upset a negotiating opponent is tochange pace during a conflict. If you approach a situ-ation slowly and then charge swiftly and forcefully,you will throw your opponent’s mind into disarray. Donot allow a moment for your adversary to take abreath. Use this instant of hesitation as an opportu-nity to win.

It is not unusual for people to be afraid during situ-ations where business conditions or structures arechanging, for instance during major reengineering ordownsizing projects, or where large amounts of

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money or organizational power are at stake. Whenoutcomes are unknown, there is always concernabout the future. When people are afraid, they aremore vulnerable.

You can make your competition afraid in manyways. Methods that are not obvious or blatant are par-ticularly useful because they work at an emotionallevel. You can frighten him with suggestions of loss.You can make a trivial point of concern seem quiteimportant. You can threaten one of his weak spots.You can move quickly without warning. You can rushat him suddenly and then just as suddenly withdraw.Anything which creates fear, confusion, and surprisein the enemy’s camp will give you the advantage.

When you are attempting to disrupt the enemy, youmust maintain order and discipline within your groupand within your own mind. The only way to do this isto practice. People who have not experienced theintense pressures of competition first hand on thepractice field will always make mistakes in real situa-tions. Without a doubt, uncertainty under pressureleads to defeat. In the heat of battle, you will act at amore instinctive, emotional level. Discipline yourinstincts and emotions beforehand. Your reactions incompetition should be natural and precise, governedby an intellect sharpened through daily practice.Study hard; your future depends on it.

Remember, your best weapons in conflict are sur-prise and fear of the unknown. Use unexpected tacticsto win. No tactic can be effective if your opponent


knows about it beforehand. If you telegraph yourmoves to the enemy, he will be prepared for your attack.Unexpected tactics, however, cause concern and fear.Even if your opponent is larger and stronger than youare, if he is concerned and afraid, you will win.

This is why disciplined practice and study are criti-cal to success in competition. Effective improvisationunder the pressure of the moment decides the out-come of most conflicts. You will not have time to studyor learn tactics in the midst of a battle. You can onlyuse what you already know.

ATTACKING A STRONG DEFENSE

If your competitor has a strong defense, it will be diffi-cult to attack him from the front. Under these circum-stances, you should look for “cracks” in his defense.On the battlefield, a crack may be a gap or bulge in aline of soldiers. In business, a “crack” is any weakness,fault, or mistake in your opponent’s presentation,arguments, position, or methods.

Cracks offer the opportunity to gain an advantage.Carefully observe your opponent’s resources and pro-grams. Concentrate on the less fortified areas. Less for-tified areas are those which, for example, are staffed byless competent people, supported by fewer resources,or located in distant areas.

When an area of weakness begins to collapse, afeeling of panic and desperation will go through the

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entire enemy group. Follow up quickly when collapsebegins and it may be possible to rout your opponentand defeat him immediately.

Against a strong opponent, you may have to whittlehim down. Every time you engage him in conflict,injure him in some way. Do not let him escape unhurt,even if only a little. This will eventually deteriorate hisphysical strength, his economic resources, and his willto fight. In the end, winning is easy.

In order to apply these concepts in difficult situa-tions, you must carefully analyze your opponent’sposition, resources, and objectives. Study him well.

CAUSING CONFUSION

Anything you can do to cause confusion is effective.Never become predictable in competitive situations.

Manipulate your competitor’s impressions of you.Make him wonder. Where are you coming from? Whatare you doing? Are you in a hurry? Are you disinter-ested? Can you be trusted? Are you stupid? Use com-petitive tactics to confuse his mind. When youropponent gets caught up in chaotic speculation, youhave certain success.

During the course of a negotiation, try various tac-tics and tricks as opportunities present themselves.Attack, retreat, change the subject, walk out of theroom, take a phone call, postpone a meeting, arrive late,arrive early, ask a large number of detailed questions,


leave early, leave late, forget something, change teammembers, feign illness. Do what you can to fluster theopposition. Of course, in business, you should use tac-tics which are appropriate to the nature of the situation.It is only necessary to win, not to embarrass oneself.

Business conflicts occur in offices and meetingrooms. They hardly ever involve physical violence.Rather than swords, the weapons of business are com-munication, information, money, influence, and tech-nology. Gaining victory means gaining more power,position, or prestige. Failures are discouraging andinconvenient, perhaps expensive; but generally theyare not fatal.

Nevertheless, there are serious consequences asso-ciated with carelessness and lack of composure.

TACTICAL THINKING

Applying the principle of ordered flexibility in compet-itive situations protects you from carelessness andinattention. Study your opponent carefully. Thinkabout how you are related to each other. Think abouthis position. Is he your boss? An employee? A cus-tomer? A vendor? A client? A banker? A salesman? Anassociate? Another company? Another organization?The government? What type of person represents yourcompetitor or challenger? What is his special compe-tence? What is his background? What is the reasonyou are competing with each other? What is the

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reward for success? Is he afraid of loss or greedy forprofit?

Using your experience, assess the other person’sgoals, objectives, and resources. If you were the otherperson, what would you be doing? You know your ownsituation much better than your opponent does. Howcould he defeat you if he knew what you know? Whattactics would he use against you?

What economic, political, technological, social, andorganizational conditions surround the contest? Whatimpact could these have on the outcome of the con-test? Who has the initial advantage? What is youropponent’s character and habits? Have you grappledwith him before? Does he telegraph his moves? Do youtelegraph your moves? Take a moment to think aboutall these questions. Even if you are not sure of theanswers, does it not seem beneficial to explore as manyfactors as possible to prepare yourself?

In a contest, think only in the present. See your sit-uation in the moment. Do not worry about pastassumptions or future consequences. The most effec-tive tactic in battles of knowledge, power, and will isdeception. Your opponent will surely try to use it. Themost effective defense is confidence. Your opponentwill surely try to steal your confidence.

During the contest, have no reservations aboutyourself, your knowledge, your product, or yourorganization. Question these beforehand or save themfor later. Confident determination leads to victory.Strengthen your resolve.


Your adversary will sense your reluctance if youare afraid to act. Advance your position without hesi-tation. Once you are engaged, do not retreat.

It may not be possible to overwhelm your opponentin business situations. Winners and losers are notalways clear cut in the office or marketplace. Conces-sions may be necessary. Partial victory may be the bestyou can achieve.

But, in order to gain anything, you must view your-self as strong, effective, resourceful. Keep a rein on youremotions. Loss of control leads to mistakes. This meansthat no matter who your opponent is, no matter howmuch or little is at stake, you expect victory. Take advan-tage of your competence and confidence. Concentrateyour resources on profitable, attainable objectives.

When your opponent is not as competent or confi-dent as you are, when your opponent is confused ordistracted, when your opponent is tired or afraid, donot be foolish and let him recover his balance even alittle. Seize the moment of victory.

Get this message into your heart.During the course of a competitive situation, you

will try many tactics. Sometimes you may repeat thesame tactic twice. But if you repeat the same tacticmore than twice, you become predictable. Predictabil-ity always spells defeat.

When a tactic does not work the first time you try it,do not rush to try it again. It probably will not workany better the second time. Change your approach.Try something different.

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Winning in conflict requires, above all, mental flex-ibility. If your competitor thinks you will attack oneway, then attack another. If he thinks you are far away,appear close at hand. Creating surprise is the expectedresult of applying the principle of ordered flexibility.

TOTAL VICTORY, TOTAL DEFEAT

Even if you think you have defeated your opponent, ifhe refuses to accept the fact he has been defeated, hemay come at you again. Your enemy is defeated onlywhen you have knocked the spirit out of him.

Make sure your opponent feels defeated from thebottom of his heart. Demoralize him as quickly andthoroughly as you can. Destroy his desire to win byany means possible. You have not really defeated himuntil he no longer has the will to fight.

Once you have crushed the competition’s spirit, youdo not have to worry about him. If he still harborsthoughts of victory, however, you will need to watchhim over your shoulder. An opponent who retains hisambition is hardly defeated. If you are unsure of yourvictory, your celebration will be short lived.

RENEWAL

If you become entangled in a prolonged conflict andno resolution seems possible, you must throw away


your current program and think about winning froma different perspective. Get back to the basics ofordered flexibility. Change your rhythm.

Modify your tactics. Try something new and differ-ent. Improvise based on the opportunity of themoment. Renew yourself. Renewal startles youropponent. In an instant you think differently and actdifferently.

When you get bogged down in details, for instance,shift your focus to the bigger issues. Do this suddenlyand it will throw your opponent off track. The abilityto switch from larger issues to smaller issues, orsmaller issues to larger issues, is an integral part ofwinning tactics. Determining the right moment tochange focus is a critical judgment. Practice this in allphases of your life to gain perspective.

Get into the mind of your competitor. See the issuesand conditions of the conflict as he sees them. Onceyou do, you will be able to control him as if he wereyour servant. If you know his mind, you can move himwherever you like. This is the power of the mastercompetitor.

Once you have attained the power of the mastercompetitor, you will be able to win in all circum-stances, using whatever tools are at hand. If youchoose to be like a mountain — inaccessible, immov-able, silent — then nothing can touch you. If youchoose to be like the sea — flexible, fluid, free — thenyou can flow around your challengers and swallowthem up.

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What I have written above consists of issues andconcerns which come up when one is trying to win thebattles of business competition. It is difficult to writeprecisely about some of these issues because you canonly master them by careful practice. In any case, theprinciples above can be used as a guide for someonewho is interested in improving his skill.

