Tuesday, September 30, 2014

Competiting in the Information Economy with the Sunzi's "Victory Temple" Model

(updated on 02.09.15)

The above chart is currently being utilized in one of our many strategic projects.  Those who understand the tangibility of the Sunzi classic, should know what the chart is about.

The Process
The time that it takes to assess and position your competition is inversely proportional to the time that it takes to influence your competition.  This guideline becomes active when a team is operating in a high risk, high reward situation. We will discussed more on this guideline in a future post. 

The Assessment 
I presumed that you are one of those up and coming strategic thinkers, who have read and understand the various strategic classics.  

You have read the Art of War and have used it as your motivator because you are a driven leader.  You make no huddle decisions faster than a NFL quarterback while throwing 100 mph fast balls into a batting cage.   Better yet, you make quick turns with the rapidity of a Formula One race driver while consuming your favorite coffee brew and your gluten-free bread toast with English butter on top of it .

You absolutely compete by the decisions that you make.  You assess. You position. You influence.  It is a quite faster process than the obsolete method of "observing, orienting, deciding and acting."  

We will touch more on that point in our future book project.

If you were not on the ground zero, calling plays, you are preparing a strategic plant that would make "The Chosen One" proud of it . Sunzi would have loved to have you as his godson or his god daughter.

The Challenge 
While studying this chart, do you think that you could employ the 13 macro concepts of Sunzi (that are listed in the above chart) to assess your competition in terms of the Big Tangible Picture?

Do you think that you can use it to find the Dao that operates within your competition?

By living in a transparent economy, it should be easy for you to find the answer?   The answer only took us 30 minutes while eating pizza and drinking Dragon Well tea.  ... 

By being the grand member of "The Masters Of The Universe" club, it should only take you about 10 minutes to answer that question while drinking Dragon Well tea. (Please, do not consume Earl Grey tea while solving this problem for the obvious TCM reason.)

Send us a note if you have deduce the singularity behind the chart.  We will send you a copy of the Essential Art of War or a copy of some strategic classic.

If you need some clues, go through the blog carefully.  They are concealed somewhere in this blog and/or in the actual copy of the Art of War and other strategic classics.

Good Luck!

Side note: At some point, we will elaborate the history and the technicalities behind this chart in a future book or in a future blog post. 

Monday, September 29, 2014

The Basics of 36 Strategies

Picture source: wikipedia

(excerpt from the book" 36 Strategies of the Chinese" by Wee Chow hou and Lan Luh Luh)

Historians today have still been unable to establish the exact time period and authors of the famous "Thirty-six Strategies". The most commonly used strategy, Strategy 36, "Escape - the best strategy" (三十六计, 走为上策), was first mentioned in "The Biography of Wang Jingze" (王敬则传) , a chapter appearing in Nan Qi Shu (南齐书) which writes that among "the thirty-six strategies of Master Tan, escape is the most supreme strategy" (檀公三十六策, 走为上计). The details of the escape of Master Tan or Tan Daoji (檀道济), a famous Song General, from the state of Wei was narrated in the 15th chapter of Nan Shi (南史), "The Biography of Tan Daoji" (檀道济传). The same phrase regarding the supremacy of the art of escape also appears in "Yuan Cai" (渊才), a chapter in The Night Tales of Leng Zhai (冷斋夜话). Judging from records, the "Thirty Six Strategies" should have a history of near two thousand years.

Although the "Thirty Six Strategies" is a summary of some of the war strategies used by the ancient Chinese warriors, the name "Thirty Six Strategies" may have come from Yi Jing's (or I-Ching) (易经) "Yin Yang Theory" (阴阳学说) which uses the Tai Yin number of 66 (太阴六六之数) to mean "many tricks". The main statement which sums up the "Thirty-six Strategies" writes:

Six multiplied by six is 36. The word "calculation" (数) conceals another word, namely "strategy" (术). In the application of a strategy, careful calculation is required. Once one is able to calculate the pattern of how situations develop, he will find the required strategy. A strategy cannot be detached from an objective assessment of a situation. It cannot work by subjective imagination.


