CHAPTER 1 Part V

7) Administration of Rewards and Punishment (赏罚孰明？)

Here I would like to stress the importance of rewards and punishment. Han Fei Zi, a great politician during the Warring States Era stressed the importance of administering rewards and punishment, writing two chapters on it. He said that the administration of it is so important it actually determines the survival or demise of the nation. And equate the administration power of rewards and punishment of the ruler to the fangs and claws to a tiger. Without the power, the ruler would not be able to administer the affairs of the state well. Would anyone listen to their supervisor if it lacks the power to administer rewards and punishment? Of course not, because he has lost authority on you.

One of the two chapters written by Han Fei Zi, is about setting the rules and condition for rewards and punishment and the next chapter on how to administer it. The reason why a chapter was written on the administration is because during those days and even till now, we tend to reward more to people that we know and love and excuse our relatives or friends from punishment when they make a mistake. Why is this so? This is because firstly, we are human beings thus we have feelings and secondly is because these friends affect our social life. We do not want to offend them.

So it is important in the modern business that they structure their reward and punishment correctly so that their work is aligned with that of the business strategy and culture. For example if you reward base on individual sales, it is very likely you would not be promoting teamwork. If you reward base on individual product department performance, it is very unlikely that cross selling would not occur.

Besides aligning with the business strategy and culture, the administration of rewards and punishment plays a big part in talent management strategies as well. In business, the pay you give to your staff is always compared to one that is similar job scope and preferably in the same industry to make a good comparison. Beside the pay being compared with other similar jobs, it is also compared with inflation as well. Employee may feel shortchanged, especially in times of high inflation, when income increase cannot be in tune with inflation.

There are other factors that determine whether the administration is successful or not. But I shall leave it to other appropriate times.

Cheers!

Chapter 1 Part IV

5) Equipped level and numerical strength of army - Technology available to staff

Now in war the equipped level and the numerical strength of the army plays and important part in victory. Because the larger the army, the more you can strengthen you positions or attack more places to distract your enemy. The next best thing would be to equip your army with the best armor and weapon so that they have the advantage over the enemy’s army. This advantage, no matter how small or little, will be important during war. Because as I said in war, it is either live or death, for the nation as a whole.

So how does this relate to business? We can easily interpret this as the equipped level of your staff in carrying out their jobs. For instance, an employee cannot do much if you only provide her with a typewriter. All she can do is fill out forms or file a report. But if you provide her with a computer, now that is a totally different thing. She can do calculation of account, enter accounts and so on.

Each and every staff should be equipped with the bare necessities to help improve their work rate. We have seen how Wal-Mart is using the latest technology, RFID, to help improve their logistics and sales. By using technology, you would be able to provide your staff with real time data so that they can make quick decision and clinch sales easily. Of course all these have to be weighted against the costs of buying and installing the technology. Be well versed with the latest available technology, note their development and once it is advantageous to equip your staff with it, go ahead to buy it.

6) Training Level of Army – skill set and knowledge level of Staff

When we say equipped level, most people would quickly relate to technology available to staff, we tend to overlook the software which is the skill set of the staff. We need to send our staff to attain more skills and knowledge. Knowledge of the industry to feel the pulse of it, new developments in their field like sales and marketing, knowledge of maximising the efficiency of the technology available and so on. A computer is nothing if one does not have the knowledge to use. Now another point I want to mention here is that most employer would send their employees to pick up skills that are needed immediately but this often does not provide a company with a competitive edge, what employers should look out for is sending staff to obtain skills that are needed in the future so that you are well equipped to handle the new opportunities that you foresee coming and reduce the reaction lag as mention in Porter’s Competitive Strategy.

Now a lot of people worry that if you send these people to improve their skill sets, they would leave for greener pastures when they are poached for that skill. I would suggest that you make this clear to the employee and ask that he be contracted for a period of time or at least require the staff to pay part of the training fees, not substantially of course.

Chapter 1 Part III

I shall talk more about the next area.

4) Effective and Efficient Execution of Orders - Business Systems like inventory management, delivery system and others.

In the fourth sub areas proposed by Sun Zi, it queries whether an army is able to execute orders efficiently and effectively.

