Protect Your Advantage (2)

The first and most important rule of gun-running is: Never get shot with your own merchandise.
- Yuri Orlov  (Movie-The Lord of War)


" ... Hedge funds closely guard their strategies. For instance, the world's biggest hedge fund, $150 billion Bridgewater Associates, is said to keep its strategy close to only a few people. Bridgewater's external PR firm didn't respond to a request for comment on its strategy.

There's a good reason for the opacity. The funds don't want to give up their secret sauce, which can then be replicated by competitors. Yet it underlies a frustration that some investors in the funds have, in that they don't really know how their money is being invested.

As for BlackBox, the performance is eye-catching, and it caught the people we asked about it by surprise. "Some of the best minds on Wall Street trade in these markets, and no one has figured out how to make 1,200 [basis points] over LIBOR and never lose money,” says Andrew Beer, managing partner at Beachhead Capital Management, an investment adviser.

Click here on more information on the Black Box Group, a hedge fund group who has been generating profits since 2009.

Succeeding in the Info. Economy with Sunzi's Six Principles and the Bill Walsh's Starter Script

(updated on 02.20.15)

Mark McNeilly, who is a very smart marketing strategist, an insightful military historian and an adjunct professor at University of North Carolina, wrote a pair of books on applying the strategic concepts and principles from Sunzi's Art of War to the business realm and to modern warfare.

The essence of his two books are based on six meta-principles, that summarized the 200+ principles of Sunzi.

Following is the list of those six principles:

1. Win all without fighting: Achieving the objective without destroying it

2. Avoid  Strength, Attack Weakness: Striking where the enemy is most vulnerable

3. Deception and Foreknowledge: Winning the Information War

4. Speed and Preparation: Moving Swiftly to Overcome Resistance

5. Shaping the Enemy: Preparing the Battlefield

6. Character-Based Leadership: Leading by Example

- SunTzu and The Art of Modern Warfare

#
His first book demonstrates how his six principles were successfully used in various business situations.   ...  It is a good book for those who are strategically-minded. We highly recommended his books on Sunzi (Sun Tzu) and George Washington. These books are great reading especially during a long weekend.

#
Our Compass Project 
In terms of planning a field operational strategy, we concluded that McNeilly's six principles are quite indispensable when or if one possesses relevant strategic experience and ultra-class strategic assessment skills.

During our research, we have carefully looked at it and transformed those six principles to a macro set of meta-principles by connecting it to other principles from other arcane Chinese classics.  Then we connected it to the famous Bill Walsh's Starter's Script and other unique but strategic models.

The Six Strategic Principles of Compass A/E  Process Model 

1.  Ready. Aim. Fire
To achieve the path of least resistance, one focuses their resources and their efforts toward the origin of the competitor's inefficiency while deciding on when to exploit it with zero to minimal impact to one's own team's. This step can be achieved when one knows the configuration of their Big Tangible Picture (BTP).

2. Focus. Focus. Hocus Pocus 
Focusing one's strengths toward onto the weaknesses of the competition with the tactical "pretext" option while avoiding the influence of the competition.

3. Know Early. Act Now
Knowing the strategic reality of the competition in each tactical situation and capitalizing on their inefficiency.

4.  Be Quick. Don't Hurry 
The strategically prepared, urgency-driven team accelerates forward to the target especially in an up-tempo no huddle mode especially when the comprehension of the technical weaknesses behind their opponent's inefficiency is fully recognized. 

5.  Stage and Shape the Competition 
Implement a sequence of tactics that influences the competition to behave in an absolute mode in a specific game situation before the "game-changer" tactic is ever implemented.

6. Lead by Deed 
By successfully following the PACE guidelines of the script and implementing the scripted tactical plays, the team starts to execute properly. The incremental momentum gain becomes possible when the team believes in their own execution, their teammates, the strategy (the motive and the methods) behind the script, the field strategist and the backroom strategists.

When the execution of the script works, the entire team becomes confident in the wisdom, the credibility, the benevolence, the courage and the discipline of the principals behind the script development.

Psychologically, the continuity of this momentum gain creates wins. Conclusively, the continuity of this positive practice generates more streaks of positive wins.

#
Strong and smart leadership and the mastery of this well-devised scheme-based tool usually play a significant role in a winning culture.

copyright 2013-2015: Compass360 Consulting Group, All Rights Reserved.


