Byline: Energy Secretary ANGELO T. REYES

MILITARY Strategy and Management Principles

According to the programme schedule of the Challenge Lunch 2007, my task this afternoon is to "close the case," so to speak, on the subject of military methods and their broader management applications.

But before I do so, I would like to thank General Tan Sri Abdul Aziz Hj Zainal for refreshing my perspective of military strategy, six years after my retirement from the active service. More than 20 years separate our stints at the AIM, and this adds flavor to my substantive enrichment in terms of getting an appreciation of how management theory and practice - or at least how these are taught at the AIM - have evolved over time.

In closing the case, I would first like to dispel the notion that the rules of military strategy are conceptually distinct from civilian management principles. I submit that these two branches of management, if you will, have evolved along parallel - and mutually influencing - tracks. We must remember that centuries before modern corporations came into being, the two biggest institutions that could incubate a formal system of management had been the government bureaucracy and the army. Further, we need to bear in mind that the force of arms is but an extension of state power - which is to say that, ultimately, military strategy is just a subset of the larger game plan of the state, which more often than not is controlled by civilians.

A number of factors make the study of military strategy particularly compelling. Among these are the epic sweep of the great battles that constitute its case studies, the graphic allure of attack and defense formations and maneuvers, and, of course, the romance associated with the exploits of brilliant generals and heroic soldiers. And, let us not forget: It is in the military context that management pressure is at its extreme. Since human lives are often on the line, commanders must face up to low margins of error.

It is no wonder then that students of management lap up books that analyze the broad applications of principles put forward by classical war strategists like Sun Tzu and Clausewitz and famous warriors like Attila the Hun, Alexander the Great and Napoleon Bonaparte. I am certain that everyone in this hall, regardless of background or area of expertise, has scanned such a military-inspired book or article at one time or another.

Objective and Offensive

On that note, let me try to refresh your memory on certain lessons you might have picked up from those war stories by taking a page, almost literally, from the Army Handbook. I will tackle the nine principles of war and attempt to draw parallel applications in diverse civilian contexts.

The first principle is objective. The handbook states: "Direct every military operation toward a clearly defined, decisive, and attainable objective...When undertaking any mission, commanders should have a clear understanding of the expected outcome and its impact. At the strategic level, this means having a clear vision of the theater end state. This normally includes aspects of the political dimension. Commanders need to appreciate political ends and understand how the military conditions they achieve contribute to them."

This principle seems self-evident. But when a war gets protracted, this principle tends to get obscured. The current situation in Iraq, for example, has placed the US armed forces in a predicament as its troops have become vulnerable in the midst of an internal civil war. As more American soldiers get killed by suicide bombers and snipers, the US high command will feel intensifying pressure from the American public to rationalize troop presence there. At what point can it be said that the military objective has been met and the troops can go home?

The situation is eerily reminiscent of the great American debacle more than 30 years ago. In their landmark book of the 1980s, In Search of Excellence , Thomas Peters and Robert Waterman, wrote: "Our obsession with body counts in Viet Nam and our failure to understand the persistence and long-time horizon of the Eastern mind culminated in America's most catastrophic misallocation of resources - human, moral and material."

In the corporate setting, the principle of objective appears equally self-evident. The process of strategic planning in companies has become so refined that objectives are usually crafted and measured with great care. Still, managers have to go back to the objective to judge whether or not they are on the right track. Sales, for example, might be good in terms of volume and growth rate, year on year, but are these what the firm is after? Or is profitability or market share the key metric? I suppose, with the hundreds of collective years of AIM training we all represent, there is no need to belabor that point.

The second principle is offensive. "Seize, retain, and exploit the initiative," commanders are advised. "Offensive actions are those taken to dictate the nature, scope and tempo of an operation. They force the enemy to react. Commanders use offensive actions to impose their will on an enemy, adversary, or situation. Offensive operations are essential to maintain the freedom of action necessary for success, exploit vulnerabilities, and react to rapidly changing situations and unexpected developments."

