the ten golden rules of wéiqí applied to business strategy - 围棋十诀

38
1 The Ten Golden Rules of WéiQí Applied to Business Strategy 棋十- Wéi Qí Shí Jué Mathieu FRANCOIS-BARSEGHIAN B6090 Chinese Classic (2011)

Upload: mathieu-francois-barseghian

Post on 31-Oct-2014

1.010 views

Category:

Business


4 download

DESCRIPTION

In this essay, I applied the 10 ancient go (wéiqí in Chinese) proverbs to business strategy, illustrated by Asian business cases. This writing was part of my MBA course Chinese Classics: Applications to Business and Marketing Practices, based on some of these well-known Chinese classics such as the Art of War, the 36 Stratagems and the Principles of Tao Zhu-gong.

TRANSCRIPT

Page 1: The ten golden rules of wéiqí applied to business strategy - 围棋十诀

1

The Ten Golden Rules of WéiQí Applied to Business Strategy

围棋十诀 - Wéi Qí Shí Jué

Mathieu FRANCOIS-BARSEGHIAN

B6090 – Chinese Classic (2011)

Page 2: The ten golden rules of wéiqí applied to business strategy - 围棋十诀

2

Table of Contents

Table of Contents ........................................................................................................................ 2

Preface ........................................................................................................................................ 5

Wéiqí and business strategy........................................................................................................ 6

The most ancient strategy game… .......................................................................................... 6

From the origins to the classical period ................................................................................ 6

The modern era .................................................................................................................... 6

… But a very modern intellectual challenge ............................................................................. 7

Wéiqí and Asian strategy ......................................................................................................... 7

The Ten golden rules of wéiqí applied to business strategy ..................................................... 9

The proverb about attitude ........................................................................................................ 10

On attitude ............................................................................................................................. 10

Greediness is not victorious [贪不得胜 - Tān bùdé shèng] .................................................... 10

Explanation for wéiqí: Winning is not killing ........................................................................ 10

Application in business: Growing concerns about ethics ..................................................... 11

Case: The failed acquisitions of Proton .............................................................................. 12

The proverbs about preparation ................................................................................................ 14

On preparation ....................................................................................................................... 14

Take care of oneself when attacking others [攻彼顾我 - Gōng bǐ gù wǒ] ................................ 15

Explanation for wéiqí: The best fights are those not played ................................................ 15

Application in business: Don’t overexpose yourself while competing .................................. 16

Case: Toyota entry in the US market .................................................................................. 16

Make thick shape, avoid hasty moves [慎勿轻速 - Shèn wù qīng sù] ..................................... 17

Explanation for wéiqí: Don’t keep the initiative at all cost .................................................... 17

Application in business: Operations excellence .................................................................. 17

Case: Geely’s delayed debut in America ............................................................................ 18

The proverbs about space and time .......................................................................................... 19

Page 3: The ten golden rules of wéiqí applied to business strategy - 围棋十诀

3

On space and time ................................................................................................................. 19

Be unhurried to enter opponent´s territory [入界宜缓 - Rù jiè yí huǎn] .................................. 20

Explanation for wéiqí: Erode big territories rather than invade them ................................... 20

Application in business: Enter into a new market ................................................................ 20

Case: BYD cautious entry into electric car market .............................................................. 21

A move must respond to the opponent´s [动须相应 - Dòng xū xiāng yìng] ............................ 22

Explanation for wéiqí: Always keep in mind the global position ........................................... 22

Application in business: The big picture .............................................................................. 22

Case: The stakes of US automotive industry in 2009 ......................................................... 23

The proverbs about power balance ........................................................................................... 25

On power balance .................................................................................................................. 25

Against strong positions, play safely [彼强自保 - Bǐ qiáng zì bǎo] ........................................... 26

Explanation for wéiqí: One does not play alone .................................................................. 26

Application in business: Prudence ...................................................................................... 26

Case: AirAsia expansion to long-distance flights ............................................................... 27

Look for peace, avoid fighting in an isolated or weak situation [势孤取和 - Shì gū qǔ hé] ...... 28

Explanation for wéiqí: One must tolerate the intolerable ..................................................... 28

Application in business: When to keep a low profile ........................................................... 28

Case: The end of a 1,400-year-old business ...................................................................... 28

The proverbs about sacrifice ..................................................................................................... 30

On sacrifice ............................................................................................................................ 30

Discard stones to gain initiative [弃子争先 - Qì zǐ zhēng xiān] ................................................ 30

Explanation for wéiqí: Stones are not important ................................................................. 30

Application in business: The Blue Ocean framework .......................................................... 31

Case: The Yellow Tail wine ................................................................................................ 32

Abandon small to save big [舍小就大 - Shě xiǎo jiù dà] .......................................................... 33

Page 4: The ten golden rules of wéiqí applied to business strategy - 围棋十诀

4

Explanation for wéiqí: Look after the big fish ...................................................................... 33

Application in business: Focus ........................................................................................... 33

Case: Panasonic bicycles ................................................................................................... 34

When in danger, sacrifice [逢危须弃 - Féng wēi xū qì] ........................................................... 34

Explanation for wéiqí: You can lose a battle and still win the war (but don’t forget to trade) 34

Application in business: Painful cuts ................................................................................... 35

Case: Nokia conversion to Telecom ................................................................................... 35

Bibliography .............................................................................................................................. 37

Books .................................................................................................................................... 37

Online resources .................................................................................................................... 38

Page 5: The ten golden rules of wéiqí applied to business strategy - 围棋十诀

5

Preface

“While the Baroque rules of chess could only have been created by humans, the rules of

go are so elegant, organic, and rigorously logical that if intelligent life forms exist

elsewhere in the universe, they almost certainly play go”

Edward Lasker, Chess Master

This essay assumes the reader possesses the minimum knowledge of the game of

wéiqí [围棋] to understand its concepts and applications to business strategy. If this is

not the case, the corresponding Wikipedia page is a good first introduction. However,

reading will never equals the actual experience from the game: numerous Internet

servers are free and available in a few clicks. Among them, the KGS Go Server

[http://www.gokgs.com/] is reputed for its international and beginner-friendly community.

Wéiqí game is also often referenced by its names in Japan and Korea, the two other

major playing countries beside China: respectively go [囲碁] and baduk [바둑]. Because

this essay is based on a Chinese classic study, the Chinese name will be consistently

used. Nevertheless for historical reasons, the game has been brought overseas by

Japan. Thus, the technical and conceptual terminology used by non-Asian players is the

Japanese one. Consequently, this paper will basically use the Japanese words and add

the corresponding Chinese characters and their pīnyīn transcription. For example: tesuji

[手筋 - shǒu jīn] are skilful tactical moves and a crucial component of one’s technique.

It may seem paradoxical that an essay about a visual game like wéiqí uses no diagram

at all. The reason is the focus on the business applications, not on the game itself.

Finally, I would like to dedicate this paper to the two people who converted me to the

most fascinating of games, and led indirectly to my personal Asian experience: the

French writer Georges Pérec, author of Le Petit Traité invitant à la découverte de l’art

subtil du go [Small treatise inviting to discover the subtle art of go], and Master Lim (Lim

Yoo Joong), from Korea, inimitable character and teacher of the first generation of

players in France in the late 1960s.

