Sun Tzu, Competition and Customers

Sun Tzu was a Chinese military general in approximately the 5th century, B.C. He is renowned for never losing a battle. He wrote a treatise on conducting campaigns called “The Art of War”. It is an excellent book and I highly recommend it.

Most people apply what Sun Tzu wrote to the on going battles with competitors, and this may in fact be a very good application of some of his axioms. Most people apply Sun Tzu’s writings from the point of “winning” that battle, when in fact he wrote about “not losing” the battle. He was renowned for never losing a battle. He didn’t win them all. Many times he chose not to engage the competition because he felt he did not have a sufficient enough advantage to assure his victory.

Sun Tzu wrote;

“If you do not know your own capabilities, and you don’t not know your adversaries capabilities, you can not win.

If you do know your own capabilities, and you don’t not know your adversaries capabilities, you can lose half the time.

If you do not know your own capabilities, and you do know your adversaries capabilities, you can lose half the time.

If you do know your own capabilities, and you do know your adversaries capabilities, you can not lose.”

This is very interesting stuff, and I have written about it before. The question I would like to address here is how this relates to Customers, not competition.

Once the engagement with the competition has been won, a new engagement begins with the customer. Once the customer has been won, they are not guaranteed to be your customer for life. The idea here is to follow the idea of “not losing” the customer. If you know your own capabilities (and you probably do because you won against the competition) you must now learn the customer’s capabilities in order to be assured that “you can not lose”.

Over time (either short or long term) your corporate / business / group focus can change. These changes may not be perceived as congruent with the directions and desires of your customer. Over time the people and requirements of your customer will also change. These changes may change their perception of the value of having the current business relationship with you. The key is to be aware of and adapt to these changes in both your and the customers “capabilities”.

Research shows that it is 5 times easier to sell a new product or capability to an existing customer than it is to sell to a new customer. Every customer that is lost out of your customer base takes 5 times the effort to replace. What this shows is that winning customers is great. Not losing the customers you have is 5 times better.

Once the competitors are beaten and the customer is engaged, it stands to reason that you can modify Sun Tzu a little to read;

“If you do know your own capabilities, and you do know your Customer’s capabilities, you can not lose.”

Don’t Produce…..Create

Happy New year to all. Here is to working toward a great 2011.

We have all heard the statements regarding the need to “produce” results. In these days of ever tighter budgets and greater demands for profits and performance, the phrase “produce, or perish” might never be more accurate. It is possible that after so much time trying to improve and refine our production that it might be time for a new approach.

“Producing” results had normally come from finding a way to do an existing job or process incrementally better than it had been done in the past. This incremental approach to producing and improving results has a tendency to run out of momentum due to the law of decreasing returns. It eventually requires more and more incremental process refinements to produce less and less incremental results improvements. After several years in the current economic environment, it may be possible to say that we are in fact in the region of decreasing returns when it comes to incrementally improving, and producing results.

What is required today in the business environment is a quality that seems to be in short supply during tough economic times: Creativity. In down economic times the “Risk / Return” relationship in business seems to invert. That is to say that the “Risk” part of the equation takes on a greater and greater importance vs. the potential for the improvement of the return. In down times it assumed that the “Return” will be more and more difficult to attain, so the process focuses more and more on reducing the risk and in many instance the cost of the change. This process plays more and more into the “Incremental” approach to improving and producing results.

The time has come for businesses at all levels to start looking at the data differently; to rethink the processes and to “Create” new business and new ways of doing things, not incrementally producing and improving the current results. This is obviously much more easily said than done. You cannot command the team to just create new ways of doing things, but as the leader of the team you can become adept at recognizing what is incremental improvement and what is the creation of new ways of doing business.

Again it is usually easier to accept the incremental improvement proposals. Some may be valuable and can be implemented; however as they say “Necessity is the mother of invention”. If you can show the unwillingness to increment, and the willingness to implement and reward the creation of the new, you can start to change the way business gets done. The responsibility to recognize and foster the creation of new processes and business needs to be vested with those that have the authority to accept and make those changes.

The time has come for businesses and business leaders to stop producing results, and start creating them.