Aligning remuneration with strategy

Aligning remuneration with strategy seem to be a common theme in most corporate turnaround I have read. For instance Continental Airlines (HBR, Sep/Oct 1998) and Baxter International change their remuneration and incentive plans to make sure each and every part of the organization is aligned with the announced strategy. And they have successfully done it.

During my MBA course of study, I also have learnt that remuneration plan is also one of the way to effectively cement any changes, be it corporate culture, strategy or structure. As such we can see the importance of the structure of remuneration plans. But how can we have a good remuneration plan? I feel the most important is a performance management system.

The performance management system should be able to measure the relevant factors. The form of measurement should be metric, meaning that it should be measurable and a number can be churned up to decide if one is performing well or not. To be aligned with the strategy, relevancy of the measure should be high as well. No use wasting resources on measuring something that is not relevant to the strategy we want to execute.

The measure should not be complex and transparent as well. As such, there would be less dispute over the measurement and energy can be channelled to executing the strategy effectively and efficiently.

It is important that the performance management system is aligned with the remuneration which in turn is aligned with the strategy otherwise, the strategy might not be executed well and it could be disastrous in a corporate turnaround where many families likelihood are affected in the case of bankruptcies or massive retrenchment.

Related Books

Buying Employee's Loyalty

Buying Employee's Loyalty is something all employers should try to do in good times and bad times. Reason is because as we understood from many management books is that high turnover can be very harmful to the company, especially those that are in the Knowledge Industry. Any staff that leave takes with him specific knowledge, skills and experience which can be very valuable. If there is an intention to replace the headcount, the organization fit and job fit might not be suitable and the corporation definitely will need time to make the new hire fully functional, usually a few months.

Of course it is unrealistic to achieve zero turnover or use legal covenants to bind the employee to the company. Doing such actions would destroy the employee's loyalty to the company and in the end he will try to rationalise his efforts in the company and not give extra value to the company. He might bad mouth the company outside and this could hurt the company's ability to attract talents. Worst thing is to leak out information of the company or take great miscalculated risk causing severe damage to company he is working in.

In this bad times, it is an opportunity to buy the employee's loyalty by treating them better than other companies which can be easily done. Treat them like customers, meet their needs using the remuneration system. Show that you care about their welfare, in fact if the company is making money, part of the profits should be shared to the employee during this bad times. Employees see that they are treated well during a downturn will be much willing to increase their loyalty to the company. Such satisfaction and happiness working in a company that cares for them in bad times can translate into greater efforts put in their jobs. The benefit is even greater in good times when other companies' staff recover from lower morale while the company that takes care of the employee's in bad times move to higher morale.

Are you buying your employee's loyalty now? Do it where possible. This recession would not last long, your company will last longer but at the end will your company be stronger or weaker after the economy disaster?

Related Books

Gathering Wisdom of Talents

Gathering the wisdom of talents is another skill the managers or entrepreneurs should learn.

Quoting a saying from Han Fei Zi,

"Low level ruler will gather all his efforts and skills, mid level ruler will gather the efforts of all, high level ruler will gather the wisdom of all."

A great ruler will rule by gathering the wisdom of his men. This applies similarly to managers as well. They must be able to gather the wisdom of his team members. The reason is because of the unique individual experiences, we can look at a problem or solutions at many angles. As such, we can be assured that most angles are covered and mistakes would not be made so easily.

So what skill is needed to "gather wisdom"? I believe there are three ingredients required.

1) Culture/Trust
2) People Skill

Are you adopting an open culture? If your culture is not open, no one will open up and you would not be able to gather their wisdom because it is locked up inside their brain and not communicated to anyone. For a culture to be open, there must be trust, trust that credit is given where it is due and trust that what they said would not be used against them.

Managers also need people's skill, to motivate, to understand and again to create a 'trusting' environment.