Page 6: The ten golden rules of wéiqí applied to business strategy - 围棋十诀

6

Wéiqí and business strategy

The most ancient strategy game…

From the origins to the classical period

According to the Encyclopedia [博物志 - Bówù zhì] written by Zhāng huá [張華] in the

IIIrd Century, wéiqí has been invented by the mythical emperors Yáo [堯] and Shùn [舜],

in order to educate their stupid sons. The game has been created in China, and is

mentioned for the first time in the Vth Century BC. Originally, the dimension of the board

was 11x11 lines then it evolved to 17x17 and eventually reached its 19x19 modern

dimensions. Wéiqí has been introduced in Japan in the VIIth Century, in the same time

than the other imperial court arts. At that epoch, the game was only played by nobles,

courtesans and monks. The classical period starts then in the XVIth Century with the

beginning of the professional system, sponsored by the Japanese shoguns Toyotomi

Hideyoshi [豊臣秀吉] and Tokugawa Ieyasu [徳川家康]. It generated the improvement of

the theory of the game, in particular for the fuseki [布局 - bù jú], or opening phase, as

well as the democratization of the game. This, added to the decline of the Qing Dynasty

after the Opium Wars, moved the center of gravity of wéiqí to Japan for a few centuries.

The modern era

Since the 1980s, the Japanese preeminence has been challenged by the Chinese and

Korean players on international tournaments. In China, the game had been long banned

by communists. But the incredible performance of Niè Wèipíng [聂卫平] at the China-

Japan supermatches in 1985 brought back the interest of the game to the Chinese

public. Since, China has become again a top country with a young generation of

talented professionals. Including the amazing Korean players, the international

competition has entered in a very active and exciting phase.

Page 7: The ten golden rules of wéiqí applied to business strategy - 围棋十诀

7

In Europe, wéiqí has comparatively a very recent history, less than one century old. This,

as well as the concurrency of the local equivalent (Western Chess), explains the inferior

number and level of the players. Nevertheless, the game has developed well since the

last decades of globalization. The pioneer epoch is definitely over, and it has been

boosted by the development of Internet. Notably, a few Western players have already

reached a professional level. I took 25 centuries to Asia to reach its current level: it is fair

to let some more time to the West.

… But a very modern intellectual challenge

Wéiqí is the most ancient board game, and combines in a unique way tactics and

strategy, that is micro and macro-thinking. Its rules are very natural and quick to learn,

but more than an entire life is required to grasp all the subtleties… It is captivating to

observe that the complexity of the game originates from simple basic rules. This scheme

of emerging properties is similar to those studied in many scientific or artistic fields.

Interestingly, it is the last game to offer a significant resistance to computerization.

Although important progress have been made since 2006 by the MoGo software, the

computer performances are still far away from those in Chess, where human

grandmasters are regularly beaten.

Wéiqí and Asian strategy

Undoubtedly, wéiqí has strong connections with Asian history and culture, at least in the

three dominant playing countries, China, Japan and Korea. Thus the game is a relevant

starting point to analyze and understand the Asian way of thinking, and then apply it to

different disciplines. In these countries, it is often amusing to watch the numerous

advertisements using wéiqí as a picturesque support. They clearly illustrate that the

Asian mindset associates the game to business and intelligence.

Page 8: The ten golden rules of wéiqí applied to business strategy - 围棋十诀

8

Because of the fighting and strategic features of the game, its first application context

has naturally been war. It is noteworthy to compare the Chinese characters for strategy

[战略 – zhànlüè], tactic [战术 – zhànshù] and combat [战斗 – zhàndòu]: these three

words, the main characteristics of wéiqí, all include the root character of war [战争 –

zhànzhēng]. Furthermore, in ancient China, and notably during the Three Kingdoms [三

国时代 - Sānguó shídài], there were mentions of wéiqí used by generals. More recently,

Scott Boorman in The protracted game: a wei-ch'i interpretation of maoist revolutionary

strategy proposed an interesting, but unfortunately too simplistic, analysis of Mao

Zedong’s revolution strategy in terms of wéiqí. The author makes an analogy between

the communist rural mass fighting the urban nationalists and the borders versus center

territories in wéiqí. Classical wéiqí theory teaches that the border-based strategy is

superior to the center-based one. Therefore, according to Boorman, it logically explains

the communist victory.

Ironically, wéiqí is condemned by the philosopher Confucius because its futility and

addictiveness are against the social order. Nevertheless, many consider wéiqí as an

appealing intellectual model and have tried to apply its concepts to other activities,

including business strategy. For instance, the number of liberties of a group of stones is

fundamental: in strategy terms, it can be translated as the number of opportunities a

company maintains, a measure of its flexibility.

But first, a few words about the limits of the analogy between war and business strategy.

In war, the conquests of the winner are offset by the destructions endured by the loser.

Hence, war is a zero-sum game … if we except some externalities, like the scientific

progress that can occur during these extreme periods.

In contrast, the capitalist assumption is that business is not a zero-sum game (if ethics

or rules are respected). Goods and services produced and traded add value and

contribute to the society’s welfare (as a whole if we neglect the redistribution issues). In

that sense, wéiqí is a better model for business rather than war. True, both players fight

(compete) to dominate the board. But, in the same time they also build territories (value).

Page 9: The ten golden rules of wéiqí applied to business strategy - 围棋十诀

9

Although the winning/losing issue is important in tournaments, most players agree that

the most exciting games are the closest one. Winning or losing by one point, what a

supreme refinement! And this leads to less frustration or humiliation for the players than

games with binary results.

The Ten golden rules of wéiqí applied to business strategy

The essay will be based on the Chinese Classic The Ten Golden Rules of Weiqi [围棋十

诀 - Wéi qí shí jué]. It contains 10 proverbs, written by Wáng Jīxīn [王积薪], a famous

player of the Tang Dynasty (618-907). Up to now, these proverbs have been well-known

and applied by generations of Chinese wéiqí players. This essay proposes to apply their

wise advises to modern business strategy and cases. Apparently, there is no strict order

of the 10 proverbs. Hence, they have been grouped here by common themes: attitude,

preparation, space and time, power balance and sacrifice.

Some comparisons will be made with the two major Chinese strategy classics, The

Military philosophy of Sūn Zǐ known in the West as The art of war [孙子兵法 – Sūn Zǐ

bīngfǎ] from Sun Tzu, and The thirty-six stratagems [三十六計 - Sānshíliù jì]. A notable

difference is that the 36 stratagems provide many deceiving techniques: the battle is

perceived as a competition. In contrast, wéiqí is a total-information game, so the

proverbs do not promote any trick: the fight is perceived as a construction.

Many books, more or less convincing, have already been written on the business

applications of wéiqí. For example in Go, an Asian paradigm for business strategy,

Miura Yasuyuki, a former international manager of Japan Airlines, reinterprets his past

strategies by using wéiqí concepts. Notably, he compares the market shares with the

territories built by both players. He argues that, like in a wéiqí game, it is not desirable to

try to crush competitors at all cost, and that coexistence is a better option. The goal of

this essay is to provoke the interest of the reader for further research and practice.