The stategist holds the key to the appropriate application of a strategy to each situation. As situations (like war conditions) change, so must the strategies. Thus, how well a strategist assesses a situation determines how good he is in applying the right strategy. The process is dynamic and the strategist is the guru. There is no single answer to any problem or situation; the answer depends on the strategists.

Classification of the 36 Strategies

Generally, the Thirty-six Strategies are grouped under 6 categories. Each category contains 6 strategies. The six categories in turn can be used in two types of situations. The three categories, the "Advantageous Strategies" (胜战计), the "Opportunistic Strategies" (敌战计) and the "Offensive Strategies" (攻战计) are used in a winning situation. The other three categories, the "Confusion Strategies" (混战计), the "Deception Strategies" (并战计) and the "Desperate Strategies" (败战计) are used in a disadvantageous situation. However, the application and usage of these strategies can be mingled in various combinations. They are not intended to be used singly, nor are they only applicable in either a winning or losing situation. The possible combination and application of these strategies are limited only by the imagination and creativity of the strategist.

Other than Strategy 36, nobody can be certain of the content of the other thirty-five strategies. The most commonly-used version is that by an Anonymous author. Nevertheless, over the years, these strategies have been commonly cited and used by many generals as well chinese businessman.

Advantageous Strategies (胜战计)
The "Advantageous Strategies" are used in situations when time and resources are to one's advantage, when there is no need to rush, and detailed planning can be carried out. The six strategies in this category include the following:

1. "Deceiving the heavens to cross the sea"
(瞒天过海 or "Man Tian Guo Hai")

2. "Besieging Wei to save Zhao"
(围魏救赵 or "Wei Wei Jiu Zhao")

3. "Killing with a borrowed knife"
(借刀杀人 or "Jie Dao Sha Ren")

4. "Conserving energy while the enemy tires himself out"
(以逸待劳 or "Yi Yi Dai Lao")

5. "Looting a house on fire"
(趁火打劫 or "Chen Huo Da Jie")

6. "Making a feint to the east but hitting out in the west"
(声东击西 or "Sheng Dong Ji Xi") 

Opportunistic Strategies (敌战计)
The "Opportunistic Strategies" thrive on situations where vulnerabilities can be exploited. The idea is to capitalise on all opportunities so as to gain the advantage. The strategies include:

7. "Creating something out of nothing"
(无中生有 or "Wu Zhong Sheng You")

8. "Secret escape through Chen Cang"
(暗渡陈仓 or "An Du Cheng Cang")

9. "Observing the fire from the other side of the river"
(隔岸观火 or "Ge An Guan Huo")

10. "A dagger sheathed in a smile"
(笑里藏刀 or "Xiao Li Cang Dao")

11. "The plum dies in place of the peach"
(李代桃僵 or "Li Dai Tao Jiang")

12. "Stealing a goat along the way"
(顺手牵羊 or "Shun Shou Qian Yang") 

Offensive Strategies (攻战计)
Like the Advantageous Strategies, the "Offensive Strategies" are used in situations when time and resources are not constraining factors. However, these strategies seek to gain victory through direct attack. The six strategies include:

13. "Hitting the grass to startle the snake"
(打草惊蛇 or "Da Cao Jing She")

14. "Borrowing a corpse to resurrect a soul"
(借尸还魂 or "Jie Shi Huan Hun")

15. "Luring a tiger from its lair in the mountain"
(调虎离山 or "Diao Hu Li Shan")

16. "Releasing the enemy to recapture him later"
(欲擒故纵 or "Yu Qin Gu Zong")

17. "Tossing out a brick to get a jade"
(抛砖引玉 or "Pao Zhuan Yin Yu")

18. "Disband the bandits by arresting their leader"
(擒贼擒王 or "Qin Zei Qin Wang") 

Confusion Strategies (混战计)
The "Confusion Strategies" aim to confuse a pursuing enemy to throw him off his guard. In this way, valuable time can be gained in making one's escape. These strategies include:

19. "Pulling out the firewood from beneath the cauldron"
(斧底抽薪 or "Fu Di Chou Xin")

20. "Catching a fish in troubled waters"
(混水摸鱼 or "Hun Shui Mo Yu")