Some More Notes on the Compass Book Project
Our book integrates the basics of Bill Walsh's Starter Script and the principles from Sunzi, Jiang Tai Gong, and other successful strategists and demonstrates how to utilize it in a chaotic strategic situation while being mindful of when and how the competition adjusts to the implementer's script.

It also utilizes our Assess, Position and Influence model that is a conceptual superset of Colonel John Boyd's Observation, Orientation, Decision and Action (OODA) strategic methodology.

More to Come

#

Using the Sunzi's Victory Temple Model to Solve The McChrystal's Afghanistan PowerPoint Problem

source: the guardian . com 

(updated at 3:33 am)

Some of us were busy with our "Strategic Assessment" book project, a few years ago.  After realizing "the state of the book market" and that the state of the strategy business have changed dramatically, that we decided to de-prioritize our book project and focused on our immediate objectives. 

During the book writing process, we were focused on the various complex strategic assessment situations that would interest our audience of strategic thinkers and implementers.

Following is an abridged example of our strategic assessment approach for a quite complex situation:  

The McChrystal Afghanistan PowerPoint slide: can you do any better?
Is the "Afghanistan Stability/COIN Dynamics – Security" slide a set of meaningless squiggles or a comprehensive guide to Afghanistan? And how would you improve on it?

Gen Stanley McChrystal, leader of American and NATO forces in Afghanistan, was shown a PowerPoint slide in Kabul last summer meant to portray the complexity of American military strategy Illustration: PA

Well you can see why Nato hasn't cracked Afghanistan yet. The Microsoft PowerPoint slide which drove US military General Stanley McChrystal to declare that "When we understand that slide, we'll have won the war" at a briefing in Kabul last summer has led to big questions about the world's reliance on the presentation software.

As Julian Borger wrote yesterday:

The diagram has an undeniable beauty. Done the right way (embroidered perhaps) it would make a lovely wallhanging and an ideal gift for the foreign policy-maker in your life. But it is a bit of a red herring … It was designed to convey the complexity of the Afghan conflict. But the big problem with PowerPoint is that it makes everything seem simple.It does not link ideas or facts in any kind of human narrative. It just lists them as bullet-points, a shopping list of things to do or jobs already done.

So, here's the Datablog challenge: how would you do it? Is there another way to present the information that doesn't look like it has been put together by a kitten with a ball of string?

Post links to them in the comment field below. The best will get displayed here. Or could even change the course of the war. Or something like that.

source: the guardian

Introduction  

Instead of viewing the above situation as a math equation or a "pick and choose"  scenario, General McChrystal and his staff should have observed it from a perspective of a macro object-oriented formula that is composed of many descending levels of other formulas. 

Thinking in terms of relativity and "fitting" qualifiers (instead of the absolute factor)  is the most efficient approach to meet the challenge of comprehending the complexity of the situation as long as one has the time, the resources and the patience to do so.

Using the Occam's approach for strategic assessment is not going to cut it here because of the obvious reason.

A Connection to the Chinese Strategy Classics

The partial framework of our proposed solution model is based on the connectivity of the following two principles from Sunzi's Art of War and an array of other strategic principles from the Seven Military Classics of Ancient China.

"Before the engagement, one who determines in the ancestral temple that he will be victorious has found that the majority of factors are in his favor. Before the engagement on who determines in the ancestral temple that he will not be victorious has found few factors are in his favor. If one who finds that the majority of factors favor him will be victorious while one who has found few factors favor him will be defeated, what about someone who finds no factors in his favor?  

If I observe it from this perspective, victory and defeat will be apparent. ...  After estimating the advantages in accord with what you have heard, put it into effect with strategic power (shin) supplemented by field tactics that respond to external factors. As for strategic power, [it is] controlling the tactical imbalance of power (ch'uan) in accord with the gains to be realized. "

- Art of War, 1  (Sawyer's translation)

A part of this solution could be found in Sawyer's translation of Li Quan's book.  ... You do know what are the factors and how to connect the dots. Do you know it?


A Brief Abstract of our Compass Solution Model

Our proposed solution model is focused on comprehending the "connectivity" state of a specific strategic situation by implementing the following steps:

• Identify the PESTLE specifics of each strategic principal; 
• Determine the validity of each principal by its weight and its balancing point to the Big Tangible Picture; 
• Examine the tangibility of the information behind each strategic principal; 
• Analyze the probable and the possible action of each strategic principal before connecting it to the Big Tangible Picture (BTP); and
• Lead with the assessed choice that offers the best benefits and the minimal to zero drawbacks to the implementers. 

