The Tao of Strategy

How Seven Eastern Philosophies Help Solve Twenty-First-Century Business Challenges

L. J. Bourgeois,Serge Eygenson,Kanokrat Namasondhi

• Publisher: University of Virginia Press
• Year: 2021
• ISBN:
  9780813946559
• Topic: Negocios y empresa
• Subtopic: Formación empresarial

The Tao of Strategy combines ancient wisdom from the Eastern world's great philosophers and lessons from modern-day business leaders to provide readers innovative approaches to unlock strategic breakthroughs for themselves and their organizations.

Today's organizational strategists—including executives, managers, consultants, and the business students who aspire to join their ranks—will encounter novel ways of solving complex problems. In this engaging examination of the wisdom of Confucius and the strategies of The Art of War, the mindfulness of the Buddha and the perspectives of the Bhagavad Gita, as well as the advice of The Tao Te Ching and the fun of playing the ancient board game of Go, The Tao of Strategy presents alternative, creative ways to open up one's strategic thinking.

The Tao of Strategy highlights a range of companies, from earth-moving equipment manufacturers Komatsu and Caterpillar to technology providers Infosys and Sun Microsystems to financial institutions Bank of America and Goldman Sachs. Interviews with chief executives from China Steel, PTT Group, Bacardi, Rodale Press, Aston Martin, and other organizations reveal how insights from Eastern philosophy inform the strategic decision-making of organizations and leaders around the world.

By engaging with Eastern philosophy from the perspective of organizational strategy, The Tao of Strategy offers a novel approach to strategic thinking that can help readers navigate today's increasingly complex strategic challenges and unpredictable global environment.

Part I

Strategy

We travel from Western approaches to business strategy formulation to the Eastern way of strategy as revealed in ancient warfare treatises and strategic board games.

Overview of Part I

In chapter 1 we encounter traditional treatments of strategy as seen in almost all MBA programs and practiced by most strategic planning professionals. However, we also note how rarely strategy happens as intended. Instead, new strategy often emerges from efforts to implement the intended strategy. We also introduce William Duggan’s notion of strategic intuition, where new insights can suddenly emerge when the strategist has beginner’s mind, connects two previously unrelated pieces of knowledge, and follows through with resolve.

In chapter 2, we look at how The Art of War lays out strategies, tactics, and factors that increase the probability of success on the battlefield. While the 500 BCE general Sun Tzu focused on the army as the unit of analysis, the seventeenth-century samurai swordsman Miyamoto Musashi’s Book of Five Rings focused on the individual and the development of his or her skills in combat. Musashi introduces the concept of emptiness (similar to Buddhism’s beginner’s mind). Both authors emphasize the need to remain flexible, adapt to life’s circumstances, prepare constantly, and invest in the process of acquiring new knowledge.

In chapter 3, we derive some surprising strategic-thinking benefits from playing the ancient board game Go. Playing Go teaches us the value—indeed, the necessity—of strategic intuition versus attempting to plan everything in advance. Just as important, we study the practice of focusing simultaneously on a number of battles taking place across the board.

1

Strategy, Insight, and Competitive Advantage

Flashes of insight are rarely experienced during the traditional strategic planning process. But strategists must undertake that process to build the foundation necessary for preparing their minds for the unforeseen flashes that will occur along the way—what we will describe as part of a firm’s “emergent strategy.”

White Sulphur Springs, West Virginia, 2018

“But, we didn’t come up with a breakthrough or anything particularly creative.”

Clay Cox, the chief marketing officer at Dominion Analytics, was describing his concerns to the senior author, who had led the firm’s planning retreat at the Greenbrier resort. “Sure, the strategic initiatives that emerged from our three days of planning are a stretch. But they seem kind of obvious.”

“Are you confident in your conclusions and paths forward?” asked the author.

“Yes, but I was expecting us to find a riveting ‘aha’ moment during the planning process,” Clay retorted, somewhat dispiritedly.

Clay’s top management colleagues, however, were content. The meeting was over, and the team was now armed with an in-depth industry analysis; a thorough understanding of Dominion’s capabilities and competitive advantages; a new mission with a destination and a timeline; and a set of well-thought-out action plans for competing in the defense cyberwarfare industry. Exhausted, they packed their bags and began the journey back to their headquarters in northern Virginia, ready to start executing the new strategic initiatives. Next week, they would start finding the resources to turbocharge their new product development, create a marketing culture, and improve the inner workings of the corporation—three of their new strategic initiatives.

Stockholm, Sweden, 2007

It came in a flash. “Of course! Let’s get our cases in front of business executives and MBA students around the world.”

The senior author, then associate dean for international affairs at the Darden School of Business at the University of Virginia, was walking past the open door of an executive classroom at Stockholm’s Swedish School of Economics. He was on a multischool tour around the world, nourishing existing relationships with other MBA programs and establishing new ones. As he passed the classroom, he noted that the students had on their desks a business case study published by INSEAD, the renowned French business school.

Two years previously, in 2005, the senior author had met with Darden dean Bob Bruner to discuss the school’s globalization strategy. The author had asked, “How will the Darden School be different in ten years? What is our strategic vision?”

“We will be recognized as among the best MBA programs in the world,” replied Bruner. This was a bold statement, as it was generally acknowledged that Darden was seen as a great regional school that had only recently achieved national ranking in the U.S.

How to do this? Darden had a total of ten thousand alumni at that time, of whom a thousand lived overseas. By contrast, Wharton had eighty-five thousand alumni, of whom thirty-five thousand lived outside the U.S. Certainly, it could not be a numbers-led game of “market share” or on-the-ground critical mass. How could Darden increase its share of mind, if not share of market, in the global arena?