As a side note, if you notice, one of the ingredients required is also the five qualities that is required to be a great general, as stated by Sun Tzu. (Please click here to read the article "Five Essential Characteristic of General" and quote in Chinese Wiki)

Related Books

Nurturing Talents

Nurturing Talents is part of any managers or employers job scope. It is very important how you nurture your talents.

If you plant pomelo trees, you can enjoy its fruits that gives out a nice smell and is sweet when eaten. If you plant hedge thorns, you will be pricked by its thorns. Thus it is of importance that the ruler takes note of what he talent he is 'planting'. - Han Fei Zi, Chapter 33

From this we can see that we have to be careful how we nurture talents. If we do not nurture well, the results can come back to 'prick' us. Managing talents is always one of the most difficult part of a manager's or employer's job because there is no one size fits all management approach due to the differences in each employees.

But I feel the most basic any managers should do is to take out some time to understand their team members, in which environment they perform well, why they are doing this job and most important of all, as the saying of Sun Tzu is seen below,

When the general regards his troops as infants, they will be willing to follow him through the greatest threats and gravest danger. When the general treats his troops like beloved sons, they will be willing to support and die for him. An army may be so overly pampered by the general that it cannot be useful, so excessively loved that it cannot be commanded and so disorderly that it cannot be disciplined. Such and army is like a bunch of spoilt and arrogant brats , and cannot be deployed. - Sun Tzu Art of War, Chapter 10

treat your team members like family members, show them that you genuinely care about their welfare. Do try your best to join your team members in any dinner or game session so that you have more time to bond with them and also understand their character better. When you understand them better, you can better assign suitable tasks to them and also avoid 'destructive' conflicts.

So go and put the dinner or game appointment in your schedule now. Get yourself invited to lunch. Chat with them and be open.

Related Books

Importance of Strategic Planning

What is the importance of Strategic Planning? Well there are at least two ancient sages that say that and they are Sun Tzu and Han Fei Zi.

In conclusion, those who have considered more details during planning and assessment in the temple will win while those who have considered fewer details will lose. The more details considered, the higher the chances of winning and vice versa. How much more certain is defeat if no planning is done at all? By observing the planning and assessment process, I am able to see whether victory or defeat is expected. - Sun Tzu Art of War, Chapter 1

Strategy, it decides between success and failures, thus its assessment is of utmost importance. - Han Fei Zi, Chapter 2

Well I can guess most of you would have said: "Of course I know strategy is important. Its obvious". Wait don't go away yet. You know strategy is important, so are you achieving your dreams, or in the process of achieving your dreams? If you are, think about how much planning have you done for the your strategy to achieve your dreams. I am quite sure there is a handful of you out there who only manage to sit down for 1hr (hopefully this is an underestimate) to do the planning and research. I know because I also tend to do that. The reason is because we find it quite 'painful' to do it especially when we know circumstances change and we might have to change or even scrap the strategy, thus finding it a waste of time.

But let me assure you, beside the importance of strategic planning, during your planning and assessment, you can learn a lot of things on the way which will cut down your learning curve in the future. So do make it a habit of planning your strategy and also assessing its effectiveness maybe once a week. Learn how to set goals and execute your strategy well. All the best in achieving your dreams!

Related Books

Stages of Talent Management

After reading so much about Ancient China's History and Military Works. I have gathered that there are three stages of using talents and all require great skills and wisdom. The three stages are as follows:

1) Recognize Talents
2) "Buy" Talents
3) Use Talents

Recognize Talents (识人)

Before you can even think about using talents, you must first be able to recognize one. How to recognize one? Well in this day and age, where information are plenty. 'Googling' for talents maybe something a company can look into. 'Google' the skills that you require and seek out the website contributors of those sites you think might lead you to the talent you are seeking. Another way of finding and recognizing talents is to ask those you know to recommend one. Usually, if one bother to recommend, even if it is only one, you should spend time to look into his recommendation. Would you recommend someone for the job if he is not good?

