Lessons from Cannae

what we do see in the story of Cannae are three aspects of strategy in bold relief, presented in their purest and most essential forms

The concept of strategy has many faces, and there are some we do not see in the story of Cannae.  The history of this battle tells us little about longer-range considerations and little about how the strategy was created.   The full design for the battle at least in the available histories, seems to have been created by Hannibal and it's implementation was by his personal command.   We know nothing of his personal abilities or methods.  In particular, one wonders at how he persuaded the the Gauls and Spaniards in his central arc to stage a mock retreat, an action that these men would have viewed as expensive in both blood and honor.  We do not know.

However, what we do see in the story of Cannae are three aspects of strategy in bold relief, presented in their purest and most essential forms--premeditation, the anticipation of others' behavior, and the purposeful design of coordinated actions.

ACTION POINT: Think, anticipate and coordinate action.

The Battle of Cannae

The ruthless genius of Hannibal's strategy was then revealed.

The classic example of design in battle strategy, one that is still studied today, is Hannibal's victory over the Roman army at Cannae in 216 B.C.  At that time the Roman Republic controlled a series of territories and city-states in Italy.  Carthage was a city-state of Phoenicians located in what is today Tunisia.  Fifty years earlier, Carthage had lost a war with Rome over control of the southern Mediterranean.  Hannibal sought to restore Carthage's power and honor by raiding towns up and down the Italian peninsula, seeking favorable terms with Rome.

Rome tired of trying to avoid these battles and the senate approved an unprecedented eight legions to defeat  Hannibal.   The location of the battle was an open field, near the ruins of a fortress called Cannae, on the Adriatic Sea.  As the morning of August 2 dawned, eighty-five thousand or more Roman soldiers faced about fifty-five thousand of Hannibal's troops.  Each army's front was about a mile long, and the two armies were about one-half mile apart.  Hannibal had arranged his troops in a broad arc, bulging out in the center toward the Romans.  In the center bulge, Hannibal placed troops from Spain and Gaul, soldiers who had been liberated from Roman rule or hired during his march from Spain to Italy.  On the flanks, or sides, of this central bulge he placed his Carthaginian heavy infantry.

When the advancing Romans met Hannibal's army, the outward-arced center of Hannibal's front line was the first point of contact.  There, the Gauls and Spaniards slowly fell back, not holding the line, just as Hannibal had ordered.   Encouraged, the Roman army moved forward with shouts of victory, rushing to exploit this apparent weakness.  Simultaneously, Hannibal's horse cavalry, placed on the sides of his mile-wide army, began its preplanned gallop in wide two-mile arcs around the sides of the roman army, engaging and defeating the smaller Roman cavalry.

As the Rome legions pushed into the Carthaginian center, the original outward arc was reversed, and it began to bow inward under the pressure.  As the center line bowed inward, Hannibal's heavy infantry units, positioned on either end of the central arc, maintained their positions but did not engage.  Then, at Hannibal's signal, reinforcements moved to bolster the Carthaginian bowed-in center.  The troops in the center stopped their retreat and held.  Their aspect changed from that of panicky barbarians to that of hard, disciplined troops.  Hannibal's heavy infantry flanks then moved to engage the sides of the Roman army, which was now surrounded on three sides.  Then Hannibal's cavalry rode in from behind and closed the Romans rear as well.

The ruthless genius of Hannibal's strategy was then revealed.  Not only was the Roman army surrounded, but as their superior numbers pressed into the arc of Hannibal's bowed-in center, the Roman ranks were squeezed together.  Many could not move and compressed together, their numerical superiority had been nullified.   The Romans did not surrender or ask for mercy.  At least fifty thousand Roman soldiers were killed that day, more soldiers than have died in any single day of battle before or since.  One tenth that number of Hannibal's troops died.  The Roman dead included counsel Paulus, several former counsels, forty-eight tribunes, and eighty senators.  In a few hour, one-fourth of the Republic's elected leadership was slaughtered at Cannae.  Rome's defeat was so great that most southern city-states in Italy declared allegiance to Hannibal.

ACTION POINT: The right strategy can surround and overcome superior forces. 

Management and Theology

Management always deals with the nature of Man, and with Good and Evil.

