Detecting the Enemy (Part 1)
Sun Tzu shows many ways to detect what the enemy is doing. Sun Tzu says, “ When the enemy is close at hand and remains quiet, he is relying on the natural strength of his position. When he keeps aloof and tries to provoke a battle, he is anxious for the other side to advance. If his place of encampment is easy of access, he is tendering a bait. Movement amongst the trees of a forest shows that the enemy is advancing. The appearance of a number of screens in the midst of thick grass means that the enemy wants to make us suspicious. The rising of birds in their flight is the sign of an ambuscade. Startled beasts indicate that a sudden attack is coming. When there is dust rising in a high column, it is the sign of chariots advancing; when the dust is low, but spread over a wide area, it betokens the approach of infantry. When it branches out in different directions, it shows that parties have been sent to collect firewood. A few clouds of dust moving to and fro signify that the army is encamping. Humble words and increased preparations are signs that the enemy is about to advance. Violent language and driving forward as if to the attack are signs that he will retreat.”
The Quiet Enemy
A business, that is a close competitor that is close to you and quiet is preparing. They are quiet as they are relying on their preparations for an advantage. The close business that is quiet has a natural strength and will be a worthy adversary.
Provoking Battle
The purpose of provoking battle is to get the other side to advance and be in worse position to fight. In business, companies will seek out projects that provoke battle so that their adversary will move from their core business that is profitable. Then, the smarter company will attack them when they are in a worse position to fight.
Bait
If the camp is easy to access, it can often be a bait. A company might let others see what they are doing by appearing lazy and open. They know competitors will see their lazy attitude and that they will feel superior like they can take over your business. The great leader will use it as a bait. Maybe you want a competitor to go down this path because it is unprofitable or because you want to go down a different path.
Here is an example. A new competitor goes into your field of business. You leave business for them that you know they will pick up. You show them how badly you work and how you are profitable, but not doing awesome. The other company will take this to heart. They will go after that business more strongly because they feel they are superior. They whole time, you know that your other better core business is safe because they took the bait.
Rising of Birds
Wild animals have a keen sense of hearing and smell. They will run away from you way before you get up close. If you see animals rising and no wild animals around, that is a good sign the enemy is near.
In business, there are certain types of industries and companies that are on the verge. They must operate perfectly to maintain their company because of high debt loads and a commodity market. The great leader will pay attention to warning signs by observing those that are the most vulnerable around them. If the most vulnerable and smaller companies keep getting wiped out, it is a sign that a larger competitor is right around the corner.
Dust
You can tell a lot about an army by the movement of the dust. The same is true of economic markets. The dust is the smart money. You follow the smart money to see what is going on. Understanding how market indicators work together is another form of dust. You can predict things by getting acquainted with the indicators and mathematically plotting their course.
In a business, you should know what the indicators are. If you are a mortgage broker, you should understand interest rates and be able to predict them. If you are a farmer, you should understand weather, futures, commodity markets, growth yields, and price yields.
The fact is that many companies ignore all the dust. They think it can't really tell them anything. The think it is futile. They may also be so busy that they think dust is too expensive to analyze.
The hard truth is that the dust tells a huge story. It tells you the exit strategy. If you know when to get out, you can save all your earnings. If you know when the opponent is advancing, you can prepare. The value of the dust is immeasurable. A company that avoids understanding dust will eventually get hit hard and may crumble.
Humble Words
People are always enamored by people with fancy cars and words of how well they are doing. When, in reality, the humble person is the one that is the most competitive. People that try and show you how well they are doing usually aren't doing well. People that are humble may be doing well and may actually be poor. In the book, The Millionaire Next Door this is called big hat and no cattle. The reason is that some of the wealthiest people in the world choose not to display their wealth.
Some small companies get frustrated and will actually call up a competitor to yell at them. Why? They feel frustrated and angry that they can't compete. The angry outbursts are actually a sign they will retreat. They may threaten you, but they won't deliver. The are having an angry outburst and that shows real weakness.
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