Reading about the wéiqí concepts brings some knowledge, but it will never replace the

experience gained through actual playing.

Page 10: The ten golden rules of wéiqí applied to business strategy - 围棋十诀

10

The proverb about attitude

On attitude

The Asian culture puts a great emphasis on the mental attitude, from the martial arts

folklore to Buddhist proverbs such as “When the student is ready, the teacher will

appear” [弟子若準備好時,老師自會出現的 - Dìzǐ ruò zhǔnbèi hǎo shí, lǎoshī zì huì

chūxiàn de]. Strategy games like wéiqí are no exception: games can be won or lost

because of a wrong mindset. In particular during professional tournaments, when the

stakes (and money prizes) are high, the fighting spirit is considered as a crucial

component. Nevertheless, this determination must not be blind and has to be carefully

balanced with the context of the game. Hence, it would be more appropriate to use the

expression right attitude. As we will see, similar concerns about the attitude can be

applied to the business world.

Greediness is not victorious [贪不得胜 - Tān bùdé shèng]

Explanation for wéiqí: Winning is not killing

This proverb is the first to learn when starting wéiqí and trying to understand the depth of

the game. Indeed, the beginners are often surprised to be taught that it is not necessary,

or even desirable, to kill the opponent’s stones at all cost. Such a peaceful statement

sounds paradoxical for a fighting game, where after all the goal is to beat the other

player. In fact, the balance of the game is such that, except when one player has made

obvious mistakes, it is not so common to capture groups of stones. Actually, it can be

easily demonstrated on the board that is much easier to build territories rather than

killing enemy stones. Therefore, the subtlety of the game is to threat to capture stones in

order to gain advantages; the ultimate refinement being to let the opponent live small

while building huge territories.

Page 11: The ten golden rules of wéiqí applied to business strategy - 围棋十诀

11

The other aspect of this proverb is more practical and teaches about how to deal with a

leading position. During the flow of the game, players often evaluate global situation:

when one is clearly ahead, his attitude will be the key for the rest of the game. On one

hand, this player should not take unnecessary risks… but on the other hand if he plays

too conservatively, the opponent will play more aggressively (he has nothing to lose)

and reduce dangerously the gap between their positions. Hence, the leading player

should carefully balance greed and safety, which is not that easy: it is frequent to watch

amateur won games… eventually lost because of this mental confusion! This is linked

with the other proverbs “Seek small gains but incur big losses” [贪小失大 - Tān xiǎo shī

dà].

The proverb leads also to an interesting comparison between the Asian cultures. It is

said that Japanese players have a less aggressive style. They look for a beauty concept

in the game, and sometimes prefer aesthetic moves to crude but more explicitly efficient

ones. Conversely, Chinese and Korean players play in a much more competitive and

violent manner, strengthened by amazing computing and technique skills. This style

difference is illustrated by the iconic professional stars from these countries: for instance,

the Japanese Fujisawa Hideyuki versus Niè Wèipíng. It is tempting to link these

difference in styles with some stereotyped culture features: the Japanese emphasis on

harmony and details versus the Chinese gambling habit.

Application in business: Growing concerns about ethics

If the lack of incentives was the main drawback of communism, the excess of greed is

the danger from capitalism. The last financial crisis and the recent corporate scandals

were provoked by the overgreediness of some companies. From the bankruptcy of

Lehman Brothers during the burst of the subprime loans bubble to the Deepwater

Horizon explosion of British Petroleum (BP), all these disasters have one common root

cause: the search for profit over every other consideration. According to Adam’s Smith

Wealth of Nations, greed is the motor that powers capitalism… until a certain limit where

it destroys the society’s welfare, we could add with the feedback from the recent crisis.

Page 12: The ten golden rules of wéiqí applied to business strategy - 围棋十诀

12

There are two categories of arguments in favour of channelizing the search for profit:

ethical and practical.

First, there are now growing concerns and debates about ethics in business. For

instance, the business schools have been accused of being responsible of the poor

ethical education of the current executives. In reaction they have introduced ethics

lectures in their MBA programmes. The inventor of the competitive strategy himself,

Michael Porter, is reconsidering the definition of capitalism through notions like shared

value.

Second, some of the most innovative and successful companies are not driven by

maximizing the short-term profit for shareholders. Conversely, they emphasize a vision

and mission that lead to profit thanks to the commitment of the employees. Google’s

corporate motto “Don’t be evil” or TDK’s “Contribute to culture and industry through

creativity” sound naïve, but the successes of these major firms show the strength of the

concept.

To sum up, the quote from Thomas McCabe, a famous American CEO in the middle of

the XXth Century still applies: “If you serve the other four groups of stakeholders [clients,

employees, community, nation] well and truly, then you will also serve the long-term

interests of your shareholders. Emphasis on Long-Term!”

Case: The failed acquisitions of Proton

This case details a less dramatic example than the previously mentioned corporate

disasters, but it shows how overgreediness can ruin the strategy of a company. Proton is

a Malaysian automobile manufacturer founded in 1983. As the dominant carmaker in its

home country, it has long been looking to an international expansion. On two occasions,

the company made the tentative of expanding through acquisition.

Page 13: The ten golden rules of wéiqí applied to business strategy - 围棋十诀

13

First, the Malaysian company became well-known by taking over the prestigious Lotus

Cars in 1997, after the bankruptcy of the former owner Bugatti. The goal was to benefit

from the quality and expertise of the British manufacturer and integrate them into its

production lines. The GEN-2, launched in UK, was the most notable result of this joint

conception. But the poor sales clearly didn’t meet the expectations.

The failed second acquisition was MV Augusta, an obscure Italian motorcycles

manufacturer, in December 2005. It appeared quickly that the purchase was poorly

managed, as unreported debts of MV Augusta had not been taken into account. As a

result, Proton ceded the subsidiary to Harley-Davidson Inc. two years later for 1 euro.

These two failures show that Proton was too in a hurry (greedy) to expand overseas

(victory). Either it was not ready to manage the acquired company, or it didn’t prepare

the purchase carefully enough. But both cases can be seen as a lesson about the

drawbacks of greediness. Hopefully, these bad outcomes have not been fatal to the

Malaysian carmaker.

Page 14: The ten golden rules of wéiqí applied to business strategy - 围棋十诀

14

The proverbs about preparation

On preparation

Every computing during a wéiqí game can be seen as a preparation. Actually, the moves

in a game are only the tip of the iceberg of the computations and counter-computations

performed by the two players. If one compares a wéiqí game with a book, then most of

the story has not been written explicitly on the paper. Likewise, appreciating implicit or

concise beauty is a common Asian feature. Back to the strategy field, the similarities

with Sūn Zǐ bīngfǎ chapter IV: Disposition of the army [形 - xíng] are striking, both for

attack and defense:

- “Thus it is that in war the victorious strategist only seeks battle after the victory

has been won, whereas he who is destined to defeat first fights and afterwards

looks for victory” [是故勝兵先勝,而後求戰;敗兵先戰,而後求勝 - Shì gù shèng

bīng xiānshèng, érhòu qiúzhàn; Bàibīng xiān zhàn, érhòu qiú shèng].