Comments From the Compass Desk 

There is a grand order to everything from the various business terrains to the strategic situations within certain board games. Most people are rarely aware of this universal law, especially if their pseudo strategy experts and/or their clients who are so focused on the rules, the situational simplifications and the simple mindless practices that they do not ever assessing the singularity of a strategic situation and the possible strategic exceptional move.

Understanding the connectivity of those factors is step one. Hypothesizing on the possible responses and the counter-responses of a strategic situation usually enables one to staying ahead of the break even point. 

While the Dao prevails in everything, the challenge is whether one could utilize it in their favor, especially in a complex situation, is a different story.

# # #

Our Favorite Strategy and Tactics Posts!

(updated at 1800 hrs) 

The strategists who are seeking for another perspective in their endeavor. Please read this post.

Following is an abridged listing of our favorite posts

Understanding the Basics of Strategy

• How to Unify the Team (from the San Francisco 49ers view)
• How to Succeeding Through the Practice of Scripting a Game (from the San Francisco 49ers view)
• How to Shape the Competition.
• Red Auerbach's 57 Strategies
• How to be the Two Moves Ahead of the competition (1)
• How to be the two moves Ahead of the Competition (2) 
• Assessing the Unfocused Strategist
• How to Strategize like Sun Bin.
• A Historical Note on Jiang Tai Gong.
• A Historical Note on Zhuge Liang.
• Zhuge Liang's The Way of General. 
• Understanding the Dao from a pragmatic view.

How to Center and Focus
One could not strategize if he/she does not possess the skill of "centering and focusing"

• Learning the basics of centering
• Achieving the State of Centerness.
• Centering by practicing Yiquan, Taijiquan and Baguazhang.

Miscellaneous Reading 

• Failure to Plan is Planning to Fail
• Preparation Precedes Performance
• The Sign of the Times: The Robots Trend is Here
• The Vending Machines Trend  
• Compass Trend (8): The Automated Trend Continues
• Compass Trend (10): Employing the Health-Perfect Employees...
• Our Compass Toolbox
• Understanding the Competition  
• Shock and Awe

Happy New Year.  ... 

How to Profit in the Information Economy: Achieving the Strategic Power (or the Strategic Advantage)

(updated on 08.08.13 18:00 hr)

After a few boring but unique posts on applying martial arts concepts and tactics from the field level, we are now returning to the topic of the art and science of competitive strategy and tactics. 

Side note 
For what it is worth, some martial artists do not understand what is strategy or cannot stay focused past the two projected moves while drinking too much liquor. In a cerebral situation, they have behaved strangely. 

In the case of some desktop strategists, most of them can't even combat their way out of a paper bag. ... They occasionally spent too much time talking about irrelevant matters, presenting idealistic solutions without ever assessing their settings, gulping diet drinks and rarely ever completing any tangible objective.  On the field, some might begin to sweat profusely while whistling a song from their book of hymns.  They just can't stay centered.

Whether one is a spirited martial artist or a competitive strategist,  he or she must understand what is Shi. It is pronounced as "Zhi".  Some people referred to it as strategic power. Others have referred it as strategic advantage.


Strategic Power (Strategic Power)

Shi has no single, comprehensible translation. Some has described it as strategic- or positional-advantage, or potential energy. Others have referred to it as "cultivating the influence of the present on the future".  The conceptual origin of Shi has been traced back to the fourth century BC political-social/quasi-religious classic- Dao De Jing.  This essay emphasizes on an indirect approach to confronting conflicting changes by the means of understanding the state of change while maintaining one's virtue.  It later gained a more military-specific development starting with Sunzi and Jiang Tai Gong.

The consummate metaphor for shi is water that flows downward. Through the laws of physics, it gains momentum and ultimately overcomes everything in its path. This action becomes one of the softest and yet powerful forces in nature.  (It is impossible to defeat gravity. ...)

The antithesis of Shi is Li. This approach is based on matching one's strength to their competition.  To most people, "Li" is  typically a more obvious, simplified  and coherent approach than the greater subtleties of the shi approach. 

Those who demand immediate gratification preferred the "Li" approach. 