21. "Making an unnoticed escape like a golden cicada shedding its skin"
(金蝉脱壳 or "Jin Chan Tuo Ke")

22. "Shutting the doors to catch the thief"
(关门捉贼 or "Guan Men Zhuo Zei")

23. "Befriend the far and attack the near"
(远交近攻 or "Yuan Jiao Jin Gong")

24. "Borrow a passage to attack Guo"
(假途伐虢 or "Jia Tu Fa Guo") 

Deception Strategies (并战计)
Deception is commonly used in war to create advantages for oneself, and to handicap the enemy. Such strategies are designed to mislead the enemy. They include the following:

25. "Replace superior beams and pillars with inferior ones"
(偷梁换柱 or "Tou Liang Huan Zhu")

26. "Pointing at the mulberry but scolding the locust tree"
(指桑骂槐 or "Zhi Sang Ma Huai")

27. "Pretending to be insane but remaining smart"
(假痴不颠 or "Jia Chi Bu Dian")

28. "Remove the ladder after the enemy ascends to the roof"
(上屋抽梯 or "Shang Wu Chou Ti")

29. "Deck the tree with flowers"
(树上开花 or "Shu Shang Kai Hua")

30. "The guest takes over as host"
(反客为主 or "Fan Ke Wei Zhu") 

Desperate Strategies (败战计)
In a desperate situation, one may have to resort to unconventional and unorthodox methods and means. As such, some of these strategies can be quite dramatic and "tragic". However, when used appropriately, such strategies can be very effective. These include:

31. "Beauty Scheme"
(美人计 or "Mei Ren Ji")

32. "Empty City Scheme"
(空城计 or "Kong Cheng Ji")

33. "Double Agent Ploy"
(反间计 or "Fan Jian Ji")

34. "Self-injury scheme"
(苦肉计 or "Ku Rou Ji")

35. "A series of interconnected ploys"
(连环计 or "Lian Huan Ji")

36. "Escape - the best scheme"
(走为上 or "Zou Wei Shang") 

# # #

We will elaborate more on the general basics on how to connect the 36 Strategies to the Art of War essay in a future post.

Someone once emphasized to us the following, "The amateur strategists of the masses have used some aspects of the 36 Strategies in some extreme competitive situations, while the elite professionals are utilizing the 100 Qi Strategies. ... Who do you think, will win in a strategic confrontation? " 


Tuesday, September 23, 2014

Persistence Prevails (Why One Competes!)

“It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena,  whose face is marred by dust and sweat and blood; who strives valiantly;  who errs, who comes short again and again, because there is no effort without error and short-coming; but who does actually strive to do the  deeds; who knows great enthusiasms, the great devotions; who spends  himself in a worthy cause; who at the best knows in the end the triumph  of high achievement, and who at the worst, if he fails, at least fails  while daring greatly, so that his place shall never be with those cold  and timid souls who neither know victory nor defeat.”          ― Theodore Roosevelt 


  • http://www.goodreads.com/author/show/44567.Theodore_Roosevelt
  • http://en.wikipedia.org/wiki/Citizenship_in_a_Republic
  • http://www.theodore-roosevelt.com/trsorbonnespeech.html

"I have fought a good fight: I have finished my course: I have kept the faith."  - 2 Timothy 4:7,

Friday, September 19, 2014

Succeeding in the Information Economy by Understanding the Complexity of the World Through the Game of Go (Weiqi)

GO:   Nine Minutes to Learn… a Lifetime to Master
Name a board strategy game that has more technical complexity than Chess? This same game usually takes less than one hour to learn and a lifetime to master. Unlike the game of Chess, the top masters of this game have not been defeated by a computer. This game was developed in ancient China and refined in Japan. It is called WeiQi in Chinese or more popularly known by the Japanese word Go. The literal meaning is to surround. (As a side note, Go is called Baduk in Korea.) For this article, the term Go will be used to describe this mysterious but ancient Asian board strategy game.

Historically, Go was considered one of the four great accomplishments of ancient China, one of the worthy pursuits of a lifetime, along with poetry, archery, and calligraphy. It is both an art and a mental exercise - ingeniously disguised as a game. People of all ages can play and enjoy Go, from children of five or six to people in their nineties. Not only was Go popular with royalty, it was also a favorite exercise for warriors, scholars and philosophers.

