Business is War

Some have argued that business is not war: war has no client. However, because in Book 1 chapter 3 of “On War”, Carl von Clausewitz says:” "Rather than comparing [war] to art we could more accurately compare it to commerce, which is also a conflict of human interests and activities; and it is still closer to politics, which in turn may be considered as a kind of commerce on a larger scale”. So is business strategy like war?

Wars have been waged by commercial corporations (eg the Hanseatic League, the East India Company) for business objectives. There have always been mercenary armies, businesses that sell their military capabilities. Marxists argue that capitalism inheres war, and point at Gulf War 2.

On the other hand, some business strategists reject the business/war analogy, arguing that business is about the creation of value, whereas war is pure destruction. However, war is about the creation of political value. Thus politics involves creative destruction in much the same manner as business does. Joseph Schumpeter in 1942 coined the phrase “creative destruction” and used the term to describe the process of transformation that accompanies radical innovation, in his book Capitalism, Socialism and Democracy, whereby innovation is the force that sustains long-term economic growth, even as it destroys the value of established companies and employees that enjoy some degree of monopoly power derived from previous technological, organisational, regulatory, and economic innovations. The point is that new developments destroy old, but better comes as a result: this is the parallel between war and business.

Strategy, therefore, is a source of insight into the nature of conflict, whether on the battlefield or in the boardroom.

GE’s legendary Jack Welch said in “Jack, Straight from the Gut” (2001, p447)
"Clausewitz summed up what it had all been about in his classic On War. Men could not reduce strategy to a formula. Detailed planning necessarily failed, due to the inevitable frictions encountered: chance events, imperfections in execution, and the independent will of the opposition. Instead, the human elements were paramount: leadership, morale, and the almost instinctive savvy of the best generals. The Prussian general staff, under the elder von Moltke, perfected these concepts in practice. They did not expect a plan of operations to survive beyond the first contact with the enemy. They set only the broadest of objectives and emphasised seizing unforeseen opportunities as they arose. Strategy was not a lengthy action plan. It was the evolution of a central idea through continually changing circumstances."

The Boston Consulting Group’s Strategy Institute chose as their very first book to publish, in 2001, “Clausewitz on Strategy: Inspiration and Insight From a Master Strategist”. In the field of business strategy, there is no better source than Clausewitz, they state.

Business and war share the notion of strategy, Clausewitz’ strength. He lived in times similar to ours in that business today is in an economic revolution, just as he experienced a military one. Then, as now, the old rules were rendered useless and the world was filled with uncertainty and constant change. Yet the true strategist welcomes such times. Uncertainty is an engine of transformation and the generator of new business opportunities. He recognised that the advantage conveyed by innovations lasts only until the enemy (or the competition) adopts them. In our turbulent times, businesspeople can learn new ways to prepare for competitive battles and wars by studying this major military strategist’s beliefs and adapting his way of thinking to the context of business.

The Genius of Strategy
Every activity requires specific aptitudes of the mind and heart. Military genius is a harmonious combination of personal qualities, and there can be many different combinations. In war, more than other human activities, strategists must make room for chance, however, the ability to prepare for chance is not primarily intellectual. Instead, warriors are constantly confronted by the unexpected. Therefore, to survive, you must have the vision to find the light that leads to truth, even in moments of darkness; and the courage, the determination, to follow that light. The French call the first coup l’oeil. In war, you need a flash of genius to sift through all forces and relationships in play to find the right course. A warrior needs the courage to face personal danger and responsibility. This kind of courage is an act of the heart, not of the mind. Here, determination relieves doubts and saves you from procrastination.

Commanders need not be scholars, but they must understand the politics and issues behind their struggles and the interests of the people involved. They must know the strengths, characters and capabilities of the people they lead, and must be able to estimate how they will perform in various conditions. This knowledge requires a talented mind.

This is why there has never been an outstanding commander who had a lesser mind. Those who describe war as an “art” or “science” focus only on material issues; that is why these metaphors are irrelevant. As war evolved and became more complex, scholars tried to invent principles and theories to describe it, but none of the theories captured the infinite difficulties of real warfare. Theoretical concepts may be useful tools for gaining insight, but in battle, talent and genius aren’t bound by theory. War is a trinity, made up of 1) innate violence, which is subject to blind hatred and instinct; 2) the interplay of probability and chance, which frees the mind to act creatively and 3) its subordinate nature as a political instrument, which is subject to pure reason. A theory that ignores any of these is worthless.