The way of the master competitor is the science ofwinning in life, of getting the most benefit for yourselfand for those to whom you owe a duty, no matter howyou define this benefit. If you study ordered flexibility,practice it diligently, and apply it steadfastly, you willnever have any doubt about your success.


5FABRIC

THE CLOAK OF SUCCESS

To be successful in business-to-business competition,your employees must be able to select and executeappropriate tactics based on prevailing market, polit-ical, and economic conditions. Managing yourorganization well allows employees to executeactions effectively. In the Fabric chapter, I write aboutthe characteristics of techniques for teaching com-petitive success and organizing larger groups of peo-ple, so that they can perform in difficult businesssituations.

When faced with a competitive situation, the idea isto respond effectively and appropriately given overallobjectives. In most situations, there are several tacticalchoices available. Some of these choices are certainly

better than others. But, often as not, the better choicesare not obvious ones except after the fact. Effective tac-tics, like effective fabrics, are woven from elements thatare simple, adaptable, and durable.

Every competitive situation involves uncertainty toa greater or lesser degree. If you adopt a method whichis too structured for specific competitive circum-stances, you will waste resources and time trying tocontrol the uncontrollable. If you adopt a methodwhich is too loose for circumstances, you will fail tocontrol the controllable. If you go too far either way,you will be defeated.

Tactics are often thought of in a way that is limitedto consideration of factors within the control of anorganization. There are very few of these factors inany case. Further, control tends to be an illusion. Someexecutives believe that by using the latest theory or bycreating a new type of structure, they can instantlyproduce desirable results. They believe new is alwaysbetter. But if new theories or different organizationstructures do not enhance simplicity, adaptability, anddurability, desirable results will not occur. In the nextsection, I will explain simplicity, adaptability, anddurability, which are the three aspects of ordered flex-ibility that affect choices of organization structure andmanagement style.


SIMPLICITY, ADAPTABILITY, AND DURABILITY

Simplicity facilitates understanding. Even if someonepractices a technique every day, if he does not under-stand the purpose of the technique and how to apply itunder different competitive circumstances, he will notbe able to use it when a difficult situation arises.

Group understanding always tends toward theaverage. Some people in every group can absorb andcomprehend almost anything, but most groups con-tain both more and less competent individuals. Thestrength of the group during a crisis or challenge is thestrength of its least effective member. Therefore, keepyour approach and structure as simple as possible. Ifthe least knowledgeable person in your group under-stands his personal mission and how this fits into thewhole, he will perform better. If the least knowledge-able person can also improvise effectively under condi-tions of uncertainty, you will inevitably achievevictory.

Adaptability fosters innovation. If people have mas-tered the details of a given technique through intenseeffort, but they do not understand the philosophybehind the technique and cannot adapt that philoso-phy to a specific situation, it will do little good in a cri-sis. Even a small misunderstanding can result in majorerrors in application.

Random events occur always and everywhere. Ran-dom events are always with us. And random events

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always result in unpredictable outcomes. Randomevents are not preventable because human beings lackcomplete understanding of the factors affecting theresults of decisions. Make your approach and struc-ture adaptable. Random events sometimes create won-derful opportunities. Be sure you can take advantageof them.

Durability encourages profitability. Buying a newwardrobe each year requires great expenditures oftime and money. The time and money spent to selectand acquire clothing is taken away from more enjoy-able and valuable activities. Changing managementtechniques frequently increases cost and diverts peo-ple’s attention away from the main objective of busi-ness — generating wealth for business owners.

THE WEAKNESS OF RIGIDITY

Some management philosophies depend heavily onrigid procedures and structured methods. From thispoint of view, they are difficult to start and, oncestarted, momentum is difficult to sustain. Further, greatattention is directed at creating the process in the firstplace. Problem identification and elaborately detailedplans are the main goals of these techniques. Effectiveexecution of plans is not necessarily considered.

The conventional wisdom associated with rigidstructure says that people can be managed throughautomatic processes in such a way that individual dif-


ferences in ability are canceled out and control ofresults increased. The need for personal leadership isminimized. Everyone follows the process to success.This conventional wisdom reflects an ignorance oforganizational reality. While processes do indeed pro-vide order, they can also mask competence. Further,processes do not lead people. People lead people. In theend, it is a trained employee with the right tools, actingin a competent, cooperative, and reasonable manner,based on the facts of the situation, who produces prof-itable results.

If time is short and competition intense, highlystructured processes are unwieldy and burdensome.They are not adaptable to rapidly changing circum-stances. Moreover, they are not durable. They becomeobsolete as soon as competitive conditions change.And they are not simple to understand or implement.

THE WEAKNESS OF SLACK

On the other hand, there are philosophies of manage-ment and structure which rely heavily on individual orsmall group competence. Management methodsinvolving empowerment or team building are exam-ples of these philosophies. Both individual responsibil-ity and small group performance are key elements inan organization’s success. But does an incompetent oruntrained person become better at his job if he isempowered? Can several incompetent or untrained

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persons create a masterpiece simply because they areworking together in a group? As the philosopher SunPin once said: “A pig who escapes his pen is quicklylost. A headless snake writhes, but accomplishesnothing.”

Empowerment is easy to talk about, but difficult topractice. Certain people can be empowered; otherscannot. Unworkable systems will continue to beunworkable, even with empowered employees.Untrained or incompetent people remain so, even ifplaced in groups. Leaderless teams drift. Purposelessorganization does not increase employee effectiveness.Useless activity wastes time and money. If people lacktraining, they cannot adapt. If organizations lack pur-pose, they will not endure. If leaders are absent, objec-tives will not be achieved.

ATTACKING WITH STRENGTH

Consider how to balance strength and weakness in con-flict. There is no such thing as absolute strength orabsolute weakness in competition. Everything is relativeto circumstances. If you attack your opponent strongly,without at least challenging your assumption of supe-rior strength, you may have difficulty in winning.

If you are intent on striking a strong blow when astrong blow is not appropriate for the circumstances,you may stumble into defeat. You accomplish theopposite of what you intend.


When you practice for conflict, it is a bad ideaalways to think about winning with strength. Some-times cunning is necessary. Your strength can be usedagainst you by a clever opponent.

When facing a difficult business situation, thinkonly of success. Consider only what your organizationis capable of. Let the circumstances shape your meth-ods. Keep your mind focused on reality and the out-come you desire. Reliance on a rigid, predeterminedset of tactics results in delay and disadvantage. Use anappropriate method at an appropriate time.

There is no such thing as an approach which canwin in all situations. The fact of the matter is that yourcompetition is just as smart, just as quick, just as capa-ble as you are. Both sides have the same opportunity.Victory belongs to the one who uses the correct phi-losophy of competition.

When you use effective competitive thinking, yougive no consideration to ideas or plans which areimpossible for your group to achieve; the reality of thesituation is all that matters. Use the power of facts toilluminate the path to victory.

No one tool, technique, teaching, or theory willwork under every set of conditions. In practice, thereis no one idea which has provided or will ever providethe final answer. Fondness for a particular approach isa fatal attraction. Defeat will follow.

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A DEFENSIVE APPROACH

At the other end of the spectrum, there are people whoalways wait until an opponent exposes his weaknessbefore striking. If applied indiscriminately, thisapproach is as dangerous as attacking too strongly. Ifyour company is feinting, dodging, and responding allthe time, you have adopted a defensive mindset. Defen-sive tactics may prolong the fight, but they seldom pro-duce victory, particularly if your opponent is strong.

You may believe that a defensive mindset is safer.But all it does is allow you to be led around by the noseuntil your opponent gets tired of the sport. This willeventually demotivate your people. After that, youropponent will maneuver you into a death trap and fin-ish you off.

KEYS TO VICTORY

The best way to win is to confuse the enemy aboutyour true intentions. Sometimes you should adopt adefensive approach, sometimes an offensive one. Beready to change. Make simplicity, adaptability, anddurability your standards.

Remember, the way of victory lies in attackingweakness with strength. Surprise always causes con-fusion and fear. When you surprise your opponent,attack him quickly and destroy him. Facts prevent sur-


prise. Listen to your first-line employees. They knowmore about what the competition is up to.

Most of what people are normally taught about tac-tics in the classroom amounts to learning how to jumpabout deftly, deflect advances, evade attacks, retreatwhen threatened, and generally get through thingssafely. They are also taught that there are right andwrong answers. Being safe and being correct becomesa habit. As a result, people usually end up gettingmanipulated and mauled by others. When you mustfight, think only of winning by using the best availablemovement. A “safe” death is still a sure death. Giveyourself a chance to win.

Because of the way people are taught, they some-times believe that activity produces results. For exam-ple, some people believe that the number of hours oneworks is a measure of one’s value. For this reason,some executives are overly impressed when outsiderspropose improvement techniques which require lots ofunnecessary meetings and many hours of unproduc-tive activity. Methods which do not measurablyimprove bottom-line profits are false and foolish. Avoidthem.

It is a delusion to think that there is any secret for-mula or technique for success in competitivesituations. The essence of all success is a practicalcombination of straightforward methods. Cut downyour enemy quickly and directly. Excessive movementsor fancy sword thrusts only give your enemy theopportunity to stab you through the heart.

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The objective of competition is to win. There is noneed to get cute. You may face challenges or obstacles.Keep your mind focused so you can deal with them.Analyze resources, environment, attitude, concentra-tion, and timing. Create a simple, adaptable, anddurable method of keeping focused.