The object of this game is simple: control the greatest quantity of territory by surrounding your opponent's stones in a 19 x 19 gridded board with the minimal amount of pieces. Stones are placed on any of the three hundred sixty-one intersections. To some enthusiasts of Go, there is a philosophical bent to it. As in martial arts, a player's Go game is an extension of their view of life.

Go originated in China about 4000+ years ago. Japan imported the game of Go around the eighth century. Players in eastern Asia have excelled at this game throughout modern times. Go reached the western hemisphere in the late 1800s. Completely logical in design, the game of Go has withstood the test of time. Today Go survives in its original form as the oldest game in the world. It has been said that there are over 100 million devotees of this game.

Asian Go masters considered the Go board to be a microcosm of the universe - an extremely complex and chaotic universe. In their eyes, an empty game board is a visual paradigm of simplicity and order.
In fact, the possibilities of game play are endless. The ancient Go masters has said that Go games are just like snowflakes – no two games are alike.

Playing the Game
A typical game of Go starts with two players and an empty game board. Players would alternate putting black and white stones on the board to surround an area or territory. Whoever has more territory at the end of the game is the winner. There are nineteen horizontal and nineteen vertical game lines on the standard board,which forms a grid of 361 intersections or "points."

During a typical game of Go, the four major goals of each player are the following:
  • Surround territory.
  • Reduce their opponent's territory.
  • Capture enemy stones.
  • Protect their own stones.
The winner is always the player who has accomplished these goals more efficiently. 

The goal is to influence the opponent to say, "‘I pass," meaning there is no way of achieving any or all of the above goals. The game is then over.

Passing presumes that all claimed territories are completely surrounded (all fence sections are in place) and no stones are in atari (a position to be captured) along the borders between opposing live groups.

Controlling a minimum of 181 territory points of the board is the only way one triumphs in this game, . Does it sounds simple?

Learning Curve
It has been said that Go is a game that takes a minimum of nine minutes to learn and nine years to win. In reality, it usually takes a lifetime to master.

After hundred of games, one gains the experience by spending too much time looking at the small-scale tactical side of a confrontation which can cause one to miss the large picture and as a consequence, lose badly. On the other hand, if one sets up patterns of safety or executes attacks without caring to examine and adapt to the changing situation, the other player can prevail. In both cases it becomes difficult to win.

The consummate Go players are those who don't waste a move or a resource. Every move that is executed should serve a small but continuous move toward their long-term objective of meeting their grand goal. It has been said that the three attributes of a consummate Go player are patience, persistence and the ability to adapt to any game situations.

Playing Against Go Computer Software
While Go is a simple game to learn, with its endless permutations it is almost impossible to master. Currently, the brute force of computers like Deep Blue, which can rapidly explore the possible outcomes of a game and choose the best course of action, is overwhelming chess masters. This "brute force" approach is not applicable to Go. For one thing, brute force depends on the ability to perform a quick, accurate positional analysis, but it is qualitatively more difficult to evaluate a "Go" position than a "Chess" position. < To succeed in this game, deep analysis is often required just to decide which strategic position favors one side or the other. A single mistake in this analysis could fatally throw off a computer evaluation.>

As a result, Go is a much more interesting computing problem than Chess. Go programmers must try to replace exhaustive search with expert knowledge, as human players do. They must approximate human perception judgment and reasoning. So far there has been little success: the best Go computers today play at the level of an experienced beginner.

Comparing the Game of Go to the Game of Chess
Before a Go game starts, the board is empty, whereas in Chess the game board is full of pieces. In a game of Chess, from the start to finish pieces are usually exchanged and positions are minimized to an empty board with a few men left standing. The winner is when one of the player's kings is captured.

Compared to Chess, Go is a total technical paradox. A typical Go game starts with an empty board and usually ends with a full board with the occupation of pieces by both sides with some exchanges of pieces for the control of selective territory. What makes Go more distinguishable from Chess is that all of the pieces possess equal importance.

