“If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.”
– Sun Tzu's “The Art of War,” Chapter 3
When I was in business school, one of my professors mentioned a 2500-year-old book from Ancient China. As you may have guessed, the book was Sun Tzu’s “The Art of War.” He said that it was sometimes assigned reading for Master’s of Business Administration programs in the West, and was even more important in the East (in places like China and Japan). Not many books from 2500 years ago are considered that practical. Sun Tzu was probably a contemporary of Confucius – not to mention Lao Tzu, the founder of Taoism (not to be confused with Sun Tzu). Sun Tzu probably wrote about five centuries before Jesus Christ – earlier than Socrates and Plato. His treatise was primarily focused on military strategy, but it also has applications to some business strategy, as I will show in this post.
Sun Tzu, which translates as “Master Sun”
This book is a fairly quick read, which I got through in about two weeks
But first, I should start by saying that I read this book in November 2010. As I wrote at the time, I “read an hour or two a day for about two weeks. It's actually not a very long read. With translator's notes and introduction included, the version I had was 172 pages with small pages and large text, and a lot of that was commentaries from people in Chinese history.” (Source: Status update of 20 November 2010) This book is divided into 13 chapters. Obviously, the version that I read was in English translation, since I don’t know any Ancient Chinese (or even Modern Chinese). Thus, I cannot rate whether Thomas Cleary’s translation was accurate, or whether it accurately communicates Master Sun’s ideas (“Sun Tzu” means “Master Sun”). But I can testify that the content of the translation was practical and useful, and that these ideas are still relevant today.
The edition of Sun Tzu’s “The Art of War” that I read in 2010
“Know the enemy and know yourself” – or, in other words, gather information about the competition
One of the things that Sun Tzu taught was the necessity of avoiding war. This did not mean that he considered all wars to be unjust, but that he believed that societies should try to avoid war whenever possible. This is interesting philosophically, and unexpected in a book about military strategy. But for the entrepreneurs of the business world, it is difficult (if not impossible) to avoid business competition. Thus, this is one of the few parts of the book that is not really applicable to business. But other parts of the book are much more applicable, and remain quite relevant today. For example, Sun Tzu said to “know the enemy and know yourself.” (Source: Chapter 3) Truer words were never spoken. One must know about the competition, and gather all information possible about them. They should find out about competing products, the prices at which they are offered, the products’ availability in remote areas, and how the competition advertises these products. They should also study the publicly available financial statements of their competitors, which give important information about their financial situation. And obviously, they should know about the financial condition of their own company as well (the “know yourself” part of that statement). Accurate accounting is not only done to keep the company out of legal trouble (although that is a big part of it), but it helps to provide useful information about the company. Information is key in the business world.
The beginning of “The Art of War” in a classical bamboo book, from the reign of the Qianlong Emperor
The importance of “terrain”: Knowing the economic and marketing environment
Sun Tzu also stresses the importance of terrain. In a military sense, the “terrain” is the environment in which a battle is fought. In a business sense, the “terrain” is mainly the economic and marketing environment. It includes studying broader economic trends, and other trends that are more specific to one’s own industry. It involves doing proper marketing research, and knowing what the customers want in advance of selling to them. It may even involve finding out about unmet needs, and the business opportunities that they can create for savvy entrepreneurs. Sun Tzu also stresses the importance of limiting the cost of the battle, and is speaking here about military casualties. But in a business sense, it can be interpreted as controlling the financial costs of running a business. Some businesses spend way too much, and get themselves into trouble as a result. Keeping costs under control is a necessity for any business, and is part of the reason that expenses should be tracked. But this might also be interpreted as a caution against excessive debt, since this can lead to enormous future costs.
A Chinese bamboo book of “The Art of War,” closed to display the cover
Miscellaneous themes, from creativity to alliances to flexibility
Sun Tzu also discusses the importance of current position, and recognizing tactical and strategic opportunities. All of this has applications to the business world. He talks about creativity and timing, which are timeless lessons for entrepreneurs. He talks about forming alliances, a concept that can be applied to business mergers or even partnerships. Not all alliances are equally good, and not all mergers or partnerships are equally wise. But this, too, is a concept with application to business. He talks about the importance of flexibility, which is a timeless lesson for all areas of life. It is no less important in the business world. It helps us to take advantage of sudden opportunities, and to adapt to changing circumstances quickly. Sun Tzu stresses the importance of intelligence, and places a high premium on good espionage. This part can technically be applied to the business world, but its legality is sometimes dubious, since there are sometimes laws against industrial espionage. Of course, there are also ethical and moral issues with doing these things outside of a military context. Companies often make their employees sign a contract promising that they won’t do things like this, which opens these employees up to legal trouble if they ever spy for the competition. Obviously, preventing the competition from spying on yourself is also a necessity, so counter-espionage measures are usually quite legal in the business environment of today. No business wants to be spied upon by their competition.
“Sun Tzu” in ancient seal script (top), regular Traditional (middle), and Simplified (bottom) Chinese character
Keeping things secret from the competition – and thus, to some degree, from the public as well
Sun Tzu said that “All warfare is based on deception.” (Source: Chapter 1) It is somewhat harder to implement this strategy today, because lying to one’s business competition usually means lying to the public as well – and this can sometimes lead to scandal, when applied in the private sector. But even in the modern business world, it is helpful to keep things secret from the competition, and to avoid discussing them in public settings. These things might seem like they’re “just common sense,” but you would be surprised at how many people don’t get them – or, at least, don’t implement them well. “Common sense” is one of the most uncommon of all virtues, which is why it has to be taught in places like business schools. Someone once described the entire finance major as “advanced common sense.” (See this page for details.)
A pocket version of Sun Tzu’s “The Art of War,” displayed to show how short the work is
Conclusion: The lessons of this book are still relevant today, all these centuries later
I cannot do justice to “The Art of War” in a review of this length, but I have tried to comment on some general themes that are extremely applicable to business. Some things should not be taken outside of their military context, and are not always applicable to the business world. But there’s a reason that Japanese executives (not to mention Chinese executives) are often required to read this book. It is a timeless classic about all kinds of strategy, and its relevance has not gone away over the centuries. People are still required to read it today, and not only in the East. For a book of such short length, it manages to be very profound and very useful. It is much recommended for current (or future) business leaders, or those who want to become such.
“All warfare is based on deception. Hence, when we are able to attack, we must seem unable; when using our forces, we must appear inactive; when we are near, we must make the enemy believe we are far away; when far away, we must make him believe we are near.”
– Sun Tzu’s “The Art of War,” Chapter 1
See also:
Wikipedia page on Sun Tzu
Wikipedia page on “The Art of War”
The book itself at Amazon
If you liked this book, you might also like:
Some good quotes from Confucius
The Buddha: The Story of Siddhartha
Niccolò Machiavelli and “The Prince”
Adam Smith and the Pin Factory
Why Adam Smith is still relevant today
My love-hate relationship with economics
What college majors are best for entering the financial field?
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