The Theatre of Strategy
War is closer to trade or politics than art, for both are conflicts of human interests and activities. War is set apart as an act of will against a person who reacts. One side must balance its efforts against its opponent’s ability to resist, as set by the opponent’s means and strength of will. War looks simple to those who’ve never experienced it. In fact, it is simple — but nonetheless very difficult. Infinite minor events create a friction that only those who’ve experienced war can grasp. The combination of this friction and the randomness of war has incalculable consequences. A good general must recognise this friction and never expect real-life operations to run precisely. Instead, generals must think in terms of probability. True, you try to leave as little to chance as possible, but that doesn’t mean the
most certain course is best. Sometimes generals should follow the most daring path instead.

Intelligence means the information you have about your enemy. Much of the intelligence generals get in war is contradictory, dubious or simply wrong. Furthermore, people naturally believe bad news more readily than good. A commander must lean toward hope, not give in to fear. Generals must stay true to their inner convictions even as they’re battered by bad news. Seeing things correctly in war is difficult, and so matters often look very different from what was expected. This is one great difference between planning and execution. A commander needs bravery and ambition, plus experience with danger, to reach even ordinary goals.

Thinking Strategy
War planning means planning combat. But combat is the sum of complete, individual acts, which we call engagements. Planning the use of your forces in engagements is tactics; joining them together to achieve the war’s objective is strategy. See engagements as links in a chain, each leading to the next, so that a momentary advantage doesn’t turn to a later disadvantage.

Battle is more the province of tactics than strategy. But strategy gives direction to battles and determines the plans for campaigns. Once a larger goal is clear, planning a strategy to reach it is easy, but it takes great clarity, confidence and character to stay with the plan amidst war’s jolts. Making strategic decisions is harder than making tactical ones. In tactics, the commander is caught up in the moment. Strategy offers time for deliberation, discussion and remorse. Thus, most generals get bogged down by fear when they should be acting.

In defence, you wait for the blow. Indeed, much of war is spent waiting. Sometimes it’s best to wait for the enemy’s attack, then respond with your attack at a better moment.

Waiting is the hallmark of defence and its main advantage. Attack and defence lead to each other. Every defence leads to a means of attack. In any engagement, three critical things lead to victory: surprise, advantageous terrain and attack from several sides. The attacker has only some surprise and a multi-pronged attack in his favour; the defender alone has maximum surprise, varied attack and all the advantage of terrain. Attackers can generate surprise only by using their full forces; defenders can create surprise with the strength and form of their attacks.

The attacker has a positive purpose, conquest, while the defence has a negative goal: preservation. Yet paradoxically, defensive war is inherently stronger than offence. It is natural in war to start on defence and end on offence. If you expect the future to be better than the present, stay on defence. If you think the future is more promising for the enemy, then attack. The third (and most common) situation is when neither side has any strong expectation for the future. In that event, the political aggressor takes the offensive. After waiting, the defence counterattacks.

If you have an advantage after the enemy’s attack, strike quickly. This transition to the attack is the vital element of defence. Just as defence leads to counterattack, so an attack that does not lead to peace must end on defence. The great weakness is that after an attack, the aggressor is in a poor position for defence. Don’t attack a capable enemy who is in a good position. In defence, caution is the true genius, while attackers need boldness and confidence. The weaker the defender’s morale, the more audacious the attack should be. The only real advantage of attack is the ability to achieve some surprise, which can cause confusion among the enemy, shattering his courage. However, the friction of war tends to dilute the advantages of surprise attack. Surprise can succeed, with favorable circumstances, but it rarely yields much benefit.

Numerical superiority is probably the most important advantage a commander can have in battle, but the advantage must be large enough to offset all others. Thus, focus the largest number of troops possible at the decisive point in the battle. Do not divide your forces without an urgent reason. All forces must be available at once. Using more force can often reduce losses, so commanders who use their forces economically are on the surest path to victory. Your battle plan should also be simple enough for you to attack before the enemy can interrupt your plans. Attack the core of an enemy’s strength, unless some secondary target offers extraordinary benefits. Thus, when you draft a war plan, recognise the enemy’s centre of power, then combine your forces against that centre in a single major action.

