So I thought I would put this up as a ‘building snowmobiles’ post, because A. it mentions the OODA loop as applied to business and B. they are copying some of the strategies that work for today’s insurgents or pirates, and applying it to business as well.
I really wish I could find a copy of Corporate Insurgency though, or get the professor onto the blog here to discuss the concept a little more. This story was also taken from the Economist.
The main theme here is to leverage the power of small forces against larger forces, or for larger forces to act like smaller forces to compete with them in business. Insurgents will not take on armies directly, and will try to attack the bigger foe’s weakest parts. Professor James talks about how businesses can do the same thing in the market place.
He also talks about the decision making cycle of large companies versus small companies. That in order for large companies to compete with smaller ones, they cannot be micro-managers of the brand. The professor derives examples of this de-centralized type command structure from today’s insurgents in places like Afghanistan. Imagine that, learning business lessons from how the enemy does it’s thing in the war?
What I really thought was interesting though was the creation of a business ‘commando’ unit for the larger companies. Something that can quickly react to the local situation and can make quick decisions outside the realm of the standard boardroom. This would be ideal for jumping on deals or business that requires speed of decision–something that smaller companies or individuals are more apt to do than lets say the larger companies.
How I envision a business commando unit in the private military sector, is a group that would seek out business in all parts of the world, or deal with the fast paced nature of the PR world. This kind of group would be ideal for getting the word out about what is going on with a company, or communicating with folks like me for a company’s strategic communications. They could be the ones that provide more of a personal touch to these larger companies, and really explore ways of connecting with potential clients or employees. I am sure there are other areas that these types of units might actually benefit a large PMC or similar defense company, and the imagination is the only limitation.
My final thought here, is what lessons could PMC’s learn from pirates or insurgents? Well I have talked about the New Rules of War in the past, and the whole OODA thing, but I have really never explored how these strategies of war could be applied to business. By taking the advice of the professor, this might show the way for smaller defense companies to take market share from the bigger PMC’s by jumping on very niche oriented services. For you guys and gals out there with small businesses, hopefully these ideas will help you to focus your energies on the niches in the market place that will give you a higher chance of success. Do you want to compete directly with a company like DynCorp for the big contracts, or do you want to become successful by tackling the small and unique types of business that DynCorp is not quick enough to jump on? Food for thought. –Matt
What managers can learn from Somali pirates
November 07, 2010
PURVEYORS of management-speak are fond of quoting cod insights from military strategists. According to David James, a professor at Henley Business School, they would do better studying the management styles of some of those the armed forces are fighting, such as Somali pirates. Alongside Paul Kearney, a lieutenant-colonel in the Royal Marines, Professor James has been studying the operations of the pirates, as well as insurgents in Afghanistan and Iraq, to see if they have anything to teach legitimate firms.
The threat to life and liberty aside, Somali pirates’ business model is impressive. According to the professor, each raid costs the pirates around $30,000. On average one raid in three is successful. The reward for a triumphant venture, however, can be in the millions.
The organisation behind the pirates would be familiar to many ordinary businesses. For a start, they have a similar backend—including the kind of streamlined logistics and operations controls that would be the envy of most companies. Their success has even prompted one village to open a pirate “stock exchange”, where locals can buy shares in up to 70 maritime companies planning raids.
But Professor James believes that the most important lesson firms can learn is one of strategy. He teaches his MBA class that one reason for the pirates’ success is that they avoid “symmetrical” conflict—challenging their targets head on by, for example, lining up against the Western navies patrolling the waters—battles they would surely lose. Instead, they use stealth and surprise, attacking targets at their weakest point. In this way, with only a dozen-or-so sailors, they wrest control of huge assets, in the form of oil tankers.
This is a lesson that serves smaller companies well as they look to take bites out of larger rivals. It might be foolish, for example, for a start-up to take on one of the traditional banks head-to-head—only another large bank could afford the pyrrhic battle that would ensue from it protecting its market. But by picking a small, localised fight a start-up can make an impression before a bank has had time to react. An example, says Professor James, is wonga.com. It has taken market share by attacking banks’ inflexible lending policies by offering loans for the exact amount and length of time the customer wants. It processes the loans extremely quickly and customers can even get immediate approval using an iPhone app.