"Buy" Talents (得人)

Now what do I mean by "buying" talents? Very simply put, to have your talent pledge loyalty to you. Why is this so? Very simple, if you are not able to gain the loyalty of the talent you are seeking, do you think he will give you his best? So recognize the needs of your talents and give it to them where possible. Now, providing a huge renumeration package can only buy that much amount of loyalty. It has to be accompanied with other intangibles like nice working environment, good working relationship with subordinates and supervisor and so on.

Use Talents (用人)

After you have recognize and "buy" the talents, then you have to know how to use the talents. You have to put him in a position that would allow his talents to add the greatest value to the company. This comes with giving an adequate amount of authority to his position as well. Because even if you put him in a position that will allow him to use his talents to the fullest, if you 'tie' him up without giving enough authority to make decision, it is equivalent to not using him at all.

So these are a brief description of the three stages of using talents. Hope it helps in your human resource management.

Recruitment Ads

Everytime I look at the Recruitment Ads in the newspapers, I cannot help but wonder, doesn't the company knows that these ads are also a form of advertising for them? What is recruitment ads for anyway? Just to find someone to fill in a position? Or you are finding the best person to fill in the position. If your reason is the latter, I think you should put in more effort in your ads. Because most of these ads are boring. Black and white only, no fanciful words to capture attention at all. Logos are not even colored.

Let me show some advantages if you put in some effort in your recruitment ads.

1) Your ads must capture as much attention as possible. The more people notice your ads, it builds on your brand equity which is good even if you did not manage to hire anyone. Capturing attention would also mean more people will apply for the job as well, having a large pool to choose from should be a better headache for the Human Resource Department then to choose from a small pool of averages.

2) Have a job description that gives prestige to the job. The more prestigious the job sounds, the more people are going to apply, because it will capture their emotions as well. They would feel that they are contributing a lot to society and company. Job description can sometimes send a nice signal to consumers as well since job applicants are consumers at the end of the day. For example," Looking for good personalities that can make our clients feel at ease." Such sentence would firstly, make the applicant feel good since he/she is making someone day nice. Secondly, any consumer who sees this would think that "Hmmmm.... this company is good since they are more customer oriented which means my needs can be met." Don't you think so?

3) Always have another email to welcome anyone who is interested to join the company. Since you have already advertised, adding another line to the advertisement does not cost much and it sends the signal that the company value talents. Again this will build on the company's goodwill.

Of course there are other ways as well to extract more value from your recruitment ads, but I shall leave that to the readers.

Cheers!

Waiting in and out

Was at a bank today to settle some personal stuff. Well, as the bank is located at a basement, the queue that started to form up was in a place that is not well ventilated at all. Thus most of the people have to queue up feeling hot and sweaty.

Now would it not be better if the bank had let their customers wait in comfort instead? The bank can still start at the stated opening hours, but when the customers are waiting in comfort, tempers are not that bad, and we know that when a customer is in a bad temper, fury may be unleashed to your front line stuff. Your frontline stuff would then have a good challenge in front to pacify the customer and also offer a level of service that can satisfy customer expectation.

By making the work of your employee easier, it can reduce the turnover rate and it makes the working environment better as well, and how much does it costs your company? Nothing because it is the environment which you had already provided. So practically no costs at all. Think about it. A small gesture of letting your customer to wait in comfort will improve customer experience with you, improve work environment for your employee and reduce (to a certain extent) employee turnover.

Cheers!

Growth & Innovation

Was reading the book that I mentioned in the last posts. It was talking about restraints to growth. From another point of view, restraints are good because we are unlikely to sacrifice long term growth for short term growth if we work within restraints. For example, when we are growing, we need to consume resources in our businesses, so resource constraint to a certain extent will limit our growth. If our growth rate is too far ahead then what we can handle, quality may deteriorate and depending on the product or service that we sell, this could have devastating effect.

But sometime, instead of griping these restraints, sometimes these restraints can be trends that we can tap on to grow or create a bursts of innovation that could either further or create another competitive advantages. For instance in the book, Sam Walton's wife would not move into a big town, so Sam Walton only open his stalls in small towns, thus avoid agitating his rivals who are in the larger towns, and grow to a size that can challenge.