Adding complications to the process of fighting isunwise. You will not kill your opponent by twistingyour hands a certain way, twirling your body around,jumping about vigorously, or leaping back and forth.Twisting, twirling, jumping, and leaping just work upsweat. Otherwise, they are totally useless. Focus onlythings that produce desirable results. Gain victory bycausing your opponents to twist, twirl, jump, leap, andgenerally waste energy. Attack at a time when youropponent is off balance, confused, and afraid. Examinethis idea well.

TRAINING PEOPLE TO WIN

When you and your organization train for conflict, donot be rigid in teaching people how to act. Trainingsituations tend to be simplified, tailored versions ofreality. Techniques used in training cannot be pre-sented as if they are the only way to accomplish a task.

Even though, for discussion purposes, you can pre-scribe standard solutions to competitive situations, thefact is that conditions in real battle are always differentfrom the conditions used as examples in training.


Indeed, training for the next battle usually consists offighting the last battle over again. The tactics whichsucceeded in last year’s marketing campaign, forinstance, are already obsolete. The key to victory issimple: Put the enemy at a disadvantage. Attack weak-ness with strength. There are many ways to do this.

Standard solutions induce an attitude in peoplethat there are easy ways to win or that one can makeoneself invincible. This is far from the truth. Standardsolutions give people the idea that there is only oneway to do things. This idea inevitably leads to difficultyand defeat.

Victory in real-life battles is won by seizing the ini-tiative through careful thinking and bold movement atthe right moment. The standard solutions taught intraining are best considered as starting points for dis-cussion of alternatives. In other words, say to people:“Start here and evolve according to circumstances.”Carefully consider how you might do this.

CONVENTIONAL AND UNCONVENTIONAL

METHODS

Sun Tzu, the great Chinese military philosopher andgeneral, said: “Approach the enemy in conventionalformation, but win the battle by unconventionalmeans.” This is the heart of ordered flexibility. Set upyour organization so that it approaches competitivechallenges in an organized, disciplined manner, but is

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not limited in its choice of maneuvers. Your enemywill think you are a conventional opponent. Thenthrow him off balance by unconventional tactics.When he is confused and irritated, overwhelm him.

In pitched battles between large organizations, it isof the greatest importance to base your initial positionon clear, factual analysis. For example, how many andwhat type of troops does the enemy employ?(Resources.) What is the structure of the battlefield?(Environment.) Is the enemy’s morale high? (Atti-tude.) What are the strong and weak points of theenemy’s strategy and structure? (Concentration.) Isyour enemy’s rhythm fast or slow? (Timing.) After youhave considered these aspects, begin the battle.

Gaining the initiative is critical to success andshould be a paramount consideration in the earlystages of battle. After you have lost the initiative, it isvery difficult to regain it. The morale and motivation ofemployees are fed by action. Waiting for the enemy toattack fosters fear and depression. Confidence andexcitement create enthusiasm. Enthusiasm powerssuccess.

PERCEIVING REALITY

Observe the enemy’s activities closely, but do not allowyour group to fix on one particular aspect of his move-ments. It is a common tactic in battle to distract anopponent with a flurry of activity in one place and


then attack strongly in other. Notice details and retaina sense of the whole at the same time. This takespractice.

Basketball players can dribble the ball, pass it, catchit, and shoot it without appearing consciously towatch the ball. This is because they have thoroughlytrained their movements. When you are thoroughlytrained, it is possible to see everything at the sametime, even while you are performing other specifictasks. A skilled juggler can manage a large number offlying objects without concentrating on any one ofthem. He feels the rhythm in the movement of theobjects as a whole. He adjusts his hands and feet inresponse to that rhythm without dropping anything.Constant practice allows him to “concentrate withoutfixation.”

When you face an opponent, assess the weight ofhis sword and the strength of his arm. More impor-tantly, see into his heart and perceive his spirit and hiswill. Strength of spirit and power of will determine theenemy’s ability to sustain the fight.

To win in any conflict, large or small, there can beno such thing as a narrow focus. When you narrowyour focus to insignificant details, you lose the per-spective of the whole. Opportunities will escape yourgrasp. Train yourself to perceive with the mind.

Seeing with the eyes and perceiving with the mindare two different ways of observing situations. Theseeing eye can be fooled; the perceiving mind cannot.Observe the nature of the situation, the state of the

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enemy, the rhythm of the conflict. Keep your peoplefocused broadly. Perceive the progress of the conflict,feel the ebb and flow of morale, watch for yourmoment of victory. This is the surest way to win.

FANCY FOOTWORK

Practicing certain predetermined movements or fancymaneuvers at the beginning of the conflict is dysfunc-tional. This is like trying to use fancy footwork insword fighting.

Fancy footwork tends to cause one to lose one’s bal-ance or to lose the initiative. Fancy footwork is fine ina dance contest. In real combat, it is a dance of death.

Hopping, floating, or leaping tends to put one in anawkward position. These maneuvers create a sense ofexcitement among people, causing them to lose focus.There is an attitude of trying to execute the movementrather than win the battle. This is dangerous.

Being unnecessarily stubborn is another uselessmaneuver. Stubbornness puts you on the defensiveand takes away the initiative. You allow your opponentto strike the first blow. This is also dangerous.

The nature of conflict is such that battle oftenoccurs under difficult conditions. Depending on thecircumstances, it may not be possible to step ormaneuver around in a specific pattern. It’s like fight-ing a duel in a swamp, or on a rocky hilltop, or along anarrow forest path.


The pattern of maneuvers used in the beginning ofa conflict should not be predetermined. Instead,approach conflict the way you approach everydayactivity. Perceive the rhythm of your opponent. Movequickly or slowly according to the needs of the situa-tion. Be orderly in approach, but flexible in response.

An overly rigid or slack organization will not allowthis to happen.

RHYTHM

Perception of the enemy’s spirit and will is essential totiming your advances. If you become too hurried andattack prematurely, you may find yourself in disorder.If you are too slow and methodical, you can lose theopportunity to beat the opponent when he isdemoralized and confused. If timing is wrong, you willnot be able to attain a quick victory.

It is absolutely necessary to correctly judge themoment when an opponent begins to doubt himselfand his defenses begin to crumble. Train your employ-ees to strike in this moment. Give the competition notime to recover.

Timing movements in conflict requires neither anattitude of speed nor an attitude of slowness. Rather,the attitude is one of sensing the rhythm of theconflict.

The master competitor moves neither fast nor slow.A skilled runner can run all day, but he never appears

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to change his stride. An unconditioned runner mayalso run all day, but he will never reach the finish line.

If an orchestra mixes skilled with unskilled musi-cians when playing a symphony, there will be a senseof either dragging or hurrying in their performance.Skilled musicians always play a piece in the correcttempo, whether fast or slow, and the music willsound appropriate because the rhythm is matched tothe score. Highly expert performers never run out oftime. Their actions are neither rushed nor lax. Expe-rienced people are never too busy, nor do they missdeadlines.

The habit of speed is particularly bad during com-petition or negotiating. Depending on the circum-stances encountered, it may not be possible,appropriate, or necessary to move quickly. If there arelarge sums of money or important issues at stake,when you rush to cut to the heart of the matter, youmay end up cutting nothing except yourself. Cut theappropriate thing at the appropriate moment. If youmove too quickly, you may stumble and break yournose. If you move too slowly, you will lose the advan-tage. You must learn this well.

If you approach a conflict with the idea of seizingthe right moment, you will never be too fast or tooslow. If the dance is a tango, then perform a tango. Ifthe dance is a waltz, then perform a waltz. Your dancewill succeed if you are in rhythm with the music. Thisphilosophy must be transmitted throughout the entireorganization.


If your opponent is in a hurry, you can use itagainst him. Match his haste with detachment.Remain calm and unmoved. Do not be manipulated totalk or act faster than you want.

STRAIGHT AND CLEAR

Managing people using the way of the master competi-tor is neither secret nor complex. Winning in conflict,negotiation, and competition is a direct and straightfor-ward affair. Management structure and approach mustbe simple, adaptable, and durable. People must be ade-quately organized, but not constrained.

Teaching your group to be master competitorstakes time and commitment. Begin with a clearframework. As your people gain experience, delvedeeper into the nuances of competitive assessmentand tactics. There is no such thing as beginning oradvanced knowledge. There is only practice. Prac-tice until the points I have made here become secondnature to everyone. You will become more skilled inthe process. These ideas are not intellectual or com-plex. But, you must act on them to understandthem.

It is like digging a tunnel into a mountain. If you digdeeply enough, you will come out the other side.Through practice and teaching, your personal under-standing will increase until conscious awareness ofyour mastery disappears.

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There is no need to make my teachings mysteriousor complicated. Take what is here at its face value. Dowhat I suggest according to your ability and under-standing. The way to win will open for you and yourorganization if you train and practice seriouslytogether.


6FOCUS

In the previous four chapters, I have written about thephilosophy of ordered flexibility. The essence of themaster competitor is, while based on ordered flexibil-ity, more subtle and comprehensive than any singlemethod or philosophy. The master competitor works ata level beyond conscious thought because he hastrained himself thoroughly. I call this level “focuswithin focus.” On this level, he knows how to act with-out the need to reconsider method or philosophy.

Beyond theory, beyond speculation, beyond philos-ophy, there is the reality of competition. In competi-tion, you win or lose, live or die. If you know how tocompete, you know how to survive and prosper.