Simply stated, given a choice of strategy, an army is better off attacking rather than defending. But the principle by no means condones a reckless attack. The key is to be able to keep the initiative and to turn it into a tangible advantage, such as control of an area. If the enemy flees, and circumstances based on solid intelligence warrant, the army must maintain pursuit and prevent the hostile forces from regrouping for a counterattack.

Again, the parallels in business are quite apparent. The whole point of any business is to cash in on a singular advantage of a product or service. However, that advantage might not last very long, unless there are formidable barriers of competitive entry such as massive capital requirements, patent protection, rabid brand loyalty, or an intricate, far-reaching distribution system. In many product categories, "me too" goods sprout like mushrooms on the heels of a successful product launch. The leader has to constantly differentiate its product to avoid being sucked into a price war that would turn the entire category into a commodity.

In the Philippines, for instance, the battle between the top two mobile phone service providers is so intense that the industry leader has to stay aggressive in terms of product development to stay ahead of the curve.

Mass and Economy of Force

The third principle of war is mass. Quoting from the handbook: "Concentrate the effects of combat power at the decisive place and time...(Commanders) mass combat power in time and space to achieve both destructive and constructive results. Massing in time applies the elements of combat power against multiple targets simultaneously. Massing in space concentrates the effects of different elements of combat power against a single target. Both dominate the situation; commanders select the method that best fits the circumstances."

Put another way, the principle is to land the decisive blow - with as much of the troops, artillery, armor and air support as possible - at the enemy's most vulnerable point and/or at the most opportune time.

The commercial application of this principle is most evident in the launch of a mass product like a soft drink or a kind of soap or shampoo. Long before the official launch date, distribution trucks would have fanned out far and wide to make sure that the neatly packaged product is stacked on the shelves of every major supermarket, grocery and small retail store that caters to its target market. On or just before launch day, budget permitting, ads spread the word about the brand on TV, radio and newspapers. At supermarkets, promo girls might even be on hand to draw attention to the new product and to give away samples. Smaller stores might be plastered with posters to make it known that an exciting new product is available. The company spares no expense within the launch budget to support the product.

The reciprocal of mass is the principle of economy of force. "Allocate minimum essential combat power to secondary efforts," the handbook states. "It requires accepting prudent risk in selected areas to achieve superiority...in the decisive operation. Economy of force involves the discriminating employment and distribution of forces. Commanders never leave any element without a purpose. When the time comes to execute, all elements should have tasks to perform."

Every time a battalion goes into a major attack, just enough troops are left behind to secure the unit's headquarters and all other vital stations in the larger area of operations. If necessary, less sensitive stations are temporarily vacated to reinforce defensive or maintaining resources in the more critical posts.

Going back to our example of the well-supported product launch, it goes without saying that the company's other products or brands would receive their share of sustaining support while the major effort is on stream. The common practice among big companies, as you well know, is for each brand in the company's product portfolio to be allotted a share of the annual marketing budget to ensure that it gets adequate support for its own product enhancements, promotion and distribution.

Maneuver and Unity of Command

The fifth principle of war is maneuver. Every commander is advised: "Place the enemy in a disadvantageous position through the flexible application of combat power...Effective maneuver keeps enemies off balance by making them confront new problems and new dangers faster than they can deal with them...Maneuver is more than just fire and movement. It includes the dynamic, flexible application of leadership, firepower, information, and protection as well. It requires flexibility in thought, plans and operations, and the skillful application of mass, surprise, and economy of force."

This principle reminds us that every offensive is not just a linear operation that unfolds almost on automatic based on a well-conceived plan. In-between are a lot of dynamic elements that leave commanders enough room to use their creativity and judgment with moves in and out of the battlefield that would keep the enemy reeling and guessing where the next tactical blow would come from.