For innovation, challenge the rules, decide if they are outdated or not. Check with your customers, ask them what problems they have encountered using your product or even those of your closest competitors. Yes, do keep in touch with your customers often. Make feedback simple for them. Know their problem and try to solve it with innovation. In the book, they mentioned there was one potato chip company found that their customers like to dip their chips in sauces and they love to eat it with a lot of sauces, so in the end they cut their chips in wavy pattern so that it can scoop more sauces and such a simple innovation has help them secure a lot more customer loyalty.

What lead to faulty thinking by Managers

I am reading this book "Bigger isn't Always Better" by Robert M. Tomasko published by AMACOM. Inside this book there is a section that mentioned why managers may have faulty thinking which I think the readers should know. They are

1) Unrealistic Optimism

Optimism is good because it is an enabler of growth, but too much of it may make people feel too capable, mistakenly think that they can achieve anything, and in the end put in too much money to earn too few profit.

2) Egocentrism

Individuals who come to think that they are the only ones who matter are likely to make many perceptual error. This is one of the traits that Sun Zi mentioned in Chapter 8 of Sun Zi Art of War. Being egocentric, chances are he will only act in ways that will benefit himself, most of the time not knowing how this behavior could impact others.

3) Omniscience

These refer to people who thinks that they already know what needs to be known and do not need to seek advice or more knowledge. These are the people who are most likely to make decision without considering the ramifications of their actions. They are so full of themselves that they are not able to consider more details during planning, compare to one that is always seeking more knowledge and advice.

4) Omnipotence

These are people who thinks they are all so powerful, pushing people through obstacles when actually they can be solved by seeking useful feedback. They think that since they are in a powerful position, they are there permanently and whatever they do will be inconsequential to their position. Assumptions of reality is confused with reality itself.

5) Invulnerability

This is the thinking that one can do anything without being harmed or exposed. Often times leading to underestimation of competitors.

Do you have these people in your companies?

Cheers!

Word of Mouth Marketing II

I am still reading the book that I recommended in my last blog post. I feel this book is really good, because firstly the author is very familiar with how word-of-mouth marketing works. Inside the book, he also tells us how to conduct research on how to find out how it works, and how you can tap this knowledge to your advantage.

To see how word-of-marketing works in your industry, the author recommend you create focus group and in this focus group, there should be a group of enthusiastic users for your products or services and a slightly larger group of non-users. Take not that enthusiastic users should be smaller in number than non-users. Strange it may seem, but after the many experience he had, this is what he has found out. The author also work in retailing through his father’s shop for a long time and has seen how his father created word-of-mouth marketing to work for him and his stores.

So I strongly recommended this book to whoever wants to explore and use this powerful marketing tool.

Another thing I want to share with the readers is a short article I read in Harvard Business Review June 2006 Issue. The article is talking about offering choices to customers. It is found out that there is a number of choices that becomes a tipping point where it will reduce customer's satisfaction. Yes, it does not mean that the greater the number of choices, the higher the customer satisfaction or can capture a larger share of the market. I personally think this is true because, once the number of choice becomes large, I would need help to find one option that can satisfy me. This complicates my purchase decision and at the end of the day, I might just give up either by not purchasing or just choose an option that I initially think is the best but at the end does not fit me at all. And since it does not fit me at all, my satisfaction is lower, and the company would lose a customer.

Food for thoughts? Sure. Cheers!

Word of Mouth Marketing I

Currently I am reading this book titled "The Secrets of Word-of-Mouth Marketing." by George Silverman. I have read until Chapter 6. In the first few chapters, it is talking about how come the word-of-mouth marketing is so powerful. The first reason is because it actually reduce the decision time and costs and depending on the word-of-mouth that the prospects listen to, the extent of reducing the decision time and costs would be different. It also talks about the nine levels of word-of-mouth marketing, from spewing bad things about your products and services to eagerly sharing what is good about your products and services.