- “The good fighters of old first put themselves beyond the possibility of defeat, and

then waited for an opportunity of defeating the enemy” [昔之善戰者,先為不可勝,

以待敵之可勝 - Xí zhī shànzhàn zhě, xiān wéi bùkě shèng, yǐ dài dí zhī kě shèng].

In the same manner, the importance of thinking and planning is recognized at all the

levels of a company, from marketing to operations. No serious business is now

conducted without evaluating the situation, the different alternatives as well as the

competitors’ moves. The number of strategic frameworks that have been developed for

many purposes proves how preparation is now emphasized in the business world. The

well-known case of Royal Dutch/Shell that anticipated the 1973 oil crisis with a scenario

planning analysis years before, shows how deep and powerful such preparation can be.

Page 15: The ten golden rules of wéiqí applied to business strategy - 围棋十诀

15

Take care of oneself when attacking others [攻彼顾我 - Gōng bǐ gù wǒ]

Explanation for wéiqí: The best fights are those not played

Professional players always take the time to correct weaknesses in their groups before

any attack. By doing so, they eliminate the risk of aji [味道 - wèi dào], or bad potential.

Such moves seem slow at first sight, but it enables then to launch quicker and more

severe attacks, without any risk of counter. Generally, amateur games are more crudely

violent than professional ones, and this is not because professionals lack fighting spirit,

far from it. In fact, the depth of analysis of pros make them aware of all the threats, so

they care to neutralize them. On the opposite, amateurs think less deep and play more

explicitly. The ancient legends provide the same advice: Zhong-Pu Liu (Song Dynasty,

960 – 1279, actually North Song, around 1078) in Chapter 2 of his classical Qí jué [棋诀],

wrote “Never be too sure about your plan, and always in doubt about killing your

opponent's stones” [侵凌夫棋路无必成,子无必杀,乘机智变,不可预图 - Qīnlíng fu qí

lù wú bì chéng, zǐ wú bì shā, chéngjī zhì biàn, bùkě yù tú].

In consequence of this, “Fighting must not be the key of wéiqí. It should be reserved as

a player's last resource, and when carried out, one should be extremely careful” [用战之

法,非棋要道也。不得已而用之,则务在廉慎 - Yòng zhàn zhī fǎ, fēi qí yào dào yě.

Bùdéyǐ ér yòng zhī, zé wu zài lián shèn] (Zhong-Pu Liu again).

That some of the strongest players advise not to fight seems surprising at a first reading.

In reality, the morality is that peace is established by mutually neutralizing the strengths

of the opponents. Accordingly, fights happen when the balance of power between the

two parties is broken. Similar concepts are developed at the individual level by Asian

martial arts, most notably aikido [合気道].

Page 16: The ten golden rules of wéiqí applied to business strategy - 围棋十诀

16

Application in business: Don’t overexpose yourself while competing

This proverb has many business applications, and teaches how to temperate the

competitive moves. True, one of the primary concerns of a company is to handle the

competition, by differentiating or attacking prices. But these actions must be planned

carefully and must not endanger the company, or at least below an accepted risk

threshold. For example, the company must not be too in debt, or any cash flow

uncertainty could be fatal. Likewise, a public company with too high cash assets could

be a very profitable take-over target. Information leakage is another form of over-

exposition and can have very negative impacts. Last but not least, this proverb applies

to any entry in a new market: the incumbents must not feel threatened by the new player

as long as possible. Otherwise, the entering company could suffer retaliation from the

incumbents, such as a pricing war, that could make fail the whole project.

Case: Toyota entry in the US market

The Japanese car manufacturer Toyota entry in the United States (US) market is one of

the best example of the application of this proverb. Toyota, like all the other post-World

War II Japanese industries first grew on the domestic market. During decades, the

Japanese developed and refined the now classical Toyota Production System (TPS),

permanently improving their procedures (kaizen) and cutting all the costs through their

no waste (muda) and Just In Time (JIT) methodologies. The Japanese considered

entering in the US market only when the quality of their cars and their prices attained the

desirable level. At that time, instead of competing directly on the same market segments

than the US manufacturers, they chose the niche segment of small cars. By doing so,

they got the time to gain reputation and lower the resistance of the US consumers.

Eventually, when the market conditions changed in favour of smaller less fuel-

consuming cars, Toyota became a terrible competitor for the American Big Three, and

conquered big market shares.

Page 17: The ten golden rules of wéiqí applied to business strategy - 围棋十诀

17

Clearly, Toyota applied a patient long-term strategy against powerful competitors

(attacking others) and a difficult market. It has applied the proverb by always taking care

of not expose itself at each step.

Make thick shape, avoid hasty moves [慎勿轻速 - Shèn wù qīng sù]

Explanation for wéiqí: Don’t keep the initiative at all cost

Playing while keeping the sente [先手 - xiān shǒu], or initiative is a key concept in wéiqí.

If a player never takes the initiative, he will passively follow the strategy of the opponent

and will likely lose the game. The fight for the initiative rhythms the game and is the

occasion for many exciting trades between the players. However, there are some

situations where it is all right to lose the global sente and play an important local gote

[后手 - hòu shǒu] (reverse of sente) move. It is typical for beginners to run blindly after

sente and let unfinished shapes. These unhealthy positions are soon perfect targets for

the opponent, who will use them to drive attacks all around the board…. And eventually

ruin the small advantage gained by keeping the initiative earlier.

Consequently, abandoning the sente to make a good local shape is a calm powerful

move, preparing further offensives. A good shape is not necessarily a thick one, but can

also be light or flexible. Obviously, the application of this proverb must no lead to the

other extreme. In particular with modern fast-paced and high komi [贴目 - tiē mù]

(compensation points to White for playing second) games, too slow conservative moves

are a losing strategy.

Application in business: Operations excellence

This proverb teaches how to take the time to build and prepare business operations, in

order to leverage them later. In the modern business environment, the always shorter

product life cycles put a great pressure on the development and production phases.

Which operations officer has never endured the rush from the marketing and sales

department? Such situations are the burden of modern competition, but if the pre-sales

Page 18: The ten golden rules of wéiqí applied to business strategy - 围棋十诀

18

steps are too poorly prepared, the company can suffer dramatic failures at the new offer

launch. These mistakes can disappoint the clients to the point of unrecoverable loss of

reputation or market shares. Therefore, the company focusing on a go to market as

soon as possible to gain the first mover advantage must carefully balance the risks of

doing so. Conversely, the company can focus on improving its product or service, but

then the quality must be a decisive blow against the first comers.

Case: Geely’s delayed debut in America

Geely is one of the biggest Chinese car manufacturers, and not a state-owned

enterprise. Notably, it performed the biggest acquisition of an international carmaker by

a Chinese company, by purchasing Volvo from Ford in 2010. The company originally

planned to begin selling cars for the North American market in 2008, the year of the

Beijing Olympics. By offering cars cheaper than $10,000, it intended to become “VW

Bug” of the XXIst Century. But after several vehicles miserably failed US crash and

emissions tests, Geely’s debut in America has been delayed until 2010.