Someone told me that comparing the technicalities of Go to that of Chess is like comparing philosophies of two different cultures - Asian and Western. This quote from Descartes describes an aspect of the Western culture and the game of Chess: "I think, therefore I am." Where the quote "We think therefore I am…" illustrates a basic of Asian culture and the game of Go.

The success of a winning Go game is when all of the pieces can work together, whereas in the game of Chess an uncertain number of pieces are usually sacrificed for the single aim of victory.
A quote from Trevanian's book, Shibumi, is a good representation of the metaphorical difference between Go and Chess: "Go appeals to the philosopher in any man and Chess to the merchant in him."

Associations and Other Resources
If you are interested in pursuing this game, you can visit the web sites of American Go Association (www.usgo.org) and the United States Go Organization (www.usgo.org).

You can also learn Go by playing it online at
  • IGS(Internet Go Server) - The biggest Go game server. At times, there are hundred games that are being played simultaneously. !
  • Online-go.com - A modern web server with a large friendly community of cyber go players. This web site provides the visitors the option of playing both live and correspondence games. (That is so cool)
  • KGS - Free and easy place to play .
  • WING - Go servers in Japan.
For those who wish to play Go on their desktop PC, my favorite is Many Faces of Go from Ishi Games ( http://www.smart-games.com/manyfaces.html)

One other interesting link is John Fairbairn's essay on "Go in Ancient China" (http://www.pandanet.co.jp/English/essay/goancientchina.html)

Over the years the AGA has distributed thousands of copies of Karl Baker's wonderful introduction to the game, "The Way To Go," to anyone who requested it by mail. It is now available for electronic distribution. You can download the file from AGA(http://www.usgo.org/usa/waytogo/), and print a copy on your printer. The layout for this version fits 8 1/2" x 11" paper.

The game of Go teaches the budding players to think from a grand view. Do not take anything only at face value: Examine the possibilities. Test them if possible. Anything you do (practice, perform, and produce) is only as good as you are.

To succeed in life as in the game of Go, one must start by occupying a strategic corner, then develop a strategic sphere of influence by focusing on continuous progress toward long-term strategic supremacy.

If you want to learn a discipline that focuses on developing a strategic sphere of influence by forsaking short-term territorial gains and concentrating only on continuous progress toward long-term dominance, the game of Go may be the answer that you are seeking. It only takes less than an hour (nine minutes if you were a genius) to learn Go, but do you have a lifetime to master this game?

  • Original Source: http://www.jadedragon.com/entertainment/go.html
Click here for a recent Wired article on the game of Go (Weiqi).

Thursday, September 18, 2014

Innovation Prevails When Synergy of Two Elements (Hardware and Software) Becomes Relevant

The notes do not exceed five, but the changes of the five notes can never be fully heard. The colors do not exceed five, but the changes of the five colors can never be completely seen. The flavors do not exceed five, but the changes of the five flavors can never be completely tasted. In warfare the strategic configuration of power (shih) do not exceed the unorthodox and orthodox, but the changes of the unorthodox and orthodox can never be exhausted. The unorthodox and orthodox mutually produce each other, just like an endless cycle. Who can exhaust them?  
                                                                                                                                                                 - The Art of War, 5

                                                                # # #
Following is an abridged version of a Wall Street Journal's 2011's article by Marc Andressen's on the emergence of the impact of software in the information economy