Many people misunderstand the nature of competi-tion. Competition is joyful; it is a fundamental processof life itself. In order to truly live, one must compete.The specific type of competition is immaterial;

compete against yourself, compete against others,compete against God. It is not important. Pick some-thing you are interested in. What really counts iswanting to do something well.

If you choose the path of competition (in truth,which of us has a real choice?), you must work atunderstanding the rules of winning in order to dowell. Do not become confused by unnecessary com-plexities or false expertise.

Master competitors study their craft accurately anddiligently. They do not question the necessity for study,nor delude themselves into carelessness. Once youhave decided to follow this path, you must practiceevery day. Learn to perceive the heart of your enemy,the essence of your challenge. When there is “focuswithin focus,” the clouds of uncertainty and confu-sion disappear.

People who do not understand the path of competi-tion very well probably think that their own methods,however superficial, are correct and solid. But I chal-lenge you to look at the lives and actions of mastercompetitors (like those discussed in the next part of thisbook). These people are not common fools wanderingaround lost in a fog, stumbling on success by accident.

The heart of success is perceiving the reality of situ-ations and doing appropriate things at appropriatemoments. No matter what you tell yourself, realityexists anyway. Function within this truth and youcannot fail. See things as they are and win. Thisrequires practice. This requires courage.


Move towards mastery in a straightforward way.Practice honestly. Learn everything you can. Thinkclearly. Make “focus within focus” your goal and thepath will open up to you.

In “focus within focus,” there is effectiveness, notfailure; strength, not weakness. Wisdom speaks; logicrules; principle guides; excellence prevails. Order andflexibility work together. The way of the master com-petitor is clear. The mind is calm. Reality governsaction.

FOCUS 117

PART IIIBATTLE TACTICS FOR BUSINESS

7GAINING COMPETITIVE ADVANTAGE

Musashi’s philosophies have been used by theworld’s most successful business executives and mil-itary generals to win in competition in the market-place and on the battlefield. In this chapter, I willgive you a number of examples so you can begin tothink about how to apply Musashi’s ideas and prin-ciples in your own situation. The examples I havechosen are:

— Howard Schultz (Starbucks Coffee)— General Robert E. Lee and the Battles of

Chancellorsville and Gettysburg— Warren Buffett— General George Washington and the Battle of

Trenton— Andy Grove (Intel)— Bill Gates (Microsoft)

— Lawrence of Arabia and guerrilla warfare inArabia

— Donald Trump— The Battle of Rorke’s Drift in the Zulu War in

Africa

Musashi’s principles have real value in winning com-petitive situations if they are applied correctly. Theexamples I have chosen here are designed to presentvarious aspects of competitive situations and explainhow the competitive situations were affected andenhanced using Musashi’s ideas. I believe that there issomething in each one of these examples which canhelp you gain an immediate advantage.

In my own business (consulting), I have discoveredthat the competitive situations I face often resemblethose faced by others in the past. (There is an old say-ing: “If you learn from someone else’s mistakes, youwill not have to learn from your own.”) If I haven’tpersonally used a given tactic or approach before, butI am familiar with a similar situation that someoneelse has faced, I can usually apply the same reasoning,at least as a starting point.

The people and situations described below may helpyou do the same thing. Look for similarities and thenwork out how to use the strategies in your own mind.Remember to use the framework of the seven princi-ples to anchor your thinking process. If you practiceenough, as Musashi suggests, the analysis will comeautomatically. I believe that this will dramatically

GAINING COMPETITIVE ADVANTAGE 121

improve your understanding of competitive situationsand your evaluation of alternatives. This understand-ing will ultimately give you the winning edge.

HOWARD SCHULTZ — STARBUCKS

How does someone turn a commodity product like acup of coffee into a multibillion-dollar worldwide cor-poration? Howard Schultz suggests you “pour yourheart into it.” (See his book Pour Your Heart Into It,Hyperion, New York, 1997. All quotes in this sectionare from this book.)

Schultz pours his heart into his business in twoways. First, he sends a strong signal about the atti-tudes required for success through his example of eth-ical leadership. Second, he shares his love of coffee andhis drive for serving the customer with every memberof his organization. The sharp edge of Starbucks’ com-petitive sword is a passion for service.

An attitude of ethical leadership is the foundationof a passion for service. Here is what Schultz saysabout ethical leadership: “Whatever your culture,your values, your guiding principles, you have to takesteps to inculcate them in the organization early in itslife so that they can guide every decision, every hire,every strategic objective you set. Whether you are CEOor a lower level employee, the single most importantthing you do at work each day is communicate yourvalues to others, especially new hires. Establishing the


right tone at the inception of an enterprise, whateverits size, is vital to its long-term success.”

Shared values are the cornerstone of competitivesuccess in leading large numbers of people. Sharedvalues spin a web of expectations which people canuse to anchor their decisions and actions. Shared val-ues encourage trust between management andemployees. And trust is the mortar that holds togetherthe bricks of an enterprise. Where trust is strong,organizations can easily prosper. Schultz adds: “Thereis no more precious commodity than the relationshipof trust and confidence a company has with itsemployees. If people believe management is not fairlysharing the rewards, they will feel alienated. Oncethey start distrusting management, the company’sfuture is compromised.”

What is Starbucks’ competitive advantage? Howdoes it earn a premium profit on a commodity prod-uct? There are several elements to its success, accord-ing to Schultz — great coffee, great service, greatatmosphere. But the most important element is theattitude of employees, an attitude which transmitsexcitement, optimism, passion for service, and a love ofthe product to the customer. Schultz has worked hardto develop this kind of attitude in his company. He sug-gests that setting an example is critical to transmittinga positive, winning attitude in his associates. He says:“The only way to win the confidence of Starbucks’employees was to be honest with them, to share myplans and excitement with them, and then to follow


through and keep my word, delivering exactly what Ipromised — if not more. No one would follow me untilI showed them with my own actions that my promiseswere not empty.”

Starbucks’ competitive sword is simple to under-stand. If you love coffee, you will love Starbucks,because it loves serving coffee to you. Employees atStarbucks generally like and trust their company. Peo-ple appreciate a fine product served to them in a con-venient location exactly the way they want it byenthusiastic employees. It is the friendly environmentsand bright smiles, it is Howard Schultz’s attitude ofconfidence transmitted through his organization, thatbring the same people back day after day. The secret ofStarbucks’ competitive sword is this: Customers willpay a premium price and buy more often if they feelgood while they are doing it. Simple to understand?Yes. Easy to achieve? No. Ethical behavior and positiveattitude are important elements of Musashi’s philoso-phy. Howard Schultz uses them effectively to succeedat Starbucks.

GENERAL ROBERT E. LEE

Military events of the American Civil War from theSouthern perspective make an excellent study for exec-utives fighting for survival in markets where theircompanies are not the dominant players. (In otherwords, the great majority of us.) The Southern Con-


federate forces were always at a disadvantage in termsof resources and manpower. The Union had moremoney, more weapons, and more men. The Confeder-ate army in Virginia, particularly, offset the Union’sadvantage by aggressiveness, morale, confidence, andspeed. This was characteristic of General Robert E.Lee’s strategic philosophy. Lee was commander of theConfederate Army of Northern Virginia. His approachto tactics has been described as defensive–offensive,which is the military embodiment of ordered flexibil-ity. That is, remain on the defensive until your oppo-nent offers you an opportunity. Then, strike quicklyand strongly.

Two battles fought in the summer of 1863 — theBattle of Chancellorsville and the Battle of Gettys-burg — illustrate the importance of Musashi’s sevenprinciples of competitive success. The same twoarmies participated in both battles. The Battle ofChancellorsville was an overwhelming victory for theSouthern forces and a tribute to the quality of theConfederate army.

The Battle of Gettysburg was, at best, a marginalmilitary victory for the Union, but it was, nonetheless,an enormous political victory. As a result of the battle,the South was not able to force the North into a nego-tiated solution to the war. Winning on the negotiationtable was the only way the Confederacy could havesurvived in the long run. But a military victory on thebattlefield at Gettysburg was necessary in order to pro-vide the political leverage. The difference in the


outcomes of these two battles can be analyzed in termsof Musashi’s principles.

The Battle of Chancellorsville was fought in May1863. In December 1862, General Lee had defeatedthe Union forces under General Burnside at Freder-icksburg. Lincoln replaced Burnside with General JoeHooker, a West Point graduate. Lincoln badly needed acommanding general who would fight rather than justtrain and maneuver. Hooker had the reputation ofbeing a fighter.

During the winter months of 1862–3, the twoopposing armies faced each other across the river atFredericksburg, Virginia. Hooker’s plan was to move asignificant force around the rear of the Confederatearmy in the spring of 1863 and catch the Confeder-ates between the Union forces holding Fredericksburgand his own troops behind them. This, Hookerthought, would pressure General Lee to retreattowards Richmond so he would not be attacked fromtwo directions. Hooker had more than 70,000 men inthe force moving towards the rear of the Confederatearmy and another 40,000 at Fredericksburg in front.Lee had a total of 60,000 men, so he was outnum-bered almost 2 to 1. Because of numerical superiority,General Hooker was very confident that his battle planwould work.