The question vexed the Center for Global Initiatives (CGI), which Bourgeois headed.1 The center had conducted a typical strategic analysis, taking the following steps:

1. 1. Analyzing trends in the global market for business education—GMAT test-taking, application trends, and the like.
2. 2. Conducting detailed analyses of twenty major global competitors, including Harvard, Wharton, and Chicago in the U.S.; INSEAD, London Business School, and IMD (Switzerland) in Europe; and some Asian business schools such as HKUST in Hong Kong and CEIBS in Shanghai. The analyses were conducted along a variety of dimensions, including the nature of the students, faculty, and alumni, and the extent of the schools’ global outreach.
3. 3. Taking inventory of Darden’s strengths, such as an outstanding classroom experience, students chosen on the basis of character as well as credentials, abundance of research resources, and a successful and extremely loyal alumni base.
4. 4. Generating a number of strategic alternatives, including establishing a Darden outpost in Asia, Europe, or South America.

The appeal of an overseas center was strong, because several other globally known players had established them as well. There were two problems. One, how could Darden raise the resources to fund such a center? The strategic plan had estimated a three-year startup period and an operational cost of USD15 million. Could Darden sell this idea to alumni donors? And, two, was this merely a copycat strategy?

The next two years were spent scoping out possible sites and partnerships with schools at each location. Beijing? Hong Kong? Singapore? New Delhi? Bangalore? The dean and associate dean called on several prominent and prosperous alumni, seeking both counsel and support.

But it wasn’t until 2007, on the trip to Stockholm, that the senior author had the flash, the “aha” strategic insight. Darden’s case-writing skills and its case-publishing arm, Darden Business Publishing, were slowly being honed and positioned to increase the school’s outside sales of classroom-ready business cases. But they hadn’t been included in the inventory of strengths (step 3 above). Darden students often complained that the case collection was very U.S.-centric and did not promote learning about business around the world.

Seeing the Swedish students using INSEAD cases, it dawned on Bourgeois that one stone—the production of international cases—could kill two birds: globalizing student learning at Darden, and placing the school’s brand in front of thousands of executive eyes around the world. The infrastructure was in place, and—most important—CGI had yet to budget for the coming year. Why not offer incentives to Darden faculty to write international cases?

Earlier in the day, Bourgeois had enjoyed a morning jog near his hotel in Stockholm, with the concomitant experience of “thinking about nothing.” While he was aware of obstacles on the sidewalk to be avoided and street corners to be turned, his mind was focused solely on the thumping bass line of Paul Simon’s “You Can Call Me Al” in his earbuds. In other words, Bourgeois had begun his day clearheaded and undistracted, with what the Buddha called beginner’s mind—fertile ground for the kind of insight that occurred to him that afternoon.

The resulting strategy was to set up a program that would subsidize case-writing activities, such that if a case were to address cross-border issues or take place outside the U.S., CGI would provide up to USD8,000 in subsidies to the effort. In addition, CGI would use its network of partner schools, alumni, and corporate contacts to generate new case leads. For example, in Italy, Bocconi University’s business school had offered access to nearby Ferrari.

The first scenario described above (Dominion Analytics) occurs on a regular basis in strategy consulting firms and across corporations all over the world. Solid analytical and economic analyses yield insights into possible futures for the firm and probable competitor and customer reactions, but the results are usually logical and incremental extensions of current strategies. The second scenario, on the other hand, is more descriptive of the strategic insight process that occurs when an executive implements a strategic initiative and takes corrective action when it doesn’t go as planned. As Bryan Quinn of Dartmouth said, “To assume your strategy is cast in concrete is to assume that new information has zero value.”2

Conventional Strategic Planning

Various approaches to strategic analysis are available, and although the details differ they all have fundamental components in common. These approaches typically attempt to find an optimal match between the resources and the capabilities available within the firm (strengths and weaknesses) and the external market conditions and environmental trends (opportunities and threats). This match or coalignment (often called a SWOT analysis) results in a strategy whose efficacy translates into some level of corporate performance. The basic dimensions of this fairly straightforward approach are illustrated in the strategy model shown in figure 1.

A key feature in the basic strategy model is the reciprocal influence of all of the variables. For example, in the late 1980s a partner at Arthur D. Little (ADL), a major science-based consulting firm, was reading a New York Times story about how the level of expenditures on health care in the United States was accelerating, a trend likely to continue. He connected this with the recognition that his firm had several professionals on staff who had carried out health-care-related assignments such as designing hospitals and evaluating medical group acquisitions. By responding to the market opportunity and articulating a health-care strategy, ADL would define a new domain (as the arrow drawn from strategy to external environment in fig. 1 illustrates) based on existing internal capabilities (arrow drawn from internal organization to strategy). Having chosen the new domain, the firm would now have to respond to the dictates of the marketplace (arrow from external environment to strategy) by, for example, designing products and services that would be in demand or adapting to whatever governmental regulations might be relevant. To implement the new strategy, ADL might reorganize its staff so that all professionals working on health-care assignments were grouped together (arrow from strategy to internal organization). Over time, this group might increase its proficiency by sharing experience, knowledge, and the like. The degree of success would be manifested in some level of performance (arrow from strategy to performance), and in turn, the performance level would serve as feedback, indicating that further adaptations of strategy might be in order (arrow from performance to strategy).

Figure 1. The basic strategy model

The model represents a system of interacting parts. But the picture painted thus far is not complete. A “perfect” strategy might be found to violate an organization’s noneconomic values.

In our ADL example, there was strong support for the health-care venture among senior management and some of the professional staff. That is, the venture fit the ...