Chapter 8. The Eastern Approach to Strategy

At the time of writing, The Art of War ranked fourth on Amazon’s ‘Strategy & Competition^⁠1’ bestseller list. So why do modern strategists continue to turn to this 2,500 year-old Chinese military treatise for insights? The answer may be that war and business share two fundamental characteristics:

1. Competition with rivals
2. Uncertainty — arising from the not knowing the intentions or actions of competitors.

Yet, despite its popularity, many business strategists today treat this work as little more than a source of pithy quotes to sprinkle their presentations with. As Derek M. C. Yuen wryly observed, “The Art of War is often heard of and read but seldom understood in the West^⁠2” since most Westerners lack an understanding of the Chinese philosophical tradition that both shaped Sun Tzu’s classic and reveals its strategic depth.

The opening line of The Art of War states that “war is a vital matter of state”. Yet, paradoxically, this work emerged from “a culture in which warfare is neither celebrated nor glorified, and in which military heroism is a rather undeveloped idea^⁠3”. The Chinese recognised that all wars, even victorious ones, are devastating as they drain resources from crucial areas like infrastructure, education and culture on which future prosperity depends. In the Chinese tradition therefore, war was seen only as an act of last resort.

However, China’s endless history also taught them that war is unavoidable. Therefore, any leader who does not study warfare is irresponsible. This pragmatism explains why “many if not most of the classical Chinese philosophical works contain lengthy treatises on military thought^⁠4”. Yet, the Chinese study of warfare is less about winning on the battlefield and more about winning without needing a battlefield and The Art of War is a high-point of this approach:

As the world's longest continuous civilisation, China retains an “intimate link to its ancient past and classical principles of strategy^⁠5” and Chinese leaders can invoke “strategic principles from a millennium-old event” and feel confident others will “understand the significance of [these] allusions”. When China faced threats from a hostile Soviet Union to the North and an ambitious Vietnam to the South, Mao Zedong resolved this peril by invoking the principle of “defeating the near barbarians with the assistance of the far barbarians^⁠6”. Mao’s 1972 rapprochement with the ‘far barbarians’ (the USA) reduced the threat from the ‘near barbarians’ on China’s borders by leveraging their mutual antagonisms, keeping them focused on each other, rather than China. Mao’s openness to the US surprised many foreigner observers, but his reference to a successful stratagem from Chinese history would have clearly and succinctly communicated his intention to his own people that, ultimately, helped create the stable conditions China needed to re-emerge as a great power.

The challenge for modern (non-Chinese) strategists is how to extract strategic insights from The Art of War if they’re unfamiliar with the long historical and philosophical traditions that shaped it? The long answer would be to learn Chinese and study their classical texts. A more pragmatic answer is to examine some of the key principles in The Art of War and explore how they influence the Eastern approach to strategy.

Shi has been described as the “key and defining idea^⁠7” in The Art of War. Like many concepts in Chinese — a highly-contextual language where meaning depends on the situation — shi has no direct translation. However, we can grasp its essence through the metaphors, often drawn from nature, Chinese philosophers used to explain these subtle concepts. Laozi, a contemporary of Sun Tzu, wrote: “Nothing in the world is more flexible and yielding than water. Yet when it attacks the firm and the strong, none can withstand it, because they have no way to change it”^⁠8. Laozi’s metaphor compares shi to water — adapting to the terrain, taking no permanent shape, so it cannot be attacked directly, giving it time to accumulate sufficient force upstream that its downstream flow eventually creates irresistible, inevitable outcomes:

We can understand shi as the accumulation and release of potential in a given situation. And strategic advantage comes from working with this potential, rather than against it, as an old Taoist story illustrates:

This story reveals two key principles needed for harnessing strategic advantage (shi):

In Chinese philosophy, even highly-uncertain situations are thought to unfold “according to a general pattern that can not only be anticipated, but can be manipulated to one's advantage^⁠9”. This requires cultivating both awareness and adaptiveness to create beneficial consequences: Actively waiting^⁠10for favourable conditionsto form (awareness); then exploiting the inherent potential in the situation with the right action and timing (adaptiveness). This is the source of competitive advantage at the heart of the Eastern approach to strategy.