The book also says what type of medium of word-of-mouth marketing should be used for the niche market that you want to focus on. For example, if you are targeting innovators, the keywords that should be used in your word-of-mouth marketing would be, "It's so new and unusual, no one's even heard of it. It works on a totally new principle. Most people wouldn't even understand it." Sentence of similar nature would get the innovator market to be interested in your products or services.

The book also breaks the buying process into the following stages.
1) Deciding to Decide
2) Weighing Information
3) Trial
4) Implementing
5) Expanding Commitment

In the end, I strongly recommend this book to people who are interested in marketing, no matter whether you are interested in knowing more about Word-of-Mouth Marketing. I am now reading the section about Expert to Expert/Expert to Peer/Peer to Peer Word-of-Mouth.

One point I hope to stress to users is, have you rewarded customers that persuade their friends or acquaintances to buy your product? I think this is an area that is greatly neglected by most of the companies. Imagine if you are rewarded for sharing a product that you loved, you would be extremely loyal to the product. As mentioned in many business books, it is cheaper to make a repeat sale then to make a new sale. Take note of this.

Power and Strategy Execution

Relating to Sun Zi Art of War on Army Organization. After reading Making Strategy Work, Chapter Nine. I finally notice a small difference between military and business. A point that is not specified in most of the military works that I have read.

In business, there is such a thing as power influence from other departments which is something that is not, at least commonly, seen in war. I think this may have derived from the very small difference between war and business.

According to the book, power by a certain department in a company is a result of resource allocation and functions. For example, a certain department may have certain things, that arises from resources it has or dept's functions, that another department wants in order to function. This created a dependece and in the end, power can be wield to influence this other department. And given human nature, each individual department would like to retain and perpetuate its power. This would then have an influence on strategy execution. This desire to perpetuate power is what is commonly known as office politics.

The department that wields the most power will have an influence on whether the strategy would be executed successfully. So high level management, please take note of how much power you have given to specific departments through resource allocation and function scope (a result of structure). Having too much power concentrated on one or a few departments could jeopardise the successful exceution of strategy.

Unity

I am currently reading the Six Strategies of Jiang Tai Gong. He is the advisor to the King Wen and Wu of the Zhou Dynasty. He helped the two kings to overthrow the Shang Dynasty and established the Zhou Dynasty.

There is a paragraph that mentioned the importance of unity. With unity, then the troops can be used to achieve the objectives of war, because a disunited troops will not act as a strong unit but act as several small units that would be easily overcome.

In Sun Zi Art of War, there is mentioned of unity as well. The people of the nation is united behind the ruler and the troops move in one single unit. Many of the troops deployment and movement strategies requires troops to move in a single unit. For example when attacking, it is required that the troops concentrate on the weakness of the enemy. When feigning weakness, the whole troops must work together to make sure the enemy will perceive them in disarray which would require that the troops work together as a unit.

So how do we ensure unity in business, well there are many ways. One is to improve communication between everyone in the company. One is to flatten the structure, but that may result in a need for change in business strategy and culture. Because corporate structure can affect your execution of business strategy and corporate culture.

But communication is the one and only method to ensure unity. Communication is both and art and a science that will take years to master even if it is corporate style. Other things that can ensure unity is during goal setting time within the departments. And again the values, vision and mission of the company will also keep the company united as one.

As I mentioned before, in the book "Built to Last", the visionary companies focus on getting the people that will fit into the values, mission and vision of the company first before capabilities are considered. Thus, again shows the importance of having unity in the companies.

So as we can see, there are a lot of business applications we can find from these Art of War from Ancient Chinese Military Strategists. Cheers!

Rewards and Punishment Part II

As most of you may know, I am reading the book "Making Strategy Works" published by Wharton School Publishing. Inside, the book it is talking about the components that are critical in making your corporate or business strategy works. So one chapter was devoted to Rewards and Punishment. As I mentioned in my previous blog, in many of the ancient chinese military works, there are many mentioned of having a good system of rewards and punishment. So I just want to share some of the thoughts and stuff that I have read here.

