5 Strategies from Ancient Chinese Warfare to Help Us Thrive in Changing Times
Although there have been record-highs in the “frothy” stock market, entrepreneurs and small businesses around the country are seriously struggling. In the United States, as of September 13, 2020, total small business revenue decreased by 20.6 percent compared to January 2020.
In addition, the number of small businesses still open decreased by 23.6 percent compared to January 2020, and restaurant diners are down 40 percent from last year. It appears that those stimulus checks went into Tesla stock on your Robinhood account and not your favorite sushi restaurant or local retailer.
Regardless, these percentage drops have made it abundantly clear that now is the time for everyone to take a step back and re-evaluate their business strategies. Because I've been in the innovation space for more than 10 years, this seemed like the right time to pull out one of my favorite tools from the business model innovation toolbox — the 36 stratagems.
Kaihan Krippendorf, a New York Times best-selling author in the strategy and innovation space, put together a framework for coming up with new business models and strategies using tricks from ancient Chinese warfare.
As I revisited them, I realized they couldn’t be more relevant today, so I picked five that are particularly applicable to business in the current era. Hopefully they'll spark some innovation or help you reinvent your business — perhaps in a way you hadn’t considered before.
1. Relax while the enemy exhausts himself (以逸待劳)
Reduce your overhead or move to a variable cost model to wait out the storm. Shut the doors for a while, take a vacation, rest up, conserve cash and plan your new strategy upon return. Reinventing your cost structures in your business could allow you to hang on to your cash reserves, help you refresh your mindset and plan while your competitors are burning cash by the day.
Here’s a good practical example of this stratagem:
A restaurant closes down for three months and uses the time to complete renovations, redo the menu and prepare for an optimized takeout experience. All the while its biggest competitor across the street remains open and drains its cash reserves running business as usual.
This strategy does have risks and implications, as you may have to lay off or furlough employees in the meantime, which is difficult but might help sustain your business in the long run. Further, you have to make sure that the hibernation time is used effectively. If the boards are on the windows but nothing is happening inside, you’re just wasting time with no end benefit.
2. Sacrifice the plum tree to gain the peach tree (李代桃僵)
This is what we call a “loss-leader strategy.” Typically, this involves a company selling a product or service for a reduced price knowing that it will bring greater dividends in the future.
A recent example is Headspace, a mindfulness app, has been offering free subscriptions for a year to people who are currently unemployed (no verification required, just honor system rules). The idea here is that this will lead to many more subscribers for Headspace afterward, and it also does good for those who are struggling — it’s an investment worth making on multiple levels.
3. Take the opportunity to pilfer a goat (顺手牵羊)
Use this as an opportunity to take a pole-position. There is a small window where you can reinvent your business to solve a problem created by a crisis before your competitors see it coming. Being a small business, you are more nimble and quick than the big guys. Spot an opportunity to solve a problem with your assets and unfair advantages.
There have been many instances of this stratagem being utilized (whether the business owners are aware of its origin or not) due to the pandemic. For example, a distillery and grill in Portland turned producer of hand sanitizer when restaurants began to close their doors, and an engineering and design company based in London pivoted to create modular outdoor spaces for socially distant seating and dining areas to help restaurants reopen.
Both companies saw a hole in the market that they could fill and readjusted their business model to fill it.
4. Borrow a corpse to resurrect the soul (借尸还魂)
Take a concept from the past that is newly relevant again. My favorite example of this is the full-service gas station. People don’t want to touch gas pumps or leave their cars, so there is new value placed on amenities that were once viewed as outdated.
And on a similar note, there’s already been a resurrection of drive-in movies and other live events like concerts and stand up comedy shows. Audience members can view their chosen entertainment from the comfort of their own vehicles just like the good old days of drive-ins. Instead of applause, audiences are flashing their lights and honking their horns.
People are adapting to the moment we are in rather than fighting against the chaos. Think retro rather than archaic.
5. Defeat the enemy by capturing their chief (擒贼擒王)
As of July 2020, there were around 30 million unemployed persons in the U.S., and that number was on the rise. The first wave of layoffs was localized to the travel, service and retail, entertainment, and hospitality industries (among some others), but it is projected that six million more layoffs might be coming — and this time it will affect white-collar employees and potentially those in upper management positions.
This gives you an opportunity to snag the talent and leadership departing from companies at a colossal rate. It’s an opportunity we haven’t seen in over a decade of tight labor markets, and these leaders are looking for a place to land. Fresh faces in leadership bring about fresh ideas, and some other company’s loss could be your gain.
Don’t let uncertainty paralyze you — move forward
Despite the hit to the broader SMB landscape, as you’ve read there are some great stories of strategy shifts that have helped some creative entrepreneurs not only survive, but thrive.
On top of that, there are those riding the waves of unexpected changes, such as the influx of Zoom and other virtual meeting options, with humor and enthusiasm — including one company that is offering virtual tours of its farm and guest appearances by goats and other livestock during conference calls and online learning sessions (for a small fee of course). It might not be pilfering a goat per se, but it definitely embodies the concept of getting creative.
When life gives you lemons, you make lemonade, or lemon hand sanitizer if the situation calls for it. Volatility and change drive innovation; it’s been this way as long as great minds have been at work in the name of progress and technology. In fact, Isaac Newton formulated his theory of gravity when he was working from home due to the plague, which means the rest of us have no excuse.