Compared to Shi, Li is a vertical-focused strategic-advantage  that is the fundamental to the advancement of western civilization itself—from capital investment and production to the endless pursuit of innovation and freedom. While pursuing these advantages, the "idealistic" chief decision makers barely understand the initial costs and the after-effects of their decisions.

Grinding toward a goal without ever recognizing the details behind the configuration is not a promising approach for the underdog.


Applying Shi (Go) to the Gameboard
The most clearest example of shi at work is the ancient Chinese board game weiqi (pronounced “wai-chee”). The Japanese calls it Go.  This simple yet most complex and methodical of all board games, where each competitor (one with black stones and the other with white) strive to surround the most territory on a square grid. The obvious initial strategy of most novice players is to pursue the corner areas for the purpose of gaining immediate points through the act of surrounding.  

The below example in this picture depicts a typical "Li" approach that situates the player of the white stones in a great disadvantage.

Based on the positional score, white is currently quite ahead in terms of tangible territory. But black has already established a strategic advantage and the intangible edge by directing into the center to control the rest of the gameboard. Black is employing the indirect and circuitous "shi" strategic approach, seeks future opportunistic potential, rather than applying direct force like the chess player who is gamed on total annihilation. Although white has the immediate advantage of 13 points and black has zero score. But black is strategically positioned for an eventual victory because it has an one stone lead on the eight other tactical locations on the board.  

The future-based shi usually triumph over the present-oriented li unless their components within their foundation are somehow dismantled.

The strategic priorities for black are: 

• becoming patient while avoiding contentment and 
• staying focused on gaining more territorial points while encircling the competition.

The implementation of this meticulous approach requires a profound understanding of the Daoist concept of how a current loss ultimately leads to a future win.  

A View From The Dao De Jing
If you want to shrink something, you must first allow it to expand.
If you want to get rid of something, you must first allow it to flourish.
If you want to take something, you must first allow it to be given.
This is called the subtle perception of the way things are.

The soft overcomes the hard. The slow overcomes the fast.
Let your workings remain a mystery. Just show people the results.
- Dao De Jing  36

Nothing in the world is as soft and yielding as water.
Yet for dissolving the hard and inflexible, nothing can surpass it.

The soft overcomes the hard; the gentle overcomes the rigid.
Everyone knows this is true, but few can put it into practice.

Therefore the Master remains serene in the midst of sorrow.
Evil cannot enter his heart.
Because he has given up helping, he is people's greatest help.

True words seem paradoxical.
- Dao De Jing 78

Remember that the tortoise sometimes defeats the rabbit in a marathon.

#

The Compass A/E Solution

copyright 2009-2013: Compass360 ConsultingGroup

Strategic power can be achieved if he/she knows how to assess the competition. Then positioning of oneself to capitalize on the positive opportunities through planning and preparation begins. Influencing starts by seizing those big opportunities with a mindful understanding of the possible on-coming changes.

The ambitious novices believed that Shi is a long-range strategic approach. It could be adjusted toward a certain short term strategic situation by comprehending the configuration of their Big Tangible Picture (BTP) in terms of the myriad of probabilities and the various possibilities.  Possessing the time and the proper resources to capitalizes on the given opportunity is the challenging step for most chief decision makers. 

Our future white paper focuses on the pragmatic approach of achieving immediate strategic power in a competitive setting through the application of Assessing, Positioning and Influencing .

If you are interested in knowing more about this topic, please contact us. 


# Side note 
Idealistically, the conceptual approach of "shi" makes sense. Having the self leadership, the tactics, the resources, the technology and the strategy to make it happen, is quite difficult.  

Assess, Position and Influence (7): Last Move Advantage

Source: wikimedia.org

There is no such thing as a last move advantage or a late starter advantage. Those protagonists with the right amount of political-legal influences can override most social-political-based business situations.

Compass Rule: When the political-legal rule is greater than the immediate economic benefit, the outcome becomes obvious.

Exception: Disrupt the power behind the political-legal rule and the social economic influence prevails.

First move advantage works when one has synchronized the proper set of political, economic, social and technological influences into their package of strategic power. We will touch more on this topic later.

Summary

The key to staying ahead of the curve is to know the Compass rules and the settings behind the Big Tangible Picture (BTP) before deciding strategically.

Compass Rule:

While the amateurs are usually focused on understanding the rules, the professionals already know the configuration and the scope of the terrain. They are just focused on the exceptions to the rules.