Typically, Geely managers should have carefully meditated the proverb. By neglecting

the quality (thick shape) of their cars and preferring to rush into the US market (hasty

moves), the company has made a costly mistake and failed. Since, Gelly has learned

from its mistakes and is now ready to enter into the US.

Page 19: The ten golden rules of wéiqí applied to business strategy - 围棋十诀

19

The proverbs about space and time

On space and time

The space and time concepts reveal some of the biggest differences between the

Western and the Chinese philosophies. The Westerners see these two concepts as two

distinct ones (two separate dimensions in a Cartesian system), while the Chinese see

them as interrelated. Interestingly, the wéiqí board is a good representation of the mixed

space and time. Indeed, the square representation of Earth by the wéiqí board is

cosmologically correct for the Chinese, with the centre as the main point. Despite the

stones do not move on the board after being played, their relations and status evolve

very dynamically all along the game. Typically, every player commenting a game will

speak of groups chasing another one, or quick moves, and so on… all these words

clearly do not refer to static positions.

Furthermore, the Western linear thinking, detailed in the Business Journey to the East:

An East-West Perspective of Global-is-Asian, sees the time as a straight line moving in

one direction only… even if the XXth Century discoveries in astrophysics have somehow

confused that visualization. Conversely, the Chinese vision of time is cyclical, and is

combined with space. For instance, each of the four seasons is associated to a specific

cardinal point.

As we will see, this intrinsic combination of space and time is the key to understand the

reasoning of Asian businessmen. They do not think in the Cartesian way, and their

apparent lack of structure can be mystifying or annoying for a Western partner. But they

are more comfortable in reasoning globally, integrating some elements a Western mind

could have missed. This global thinking allows a greater flexibility when conditions

change. In contrast, when faced to such changes, a Westerner has to reinitialize all its

analysis with the new assumptions, which is a longer process.

Page 20: The ten golden rules of wéiqí applied to business strategy - 围棋十诀

20

Be unhurried to enter opponent´s territory [入界宜缓 - Rù jiè yí huǎn]

Explanation for wéiqí: Erode big territories rather than invade them

When facing a huge moyō [地域 - dì yù], or enemy potential territory, the best approach

is usually to erode it. The attacker will use sabaki [腾挪 - téng nuó] techniques,

emphasizing light shapes and speed. Usually, complementary kikashi [先手利 - xiān

shǒu lì], probing or forcing moves, will support the erosion. The purpose is to slightly

reduce the territory while not providing the opponent the opportunity to attack the

eroding stones. If the erosion is too deep, or if it is a frank invasion, the stones will suffer

a strong counter-attack, giving the global initiative to the adversary.

It is noteworthy that the opponent can build a threatening big moyō only if the player has

gained an advantage elsewhere, by building another territory or influence. If this not the

case, it means that the balance of the game has been broken by some earlier mistakes,

and that desperate moves, like an all-out invasion, are needed to win. Therefore, we see

through these erosion issues that the space and timing notions are closely interrelated in

a wéiqí game.

Application in business: Enter into a new market

This proverb applies best to the companies looking to enter into a new market. Indeed,

the right market segment (space) and timing (time) are crucial to succeed. A careful

marketing analysis, supported by market surveys must be performed before any

decision. Moreover, the proper Time To Market (TTM) is all the difference between an

invention launched too early with no clear market and a successful innovation. Likewise,

the too early entry on a market can be costly as the company has to operate while

waiting the consumers to mature. But on the other hand, a too late entry can fail as the

competitors have gained the first mover advantage and have already built entry barriers.

Page 21: The ten golden rules of wéiqí applied to business strategy - 围棋十诀

21

Case: BYD cautious entry into electric car market

The Electric Vehicles (EV) have been announced since a long time without great

outcome… but the turning point could happen soon. BYD Auto has been created in

2003 and is a major player in the EV industry. The firm is part of the Chinese group BYD

Co. Ltd., created in 1995 by Wang Chuan-Fu [王传福] , wealthiest man in China (2009).

This charismatic CEO, originally a chemist, has turned the company into a world leader

in rechargeable battery manufacturing. The reverse engineering capabilities of the R&D

team, added to optimized and low-cost labour-based production process ensured the

success of the diversification. As a result, BYD became the 1st economy-car

manufacturer and 3rd overall in China (2009). As a proof of the outstanding potential of

the company, it is the only Asian company with investment from Warren Buffet ($230

million in 2008).

BYD took the time (be unhurried) to build a strong position before entering into the

international EV market (opponent’s territory) with models like the all-electric BYD e6. Its

development relies on a huge domestic market potential and on synergies between the

battery technologies and markets: mobile IT, EV and energy storage… the battery

performance being the key component of the EV. Of course, the company is facing

many challenges, such as the poor reputation of Chinese brands until now, protectionist

barriers or the appreciation of the Yuan currency, but the business story is promising.

Page 22: The ten golden rules of wéiqí applied to business strategy - 围棋十诀

22

A move must respond to the opponent´s [动须相应 - Dòng xū xiāng yìng]

Explanation for wéiqí: Always keep in mind the global position

The most unique and subtle feature of wéiqí is the overall balance between local and

global positions. One of the first basic techniques acquired by beginners, the shichō [扭

羊头 - niǔ yáng tóu], or ladder, illustrates in a spectacular way how stones on the

opposite side of the board have a decisive influence on what looks like a local fight. The

more skilled player is later delighted to discover the numerous complex masterworks,

still based on this technique [http://denisfeldmann.fr/bestiaire3.htm#p6].

Similarly, wéiqí games involve many typical sequences called jōseki [定式 - dìng shì].

Knowing many jōseki is part of the theory knowledge of good players. Nevertheless

these are different from the chess openings in the sense they are sequences with an

outcome considered as locally even for both players. Thus, the art of well playing jōseki

is to choose the most adapted one in the global context. Conversely, a poorly chosen

jōseki can lead to an acceptable local result, but to a global disaster.

In consequence, at every move, and in addition to the local computations, the global

situation is evaluated and taken into account by the wéiqí players. This powerful game

mindset is a very good school to the Asian global thinking and its business

implementation.

Application in business: The big picture

This proverb entails to think business globally, but also many moves ahead. It is similar

to the Stratagem 35: A series of interconnected ploys [連環計 - Liánhuán jì] in the way

that it emphasizes the combination of different tactics, with the final objective in mind. It

requires a mental flexibility, ready to analyze any information about changes in market,

competition, technology or political change. It also requires the time to perform such

analysis… that is often the problem for many managers, overwhelmed by the daily tasks.

Page 23: The ten golden rules of wéiqí applied to business strategy - 围棋十诀

23

The glocalization concept is another good application of this proverb. Gurucharan Das,

ex-CEO of Procter & Gamble India, believes that big companies will mainly indulge with

small decentralized units to focus on particular markets and customers. His “Think global,

act local” motto applied to the Vicks Vaporub product has been the perfect example of

how global corporate brands can be customized to meet the specific needs of local

customers.

