I must confess to a very limited business education. In fact, I spent just three intensive months in the early 1990s doing an executive management programme at Ashridge Business School in the UK. The members of my group, mainly men, were already board directors and would conceivably become chief executives. Top of our reading list was The Art of War, Sun Tzu’s classic.
Management theorists have long used military thinking not only as a metaphor for business strategy but also as object lessons in competition analysis, supply line management, leadership, organisational structure and success tactics. The job of running a company, goes the consensus, is very much like running an army, and corporate growth strategy very much like winning a war.
But is conventional military strategy still a useful paradigm for the corporate world?
Last year, John Arquilla, professor of defence analysis at the US Naval Postgraduate School in California, wrote a shocking article in the journal Foreign Policy called “The new rules of war”. Every day, he argues, the US military spends $1.75bn, much of it on big ships, big guns and big battalions that are not only not needed for any of the current conflicts in which the US is engaged, but are unlikely to be required in the future either. His first new rule of war is that “many and small” beats “few and large”. No matter how overwhelming the national force, nations cannot win against networks. Military power will continue to fail against smaller, nimbler and more mobile guerrilla insurgents, and technology is helping those networks form and organise.
David James, executive professor of marketing and growth management at Henley Business School, has been teaching his students the business lessons to be learned not from military strategy, but from Somali pirates. A raid costing $30,000 and involving 12 pirates in inflatables has an average chance of one in three of winning a prize worth many millions of dollars. Avoiding “symmetrical conflict”, the pirates use stealth and surprise, attacking their quarry at its weakest point. By the time the captain of an oil tanker sees the pirates’ inflatables, it’s too late. Just as the tanker is too slow and cumbersome to react to small, narrowly focused attackers, so large corporations are vulnerable to attack from small, disruptive upstarts, he suggests.
Citing Wonga.com, the UK internet loans company, Prof James shows how a small company has successfully stolen market share from banking conglomerates thousands of per cent bigger by attacking their inflexible and laborious lending policies. Companies need “commando” forces that are locally focused and not trammelled by weighty bureaucracies, distant reporting structures and drawn-out timelines, he says.
Women are generally thought to be better at keeping the peace than waging war – or indeed piratical attacks. Perhaps what companies (and nations) may need in the future are better strategies for negotiating with competitors, sharing resources, identifying common aims and creating win-win scenarios. Might the executive management programmes of the future draw parallels from diplomacy rather than warfare?