Management always lives, works and practices in and for an institution, which is a human community held together by a bond: the work bond.  And precisely because the object of management is a human community held together by the work bond for a common purpose, management always deals with the nature of Man and (as all of us with any practical experience have learned) Good AND Evil as well.  I have learned more theology as a practicing management consultant than when I taught religion.

ACTION POINT: Understand the nature of man and the fact that you will be confronted with good and evil.

The Father of Strategy

...they also found that organizing and coordinating the actions of fighters greatly magnified their effect.

To begin at the beginning, armies, together with the authority structures supporting them, first arose in the Bronze Age in parallel with complex urban societies.

Just as humans discovered that organized agriculture paid great dividends, they also found that organizing and coordinating the actions of fighters greatly magnified their effect.  Properly organized and led, ordinary men could defeat skilled warriors who fought as individuals or as small bands.

ACTION POINT: Organize and lead ordinary men and women properly to defeat skilled opponents.

Using Design

...you can take certain fundamental lessons from military history and be the wiser for doing so.

The word "strategy" comes to us from military affairs.  Unfortunately, humans have put more effort, over more time, into thinking about war than any other subject.  Much of this knowledge has very little to tell us about strategy in non-military situations.  In particular, the primary way business firms compete is by placing their offers in front of buyers, each trying to offer a more attractive deal.

This is a process more like a dance contest than a military battle.  Businesses do not bomb one another's factories or kill one another's employees.  While business employees can quit on a moment's notice, soldiers are indentured.  Employees are not expected to stand an drive up their lives to protect the company.  And the impact of size is radically different.  Other things being equal, the larger army has the advantage whereas the winning business tends to be the one whose offerings are most preferred by customers, its size being more the consequence than the cause of its success.  Despite all these cautions, if you are careful about the level of abstraction, you can take certain fundamental lessons from military history and be the wiser for doing so.

ACTION POINT: Stay tuned for examples from military history that will enlighten you on the power of strategy.

Excellence at IKEA

The chain-linked activities should form an unusual grouping such that expertise in one does not easily carry over to expertise at the others. 

For IKEA'S set of policies to be a source of sustained competitive excellence, three conditions must hold:

• IKEA must perform each of its core activities with outstanding efficiency and effectiveness.
• These core activities must be sufficiently chain-linked that a rival cannot grab business away from IKEA by adopting only one of them and performing it well.  That is, a tradition furniture manufacturer that adds a ready-to-assemble line is no real threat to IKEA, nor is a traditional retailer that adds a catalog.
• The chain-linked activities should form an unusual grouping such that expertise in one does not easily carry over to expertise at the others.  Thus, a traditional furniture retailer that did add a catalog would still have to master design and logistics and build vastly larger stores to begin to compete with IKEA.  Plus, looking beyond traditional furniture companies, there are no potential competitors that possess the this mix of resources and competencies.

ACTION POINT: Build a sustained strategic advantage by creating constellations of activities that are chain-linked.  It will add extra effectiveness to the strategy and makes it difficult of the competition to imitate.

Excellence

IKEA's strategy is an effective way to coordinate policies, but it is hardly secret.

The excellence achieved by a well managed chain link system is difficult to replicate.  Consider IKEA.   The company designs ready-to-assemble furniture it sells through special IKEA-owned stores, advertised by its own catalogs.   Giant retail stores located in the suburbs allow huge selections and ample parking for customers.  In stores the catalogs essentially substitute for a sales force.  It's flat-pack designs not only reduce shipping and storage costs; they also help keep the stores in stock and let the customers pull their own stock out of inventory and take their purchases home, eliminating long waits for delivery.  The company designs much of the furniture it sells, contracting out manufacturing, but managing its own worldwide logistics system.

IKEA's strategy is an effective way to coordinate policies, but it is hardly secret.  Won't other companies see how it works and copy it, perhaps even improve it?  The explanation for its continued excellence and the lack of any effective me-too competition is that its strategy builds on chain-link logic.  Because IKEA's policies are different from the norm and because they fit together in a coherent design IKEA's system has a chain-link logic.  That means that adopting only one of these policies does no good--it adds expense to the competitor's business without providing any real competition to IKEA.  Minor adjustments just won't do--to compete effectively with IKEA, an existing rival would have to virtually start fresh and, in effect, compete with its own existing business.  No one did.  Today, more than fifty years after IKEA pioneered its new strategy in the furniture industry, no one has really replicated it.