Case: The stakes of US automotive industry in 2009

In 2009, the Detroits’s Big Three, General Motors, Chrysler LLC and Ford Motor were

very close to bankruptcy. After a first refusal by the Senate, an intense lobbying was

performed to let these companies receive a federal aid of hundreds of billions dollars.

Surprisingly, the overseas competitors, most notably Toyota and Honda Motor,

endorsed these measures.

Indeed, they estimated that the failure of any Big Three would create severe collateral

damages to the whole industry. The first firms to suffer would be the automaker’s

suppliers. Since the manufacturers often get their parts from the same suppliers, the

other carmakers would experience disruption in their production as well. A similar

cascade of events could affect the networks of car dealers because they sell both US

and foreign brands. Finally, the collapse of one of the Big Three would probably cause

an economic shockwave in the country, that would reduce the demand for the whole

industry.

All these reasons explain the unexpected solidarity of the Japanese carmakers with their

US counterparts, whom they usually fiercely compete with. But the Japanese companies

didn’t stop their analysis to these points and actually had anticipated even further the

consequences of a Big Three failure. In reality, their biggest concern was that the weak

state of the industry would open the door to the low-cost competitors from India and

China, like Tata and Geely. Undeniably, these automakers succeeded in the developing

world and are now very interested in expanding into Western markets like the US. They

wouldn’t miss an opportunity to enter earlier into the market, and would be ready to

Page 24: The ten golden rules of wéiqí applied to business strategy - 围棋十诀

24

acquire the assets of the distressed companies. On the contrary, the Japanese rarely

rely in this method of growing, so they couldn’t benefit in the same way from the

situation.

In this case, the depth of analysis of Toyota and Honda is outstanding. Following the

wéiqí proverb, they thought many moves ahead and embrace the global position in order

to decide their long-term strategy.

Page 25: The ten golden rules of wéiqí applied to business strategy - 围棋十诀

25

The proverbs about power balance

On power balance

The balance of power is a key concept in wéiqí, and can be considered as the morality

of the game. A game well played by two players of similar strength remains close a very

long time, and can be won by only one point. For instance, if a player is opting for

immediate territory points, it will be offset by the influence gained by the other, and vice-

versa. If the player is strong in an area of the board, he’s weak in another, and so on.

The Chinese instinctively care significantly about the power balance when dealing

politics or business. A good illustration is the way how China has dealt the rise of its

economic and political influence since the Dèng Xiǎopíng’s economic reforms. Thus,

China has long been cautious about not appearing too threatening to its most powerful

rivals, despite obvious international ambitions. Besides, it diversifies its partnerships by

establishing many bilateral relations with foreign countries, from Asia to Africa.

To illustrate, although Europe is its biggest economic partner, China managed perfectly

in its favour the balance of trade with the region. By exploiting the lack of unity and

consistency among the European countries, China was able to neutralize the bargaining

power of the European Union.

Currently, the most critical application of the principle of power balance in the world is

the mutual interdependency between US and China. US are the biggest importer of

Chinese goods, and their trade deficit is mainly funded by China itself, that bought for

hundreds of billions of dollars of US Treasury bonds. The economies of both countries

are currently so interrelated that it is not clear whether the situation favours one side or

another: US depend on China to borrow money, and China’s foreign reserves value

depends on the exchange rate of the US dollar. In brief, everyone agrees that this

cyclical relation went too far and is not healthy for the global situation, but the way to

attenuate it is not a consensus yet.

Page 26: The ten golden rules of wéiqí applied to business strategy - 围棋十诀

26

At the business level, many Asian companies are vigilant about the balance of power,

and they generally expand with few publicity. Nowadays, industry after industry, the

world realizes that Chinese firms became international players: from Lenovo in

computers to Huawei in Telecom... the next major changes will probably happen in the

automotive industry. The two next proverbs will show how the principle of power balance

is applied in wéiqí and business, for both attack and defence.

Against strong positions, play safely [彼强自保 - Bǐ qiáng zì bǎo]

Explanation for wéiqí: One does not play alone

This proverb is not contradictory with the aforementioned fighting spirit, but is rather a

complement for the right attitude from the first proverb. Wéiqí is a total information

game: the only unknown element is the psychology of the other player. But as all the

information needed for a rational decision is displayed on the board, the psychology

factor is undeniably less important than in other games, like poker. That is to say, most

of the deception techniques, like those described in the 36 stratagems do not apply here.

Consequently, the player must assume the opponent is as clever as himself, and must

not be underestimated. For this reason, it is a wrong style to play sequences expecting

opponent’s mistakes… even if such traps can work in practice during amateur games.

Because of this balance of strength, the victory can be achieved only by a long-term

multi-steps strategy, creating progressively opportunities. Winning is clearly not about an

all-out fight with all energy committed in a unique attempt.

Application in business: Prudence

This proverb teaches that patience and prudence are important when initiating

competitive actions. When the incumbents are strong, the company must take the time

to build its position in the target market. Following this, neither frontal attack nor

provocation must be launched, or the incumbents could over-react aggressively and

neutralize the attempt.

Page 27: The ten golden rules of wéiqí applied to business strategy - 围棋十诀

27

Case: AirAsia expansion to long-distance flights

AirAsia is a pioneer of low-cost travel in Asia. The airline is based in Malaysia and has

started its operations in 1996. It shares a story very similar to the one of RyanAir, as it

has succeeded the transformation from a money-losing regional operator to a profitable

budget airline.

The strategy of the company is based on the low-cost airline model, taking the opposite

path of the prestigious Asian brands like Singapore Airlines or Cathay Pacific. It has

achieved the lowest possible prices by saving aggressively on services and operations,

without of course compromising the flight safety standards. AirAsia has rapidly

expanded to become the major carrier in the region, taking advantage of the rising Asian

middle-class population. The huge success of the company was possible because of its

different positioning. Ironically, the traditional airlines have reacted by launching their

own low-cost subsidiaries, like Tiger Airways from Singapore Airlines in 2003.

AirAsia clearly has applied the wéiqí proverb, as it took the time to establish a strong

regional position (play safely). Only then, the company has started to compete on the

long-haul flights with the other airlines (against strong positions). Notably, Sir Richard

Branson took a 20 per cent stake in AirAsia X, to help kick-start the new destinations to

Europe. The company is continuing its provocative and humoristic marketing tradition,

as Richard Bronson himself, maybe disguised as a stewardess, will serve passengers

on the flight between Kuala Lumpur and London on 21st February 2011.

Page 28: The ten golden rules of wéiqí applied to business strategy - 围棋十诀

28

Look for peace, avoid fighting in an isolated or weak situation [势孤取和 -

Shì gū qǔ hé]

Explanation for wéiqí: One must tolerate the intolerable

This proverb provides a similar prudential advise, but from the defence perspective. It

emphasizes a pragmatic and realistic approach when a player is in a weak position.

According to the power balance principle, the player must not expect any miracle from

opponent’s mistakes and must play very safe moves. Otherwise, the game is over

because the risky moves will be irremediably sanctioned. In short, this proverb teaches

patience and humility: one has to restrain his pride while waiting for future gains. Once

again, the flow of the game implies that such local submissive moves must have been

balanced elsewhere on the board, so this low profile attitude is opportunistic and

temporary. It is tempting to connect this proverb with the Stratagem 27: Pretending to be

insane but remaining smart [假痴不癲 - Jiǎ chī bù diān] and to the exceedingly humble

Asian behaviour, often confusing the Western partner.