On May 1, 1863, General Hooker attacked Lee asplanned. But because he had sent his entire cavalryforce on a mission away from the battlefield towardsRichmond as a diversion, Hooker had no information


about the enemy’s movements. Without information,in the midst of what appeared later to be a successfulattack, Hooker hesitated, lost his nerve, and withdrewhis troops back into their previous lines. This set thestage for Lee’s spectacular attack on May 2, 1863.

Hooker settled his 70,000 men around Chancel-lorsville on the night of May 1. Because Lee had asuperb cavalry under J. E. B. Stuart, he knew wherethe Union army was camped and how they were dis-posed. The Union troops directly facing Lee werestrongly positioned with a river on their left flank. Theright flank and rear were, however, exposed. It is easyto suppose that General Hooker was so confident ofvictory, because of numerical superiority, that he feltthere was no danger of Confederate attack on hisright flank (which was actually behind him to thewest).

At dawn on May 2, General Stonewall Jackson and26,000 men (almost half of Lee’s effective force)began marching south around the Union army posi-tion. When dust from this movement was spotted byUnion observers, General Hooker assumed that Leewas retreating. Instead of retreating, Stonewallmarched all the way around Hooker’s camp and hitthe right rear of the Union army at 6 p.m., routing themen. The attack was totally unexpected and beauti-fully managed. Lee and the Confederate army wonbecause they obtained accurate information, focusedstrength on weakness, and executed appropriate tac-tics at an appropriate moment.


Here are the factors which gave the outnumberedConfederates a victory: Lee and Jackson were a battle-tested team. Hooker was newly appointed and had notbeen commanding general before. Hooker’s cavalrywas elsewhere during the battle. J. E. B. Stuart pro-vided Lee with up-to-date and accurate information.Because of the information, Lee was able to concen-trate his attack on the Union army’s unprotected andvulnerable right rear. Stonewall Jackson had trainedand organized his troops so they could move quicklyand strike boldly. They marched around the Unionarmy and then attacked in the evening of the sameday; there were no delays and no hesitation. Lee andJackson followed Musashi’s principles and succeeded.Unfortunately for the Confederate army, StonewallJackson was wounded by his own men during the bat-tle and died a few days later.

The Battle of Gettysburg was fought two monthslater, July 1–3, 1863, by the same armies. In thisbattle, the balance of competitive advantage shiftedto the Union forces, causing a Confederate defeat.After Chancellorsville, the Union army moved toprotect Washington, D.C. with the Confederate armyfollowing. But Lee’s men were running low on sup-plies. Hence, the Confederates decided to invadePennsylvania. The North was rich with supplies thatwere desperately needed by Southern soldiers. Fur-ther, an invasion would apply military pressure andperhaps compel the Union to negotiate an end to thewar.


Lee reorganized his army because of StonewallJackson’s death. He promoted the best generals he hadinto command of his divisions, but they were neitheras experienced nor as effective as Jackson. Before mov-ing into Pennsylvania, Lee split his army into severalparts. He did this to allow his men to obtain the maxi-mum amount of badly needed supplies and material.The Battle of Gettysburg started when a unit of Lee’sarmy moved towards Gettysburg on July 1, 1863,looking for a large quantity of shoes which were sup-posed to be stored in the town.

Although Lee’s forces won a decisive victory on thefirst day of the three-day battle, Lee was unable to fol-low up his initial advantage because he lacked accu-rate information; he did not concentrate strength onweakness; and his commanders executed tacticspoorly. J. E. B. Stuart and his cavalry were not on thebattlefield until the third day of the battle. Lee had sentStuart ahead of him into Pennsylvania, and Stuart, forsome reason, did not remain in close contact with Lee.The information Lee needed about the size of theUnion army and its disposition were lacking. He didnot know the details of the forces opposing him atGettysburg.

Lacking specific information, Lee could not concen-trate his attack on enemy weakness. He tried attackingat various points across the Union front in the hope offinding an opportunity, but because he could not con-centrate, his attacks did not accomplish the desiredresult.


Further, the newly appointed Confederate com-manders were not experienced enough nor boldenough to continue the attacks once the initialadvantage had been gained. Several of them hesitatedat crucial moments on both the first and second daysof the battle, losing opportunities to gain an advan-tage. (I would like to note that boldness and initiativeare two of the main strengths of highly effective busi-ness executives. Gates and Trump come to mindquickly.)

Lee and his chief lieutenant, General JamesLongstreet, disagreed on tactics for the battle.Longstreet did not want to attack the strong Federaldefensive positions. Rather, he wanted to maneuverthe Confederate army towards Washington and forcethe Union army to attack him. As a result of the dis-agreement, Longstreet seemed to drag his feet at cru-cial points in the battle, again losing valuable time andblunting initiative. The impact of Longstreet’s reluc-tance to follow orders on the outcome of the battle is amatter of considerable debate, even today. Lee himselfwas quoted in later years as saying that he would havewon the battle if Jackson had been there.

Anyone who leads people in highly competitivesituations needs to learn two important lessons fromLee’s defeat at Gettysburg. First, one superbly talentedperson can make a difference — the Michael Jordanprinciple. Second, every team member, regardless oftalent, needs to make their best effort after decisionsare made.


Lee’s generals did not execute well, particularlywith respect to timing. Attacks, when they occurred,were late and in the wrong places. At times, there didnot seem to be much vigor and energy in the Confed-erate attempts. By the third day, Lee was deadlockedand could not continue the battle. He was forced bycircumstances (not military defeat) to retreat backtowards Maryland on July 4, 1863.

WARREN BUFFETT

Successful people seem to take similar approaches tocompetitive success. Like General Lee, Warren Buffettuses information as his primary competitive tool andtiming as his primary tactical maneuver.

As a young man, Warren Buffett made two start-lingly simple observations. First, he observed that theway people value stocks in the short run was based onthe alternating emotions of greed for profit and fear ofloss. Fear and greed caused stock values to fluctuateabove and below their objectively determinable intrin-sic values.

His second observation was equally important.High-quality stocks which had been depressed belowtheir objectively determinable intrinsic values byshort-run fears were better long-term investments.They had a higher probability of gain.

Having made these two simple observations, Buffettcentered his attention entirely on four critical


competitive elements to make his fortune. First, hebecame an expert at using available information todetermine the intrinsic value of stocks. Second, heapplied his attention to a small group of industries sohe could become an expert in determining the value ofpotential investments. Third, he developed a workablemethod for timing his transactions. Fourth, he prac-ticed self- discipline. These four competitive elementsoperating together over an extended period resulted inbillions of dollars of wealth. Let’s look at the elementsof Buffett’s competitive sword (i.e., information, tim-ing, and self-discipline) more closely.

Warren uses information to determine an objectiveintrinsic value for a business. A business is valuable toBuffett when the projected annual compound rate ofreturn on his investment exceeds a certain value. Thatvalue is reported to be 15 percent. There is a hugeamount of data available to investors these days. Butinformation is created only when some kind ofknowledge is uncovered through appropriate analysisof data. Hence, Buffett first gains knowledge from databy becoming thoroughly familiar with certain indus-tries. He does not even look at companies in industrieswhich are outside his “circle of competence.” (This isan excellent example of the use of focus.) Second,within these selected industries, Buffett invests only incompanies whose earnings streams are reasonably pre-dictable and whose market position and cost structureare strong. A strong market position and cost structureare evidenced by consistently high returns on share-


holders’ equity, high market share, the existence ofbarriers to entry for potential competitors, and a man-agement team that is shareholder value oriented.

Warren selects his acquisition targets and thenwaits until the price he must pay to acquire an invest-ment allows him to earn his target return. The stockmarket, as a whole, is not highly objective in settingthe prices of stock shares. While the price one pays orreceives for stock is a reflection of the supply anddemand for the stock at a given moment, the price isnot necessarily related to an objectively determinedintrinsic value. Emotion is a strong influence on thepoint-of-the-moment value of stocks. The impact ofemotion on stock prices causes prices to fluctuate con-siderably over even short periods of time.

In general, an average stock traded on the New Yorkstock exchange fluctuates 20 to 30 percent in valueeach year. The ideal investment strategy would investmoney at low points in the annual price cycle. This iswhat Buffett has been able to do. By using informationto target certain companies and by setting targetacquisition prices which will yield expected rates ofreturn, Buffett has developed a workable timing sys-tem. This system will not be infallible, but it does givehim a greatly increased probability of earning a profitand a greatly diminished chance of losing money.

According to research done on Buffett’s results, asignificant portion of the money he earns can beattributed to a relatively small number of the invest-ment decisions. If one were to eliminate the big


winners, Buffett’s returns are only mediocre. Self- dis-cipline makes the difference. He has the discipline toride the winners and dump the losers. If an investmentis not performing well (based on objective intrinsicvalue analysis), it is removed from the portfolio. If aninvestment meets the objective criteria, it stays,regardless of what price the highly emotional stockmarket assigns to it at a given moment.

What is Buffett’s competitive sword? Buffett ana-lyzes data to create usable information. With the infor-mation, he selects industries and companies whichmeet certain objective criteria as investment targets.He times his acquisition of these companies based onmeasurable economic and business factors. Finally, hedoes not react to short-term fluctuations in stockprices. Hence, Buffett applies Musashi’s principles ofinformation, timing, and self-discipline.

GENERAL GEORGE WASHINGTON

As we have seen, boldness and initiative are commoncharacteristics of both successful military leadersand business executives. Boldness and initiative areespecially needed when a competitive situation isdeteriorating. Gaining the initiative in a fight, partic-ularly against a stronger opponent, is immenselyimportant. But executing bold tactics from a positionof relative weakness requires careful use ofMusashi’s principles.