Even with the best strategic plan and seemingly perfect conditions for executing it, many things could still go wrong in either the military or corporate battlefield. One just has to be prepared to maneuver as the situation demands. In the words of Peters and Waterman: "The excellent company response to complexity is fluidity, the administrative version of experimentation."

In the case of the mobile phone war in the Philippines, sharp maneuvering has been taking place for many years now. Both carriers have bought out smaller players, creating flank low-end brands that neutralize each other and a third operator. Both have aggressively attacked the pre-paid market, not just to further grow subscriber base but, more strategically, to tap the rich potential offered by millions of Filipinos working overseas through electronic remittance services. Both have cultivated relationships with resellers and distributors around the country. On the other end, there is a relentless battle to hold on to high-value subscribers through plans that make it possible for the status-conscious set to acquire the latest and sleekest handsets nearly every year - with a host of perks to boot. Just last month, the lead carrier upped the ante yet again with the launch of its mobile TV service. The intensity of maneuvering can be seen in the mass media as well, making the mobile phone industry consistently among the top advertisers.

The sixth principle of war is unity of command. The strategy guidelines state: "For every objective, ensure unity of effort under one responsible commander...(A) single commander directs and coordinates the actions of all forces toward a common objective. Cooperation may produce coordination, but giving a single commander the required authority unifies action."

In the military organization, the overriding concept is the chain of command. This defines more than just the pecking order in the hierarchy. It underscores the philosophy that someone has to call the shots to guarantee convergence of effort among various units and soldiers toward a common goal. The commander draws his authority not from the stars on his shoulder but from the ultimate responsibility for the success of the mission and the lives of his men. One disjointed move by a platoon could spell tragedy and failure for the entire battalion on a high-risk mission.

Like the army, most corporations harbor no pretensions of being democracies. The buck stops with the CEO. Even as he or she can delegate authority and responsibility for specific programs, product lines or tasks to, say, the chief technology officer or a brand manager, the CEO remains answerable for the bottom line. Thus, he or she needs to make sure that everyone else in authority works toward delivering those margins or toward achieving the specific objectives laid out by the company.

Again, the art of strategic planning among civilian institutions has been so refined in the past two decades that processes are in place to virtually guarantee unity of effort - at least on paper. All of us have undergone workshops where we wrack our brains crafting vision and mission statements, after which we go through the tedious process of distilling key result areas (KRAs) per unit and key performance indicators (KPIs) per employee that would contribute to achieving our avowed mission.

Depending on the personality of the CEO, the principle of unity of command may not always be palpable in the corporate setting. In some cases, delegation of authority may be so loose as to blur lines of accountability. When that happens, as is often the case in companies with well-entrenched fiefdoms, the likelihood of mission failure is quite pronounced. Only a strong assertion of leadership by the CEO can cure that. There is nothing like a Lee Kuan Yew to straighten out a recalcitrant bureaucracy.

Security, Surprise and Simplicity

The seventh principle of war is security. The Army handbook says: "Never permit the enemy to acquire an unexpected advantage. Security protects and preserves combat power. It does not involve excessive caution. Calculated risk is inherent in conflict. Security results from measures taken by a command to protect itself from surprise, interference, sabotage, annoyance, and threat. Military deception greatly enhances security. The threat of asymmetric action requires emphasis on security, even in low-threat environments."

Security is akin to internal discipline, combined with vigilance. To safeguard the army against lurking threats born of complacency, the commander has to build and reinforce a culture of discipline, trust and high morale. It would be extremely difficult to infiltrate such a tightly-run unit. Failing that, his unit will always be vulnerable to threats from within and without.

Similarly, the long-term security of civilian organizations rests on a strong corporate culture. These are the companies with strong bonds and values that insulate them from buckling in times of adversity. In the words of Jim Collins, these are the types of companies that are built to last. Writing a decade earlier, Peters and Waterman provide a similar insight:

While it is true that the good companies have superb analytic skills, we believe that their major decisions are shaped more by their values than their dexterity with numbers. The top performers create a broad, uplifting, shared culture, a coherent framework within which charged-up people search for appropriate adaptations.