There are many brief mentioned of the system of rewards and punishment in many of the works, for example, Sun Zi Art of War, Six Strategist by Jiang Taigong, Han Fei Zi and many others. They only mentioned that the system must be transparent and should be the same regardless of who. Which means, there is no such thing as biasness, all are treated equal under the system.

The system is suppose to reward the correct behavior and rectify the undesirable behavior in the army, thus it is necessary as it impose certain level of discipline and unity into the troops which is critical because how can one fight an army that has a mind of its own or, each individual in the army act according to what they deem fancy.

Bringing this to business will be actually, rewards and punishment should help the company's staff to focus on getting the short term goals that would ultimately lead to the success of execution of strategy. So rewards must be given immediately when the target has been reached and like I mentioned in another set of blog, the goals set must be clear-cut. There is no such thing as grey area. It is either achieved or not achieved yet. And once it is achieved, rewards must be given out quick so as to send a signal that you value and recognize the staff's contribution to achieving the short term goal. Thus would incentivise him to quickly achieve the next goal, knowing that once he achieved it, the rewards would be given as promised. This is just one side of the integrity of the rewards and punishment system. When rules are broken, some form of punishment must be meted out as well, but one must also built in the consideration of the circumstances as well. For example, if the goals set was to achieve, 20% increase in sales revenue, but the manager only achieved 16% but his peers in other companies only achieved 12% due to the industry conditions, then punishment should still be meted out but one must be lenient not to enforce the full extent of the punishment. Even if the person committing the mistake is of the highest level of authority, he must also show that he is liable for punishment as well. Or else he himself would compromise the integrity of the system and in the end incur an even larger costs to the company.

In Romance of Three Kingdoms, in one of the scenario, Cao Cao order his troops not to trample the rice fields of the commoners, those who committ the offense will be executed, but during the march, his horse was startled by the birds that suddenly appear from the rice fields, his horse ran through the rice field, trampling a good part of it. He wanted to execute himself, to maintain the integrity of the system, but his advisor knows his intention and told him how can the leader be executed, so in the end, Cao Cao cut his hair to represent that he has been 'executed'. (In the past, hair is not cut because it is believed that since any part of the body is given by the parents, it would be unfilial to cause 'hurt' to the body) Thus, Cao Cao was able to maintain the integrity of the system.

Of course in business, things are not so straightforward. The extent of rewards and punishment is also important as well. One must reward enough to make his staff motivated to achieve short term goals on time. Too small an extent of reward does not have a good effect of motivation, too large an extent would incur unnecessary costs to the company. Too small an extent of punishment, may cause the mistake to be repeated. Too large an extent may actually weaken the morale of the staff, because the person being punished may hold grudges and consequences maybe unthinkable. And the extent may be difficult to grasp when the rewards promised or punishment meted out maybe to a group of person.

So this system is a critical part of strategy execution, and definitely it is an art and science to implement it successfully. Hope I can discover more of it and share it with readers here.

Cheers!

Swiftness

其用战也贵速，久则兵钝挫锐，攻城则力屈，久暴师则国用不足。夫钝兵挫锐，屈力殚货，则诸侯乘其弊而起，虽有智者，不能善其后。故兵闻拙速，未睹巧之久也。夫兵久而国利者，未之有也。故不尽知用兵之害者，则不能尽知用兵之利也。

The purpose of raising an army is to achieve swift and decisive victory. If victory cannot be achieved quickly, the army would be lethargic and lose their fighting spirit. When they attacked city walls, they would be greatly exhausted. If the army is out on a military campaign for too long, the nation’s resources would be greatly depleted. When the army is in a bad shape and the resources of the nation are exhausted, other neighboring warlords would capitalize on these weaknesses by launching an attack on us. Even if there are clever and capable strategists or advisors, they would not be able to reverse the situation.

While blunders are known to occur during military operations, one has yet witness a successful military operations where there are long delays. No one has seen a military campaign where the longer the campaign, the more beneficial it is to the nation.