Application in business: When to keep a low profile

In the current very competitive and global environment, it seems paradoxical to advise

rather conservative and calm moves. But how many companies have disappeared

because of an over-exposition, or too ambitious plans? The changes and crisis of the

last decades have never occurred with such an intensity before in history. True, flexibility

is now one of the keys for the companies to evolve as the business conditions require.

But the financial stability must not be sacrificed for temporary enthusiasms about what

looks like opportunities.

Case: The end of a 1,400-year-old business

The Japanese temple builder Kongō Gumi was the world’s oldest family business. It had

run continuously under the founder’s descendants since 578, but it collapsed in the poor

business environment in 2006.

Page 29: The ten golden rules of wéiqí applied to business strategy - 围棋十诀

29

The longevity of Kongō Gumi can be explained by the stability of its industry. After all,

the Buddhist religion is thousand years old, followed by millions of believers. But the

company also survived difficult eras, notably the Meiji Restoration in the XIXth Century,

when it lost government subsidies. At that time, the firm started constructing commercial

buildings in addition to its core activity. Furthermore, it had developed over the ages

some best practices in management. Thus, at each succession, the most capable leader

was selected rather than the eldest son of the family.

Despite such traditions, this extraordinary company collapsed for shockingly ordinary

reasons. First, it borrowed important amounts to invest in real estate during the 80s

bubble in Japan. As a result, the value of the assets declined strongly after the bubble

burst in the early 90s. Then, the company suffered a drop in the market demand, as the

temples receive less and less contributions because of the social changes in Japan.

Consequently, Kongō Gumi never recovered from its debt situation, and was finally

acquired by a large construction company in 2006.

The proverb applies perfectly to this case. The firm stayed consistent with its core

business, while adapting to the conditions change. But at a critical time, it didn’t estimate

correctly the weakness of its situation and overexposed itself (didn’t avoid fighting)…

and ended in sad circumstances.

Page 30: The ten golden rules of wéiqí applied to business strategy - 围棋十诀

30

The proverbs about sacrifice

On sacrifice

Sacrifice is very common in Chinese mindset. For instance, many of the 36 stratagems

involve some kind of sacrifice, such as Stratagem 14: Borrowing a corpse to resurrect a

soul [借屍還魂 - Jièshīhuánhún] or Stratagem 34: Self-injury scheme [苦肉計 - Kǔròujì].

Maybe the roots of this practice lie in the Confucianism philosophy combined to the

dimension and population of the country. There are many examples in the Chinese

literature of sacrifices of expandable resources, generally the subjects themselves, for

the cause of the Emperor.

Beyond its ethical issues, sacrifice also requires a certain mental flexibility. Indeed, one

has to be able to accept a loss for a further benefit. Thus, the sacrifice can be seen as a

way of dealing with changing conditions, without losing sight of the primary objective.

Conversely, the Western linear thinking can be less reactive to such changes, as paths

of analysis have to be computed again. In addition, the Judeo-Christian values make

generally more reluctant, consciously or not, to use such tricks.

The following last proverbs will explain the three levels of sacrifice: tactical, strategic and

emergency measures.

Discard stones to gain initiative [弃子争先 - Qì zǐ zhēng xiān]

Explanation for wéiqí: Stones are not important

In wéiqí, the stones have a low intrinsic value: one point per stone captured. Their real

value is based on their relations with the other stones. For example, a single stone

cutting two adversary groups serves a strategic purpose, and will be much more

important than a small group of stones accomplishing nothing. Obviously, the value of

the stones can change very quickly depending on the circumstances. Therefore, the

stones are expandable resources and can be sacrificed if it is profitable to do so.

Page 31: The ten golden rules of wéiqí applied to business strategy - 围棋十诀

31

Remember that one stone, or light groups are more flexible than heavy shapes. Thus,

the effectiveness of the group shapes is the key to let the maximum number of options

open, including sacrifice. In contrast, a heavy group corresponds to an investment in one

direction only, and it will be generally more painful to sacrifice it.

There are numerous techniques based on sacrifices of unimportant stones, achieving

different tactical goals: shichō to capture a group of stones, cut through the keima [飞-

fēi] (knight’s shape) to keep the initiative at the end of the sequence, shibori [滚打包收 -

gǔn dǎ bāo shōu] to squeeze the opponent’s shape to make it heavy and easy to attack,

and many others.

Application in business: The Blue Ocean framework

The acclaimed Blue Ocean framework from Chan Kim and Renée Mauborgne is a

powerful application of the sacrifice proverb. Their core idea is to avoid the existing

markets enduring a fierce competition, the Red Oceans, and rather to create new

markets with no competition, the Blue Oceans.

They propose a simple and powerful tool, the Strategy Canvas, to visualize how different

is the company’s value offer compared to the competitor’s. Interestingly, the four actions

framework (Eliminate-Reduce-Raise-Create) they use to adjust the company’s

differentiation is heavily based on sacrifices. To create a Blue Ocean, the company must

eliminate the factors that its industry takes for granted, and reduce some factors well

below the industry’s standards. It seems paradoxical that improvements are not

necessarily creative, but many business successes have applied this destructive

innovation paradigm. Low-cost airlines are probably the most representative example of

this approach.

Page 32: The ten golden rules of wéiqí applied to business strategy - 围棋十诀

32

Case: The Yellow Tail wine

Yellow Tail is an Australian brand wine, made by the family winery Casella Wines. Since

its introduction in 2000, it has greatly succeeded its positioning between the budget and

premium wines in saturated market. For instance, it became the most imported wine to

USA in 2003, and the volume of sales has now reached 300 million of litres.

This booming globalization of the wine product has been based on following the

consumer desires of change: why not buy wines by variety and brand names, like any

other product? Yellow Tail took the opposite path of Old World wines, where the terroir

and history knowledge are part of the appreciation experience. The busy modern

customers are less inclined to accept the uncertainties of the traditional way. Not

everyone can spend time enough to become a connoisseur and choose the right French

Bordeaux, according to the vineyard, the year of production and many other confusing

factors. Last but not least, the pretentious behaviour of some dealers make the client

feel uncomfortable during shopping.

Therefore, Casella Wines applied the proverb and differentiated Yellow Tail by

sacrificing conventional wine feature (discarding stones). First, it has eliminated the

oenological terminology and distinctions. Then, it has reduced the complexity and range

of the product, as well as the vineyard prestige. In order to avoid customer confusion,

Casella Wines has limited the offer to just one white wine and one red wine. By doing so,

the company has created (gained initiative) a new customer experience for wine

drinking: “easy drinking, ease of selection, and a sense of fun and adventure”.

Page 33: The ten golden rules of wéiqí applied to business strategy - 围棋十诀

33

Abandon small to save big [舍小就大 - Shě xiǎo jiù dà]

Explanation for wéiqí: Look after the big fish

This proverb sounds obvious, but the challenge is to distinguish the big from the small.