ACTION POINT: Is there a pioneering chain-link strategy in your business that would be difficult for the competition to replicate?

Management as the Alternative to Tyranny

The alternative to autonomous institutions that function and perform is not freedom.  It is totalitarian tyranny.

If the institutions of our pluralist society of institutions do not perform in responsible autonomy, we will not have individualism and a society in which there is a chance for people to fulfill themselves.  We will, instead, impose on ourselves complete regimentation in which no one will be allowed autonomy.  We will have Stalinism rather than participatory democracy, let alone the joyful spontaneity of doing one’s own thing.  Tyranny is the only alternative to strong, performing autonomous institutions. 

Tyranny substitutes one absolute boss for the pluralism of competing institutions.  It substitutes terror for responsibility.  It does indeed do away with the institutions, but only by submerging all of them in the one all embracing bureaucracy of the apparat.  It does produce goods and services, though only fitfully, wastefully, at a low level, and at an enormous cost in suffering, humiliation, and frustration.  To make our institutions perform responsibly, autonomously, and on a high level of achievement is thus the only safeguard of freedom and dignity in the pluralist society of institutions.  Performing responsible management is the alternative to tyranny and our only protection against it.

ACTION POINT: What steps can you and others take now to improve the performance of the institution for which you are responsible?

The New Corporation’s Persona

In the Next Society’s corporation, top management will be the company.  Everything else can be outsourced.

Increasingly, in the Next Society’s corporation, top management will, in fact, be the company.  This top management’s responsibilities will cover the entire organization’s direction, planning, strategy, values, and principles; its structure and relationships between its various members; its alliances, partnerships, and joint ventures; and its research, design, and innovation.

Establishing a new corporate persona calls for a change in the corporation’s values.  And that may well be the most important task for top management.  In the half century after the Second World War, the business corporation has brilliantly proven itself as an economic organization, as a creator of wealth and jobs.  In the Next Society, the biggest challenge for the large company and especially for the multinational may be its social legitimacy-its values, its mission, its vision.  Everything else can be outsourced.

ACTION POINT: Focus on your organization’s values, mission, and vision, and consider outsourcing everything else.

Autonomy in Knowledge Work

Knowledge work requires both autonomy and accountability.

Demanding of knowledge workers that they define their own task and its results is necessary because knowledge workers must be autonomous.  As knowledge varies among different people, even in the same field, each knowledge worker carries his or her own unique set of knowledge.  With this specialized, unique knowledge, each worker should know more about his or her specific area than anyone else in the organization.  

Indeed, knowledge workers must know more about their areas than anyone else, they are paid to be knowledgeable in their fields.  What this means is that once each knowledge worker has defined his or her own task and once the work has been appropriately restructured, each worker should be expected to work out his or her own course and to take responsibility for it.  Knowledge workers should be asked to think through their own work plans and then to submit them.  What am I going to focus on?  What results can be expected for which I should be held accountable? By what deadline? Knowledge work requires both autonomy and accountability.

ACTION POINT: Write a work plan that includes your focus, desired results, and deadline.  

Knowledge Workers: Assets Not cost

Management’s duty is to preserve the assets of the institution in its care.

Knowledge workers own the means of production.  It is the knowledge between their ears.  And it is a totally portable and enormous capital asset.  Because knowledge workers own their means of production, they are mobile.  Manual workers need the job much more than the job needs them.  It may still not be true for all knowledge workers that the organization needs them more than they need the organization.  But for most of them it is a symbiotic relationship in which the two need each other in equal measure.

Management’s duty is to preserve the assets of the institution in its care.  What does this mean when the knowledge of the individual knowledge worker becomes an asset and, in more and more case, the main asset of an institution? What does this mean for personnel policy? What is needed to attract and to hold the highest-producing knowledge workers?  What is needed to increase their productivity and to convert their increased productivity into performance capacity for the organization?

ACTION POINT: Attract and hold the highest-producing knowledge workers by treating them and their knowledge as the organizations most valuable assets.

Practice of Abandonment

If we did not do this already, would we go into it now?

The question has to be asked-and asked seriously-“if we did not do this already, would we, knowing what we know, go into it now?” If the answer is no, the reaction must be “What do we do now?”