The situation facing General George Washingtonin late December, 1776, was rapidly getting worse.His small and badly equipped army was about to meltaway because many enlistments were expiring onDecember 31. The pay and conditions were so badthat none of the volunteers wanted to stay and fightfor independence. He needed to revitalize morale bywinning a victory. Washington selected the Hessiangarrison at Trenton, New Jersey as his point of attack.Here is how he would have used Musashi’s REACTprinciples (resources, environment, attitude, concen-tration, timing) to plan and execute tactics for thisbattle.

Washington had three important resources at thiscritical time (December, 1776). First, he had an armyof about 6000 men which would shrink to 1200 afterJanuary 1, 1777. The men required to do the job weretrained and available for the next few weeks. Second,he had information. Washington knew where theBritish were stationed. It was winter and the mainBritish army had entered its winter quarters in NewYork. Across areas controlled by the British, therewere garrisons of troops, but the garrisons were smalland separated by too great a distance to allow them toreinforce each other quickly. Therefore, he couldattack with superiority of numbers in specific loca-tions if he surprised the enemy. Third, he had boats.Between Washington’s army and the New Jersey shorewas the Delaware River. Washington had a fleet of flat-boats which were ideal for moving men and


equipment across a river. Further, his army had expe-rience in using these boats for transport.

The main environmental factors were the weatherand the time of the year. Washington assumed cor-rectly that the British would not expect a major attackon the day after Christmas. The day of the attackturned out bitterly cold with blowing snow. Eventhough this type of weather was difficult to movearound in, it was ideal for surprise.

Attitude played a significant role in Washington’ssuccess. The British were smug in their belief that theAmerican army could not attack in winter, or if theydid, the British would easily defeat them. Washingtonknew that the British general in charge of the gar-risons in New Jersey held the American army in con-tempt. As a result, the British were careless in theirdefensive preparations. The Americans, on the otherhand, had a “do or die” attitude towards the battle. IfWashington’s army did not win a quick victory, theAmerican revolution could end. The rebels had noth-ing to lose and everything to gain by swift, aggressiveaction. (This is an important consideration if you findyourself with the upper hand in a competitive situa-tion. Musashi tells us that an enemy is not defeateduntil he no longer has the desire to fight. If you win abattle, win it thoroughly and completely. Do notunderestimate your opponent or you may find yourselfin the same position as the British.)

Washington concentrated his ragged army againstthe even smaller force of Hessian mercenaries gar-


risoned in Trenton. Although the British outnum-bered him greatly in total forces in the region, thisapproach gave him local superiority. Washington’splan of attack called for three units to attack Trentonfrom different directions. In this way he would preventany of the garrison from escaping.

Washington marched his men towards Trenton,New Jersey, on Christmas Day, 1776. He expected (cor-rectly) that the British would be inattentive on thatday. Although he did have the larger force of men atthe point of attack, Washington’s most powerfulweapon was surprise. He moved his men on Christmasnight across the Delaware River and marched throughthe night to Trenton for an early morning attack onDecember 26.

Washington’s forces completely surprised the Hes-sians. In fact, Washington lost only two men in thisbattle, both of whom froze to death when they stoppedduring the march for rest. The victory at Trenton revi-talized American military operations.

In competitive business situations, it is important tokeep the factors of success in front of you at all timesusing a tool like the REACT principles. If you arestronger in a situation, complacency and carelessnesswith regard to your competitors lead to surprise,embarrassment, and defeat. On the other hand, if youare weaker, reviewing the factors of competition mayreveal unexpected opportunities for profit. Althoughvictory in battle goes more often to the side withgreater assets, this is true only if both sides are equally


prepared. If the weaker side is more informed andactive than the stronger side, it is possible for theweaker side to win.

ANDY GROVE — INTEL

Andy Grove, CEO of Intel and Time magazine’s 1997Man of the Year, provides a sterling example of how touse Musashi’s principles to achieve outstanding resultsin a competitive high-technology business. In his bookOnly the Paranoid Survive (Currency, New York, 1996),he tells about the circumstances, decisions, and actionsinvolved in Intel’s decision to de-emphasize its memorybusiness and devote its resources to developing andmanufacturing microprocessors.

By 1985, the Japanese memory chip manufactur-ers had obtained more than a 50 percent share of thememory chip market. They did this in two ways. First,they used their competitive sword of manufacturingquality and process improvement to develop higher-quality memory chips which could be produced at alower cost than those of American manufacturers,including Intel. Second, they used their quality/costadvantage and aggressive marketing tactics to drivedown memory prices. In effect, they turned computermemories into a commodity product. Economics forcommodity businesses favor the low-cost producer.The Japanese have successfully used this tactic overand over again.


According to Grove, Intel was faced with threechoices in response to the growing Japanese challenge.First, Intel could try to out-duel Japanese manufactur-ers by creating more economies of scale and subse-quently lowering production cost (i.e., low-coststrategy). In this way, Intel would end up the low-costproducer, at least for a short while until the Japaneseresponded. Second, Intel could look for niche marketsfor which the company would produce special-pur-pose memory chips that could be sold at a premiumprofit (i.e., niche strategy). In this way, Intel wouldmaintain its profit margins, but it might sacrifice vol-ume, total profitability, and growth rate, not to men-tion share price. Or, third, Intel could try to innovate inorder to produce a branded, non-commodity productwhich the Japanese could not duplicate easily (i.e.,product innovation strategy). In this way, Intel couldmaintain both profit and volume, but the risk of fail-ure was relatively high.

The company chose the third option, to innovateits product. In implementing this decision, the com-pany’s management superbly utilized the philosophyof ordered flexibility coupled with leadership andtiming.

Intel’s upper management spent months preparingand convincing company employees and executives tomove in a new direction. They maintained the currentorder while paving the way for change. Groves writesthat this was a difficult task. People within the com-pany were passionately attached to the existing


product structure. They were not anxious to change.But Grove provided stable leadership and cleardirection.

However, he adds, it is not enough to be clear andstable. He also recommends experimentation, that isflexibility, during challenging times. Yesterday’s solu-tions do not necessarily fit today’s problems. Yet,today’s executives have succeeded using yesterday’smethods. Flexibility is absolutely necessary to over-come challenges. If a company is experiencing rigidityin thinking and resistance to change among execu-tives, that company will not survive in a high-speed,global marketplace. Innovation is the key to prosperity.And experimentation is the key to innovation. Orderand flexibility worked together to create an increas-ingly effective and profitable organization at Intel.

Once Intel decided to get out of the computer mem-ory business, it faced the question of what sort ofproduct it would produce. Here is where timing andexecution played a significant part. You will rememberthat I defined execution as “taking appropriate actionat an appropriate time.” Intel had been making 386microprocessor chips for IBM PCs, but had not devotedsignificant resources to this product. At this moment,Grove irrevocably devoted his entire company’s futureto building microprocessors. Microprocessors were aproduct the Japanese could not copy easily. Further, byusing a continuous product obsolescence strategywith its processor chips, Intel could assure itself of amajor share of the processor market on a continuing


basis at a premium profit. I am sure that it costs nomore, maybe even less, to manufacture a Pentium(586) processor than it does a 386 chip.

Intel is continuously developing faster and fasterchips. The company actively promotes a “latest is great-est” attitude among computer buyers, a sort of “my chipis bigger than your chip” mentality, to create demand forits newer, faster products. And the strategy works verywell. Changing Intel’s core business from memory tomicroprocessors was an appropriate action at an appro-priate time. Grove’s actions are an excellent case studyin the proper application of Musashi’s concepts.

BILL GATES — MICROSOFT

Let’s continue our discussion of Musashi’s tacticsapplied to high-technology competition. Bill Gates andMicrosoft are facing a crisis during the time that thisbook is being written (early 1998). The United Statesgovernment is accusing Microsoft of violations of theantitrust laws. So, rather than restate how Gates andhis company found fame and fortune fueled by pizzaand soda pop, I would like to pose some questionsabout strategy and tactics related to this crisis. We willplace ourselves in Musashi’s position, apply his rea-soning, and inquire about what Mr. Gates should bedoing. (The readers of this section will have an advan-tage over me. The strategies used and their outcomeswill already be known.)


As everyone is aware, Bill Gates, founder and CEO ofMicrosoft and one of the world’s richest men, had atleast one magnificent revelation in his life. He foresawthe personal computer revolution. Further, Gates had,and continues to apply, one magnificently profitablebusiness strategy. Simply put, his strategy for Microsoftis to create and maintain a monopoly in operating soft-ware. His early MS-DOS (DOS means “disk operatingsoftware”) for IBM personal computers, along with itsproduct descendants, Windows, Windows 95, andWindows 98, dominate the world of operating soft-ware. Microsoft products are reportedly installed on80 percent of the world’s IBM PC-based systems.

Gates pioneered the now common strategy of mak-ing computer manufacturers dependent on his soft-ware. This is an example of Musashi’s principle ofconcentration carried to its extreme. When the micro-computer revolution began, Gates was one of manysoftware developers supplying product to the severalhundred startup microcomputer manufacturers.Through intense effort and aggressive marketing, cou-pled with high product suitability, MS-DOS took overthe operating system market. Gates later solidified hismonopoly and increased his cash flow by forcing com-puter manufacturers to pay him just for the privilegeof having his product available on their machines.Since his software was an absolute necessity in orderfor computer manufacturers to sell their product, hishighly focused strategy worked well. Everyone paid,but he did not make many friends.