In war, if the orders are not clearly passed down to everyone in the army, confusion will prevail and would render the whole army useless and in the end the general would not be able to execute his strategy. So we can see from here is that strategies can be formulated but there would be risk in carrying out the strategy. In Romance of Three Kingdoms, we have marveled at the strategies that was formulated by Kong Ming, or more often known as Zhuge Liang, but if the generals that he delegated the assignment to was not able to execute them well, his strategies would be useless no matter how good it sound on paper.

Relating this to business, I think the most prominent thing that a company should go for is to improve the business systems in his company. Business systems could be logistic/supply chain systems, sales processing systems, HR systems and many more. As most companies, operate or expand, they should aim to improve their systems. Make it more convenient and effective for the staffs that are using it. Sometimes, as the companies expand too fast, like catering to several overseas market or relocation of some functions of the company to other countries and so on, some requirements that were needed could be redundant and new requirements & regulations or technology must be added to improve it.

So how do you improve the systems in your company? Well, need I say more, ask the people who are using the system. For example, for sales processing system, ask your salespeople, admin staff for the system. You may include your IT personnel to see if there could be some cost effective automation integrated into the process.

All in all, give your staff the necessary resources and convenience to carry out their task effectively and efficiently. Hope this bit of information would help those that are reading this. Cheers!

Chapter 1 Part II

Have been doing a lot of reading, have been reading Michael Porter’s Competitive Strategy and also the former CEO of IBM, Louis V. Gerstner Who says elephants can’t dance? (For those who have read my other blog would know why I am reading two books at a time.) Both of these books are excellent so I would really recommend anyone who is interested in venturing into business to read these books. I am halfway through and I hope I will have time to put my thoughts on these books in this blog, as well.

Ok, I shall talk more about the first three areas of the 7 sub areas I was talking about in my previous blog.

1) Unity: Employer or top management ability to unite the company or department behind a vision or to achieve certain goals

As the heading says, political leadership in war is equivalent to the ability of the top management of the company to unite behind certain goals and vision.
Easier said than done? Sure but I think there are certain guidelines we can follow, first of all, the idea and purpose of the goals and vision should be made as clear as possible to the whole company. How do you do that? Quite easy, in my opinion, involve the whole company in crafting the goals and painting the vision. For those of you who has seen the recent episode of Apprentice 3, in the graffiti competition, the leader of Magna Corp, was able to consult some of the kids from the street to provide some input to the graffiti that they were painting. In the end, because the focus group that determines the winner was able to identify with the graffiti, (the kids and the focus group came from the same neighborhood), the Magna Corp won the competition.

For those of you from big companies, it is definitely very difficult to involve the whole company. So the top management could decide some macro goals and vision, pass it down to the middle management and get them to craft out the goals of their department according to the goals or vision crafted by the top management and so on. What is important is the whole company can relate to the macro goals and vision painted by the top management.

Another important factor is the hiring process. Michael Dell, from Dell Computers stresses that it is important to hire people who is completely in sync with the company’s philosophy and objectives. This person’s thinking must be compatible with company’s value and belief. (Pls read Direct From Dell by Michael Dell).

2) Capability of Generals: Capability of Manager or Team Leader (Leadership)

This is more straightforward than the previous sub-area. This is one area that is quite important in my opinion. The reason why I say that is because firstly, a good leader would have been able to unite and command the respect of his army and people of the nation. A wise general would not be leading his army to attack when weather conditions are bad or terrain is unfavorable. Even if he is forced to do so, his wisdom (one of the characteristics for mentioned comparison) would be able make his troops avoid engaging his enemies or turn disadvantages into advantages. Good generals would be able to create a strong organization structure and control in his army through the other four characteristic mentioned for comparison.

The five capabilities that are advocated by Sun Zi are Wisdom, Benevolence, Courage, Discipline and Trustworthiness. Just these five characteristics are definitely not and exhaustive list of the characteristic of a good leader, but in my opinion these five are the most important so that an army, or in business, the project team or department to function properly. And from these five words, there are a lot of things to look out for, which I shall not write here or I would be writing a whole chapter. For those who are interested in discussing the five characteristics can drop me a mail. I would love to discuss such works with like-minded people.

3) Advantage of provided by Weather and Terrain: Different Aspects of Market like the culture of people, government set rules and regulation

This is something that is not straightforward, not a lot of people can relate from weather and terrain with respect to which area of business. After reading some books and some thoughts, I would like many to take note of the difference.