In three cases the right action is always outright abandonment.  Abandonment is the right action if a product, service, market, or process “still has a few years of life.”  It is these dying products, services, or process that always demand the greatest care and the greatest efforts.  They tie down the most productive and ablest people.  But equally, a product, service, market or process should be abandoned if the only argument for keeping it is  “It is fully written off.”  For management purposes there are not “cost-less assets.”  There are only “sunk costs.”  

The third case where abandonment is the right policy-and the most important one-is the one where, for the sake of maintaining the old or declining product, service, market, or process the new and growing product, service, or process is being stunted or neglected.

ACTION POINT: Ask the questions posed above and if the answer is no, make the tough choice to abandon a cherished business, process, service or market.

Abandonment

There is nothing as difficult and as expensive, but also nothing as futile, as trying to keep a corpse from stinking

Effective executives know that they have to get many things done effectively.  Therefore, The concentrate.  And the first rule for the concentration of executive efforts is to slough off the past that has ceased to be productive.  The first-class resources, especially those scarce resources of human strength, are immediately pulled out and put to work on the opportunities of tomorrow.  If leaders are unable to slough off yesterday, to abandon yesterday, they simply will not be able to create tomorrow.

Without systematic and purposeful abandonment, an organization will be overtaken by events.  It will squander its best resources on things it should never have been doing or should no longer do.  As a result, it will lack the resources, especially capable people, needed to exploit the opportunities that arise.  Far too few businesses are willing to slough off yesterday, and as a result, far too few have resources available for tomorrow.

ACTION POINT: Stop squandering resources on obsolete businesses and free up your capable people to take advantage of new opportunities.

Getting Unstuck

The first logical problem in chain-link situations is to identify the bottlenecks...

Marco Tinnelli is the general manager of Lombardy machine company. When he took over the company after his Uncle's passing things were not good.  The quality of machines had declined, especially compared with the best competitors,  costs were too high and the sales personal were not technically sophisticated.

This was a good example of chain-link logic that was stuck.  Any payoff from better-quality machines was diluted because the sales force could not accurately represent their qualities and performance.   A better sales force, by itself, would have added little value without better machines.  And improvements in quality and sales would not save the firm unless costs were reduced.

Tinnelli's solution was to conduct three campaigns, one after another.  In the first campaign the company spent 12 months just on quality.  Everything the employees did for the next year would be focused on making the best machines in the industry.   Once they had good machines, they focused on the sales function.   The salespeople had been involved in the quality campaign, and now the engineers and manufacturing people worked with sales to build skills, selling tools, and communications links back to the factory.  

The first logical problem in chain-link situations is to identify the bottlenecks, Tinelli did that by --quality, sale's technical competence, and cost.  The second greatest, problem is that incremental change may not pay off and may even make things worse.   That is why systems get stuck.  Tinelli's solution was to take personal responsibility for the end result  and direct others attention to the three bottlenecks one after another.

ACTION POINT:  Identify the bottlenecks and focus attention on them.

Getting Stuck - Examples

It is of little use to supply advanced machinery to unskilled workers

The various problems at General Motors from 1980 to 2008 had strong chain-link features.  Increasing the quality of an automobile transmission does little good if the knobs fall off the dashboard and door panels continue to rattle.  Improving fit and finish, along with the drive train, may offer little overall improvement as long as the designers continue to produce pedestrian designs.

Improving the look of the automobiles may only increase costs unless the complex technology of design for manufacturability is masters and so on.

As another example, many of the thorny problems of economic development arise from chain linked issues:

• It is of little use to supply advanced machinery to unskilled workers, but it is also useless to educate people for jobs that do not exist. 
• Government bureaucracy can be a terrible burden, but improvement in its effectiveness can be won only if there is an efficient private sector.
• Without corruption, it would be impossible to get around the stifling bureaucracy, but bureaucracy is a necessary counter  to nepotism and a culture of corruption.
• Improving the roads puts a strain on poor port facilities, and better ports without good roads are of little value.  Improve both the roads and ports, and corrupt officials and unions will demand payments for letting shipments through.

ACTION POINT: Fixing two out of three links will not be good enough, real improvement require addressing all areas.

Getting Stuck

When each link is managed somewhat separately, the system can get stuck in a low-effectiveness state.