This part of the history of Bill Gates and Microsoftis familiar to most people, so let’s fast forward now to1998. Bill is still pursuing his simple, heretofore effec-tive strategy, but this time with his Internet browser.(An Internet browser is a software program thatallows you to look at Web pages on the World WideWeb. It is the functional equivalent of operating soft-ware, except it is for the Internet.) The problem is thatMr. Gates is trying to create another monopoly, at leastaccording to the federal government and his competi-tors. His first monopoly happened naturally, a result ofthe birth of a new technology. No one knew at the timethat it was happening. The current Internet monopolyis being pursued on purpose. It is a deliberate attemptto create a money-printing machine for Microsoft.

No one (particularly Musashi and I) should criticizeBill for trying. After all, as I said earlier, the object ofwinning in business competition is to win big. Thequestion I have is whether this tactic, which everyone— including the federal government — is prepared tofight, is the best one for Microsoft at this point. Look atthe amount of time already wasted and the volume ofnegative press generated by the effort.

Bill should use the REACT acronym to analyze hissituation to find a tactic that works. Microsoft has animmense pool of resources which it can apply to solv-ing any problem or fighting any battle. But the busi-ness and political environment is adamantly opposedto the formation of another Microsoft monopoly.Instead of taking the attitude that Microsoft must


dominate every market, why not take the opposite atti-tude and foster competition while maintaining animportant stake in the outcomes of different technolo-gies which are directed at profiting from emergingopportunities (for example, the Internet). ConcentrateMicrosoft resources into developing alternative solu-tions which will then stand on their own merits asproducts.

This approach requires a confident mindset and tol-erance for risk taking. But I am sure that the employ-ees at Microsoft can handle the challenge. People I talkto do not object to Microsoft products. They do objectto having Microsoft products shoved down theirthroats. Given a reasonable choice, they may very wellselect Microsoft because the company can presumablyproduce better products.

And the time is now. The birth of every majorindustry in America has been accompanied byattempts by early industry executives to monopolize it.Look at the railroad industry, the steel industry, theelectric power industry, the telephone industry. Andhere comes Microsoft. Every one of these industrieshas gone through extended periods of profit difficultyas a result of trying to create and foster its monopolies.

Musashi advises us to react to the reality of the sit-uation in order to maintain our competitive balance.Microsoft has many, many high-profit opportunities.Perhaps the company should select a set of strategiesand tactics which are more in tune with what seems tobe the reality of the moment and the spirit of the


times. Musashi would ask, “Why fight a costly, embar-rassing battle which the company may not winbecause the time and the conditions are not right?”

There is some evidence in its recent acquisitionsand investments that Microsoft is taking a more pro-ductive approach. Even as I write this, Microsoft is soft-ening the strident tone of its news releases defendingthe right to create a monopoly (which the companymay not have). If Microsoft handles this matter cor-rectly, it will end up with a virtual monopoly and noneof the negative repercussions.

What is Bill Gates’ competitive sword? Initially, itwas intense personal effort and perfect timing. Bill wasthe right person at the right time in history to propelthe PC revolution. As a corporate bureaucracy,Microsoft probably cannot sustain the personal inten-sity of its founder. Its competitive sword now becomesimmense resources and great reputation. To use thissword, the company as a whole must identify andexploit better opportunities without scatteringresources to the wind. Great success is sometimes themost difficult situation to manage.

LAWRENCE OF ARABIA

The idea of concentration in tactics is best illustratedin warfare by situations where guerrilla tactics aresuccessfully employed against a larger and strongerenemy. Lt. Colonel T. E. Lawrence was charged with


the responsibility for commanding elements of theArab Revolt in the Middle East during World War I.Because of the nature of the Arab army, which con-sisted of personally brave, but poorly organized, tribalunits, and because his forces were outnumbered by theTurks by perhaps 30 to 1, Lawrence had no choice butto conduct a careful guerrilla campaign. His analysisof the situation and decisions about tactics illustratethe kind of thinking required to implement Musashi’sprinciples effectively.

Lawrence’s reasoning started with the understand-ing that the Arab army could not hold any territory. Itwas too weak for defending any position. Wheneverhis forces were threatened, they needed to fade into thedesert, “disappear like a vapor.” His conclusion wasthat operating materiel — equipment and supplies —rather than men was more crucial to the Turkisharmy. They had plenty of men. But men without foodor clothes or weapons or ammunition are helpless,even against a small force. So, Lawrence determined,the Arab army would attack materiel rather than men.The idea was to concentrate attacks on railroads, sup-plies, or equipment in such a way that Arab soldierswere exposed to little or no danger.

In his book, Seven Pillars of Wisdom, Lawrence said:“The decision of what was critical would always beours. Most wars were wars of contact, both forcesstriving to stay in touch to avoid tactical surprise. Oursshould be a war of detachment. We were to containthe enemy by the silent threat of a vast unknown


desert, not disclosing ourselves until we attacked. Theattack might be nominal, directed not against him, butagainst his stuff; so it would seek neither his strengthnor his weakness, but his most accessible material. Inrailway-cutting it would usually be an empty stretch ofrail; and the more empty, the greater the tacticalsuccess.

“We might develop the rule never to engage theenemy, never afford them a target. Many Turks on ourfront had no chance all the war to fire upon us, and wewere never on the defensive except by accident and inerror. The corollary of such a rule was perfect intelli-gence, so that we could plan in certainty. The chiefagent must be the general’s head; and his understand-ing must be faultless, leaving no room for chance.Morale is built on knowledge and broken by igno-rance. When we knew all about the enemy we shouldbe comfortable.”

In competitive situations, the critical elements aretime and talent. To succeed, time and talent must bealigned precisely, with information as the guide, ontargets which produce sufficient profit (i.e., the War-ren Buffett approach to investment strategy). Attackson competitors must be efficient, that is, low cost.Attacks must be timely. If you can occupy a competi-tor’s critical resources (time and talent) with unpro-ductive tasks, then you can gain a local advantage.The main requirement of this strategy is accurate, reli-able, current information. You, as executive in charge,must know what the competition is doing now.


Operations based on unfounded speculation increasethe risk of failure. Aligning your strength on youropponent’s weakness gives you immense leverage. Ifyou get enough leverage, you can win. Just likeLawrence eventually did.

DONALD TRUMP

Leverage is a concept which is clearly understood byDonald Trump. Trump, unlike Bill Gates and T. E.Lawrence, is not a private person. He has chosen toexhibit a high profile, to “Trump-et” his successes andfailures in the world media. The publicity provides himwith powerful business leverage. He has, in addition,shown himself to be a resilient fighter and superbcompetitor.

Trump has successfully adapted Musashi’s con-cepts, using them in his own fashion to create andmaintain his personal fortune. In his recently pub-lished memoir, Trump: The Art of the Comeback (Ran-dom House, New York, 1997), he gives his views oncompetitive strategy and tactics which I discuss below.These views parallel Musashi’s principles and showhow Musashi’s ideas can be applied in an intenselycompetitive environment.

Musashi teaches that practice and preparation areessential for competitive success. In the same vein,Trump advises that “having money, good looks, andconnections is a wonderful thing and certainly very


important, but if you do not know what you’re doing,money, looks, and connections will not solve yourproblems. There is an old saying that if you put a lotinto something, chances are, you will get a lot out of it.While there’s nothing fancy or pretty about it, plainold hard work is, with very few exceptions, a primaryingredient for attaining success. You can coax luckinto your life by working hard.”

Like Musashi, Trump firmly advocates the philoso-phy of ordered flexibility. Maintain order by graspingcurrent reality. Remain flexible by planning for thefuture. Trump states that “in order to succeed, youreally have to focus on the present. My policy is tolearn from the past, focus on the present, and plan forthe future. One thing that has become clear to me inthe past few years is that you’ve got to be flexible andopen-minded. That’s part of what vision is all about —finding creative ways to make the best of both goodand bad situations. I never got attached to one deal orone approach. I keep a lot of balls in the air becausemost deals fall out no matter how promising they seemat first.”

Napoleon once said that a tree without brancheswill bear no fruit. Plans which are limited to one alter-native often fail due to lack of flexibility. Keep multipleoptions available.

Competition for Donald Trump is both intense andpersonal. He warns, “Deals are people, they are notimpersonal, and if you don’t have a deep understand-ing of people and their motives, you can never become


a great deal maker. You’ve got to be tough. You’ve gotto negotiate tough, and you cannot, at any time, letanyone take advantage of you. Suddenly, the word getsout on the street that you are a pushover — or worse— and whoosh! You’re history.” Sword fighting is likethat, too. Let down your guard for a moment andwhoosh! You really are history.

Making money in real estate, gambling casinos,and hotel management is difficult at best. Trump pro-vides insight into the fundamental aspect of succeed-ing in competition. He describes a situation inreal-estate development as follows: “The whole thingwas a mess. But where there’s turmoil, there’s oppor-tunity. Timing, once again, is everything.” By waitingfor the appropriate moment, Trump was able to profitwhere others had faced only loss. Taking an appropri-ate action at an appropriate time is the basic skill ofthe master competitor.