Today, the world's largest bookseller, Amazon, is a software company—its core capability is its amazing software engine for selling virtually everything online, no retail stores necessary. On top of that, while Borders was thrashing in the throes of impending bankruptcy, Amazon rearranged its web site to promote its Kindle digital books over physical books for the first time. Now even the books themselves are software.
Today's largest video service by number of subscribers is a software company: Netflix. How Netflix eviscerated Blockbuster is an old story, but now other traditional entertainment providers are facing the same threat. Comcast, Time Warner and others are responding by transforming themselves into software companies with efforts such as TV Everywhere, which liberates content from the physical cable and connects it to smartphones and tablets.
Today's dominant music companies are software companies, too: Apple's iTunes, Spotify and Pandora. Traditional record labels increasingly exist only to provide those software companies with content. Industry revenue from digital channels totaled $4.6 billion in 2010, growing to 29% of total revenue from 2% in 2004.
Today's fastest growing entertainment companies are videogame makers—again, software—with the industry growing to $60 billion from $30 billion five years ago. And the fastest growing major videogame company is Zynga (maker of games including FarmVille), which delivers its games entirely online. Zynga's first-quarter revenues grew to $235 million this year, more than double revenues from a year earlier. Rovio, maker of Angry Birds, is expected to clear $100 million in revenue this year (the company was nearly bankrupt when it debuted the popular game on the iPhone in late 2009). Meanwhile, traditional videogame powerhouses like Electronic Arts and Nintendo have seen revenues stagnate and fall.
The best new movie production company in many decades, Pixar, was a software company. Disney—Disney!—had to buy Pixar, a software company, to remain relevant in animated movies.
Photography, of course, was eaten by software long ago. It's virtually impossible to buy a mobile phone that doesn't include a software-powered camera, and photos are uploaded automatically to the Internet for permanent archiving and global sharing. Companies like Shutterfly, Snapfish and Flickr have stepped into Kodak's place.  ... 
Today's fastest growing telecom company is Skype, a software company that was just bought by Microsoft for $8.5 billion. CenturyLink, the third largest telecom company in the U.S., with a $20 billion market cap, had 15 million access lines at the end of June 30—declining at an annual rate of about 7%. Excluding the revenue from its Qwest acquisition, CenturyLink's revenue from these legacy services declined by more than 11%. Meanwhile, the two biggest telecom companies, AT&;T and Verizon, have survived by transforming themselves into software companies, partnering with Apple and other smartphone makers.
Software is also eating much of the value chain of industries that are widely viewed as primarily existing in the physical world. In today's cars, software runs the engines, controls safety features, entertains passengers, guides drivers to destinations and connects each car to mobile, satellite and GPS networks. The days when a car aficionado could repair his or her own car are long past, due primarily to the high software content. The trend toward hybrid and electric vehicles will only accelerate the software shift—electric cars are completely computer controlled. And the creation of software-powered driverless cars is already under way at Google and the major car companies.LinkedIn is today's fastest growing recruiting company. For the first time ever, on LinkedIn, employees can maintain their own resumes for recruiters to search in real time—giving LinkedIn the opportunity to eat the lucrative $400 billion recruiting industry.  ... 
...  Oil and gas companies were early innovators in supercomputing and data visualization and analysis, which are crucial to today's oil and gas exploration efforts. Agriculture is increasingly powered by software as well, including satellite analysis of soils linked to per-acre seed selection software algorithms.
The financial services industry has been visibly transformed by software over the last 30 years. Practically every financial transaction, from someone buying a cup of coffee to someone trading a trillion dollars of credit default derivatives, is done in software. And many of the leading innovators in financial services are software companies, such as Square, which allows anyone to accept credit card payments with a mobile phone, and PayPal, which generated more than $1 billion in revenue in the second quarter of this year, up 31% over the previous year.
Health care and education, in my view, are next up for fundamental software-based transformation. My venture capital firm is backing aggressive start-ups in both of these gigantic and critical industries. We believe both of these industries, which historically have been highly resistant to entrepreneurial change, are primed for tipping by great new software-centric entrepreneurs.
Even national defense is increasingly software-based. The modern combat soldier is embedded in a web of software that provides intelligence, communications, logistics and weapons guidance. Software-powered drones launch airstrikes without putting human pilots at risk. Intelligence agencies do large-scale data mining with software to uncover and track potential terrorist plots.
Companies in every industry need to assume that a software revolution is coming. This includes even industries that are software-based today. Great incumbent software companies like Oracle and Microsoft are increasingly threatened with irrelevance by new software offerings like Salesforce.com and Android (especially in a world where Google owns a major handset maker).
In some industries, particularly those with a heavy real-world component such as oil and gas, the software revolution is primarily an opportunity for incumbents. But in many industries, new software ideas will result in the rise of new Silicon Valley-style start-ups that invade existing industries with impunity. Over the next 10 years, the battles between incumbents and software-powered insurgents will be epic. Joseph Schumpeter, the economist who coined the term "creative destruction," would be proud.