Reciprocal to security is the principle of surprise. The book states: "Strike the enemy at a time or place or in a manner for which he is unprepared...It is a powerful but temporary combat multiplier. It is not essential to take the adversary completely unaware; it is only necessary that he come aware too late to react effectively. Factors contributing to surprise include speed, information superiority, and asymmetry."

The term, surprise attack, has become a clichA[c], but it continues to embody the single most effective way of catching the enemy off-balance en route to a swift victory. To be able to conceal one's intent and movement in the battlefield is the most subtle aspect in the art of warfare, one that can only be learned from extensive experience in diverse battle situations.

The element of surprise is just as important in the business world. In a crowded marketplace often characterized by low barriers of entry to competitors, one needs to be adept at keeping the winning cards close to his chest until the precise moment when the powerful move would be made. In addition to this direct parallel to the military surprise attack, there are many nuances of the principle of surprise in the business setting. For instance, quick service at a big bank can be a pleasant surprise, as is a retinue of smiling government employees who go out of their way to help common folk. Such surprises are just as effective in ensuring victory in the business battlefield.

Finally, there is the principle of simplicity. The handbook reads: "Prepare clear, uncomplicated plans and clear, concise orders to ensure thorough understanding. Simple plans and clear, concise orders reduce misunderstanding and confusion...Simple plans executed on time are better than detailed plans executed late. Commanders at all levels weigh the apparent benefits of a complex concept of operations against the risk that subordinates will not be able to understand or follow it."

The manual goes on to point out that simplicity becomes even more important in multinational military operations where differences in language, doctrine and culture can foul up cooperation among units. Clearly, the larger the organization and the more units involved, the greater the imperative to keep things simple and direct for everyone to follow down the line.

Among civilian organizations, the principle of simplicity applies just as well - unless one is involved in a business where it can actually be advantageous to be complex or obscure. I am not quite sure if lawyers and accountants fall under this class of exceptions...

Seriously, though, there are no better examples of the power of simplicity than in the corporate world. Again, Peters and Waterman provide a good overview:

... One of the key attributes of the excellent companies is that they have realized the importance of keeping things simple despite overwhelming genuine pressures to complicate things. There is a powerful reason for this, and we turn to the Nobel laureate Herbert Simon for the answer. Simon has been deeply involved in the field of artificial intelligence in recent years, trying to get computers to "think" more as people do rather than conducting inefficient, exhaustive searches for solutions.

Among Simon and his colleagues' most important findings, for example, is that human beings are not good at processing large streams of new data and information. They have found that the most we can hold in short-term memory, without forgetting something, is six or seven pieces of data.

The famous sports brand, Nike, relies on an economy of words and symbols to convey its message across its workforce and around the world. Its swoosh logo, the tagline "Just do it", and the images of world-class sports personalities converge to tell us what the brand is all about.

In the case of Apple, the sheer beauty and sleekness of design - consistently applied on products like the Macintosh computer, the iPod and the iPhone, along with their accessories and Apple's specialty stores - project what the brand stands for without really needing to resort to words. That is simplicity in its purest form, a character that appeals not just to its sophisticated clientele but also to those who aspire to be worthy of the brand. One can only imagine how proud its employees must be to part of such a distinct and prestigious corporate culture, and how easy it must be to align one's actions and aspirations to what the company is trying to achieve.

The Changing Face of Warfare and Business

With the technological advances and events that have altered the way wars are fought in the 21st century, the question is often posited: would the "old' principles of war still apply? And the categorical answer is yes.