However, in the Chinese philosophical tradition, no two situations can be considered entirely identical as “minute fluctuations can amplify into dramatic changes^⁠11”. Therefore, there are no universal recipes to follow. Instead, wise commanders must continually improve their awareness of the current situation, extracting rich information from commonly recurring patterns: Troops leaning on their weapons as a sign of tiredness, suggesting they’re ripe for being attacked; birds gathering in trees pointing to unoccupied positions in enemy lines that can be exploited^⁠12. Yet, a wise commander must also be alert to deception — an enemy who makes you think they’re distant when they’re near, or too tired to fight when they’re well rested and ready for battle:

Ever changing conditions and pervasive uncertainty explains why wise commanders do not allow those far away — political commanders or advisors — to influence decision-making at the frontline. Those far from the frontline lack real-time information and therefore tend to re-fight the last war. This makes their strategic moves predictable and more easily countered by commanders who take their intelligence “directly from the specific situation” and use it to enhance their "capacity to thus control events^⁠13”:

Sun Tzu provided a framework of ‘Five Factors’ commanders can use to assess the potential in a situation and ‘anticipate victory^⁠14’ — he was clear about its importance:

The First Factor is tao — or the Way^⁠15 — which is concerned with how well-aligned troops are with their commander around a common direction or purpose.

The Second Factor is climate, which is concerned with the rotation of days and seasons.

The Third Factor is terrain, which is concerned with the physical landscape and distances involved, as well as how these may be affected by changes in climate.

The Fourth Factor is command, which is concerned with the decisions a commander makes — after considering tao, climate and terrain — based on their “wisdom, integrity, humanity, courage, and discipline^⁠16”.

The Final Factor concerns regulations, which determine how effectively a commander’s forces can respond to different situations through “organisational effectiveness, a chain of command, and … logistical support^⁠17”.

Wise commanders use the Five Factors to anticipate whom conditions favour more:

And wise commanders use the Five Factors to harness strategic advantage (shi) from conditions by:

Victory therefore doesn’t come from daring or courage but from shi. This is The Art of Strategic Advantage:

Chinese philosophers understood that “unforeseen circumstances may arise” in any situation, meaning “it is not always possible to draw up a plan in advance^⁠18”. This is why commanders, in the Chinese philosophical tradition, are encouraged to cultivate superior awareness. Awareness helps them identify the potential (shi) in changing situations, while they can tip the scales further in their favour by using deception to hinder their rivals’ awareness — creating a mis-match between reality and their rivals’ perception of it. Commanders are also encouraged to develop adaptiveness in their forces ahead of time to ensure they can respond effectively — making the right moves at the right time — to harness the potential in a situation. When their attack comes, it’s like a raging torrent crashing down a gorge, impossible to resist:

² Deciphering Sun Tzu. Derek M. C. Yuen. (2014) p.3

³ Sun-Tzu: The Art of Warfare (Introduction by Roger Ames) p.31

⁴ Sun-Tzu: The Art of Warfare (Introduction by Roger Ames) p.31

⁵ On China. Kissinger (2011) P21

⁶ On China. Kissinger (2011) p93

⁷ Sun-Tzu The Art of Warfare (translated by Roger Ames) p.50

⁸ Tao Te Ching (Chapter 78)

⁹ Deciphering Sun Tzu. Derek M. C. Yuen. (2014) p.53

¹⁰ Making a constant, rigorous effort to understand the truth of the current situation, how it’s changing and where your options for action might be.

¹¹ Sun-Tzu: The Art of Warfare (Introduction by Roger Ames) p.62

¹² The Art of War, chapter 9

¹³ Sun-Tzu: The Art of Warfare (Introduction by Roger Ames) p.63

¹⁴ The Art of War, chapter 3

¹⁵ Again, another very difficult concept to translate simply.

¹⁶ The Art of War, chapter 1

¹⁷ The Art of War, chapter 1

¹⁸ Deciphering Sun Tzu. Derek M. C. Yuen. (2014) p.82

¹⁹ On China. Kissinger (2011) p54