Someone who does not fully understand the inherent danger of deploying troops would also not understand the advantages of using it.

Now where can we apply the concept of swiftness in business? Well most people would say, when we launch a marketing campaign, it must be swift and capture the attention of target market fast. Or when we want to implement a strategy against business competitors, the strategy must be implemented swiftly so that 'damage' is done without any resistance from our business competitors. These are normal areas most people can think of when applying swiftness.

In my opinion, there are other places where swiftness can be used as well. Recently, the SK-II saga in China is one good example where swiftness can be applied. When facing bad press, a company should swiftly have a plan to compensate those affected and also do what a responsible company should do, for example, product recall and make arrangement for refund of payment. By responding to these crises fast, would you be able to firstly reduce damage, secondly, do not let customer loyalty drop down too much so much so it does not pass the threshold level and you may even get new customers as well, because consumers will know that buying your product will reduce the risk they have to bear. And in times like this, if you swifly reduce damage, you may have a few less customers to badmouth about your services.

So how can we act swiftly? The key is to overprepare and always play out many possible scenarios. For example if you are in the food business, there maybe food poisoning, illegal substance found in raw materials, medical studies show that eating one of the raw materials you use is harmful and so on. You have to have your whole supply and manufacturing process put on a piece of paper and play out the various scenario that can happen to each stage of the process, and through these scenarios, play out what are the rectifying plan you can have, to swiftly counter the scenario.

Management of Talent -Sun Zi Part 2

As most of you who are familiar and waiting for this blog to update, I am back and I hope to commit at least one entry per week for this blog.


将听吾计，用之必胜，留之。将不听吾计，用之必败，去之。计利以听，乃为之势，以佐其外。势者，因利而制权也。

Generals who adopt my strategies would be able to win the battle; he must be retained. Generals who do not adopt my strategies would not be able to win the battle, he must be removed. Besides adopting the proposed plans and strategies, the general must create or take advantage of situations to push for success and victories.

Yes, I have mentioned this sentence before in my previous blog entry, but I shall talk more abt it substantiated with this book titled " Built to Last". People who read a lot of business books will know that this book is a must read and a prequel to "From Good to Great" In one of the chapters in the book, it was talking that these visionaries companies and strong advocate of their ideologies. And they make sure that their staff from ALL levels are able to follow these ideologies. Most of them have their own training program that will make sure these ideologies are imprint on to present and new staff. With these ideologies in mind, the staff are them given a lot of latitude in how they carry out their work as long as they adhere to the ideologies set out by the company. The staff can make some mistakes as long as these mistakes do not go against the company's ideologies, but once they go against it, even for only one time, they are immediately sacked from the company, no excuses. But of course with this strong requirement of following the company's ideologies, staff are paid well compare to other companies in the same industry. So those that believe and advocate their respective company's ideologies are rewarded extremely well, while those who cannot fit in are out sooner or later.

To a certain extent, these strong advocacy of ideologies also caused those that flourish in the visionary companies to be united. These unitedness is important as mentioned in Chapter 1 of Sun Zi Art of War or below.

道者，令民与上同意者也，可与之死，可与之生，民不畏危。

Political Leadership of Ruler refers to the ability of the ruler to unite the nation’s people and army for its cause. If the ruler is a strong leader, he is able to unite the whole nation, his people and army would be willing to lay down their lives for him and brave dangers.

These strong advocacy of ideologies set up would make the staff be united for many generations of CEO to come.

Chapter 1: Part VIII - Strike where Rival Least Expect

攻其不备，出其不意

Sun Zi said to attack places where your enemy is not well prepared or least expects an attack. It is not difficult to know the reason behind for saying such a statement. Only by attacking in such places would you have a greater chance of victory and at smaller costs because these are the places that have the least resistance.