Precise weapon systems, guided by global positioning satellites, powerful computers and infrared heat sensors, seem to reframe warfare within a new paradigm. But Bevin Alexander puts all this in neat perspective in his book, How Wars Are Won: "The face of battle will be transformed. It will be spread over a much larger surface, will employ weapons that nearly always hit their targets, and will demand officers and soldiers who are more accountable and reliable than has ever been required in the past. But the element that makes for victory - essentially the application of superior force at a crucial point - will continue as before. The commander who can see how to bring this about under the altered conditions prevailing today will be successful."

To Alexander, 9/11 did not mark the advent of a new era in warfare as some are wont to believe. He describes that infamous day as "the moment when the world ceased to think of warfare exclusively as conventional clashes of massive, sophisticated weapons on the battlefield, and reverted to seeing war in its rawest, truest, and oldest form, characterized by small groups of warriors striking by surprise, or at night, against the actual or psychological rear of the enemy."

Similarly, the technological and internet revolution seem to have altered the rules in the marketplace. For instance, Michael De Kare-Silver, in his book, e-shock: the new rules, proffered this advice to retailers: "Think in terms of convenience, convenience, convenience. The sophism or motto that retailers have lived by in the past decade has been 'location, location, location'. The internet has turned that on its head. Location is irrelevant on the internet."

Upon deeper reflection, however, we find that only the perspective has changed. The rule has remained essentially the same. In this case, we are still speaking of the principle of maneuver. Convenience and location are but two sides of the same coin. The true spirit of the principle has to do with presence and accessibility where the critical action is expected to occur. This brings us back to the need for mobility and flexibility in operations, and technology has actually made it easier and more cost-efficient for us to adapt to changing situations in the marketplace.

Kenichi Ohmae points to another facet of the new economy, business process outsourcing (BPO) in his book, The Next Global Stage:

.... BPO is about optimization. Activities that were traditionally carried out in a high-cost environment are switched to one in which lower labor costs apply without any loss in the quality of the process provided. The business community is accustomed to relocating sources (suppliers for new materials and components for manufacturing). The most important change over the last decade has been the emergence of cross-border business process outsourcing.

What Ohmae is saying is that companies all over the world are being forced to focus on their core business and to seek out more efficient ways of doing the rest of their work elsewhere. One can also view this as an application of the principles of mass (concentrating forces on the point of maximum impact), economy of force (the optimal deployment of resources in vital areas other than the main theater of action), maneuver (keeping the competition off-balance via a fresh approach to doing business), and simplicity (keeping things manageable within one's core competence).

Ohmae also puts a premium on good leadership in the new global economy:

Good leaders...must not be timid. The global economy is a new phenomenon. It does not have the certainties of the past, the mental and psychological crutches upon which leaders in the old economy supported themselves...In such an environment, the need for a strong, decisive, and brave leadership figure is overwhelming. The leader must be truly fearless.

...We might say that good leaders should have vision, but they should remain pragmatists, never becoming prisoners or mute puppets of their visions.

x x x

One of the most important assets that a leader can possess is not having very rigid, preconceived attitudes about his role. He must be flexible and intuitive, able to tune in to change."

In this instance, we see the application of the principles of offensive, objective and maneuver in defining the character of the leaders we seek for the 21st century.

Again, there is nothing really new about this mold of leadership. Back in 1929, Konosuke Matsushita articulated the following philosophy for his new company:

"Recognizing our responsibilities as industrialists, through the manufacture of high-quality, high-performance products that meet the needs of our customers, we will devote ourselves to the progress and development of society and the well-being of people through our business activities, thereby enhancing the quality of life throughout the world."

Over the years, he ventured to make those products, constantly improving their quality, in pursuit of his goal to uplift the lives of the Japanese people. One additional factor going for him was the principle of simplicity. He was animated by a pure vision born of a deep social conscience. In this, perhaps, Mr. Matsushita provides a clue to the real battlefield of the 21st century: The hearts and minds of ordinary people who constitute not just the customer base for our products and services but also the community that nurtures us and gives meaning to all our endeavors.