For weather, we know that in war, the advantages and disadvantages presented by it can be tremendous and influence is wide ranging. It is one of the factors that we cannot control at all. For business, these could be the trends that are happening in the broad industry. Like certain consumer trends, e.g. Consumers are going for healthier food. Grey-ing market, Current Technology is going the convergent route and so on.

So what about terrain? Well after much thought I think it can be comparable to the market you are battling or catering to. Depending on the market and your strategic focus, the barriers of entry and exit are determined. If you have looked through Sun Zi Art of War, you would have known that when Sun Zi mentioned about terrain, it is most of the time, how easy or difficult one can enter the terrain. For a comprehensive list of barriers of entry or exit, I would recommend Michael Porter’s Competitive Strategy which I am still reading.

So there you have it, very long, but I thoroughly enjoy writing these out for all those out there to help in your business. This is just a very short summary of the thoughts I have on Sun Zi Art of War. If you want more info, just drop me an email, I will contact you asap.

And also I am interested in meeting more people who share the same interest as me, so drop me a mail!

Cheers!

Business = War

As mentioned, I am going to write some thoughts on Sun Zi Art of War Application on Business. Please feel free to give me any comments and opinion that you have!

In the first part of Chapter 1 of Sun Zi Art of War, it was mentioned that going to war is of vital importance to the state, because it can determine whether it survives or not and also whether it will prosper or be destroyed. There is no in between. Since the stakes are high, initial planning and assessment are critical.

So which area should the ruler look at before deciding to go to war? Sun Zi proposed these five main areas and they are broken down into seven sub areas.

We can see from the writings that Sun Zi is a very meticulous person because he broke the five points down to the dimensions that one should look out for. For example, he broke down the terrain into whether it is high or low, near or far, wide plains or narrow paths, treacherous or accessible or the weather is broke down into cold or hot, night or day and which season it is in.

The 5 areas and 7 sub- areas are:

故经之已五，校之以计，而索其情: 一曰道，二曰天，三曰地，四曰将，五曰法。

1) Political leadership of the Ruler (道)
2) The weather where the battle is taking place (天)
3) The terrain where the battle is taking place （地）
4) Generalship, the person commanding the battle （将）
5) Army organization structure and systems （法）

7 Sub areas

a) Moral influence of a Ruler （主孰有道?)
b) Capability of General (将孰有能?)
c) Advantage of provided by Weather and Terrain (天地孰得?)
d) Effective and Efficient Execution of Orders (法令孰行?)
e) Equipped level and numerical strength of army (兵众孰强？)
f) Training level of army (士卒孰练？)
g) Administration of rewards and punishment (赏罚孰明？)

Relating to business aspect, these are important factors that determine the successful implementation of a company’s strategy. The key here is to relate these factors to business. There should not be much difficulty in relating these factors from military to business.

a) Employer or top management ability to unite the company or department behind a vision or to achieve certain goals
b) Capability of Manager or Team Leader
c) Different Aspects of Market like the culture of people, government set rules and regulation
d) Business Systems like inventory management, delivery system and others
e) Technology available to staff
f) Skill set and knowledge level of staff
g) Administration of rewards and punishment

In the next blog, I will talk more about the first three sub-areas and its application on business strategy assessment.

Strategist At Work

Hello to all those who are reading this.

I am currently reading Sun Tzu Art of War. Currently looking at where it can be applied to various aspect of business especially on strategies. So keep a look out for it. For those who are English educated only, there is a book I recommend, if you are really interested in Sun Tzu Art of War. The title is Sun Zi Art of War - An Illustrated Translation With Asian Perspectives and Insights by Prof Wee Chou Hou (Note: I am not receiving anything from him for recommending his book) His book is one of the best translated book on Sun Tzu Art of War I have seen. Since it is the only English Book on Sun Zi Art of War that was written by a Chinese.

In this blog, I am going to write about Sun Tzu Art of War first since I am re-reading it again and publish some thoughts and its application on BIZ. I will be going on to other Ancient Chinese Classics like Romance of Three Kingdoms, 36 Strategies, Wu Zi Art of War. Hope it will help those people who are at the executive level or just started their business.

I will also post some thoughts on business books that I am going to read as well. Do feel free to comment. Cheers!