What is Donald Trump’s competitive sword? Ibelieve his competitive sword has two edges: personalcompetence and public image. He uses both edgesequally well. Trump is a highly competent real-estatedeveloper. Before he became “The Donald,” he provedhimself by successfully developing properties in NewYork. He earned the trust and confidence of the finan-cial community by making money for himself and forothers. His hands-on project management skills andhis ability to work with the building trade in New Yorkallowed him to acquire and profit from opportunities.Personal competence is his first advantage.


There are many personally competent people in theworld. Trump magnified his personal competence bycreating and maintaining a public image. It is difficultto tell where the public Trump ends and the privateone begins. In deal making, Trump’s public imagegives him a terrific weapon.

Look at what he does in his books. He is not the leastbit hesitant about heaping praise or blame on peoplethat have either helped or hurt him, as the case maybe. His praise is effusive; his blame, scathing. If youwere entering a business deal, knowing his propensityfor publicly airing other people’s faults, what wouldyou be thinking? I would certainly be very worriedthat I might end up as a nasty footnote on page 122 ofhis next book. Does this give him an advantage? Possi-bly. As Musashi says, anything that upsets your oppo-nent and causes him to lose his balance will help you.

Trump is a master of using Musashi’s ideas aboutcompetence and confidence presented as Chapter 2(the Foundation chapter). He uses competence tomake sure that his deals work out profitably. He usesconfidence to build a public image which gives himleverage going into deal negotiation. These strategiesare extremely effective for him.

RORKE’S DRIFT

The British army’s invasion of Zululand in 1879 setthe stage for the small, but intense, Battle of Rorke’s


Drift. This ferocious battle teaches the benefits of train-ing, practice, and discipline coupled with soundassessment of the competitive situation, particularlywhen one is caught in some very bad circumstances.The battle is a clinic on how to apply strength againstweakness to succeed in situations where the odds arereally against you.

The Battle of Rorke’s Drift may be the most famousbattle ever fought by British soldiers of the Victorianera. It occurred shortly after the main column ofBritish troops was attacked by the Zulu army at Isan-dlwana (which was about 5 miles away) and sufferedan embarrassing defeat. Three thousand or more Zuluwarriors, who had been part of the reserve forces atthe Battle of Isandlwana, moved against the supplydepot at Rorke’s Drift, which was manned by 150British troops. Outnumbered at least 20 to 1, theBritish troops were nonetheless able to withstandrepeated massed assaults by the Zulus and hold theirposition from the afternoon of January 22, 1879 untilthe morning of January 23 when the Zulu armyretreated.

At first glance, it may seem that the British forcestood no chance against the overwhelming numericalsuperiority of the Zulu force. But the British side hadsome significant strengths. First, they had betterweapons and virtually unlimited ammunition. Themain attack weapon of the Zulu army was a shortstabbing spear which could only be used at shortrange. The Zulus also had a number of rifles and guns.


But because the warriors were not trained to use themeffectively and they had no proper powder or bullets,the guns could not give them any additional impact.The British had modern rifles accurate at ranges of500 yards. Further, Rorke’s Drift was a supply depot.The defenders had lots of bullets.

Second, the British prepared a strong defensiveposition. Walls built of biscuit boxes, meal bags, andoverturned wagons gave them a solid defensiveperimeter. With a bayonet attached, the British riflewas much longer than the Zulu stabbing spear, thetribe’s primary weapon for centuries. This meant thatthe Zulu warriors had to attack by first runningthrough several hundred yards of accurate rifle fire;then they had to go over the walls which were mannedby desperate soldiers armed with bayonets whichcould reach a greater distance than their own spears.Although the British were forced to reduce the size oftheir defensive perimeter during the fight, the wall wasnever breached.

Third, and most important, the British were trainedto fight this kind of engagement and had the militarydiscipline to hold up under pressure. The two officersin charge of the depot on the day of the battle, Lieu-tenants John Chard, an engineer, and Gonville Brom-head, an infantry officer, did not have distinguishedrecords. Chard had not seen action before. They did,however, have years of British army training and dis-cipline. They and their men had a long tradition oforder and performance under fire. Once the two


officers realized their difficult position, they knewexactly what to do. And they did it. I believe they musthave had confidence in their ability to defend this postagainst the threat.

The British survived the Battle of Rorke’s Driftbecause they followed Musashi’s fundamental princi-ple of concentrating strength against weakness. Supe-rior weapons and superior position, coupled witheffective execution, made the difference. The Zulus didnot make good use of their numerical advantage,choosing to waste men and energy in brave, but unco-ordinated, attacks.

COMMON THREADS

In researching the exploits of the master competitors Idiscuss above, I have observed common threads intheir lives and in how they handle competitive situa-tions. Each of these competitors applies the heart ofMusashi’s philosophy, which can be boiled down tothree short statements:

1. Prepare always.2. Recognize reality.3. Take action.

These competitors share some common characteris-tics and experiences:


1. They do not succeed every time. But they do notstop trying and they do learn from their mistakes.

2. They emphasize their strengths, not their weak-nesses. Each person is very strong in applying someof the seven principles of competitive success, but isnot necessarily expert at all of them.

3. They have a high tolerance for random events andunderstand, at least intuitively, the effects of proba-bility on the outcome of their actions. They exploitprobability by aligning strength where it will do themost good.

I do not believe that success in competitive situations isa mere matter of chance. Clearly, preparation, analy-sis, and action play important parts. Opportunityabounds in the wired world of tomorrow. But there aremany people pursuing that opportunity. Without astrong foundation in the principles of winning in com-petition, your ability to obtain power, position, andprestige are diminished. Learn Musashi’s principles.Use them for your benefit.

All the situations discussed above where the weakerforce defeated or withstood attacks by the strongerforce are exceptions to the general rule of competition:most of the time, in competition, whether military orbusiness, the stronger side wins. When you have greatresources at your disposal, it is easy to assume that youcan win in every situation because you usually do. Butin the rapidly evolving wired marketplaces of thetwenty-first century, any kind of complacency will


sooner or later lead to loss. The computer networkwhich exists throughout the world allows swift andconvenient exchange of information about prices andservices. Competitors can literally pop up overnight.Small, lean, concentrated companies can be fierce com-petitors. So can lean, concentrated larger companies.

THE WAY OF THE MASTER COMPETITOR

Musashi’s principles are a reliable, solid framework forcompetitive thinking, regardless of the competitive sit-uation. Working through the seven principles of com-petitive success — each business day, as you makedecisions — will keep important factors up front.When a competitive challenge occurs, you will beready. Here is a quick review of Musashi’s competitiveprinciples for business executives.

MUSASHI’S PRINCIPLES

1. Ordered flexibility2. Execution3. Resources4. Environment5. Attitude6. Concentration7. Timing


1. Ordered flexibility is the fundamental philosophicaltenet of Musashi’s entire approach to winning inconflicts. It embodies preparation, observation,poise, timing, and readiness to act. That is, the com-petitive executive is prepared to do whatever is nec-essary given the actual situation. He is grounded inthe reality of the moment, observant and poised.Yet, he can easily respond to changing circum-stances. He does not make up his mind to act untilthe appropriate time, but when he does act, hemoves decisively. The objective of ordered flexibilityis to allow the executive to determine the mostappropriate response to opportunity or challenge.

2. Execution means getting the job done, applying tac-tics to circumstances. Once competitors have deter-mined where they will align resources and created aplan of action, the plan must be carried out success-fully in order to get the benefits. Several factors shouldbe considered in execution. They are: resources, envi-ronment, attitude, concentration, and timing.

3. Resources are the assets you have available. Themost significant of these is people. The right peoplemust be in the right place. Action depends on peo-ple. In a critical situation, the difference betweensuccess and failure is the competence of the personon the spot. Capable, trained people must be inplace before they are needed.


4. Environment is the place and situation in which acompetitive situation is occurring. It could be assmall as a meeting room or as large as the floor ofthe New York Stock Exchange. There are particulardynamics associated with every different environ-ment. These dynamics must be understood andused to your advantage.

5. Attitude is the way you think about the competitionat hand. Stupidity is not an acceptable attitude. Themost effective attitude is one of ordered flexibility.The facts govern the situation. There is a realitypresent whether you like it or not. Pay attention toreality. Attune your senses to discover the way towin.

6. Concentration simply means focusing yourstrength on your opponent’s weakness. Or, in animpersonal sense, concentration directs resourcestowards opportunity. Effective concentration is crit-ical to success because no company or individualhas unlimited resources. It is like the blade of thesword, the cutting edge of competitive tactics.Sharp concentration is a critical aspect of successin competitive situations. No person or companyhas enough resources to exploit every opportunityor fight every battle. Musashi says:

The ability to focus is your greatest asset in a com-petitive situation. When you appreciate the power of


focus, you will feel the rhythm of your opponent andmaintain control of his actions. You will understandhis approach and effortlessly defeat him by naturallyconcentrating your attack in an appropriate place atan appropriate time.

7. Timing means that action must be taken at theright time. Timing determines whether an actionproduces desired results or produces nothing. Suc-cessful leaders know when to move and when toremain still, when to attack and when to retreat.

The seven principles of competitive thinking devel-oped by Musashi in The Book of Five Rings are as effec-tive for managing today’s business situations as theyhave been for winning military battles. They are botheasy to remember and readily applied. People whotrain themselves and others to use this framework dur-ing normal business operations will automaticallyadopt ordered flexibility during a challenge or crisis,increasing the probability of a successful outcome.Follow Musashi’s principles and be a mastercompetitor.


Book of 5 Rings for Executives

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