There are portions of organizations, and even of economies, that are chain-linked.  When each link is managed somewhat separately, the system can get stuck in a low-effectiveness state.  The problem arises because of quality matching.  That is, if you are in charge of one link of  fate chain, there is no point in investing resources in making your link better if other link mangers are not.

To make matters even more difficult, striving for higher quality in just one of the evinced units may make matters worse!  Higher quality in a unit requires investments in better resources and more expensive inputs, including people.  Since these efforts to improve just one linked unit will not improve the overall performance of the chain-linked system, the system's overall profit actually declines.  Thus, the incentive to improve each unit is dulled.

ACTION POINT: Ensure the strengthening of all links is unified.

Integrity in Leadership

The spirit of an organization is created from the top

The proof of the sincerity and seriousness of a management is uncompromising emphasis on integrity of character. This, above all, has to be symbolized in management’s “people” decisions.  For it is character through which leadership is exercised; it is character that sets the example and is imitated. Character is not something one can fool people about. The people with whom a person works, and especially subordinates, know in a few weeks whether he or she has integrity or not.  They may forgive a person for a great deal: incompetence, ignorance, insecurity, or bad manners. But they will not forgive a lack of integrity in that person.  Nor will they forgive higher management for choosing him.

This is particularly true of the people at the head of an enterprise.  For the spirit of an organization is created from the top.  If an organization is great in spirit, it is because the spirit of the top people is great.  If it decays, it does so because the top rots; as the proverb has it, “Trees die from the top.”  No one should ever be appointed to a senior position unless top management is willing to have his or her character serve as the model for subordinate.

ACTION POINT:  Align yourself with people who have integrity.

Quality vs Quantity

On the other hand, if a three-star chef is ill, no number of short-order cooks is an adequate replacement.

Quality matters when quantity is an inadequate substitute.  If a building contractor finds that her two-ton truck is on another job,she may easily substitute two one-ton trucks to carry landfill.  On the other hand, if a three-star chef is ill, no number of short-order cooks is an adequate replacement.

One hundred mediocre singers are not the quality of one top-notch singer.  Keeping children additional hours of weeks in broken schools-schools that can neither educate nor control behavior--does not help and probably increases resentment and distrust.

ACTION POINT:  Know when quantity is no substitute for quality.

Management Is Indispensable

Whoever makes two blades of grass grow where only one grew before deserves better of mankind than any speculative philosopher or metaphysical system builder.

Management will remain a basic and dominant institution perhaps as long as Western Civilization itself survives.  For management is not only grounded in the nature of the modern industrial system and in needs of modern business enterprise, to which an industrial system must entrust its productive resources, both human and material.  Management also expresses the basic beliefs of modern Western society.  It expresses the belief in the possibility of controlling man’s livelihood through the systematic organization of economic resources.  It expresses the belief that economic change can be made into the most powerful engine for human betterment and social justice-that, as Jonathan Swift first overstated it three hundred years ago, whoever makes two blades of grass grow where only one grew before deserves better of mankind than any speculative philosopher or metaphysical system builder.

Management-which is the organ of society specifically charged with making resources productive, that is, with the responsibility for organized economic advance-therefore reflects the basic spirit of the modern age.  It is, in fact, indispensable, and this explains why, once begotten, it grew so fast and with so little opposition.

ACTION POINT: Come up with a few examples of why management, its competence, its integrity, and its performance, is so decisive to the free world. 

Identifying the Future

“The important thing is to identify the “future that has already happened”

Futurists always measure their batting average by counting how many things they have predicted that have come true.  They never count how many important things come true that they did not predict.  Everything a forecaster predicts may come to pass.  Yet, he may not have seen the most meaningful of the emergent realities or, worse still, may no have paid attention to them.  There is no way to avoid this irrelevancy in forecasting, for the important and distinctive are always the result of changes in values, perception, and goals, that is, in things that one can divine but not forecast.

But the most important work of the executive is to identify the changes that have already happened.  The important challenge in society, economics, politics, is to exploit the changes that have already happened” – and to develop a methodology for perceiving and analyzing these changes.   A good deal of this methodology is incorporated in my 1985 book Innovation and Entrepreneurship, which shows how one systematically looks to the changes in society, in demographics, in meaning, in science and technology, as opportunities to make the future.

ACTION POINT: Identify the major trends in your market that have already appeared.