"First of all, every new company today is being built in the face of massive economic headwinds, making the challenge far greater than it was in the relatively benign '90s. The good news about building a company during times like this is that the companies that do succeed are going to be extremely strong and resilient. And when the economy finally stabilizes, look out—the best of the new companies will grow even faster.

Secondly, many people in the U.S. and around the world lack the education and skills required to participate in the great new companies coming out of the software revolution. This is a tragedy since every company I work with is absolutely starved for talent. Qualified software engineers, managers, marketers and salespeople in Silicon Valley can rack up dozens of high-paying, high-upside job offers any time they want, while national unemployment and underemployment is sky high. This problem is even worse than it looks because many workers in existing industries will be stranded on the wrong side of software-based disruption and may never be able to work in their fields again. There's no way through this problem other than education, and we have a long way to go.  ... 
Finally, the new companies need to prove their worth. They need to build strong cultures, delight their customers, establish their own competitive advantages and, yes, justify their rising valuations. No one should expect building a new high-growth, software-powered company in an established industry to be easy. It's brutally difficult.
I'm privileged to work with some of the best of the new breed of software companies, and I can tell you they're really good at what they do. If they perform to my and others' expectations, they are going to be highly valuable cornerstone companies in the global economy, eating markets far larger than the technology industry has historically been able to pursue.
Instead of constantly questioning their valuations, let's seek to understand how the new generation of technology companies are doing what they do, what the broader consequences are for businesses and the economy and what we can collectively do to expand the number of innovative new software companies created in the U.S. and around the world.
That's the big opportunity. I know where I'm putting my money. "
--- eof
Click here for the entire essay's on "Why Software is Eating The World."

Side Note 
Software is not the singular cause of the dramatic change in our information economy. One needs to have the right software tools that works with the hardware systems.   ...  Luckily, many of the popular tool kits are quite sophisticated and are able to operate under many different systems. Concurrently, the programming skills of software engineers are 

Connecting the integration of software and hardware to the right marketing niche, is a good example of a force multiplier- a product that is in the right place and in the right time. 

Leading the Innovation Wave
United States companies is the bellwether in the innovation game for the various reasons. 

One of their secret components is the emphasis of innovation as one of the alpha objectives.

iPhone, Tesla cars, Amazon's Kindle's e-book device are some of the well-known examples of software and hardware integrating in a positive constructive mode. 

As Software and Hardware Advance Together, the Next Innovation Wave Rises
... The U.S. has a chance to win bigger with the rise of smarter, software-driven machines. Silicon Valley remains a hub for the most sophisticated software and creative uses for processing power. Tesla's cars and GE's jet engines have begun to fit this model. Now the factories that produce them are being computerized. A startup called Sight Machine taps into cameras and sensors on factory floors and uses software to analyze data and spot flaws; it's also been hired to monitor fast-food assembly lines, said CEO Jon Sobel. "When you think about combining the innovation that's available with the physical world, it implies some major changes to how we do things," he said.

Some glitches

America isn't guaranteed victory. Nest recalled smart smoke detectors after a software glitch. Economists including Cowen and Annunziata also point out that this era might not be great for everyone; an automated car factory cranking out self-driving vehicles stands to put plenty of people out of work. Cowen predicts a massive labor shift from taxis and factories toward housekeeping and child care.
Annunziata's take is more optimistic - that smart equipment can help drive the global economy for years to come. "There is no limit to human beings' hunger and desire for new things and services," he says. "This will create wealth."
Click here for the rest of the Bloomberg's article.

As software and hardware advance together, so does innovation.  ...  Software works as long as the right hardware is there.  The brain is worthless without the body and vice-versa

...  Thus [none of] the five phases constantly dominates; the four seasons do not have constant positions; the sun shines for longer and shorter periods; and the moon wanes and waxes.                                                                                                                  - The Art of War, 6

While technology is constantly evolving, certain behavioral patterns and economical matters are the attributes that drives the ever-changing marketplace.

Side Note
Some people believed that culture prevails over strategy.  However, it could only go so far without the right organizational attributes.

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