Fighting is always interrupted by pauses, long or short. These pauses come when neither side wants anything positive. When one side chooses a new positive goal, acts to achieve it and meets resistance from the other side, there’s a tension of forces. A measure taken during a state of tension is more important, and yields greater results, than it would during a pause. Generals must recognise these states of equilibrium and tension, and then act accordingly. Often one side does not completely defeat the other, but instead a culminating moment occurs when one side reaches its main objective. This is a dangerous moment for the victor. If the overextended, exhausted victor overshoots the goal, the enemy often responds with a destructive counterattack. A commander must know when to halt the attack.

The Virtues of Strategy
Moral forces are a vital topic in war. Any theory of war must acknowledge their power, but they are not easily defined or codified. In war, the main moral powers are the general’s talents, the army’s military skills and popular sentiment. When all armies seem similarly skilled, sentiment and the army’s excellence play a larger role.

Military virtues go beyond mere courage. Courage, while needed, must submit to a chain of command. Since the individual’s role in war cannot be eliminated, an army needs esprit de corps, which gives it cohesion and crystallises its skills. An excellent army is one that stays in order under fire, resists fear, stays obedient even in defeat, and remains confident in its generals. This military virtue is to the individual what the general’s genius is to the whole. This spirit comes only from many victories, or rigorous training. War is a composite of the battles fought by each soldier, and victory is the sum of their victories.

A commander’s virtues must include boldness, but as a general moves up the chain of command, boldness must be paired with a superior mind, so it doesn’t become blind emotion. Generals must have perseverance, so that they are not diverted by mistakes, misinformation and uncertainty. They must also have great self-control, a character that does not lose its balance in the face of the strongest passions.

Beyond Strategy
Only start a war if you intend to pursue both your immediate and your ultimate goals with full strength and effort. It is a serious means to a serious end. War always arises from a policy motive. It is the result of pulsating tensions that grow strong enough to burst into fighting, but it always remains under the control of a guiding intelligence.

Therefore, war is always influenced by policy. It is, then, an extension of political will by other means. Those means must conform with the policy goal; they can never be separated from the ends.

War Gaming
Here’s what I believe. CvC’s thoughts are fascinating, but I feel they are useful to business strategists as illustrations or analogies. Business strategy more closely equates to military strategy in war-gaming. War-gaming is something that I and all the other Aberystwyth students in the War, Politics & Strategy group know well and have studied.

War gaming is a technique that uses in-depth role-playing. Few business managers outside of the top ranks have ever participated in a war game. Straightforward war games can help any manager make better competitive decisions. War games are useful to prepare for market shifts, experiment with strategies, manage new initiatives, create support for a business case, diagnose its deficiencies, and attack – or defend against – your competitors. War games can break through conventional wisdom, reveal crucial data gaps, create support for a campaign and improve awareness of your firm’s position.

War games involve acting out various roles. Preparation includes researching competitors and other parties whose decisions may change the field of play. Live role-playing works best, especially when a decision or a plan is at stake, and the wrong decision will be costly.

Famous Games
War games go back a long way. Frederick the Great carried a war game kit. In the 1800s, Otto von Bismarck studied probable political responses to his plans, and devised strategies that united Germany. In 1976, Israeli forces used a thorough, detailed war game to plan the rescue of hostages held in Entebbe, Uganda. They role-played the hijackers, who had taken over an Air France flight between Tel Aviv and Paris, and the Ugandan sentries, officers, radar operators and other potential participants on the ground, including erratic Ugandan leader, Idi Amin. Israel’s successful rescue mission took about 90 minutes, thanks to thorough, realistic war game preparation.

In the 2002 Millennium Challenge, a $250-million war game exercise, some 13,500 participants enacted a hypothetical US military campaign against an unnamed Middle Eastern opponent. The Blue Team represented the US at a time when Secretary of Defence Donald Rumsfeld wanted to reshape its military into a technological powerhouse.

Paul Van Riper, retired head of the Marines’ Combat Development Council, led the hypothetical Middle Eastern Red Team. Red humiliated Blue with unconventional tactics, rendering Blue’s high-tech military power all but impotent. For instance, Red sank Blue’s navy with suicide attacks. This was so unexpected and unwelcome that the game’s organisers vetoed it. They resurrected Blue’s navy and told Van Riper to disable Red’s air defences so Blue could attack successfully. Rumsfeld’s team declared victory, having followed a script, but not having played a genuine war game. They took the US to war in Iraq using tactics they believed should, in all rightness, have won both the Challenge and the actual war. Van Riper soon quit. We are now living with the consequences. Business leaders are too.