The key is to think beyond short-term and narrow-minded captures or gains.

For example, it is a poor idea to try to capture some stones that the opponent could non-

painfully sacrifice (cf. the previous proverb). It is much more subtle and profitable to

make the target group bigger and heavier and then attack it severely. Nevertheless, the

assailant must not forget the proverb “Big dragons never die” [大龙永远不会死 - Dà lóng

yǒngyuǎn bù huì sǐ]. Hence, the offensive will be profitable not by trying to capture the

big group, which is risky when the prey is desperate, but by threatening it while gaining

indirect benefits (building influence, or another territory). In short, the small is the

immediate value, and the big is the potential value.

Another application of the proverb is the tenuki [脱先 - tuò xiān] concept. It is sometimes

bigger to ignore opponent’s last move to play elsewhere and gain the initiative or gain

other points.

Application in business: Focus

This proverb highlights the importance of focus in business. Nowadays, outsourcing is a

common practice for a company to focus on its core competencies. The company

prefers to delegate (sacrifice) the standard activities with small value, in favour of the

core business activities with big value. Another example is the focus on the key products

or markets segments. Many frameworks, starting with the venerable BCG Growth-Share

Matrix, promote a differentiation strategy by simplifying the portfolio. In the BCG case,

the company must disinvest from the dogs, the business units with low (small) market

share and growth rate. On the opposite, it must invest in the stars, with high (big) market

share and growth rate.

Page 34: The ten golden rules of wéiqí applied to business strategy - 围棋十诀

34

Case: Panasonic bicycles

Panasonic is a renowned multinational corporation founded 1918. It is now the largest

Japanese manufacturer of consumer electronics in many industries and under many

brands. Nevertheless, few know that after World War II, the production of bicycles was a

substantial part of its revenue. The founder Konosuke Matsushita was so passionate

about cycling that he even enforced high quality production policies, no matter the profits

of the bike division. In the 1970s, the quality reputation added to modern production

lines led to international exports, including a partnership with the US Schwinn

manufacturer. But in 1985, the increase of yen plus the low-cost production from

emerging countries cut Panasonic’s competitiveness. The removal (sacrifice) of the

bicycles from the products portfolio was ineluctable. Indeed, the business unit became

the least profitable (small) of the company, and its activities were distant from the core

business (big). But because of the involved emotional decision factors, the division was

sold only in 1989, just after Konosuke Matsushita’s death.

When in danger, sacrifice [逢危须弃 - Féng wēi xū qì]

Explanation for wéiqí: You can lose a battle and still win the war (but don’t forget

to trade)

This proverb applies when emergency measures are needed. When in a desperate

situation, it is preferable to accept a temporary defeat, if there remains the hope to

counterbalance in the long-term. However, the opponent must not get easy free points,

so the loss must be pugnaciously compensated, typically by trading points for influence.

Some of the most known spectacular sequences involve such sacrifices in desperate

situations. This is a pragmatic attitude, still in phase with the fighting spirit of the game,

and similar to the Stratagem 36: Escape, the best scheme [走為上策 - Zǒu wéi shàng].

In the same way, notions like honour, pride or ego are irrelevant: only final victory

matters.

Page 35: The ten golden rules of wéiqí applied to business strategy - 围棋十诀

35

Application in business: Painful cuts

Likewise, this proverb applies to business in very difficult situations. It is a sad and

sensitive, but very current topic: facing the globalized competition, many companies

have to reorganize, abandon products and cut jobs. Most of the time, the firms have few

other choices to survive, but there are also cases of abuses and bad practices. The

sacrifice principle must be applied in a thought and fair manner

An example of poor application of the proverb is the shutdown of the Continental

manufacture in Clairoix, the biggest one in France since the recession. In 2009, a

thousand of workers learned the closing of the German pneumatics production site from

the media, and not from the management. This decision was very brutal and surprising.

Indeed important amounts had been recently invested in equipments and the workers

had previously accepted reduction of salaries in order to sustain the company. On top of

that, the only alternatives proposed by the firm were humiliating and unrealistic positions

in developing countries. The demonstrations that followed the announcement led to one

the major social event of the year in France.

But business history records provide also more positive and creative usages of sacrifice

for strategic purposes. Intel switching from memory chips to microprocessors market in

the 1980s, because of the increased competition of Japanese manufactures, is one of

those successes. But even more extreme and perilous sacrifices have also proven

successful.

Case: Nokia conversion to Telecom

Nowadays, few people know what were the activities of Nokia before being a world

leader in the mobile and Internet converging devices and services. The history of this

major Finnish company started in the XIXth Century. Over time it became a huge

industrial conglomerate of very diverse business units: from paper, bicycle tires, cable,

military, chemicals to consumer electronics. But the firm endured serious financial

problems in the late 1980s and early 1990s, endangered by the severe economic

Page 36: The ten golden rules of wéiqí applied to business strategy - 围棋十诀

36

depression in the country. The situation was so dramatic that the CEO at that time, Kari

Kairamo, took his life. Therefore the management made drastic decisions and

concentrated the company of Telecom only. Therefore, during the 1990s, the other

divisions were gradually sold. Eventually, the vision, courage and skills of the

management turned these sacrifices into a tremendous success in the mobile and

Internet communications era.

Page 37: The ten golden rules of wéiqí applied to business strategy - 围棋十诀

37

Bibliography

Books

L’art de la guerre from Sun Tzu [The art of war]

Les trente-six stratagèmes [The thirty-six stratagems]

The wealth of nations (1776) from Adam Smith

Gô et Mao (1972) from Scott Boorman

[The protracted game: a wei-ch'i interpretation of maoist revolutionary strategy]

Petit traité invitant à la découverte de l’art subtil du go (1969)

from Pierre Lusson, Georges Perec and Jacques Roubaud

[Small treatise inviting to discover the subtle art of go]

Le go aux sources de l’avenir (1992) from Pascal Reysset

[The go to the sources of future]

Go, an Asian paradigm for business strategy (1998) from Miura Yasuyuki

36 Strategies of the Chinese, the adapting ancient Chinese wisdom to the business

world (1999) from Wee Chow Hou and Lan Luh Luh

Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition

Irrelevant (2005)

from Chan Kim and Renée Mauborgne

Iconographie du jeu de go dans la peinture japonaise (2006) from Motoki Noguchi

[Iconography of the game of go in Japanese paintings]

Business Journey to the East: An East-West Perspective on Global-is-Asian (2008)

from Wee Chow Hou and Fred Combe

Page 38: The ten golden rules of wéiqí applied to business strategy - 围棋十诀

38

Online resources

http://lorl.free.fr/gomyst.htm

From Youyi Chen, translated and adapted by Laurent Lamôle

Game explanations of the Ten Golden Rules of wéiqí

http://senseis.xmp.net/ wiki dedicated on wéiqí

http://denisfeldmann.fr/bestiaire3.htm#p6 from Denis Feldman

Historical and exotic game positions

http://bibliographie.jeudego.org from Didier Kropp

Comprehensive bibliography of wéiqí books and resources (French)

http://timnovate.wordpress.com/ from Prof. Shlomo Maital

Blog about business and innovation