BUSINESS APPLICATION (1): If you are a small business owner and fretting about the competition from big businesses or corporate. Why not look at how the big companies carry out their businesses. Ask their customers how they find the big companies’ services. Find the weaknesses in their services. This is the place where you can ‘attack’ and provide better services. For all you know, it may be because of the size of these big companies which is why such weaknesses appear. This is where you can actually work together with big companies to provide a more comprehensive service to customers, carving a niche for yourself.

LIFE AND BUSINESS APPLICATION (2): Remember in the first section of the commentary, where we say that initial planning and assessment are of vital importance. Looking from another point of view for this section’s header, have you overlook anything that you have planned recently, is there anything you have left out of your consideration in your initial planning? In this world of fast changing environment, some details that you once considered to be obsolete and some new details that require your attention could surface. Please note that the more details you look at and consider, the less chance that a crisis may hit you where you least expected. So the more details you expect, the more prepared you are. To quote from Rudolph W. Giuliani, PREPARE RELENTLESSLY.

Chapter 1: Part VII - Deception

兵者，诡道也。

Sun Zi mentioned that deception is also part of war. The reason is, as Sun Zi mentioned in the first line of the chapter, war can determine the survival of the nation and its people. So it is of great importance to gain as much advantages over the enemies as possible. Deception would be able to achieve that. Thus the wisdom of the generals comes into play. He must be able to execute his deception well so that the enemy will be completely taken into it and gain advantages or attack the enemies where he least expect it. Note that your enemies can also use deception on you as well.

From my opinion, the deciding factor whether a deception is well executed is the wisdom of the general. Wise generals would be able to come up with a fool proof plan, avoid being deceived by enemies and change his plan accordingly when the enemies are not deceived at all.

BUSINESS APPLICATION: In business, deceptions can also be used but I am not going to go into that. But what we can use here for business is the word ‘secrecy’. As we all know, corporate strategies must be kept secret in order to reap the full benefits after execution of it. If these strategies are leaked out, your business rivals would be able to at least prevent damage or in a worse case scenario, come up with a counter strategy and all your effort would be loss.

With the proliferation of computers and internet, companies should have a computer security policy that employees strongly adhere to. All employees should be informed of any breach of security and how the breach is made as well so precautions can be set up ASAP.

There used to be a study where most of the breach actually comes from employees. They are unknowing victims of corporate spies, providing them passwords that they can use. (Cannot remember where I read it though).

So secrecy and security is very impt to a company, please take note of it.

Chapter 1 Part VI : Management of Talent

将听吾计，用之必胜，留之。将不听吾计，用之必败，去之。

In this line, it is saying that generals who adopt his strategies would win and those who do not don't.

In those days, most of the officials in a country can be broken down into advisors and generals. Advisors would come up with strategies for administration of country like foreign policies and internal affairs and generals would usually be involved in the training of soldiers, resource preparation and so on.

So during war time, the military advisors would come up with the overall strategies and the ruler should decide which one to adopt. Once the overall strategies are set, task and duties are distributed out. We can see from here that, generals who follow orders would contribute greatly to the success execution of the overall plan, achieving the desired objectives. This could improve the odds of winning tremendously. That is why Sun Zi advocates the removal of generals who do not follow the overall strategies because these generals would be detrimental to the odds of winning. But Sun Zi also stress that generals should also be flexible and smart to grab or create chances that would help the army to gain decisive victory. As stated in the next line:

计利以听，乃为之势，以佐其外。势者，因利而制权也。

In business, it is best that those in the management position also follow the overall plan the company has planned out. So it is important to have a mission statement and plans. They should be conveyed to everybody in the company. As mentioned in previous blogs, involve the staff, as much as possible in writing the mission statement. For new staff, teach them with pride and enthusiam what is behind the mission statement. The mission statement should be a 'rallying' point allowing the management to have the flexibility to grab opportunities that surfaced and supports the mission statement.

The management should then be able to execute the plans well because that is what they are meant to do but in these times of volatile business conditions, management must also be able to grab chances that surface as well.

So have you given your management people room to maneuver and make decisions on their own or are you micro-managing?