Regardless of whether we are designing strategy, selling products, or negotiating a contract, we are constantly either taking action or reacting to things around us. Taking the initiative is critical in Musashi Miyamoto’s classic work on swordsmanship, The Book of Five Rings. This third article in a Special Five-Part Series takes five principles from Musashi’s work and demonstrates how they can be used in business. The first article in the series is found here, the second is found here.

Lessons from the Fire Scroll

In the Fire Scroll, Musashi discusses the principles of warfare. Fundamental principles discussed relate to:

• the number of opponents
• fighting actual battles
• taking the initiative; and
• various fighting techniques.

Lesson 1. Know the Battle Circumstances

In this scroll, Musashi discusses the concept of “knowing conditions.” He said that this means “knowing where your opponents flourish or fall, knowing the number of their allies, understanding the terrain, observing your opponents’ condition and, according to the maneuvering of your own allies and these principles of the martial arts, grasping the way of victory with certainty, understanding the initiative to be taken, and going into battle.”

This lesson states that victory in battle comes from accurate knowledge of battle circumstances. He specifically refers to understanding:

• the battlefield
• enemy strengths and weaknesses
• the enemy’s current circumstances; and
• one’s allies.

This has direct business application.

• The battlefield in business is the market where products are purchased and sold, and market share is won and lost. The battlefield also refers to a firm’s internal state and dynamics, which have a decisive impact on competitive ability.
• Enemy strengths and weaknesses refer to the advantages and disadvantages of company competitors. This includes their market share, business model, strategy, product line, team, business methods, and client base.
• The enemy’s current circumstances refer to the status of competitor business plan implementation, whether a company is growing or shrinking in size, and their level of financial and other resources.
• One’s allies refers to the situation of people that support the business and their ability or willingness to support a company in connection with its growth strategy.

The lesson in this scroll is that a strategic initiative should not be launched in a vacuum but only after completely understanding the context. This is necessary to:

• make sure that one’s strategy is appropriate given the market opportunity and competitive environment;
• review and adjust the action plan so that it is most viable based on the situation and available resources; and
• determine how the company will react in the face of different potential obstacles.

A strategic initiative should only be launched after understanding the context.

Lesson 2. Take the Initiative

Once understanding the context where a battle is to be fought, the next step is to take the initiative. Musashi describes three types of initiative:

• when you attack the opponent
• when the opponent attacks you
• when you both attack at the same time

In Musashi’s discussion of these principles, two points stand out. The first is that the type of initiative taken depends on the circumstances. The second point is that even if you do not attack first, you should prepare to counterattack rather than wait passively. Your opponent’s attack, in essence, becomes part of your attack.

Initiative is a defining element in business because regardless of the activity we are engaged in, we are acting, reacting, or acting at the same time. These actions should not be viewed independently but rather as part of a larger set of actions that will strengthen or weaken your position.

To carry out Musashi’s advice, the first step is to divide the firm into different areas and determine where it will go on the offensive and what areas it is more advantageous to wait for more favorable opportunities to act. Key action areas could include hiring new employees, generating revenues, or cutting costs.

Once the areas have been defined, a firm should have a clear plan concerning each of these areas regarding:

• what the goals are
• what steps will be taken to achieve them
• who will be responsible for action items; and
• alternative plans if unexpected obstacles arise.

Lesson 3. Venture Forth to Win

Musashi says, “Throughout life, there are many challenging moments. On a ship’s course, you know where these places are, you know the capacity of the ship, and you know the passages of the weather situations well. Even if other ships do not venture out, you respond to the conditions of the hour, rely on either a crosswind or a tailing wind and, if the wind changes, put in the oars for two or three ri. Setting your mind on arriving at port, you board the ship and ferry across. With that in mind, you should think in terms of ferrying across when you pass through society and set your mind to some serious affair.”

The decision to act should be based on your capabilities rather than the capabilities of others.

This lesson discusses how one should react in the face of challenging objectives. Musashi’s key point is to act based on whether something furthers your strategic objective and whether something is reasonably within your capabilities. Conversely, you should not act based on what others are capable of doing or willing to do.

A second point that Musashi makes is that the decision to move forward should not be based on the assumption that all will go smoothly or that no obstacles will arise. Instead, it should be based on the belief that obstacles will be encountered, but the company will be able to overcome those obstacles with the organizational resources it has at hand.

All business initiatives require venturing out into the unknown.

Ferrying across is a metaphor for all stages of business growth. Every initiative, including entering a new market, increasing revenues, and facing new regulations, requires journeying into unknown circumstances. Faced with risks of the unknown, many competitors will wait until conditions improve or first see what happens to other people who venture out.

Musashi advises that we should not let uncertainty or competitors’ decisions imprison us in a state of immobility. If the opportunity clearly exists, and a company has the ability to seize that opportunity, the company should put aside doubts and move forward even if it is risky and other competitors choose to wait. An excellent example of putting this strategy into practice is Suzuki’s 40-year history of investing in India. A discussion of Suzuki’s plan to ramp up its investment further.

Lesson 4. Become Your Competitor

Musashi said, “When you look at the world, people are apt to think that someone who has committed a robbery and hid himself up in a house must be a strong opponent. But if you consider it from the robber’s point of view, he thinks the whole world is his enemy and there is no way of escape.”

This is profound insight because it highlights the degree to which we often see other people’s strong and weak points through the lens of our situation. To use Musashi’s robber example, when we gauge the risk the robber poses, we might more heavily weigh the uncertainty about exactly where the robber is hiding in the house rather than the difficulty he would have escaping.

This often happens in business. In a moment when a firm is going through a difficult situation, there can be a tendency to assume that competitors are likely better off financially and, therefore, come to the conclusion that it is best not to pursue strategic growth opportunities, particularly if they involve the expenditure of a significant amount of resources.

In reality, if a reasonably well-run firm faces financial difficulty, there is a good chance that other firms have similar challenges. Because of this, a time of financial stress can be an excellent time to increase strategic position and market share.

Understanding a competitor’s situation has many strategic benefits.

More generally, understanding a competitor’s situation is not only relevant for gaining short-term strategic advantage. A better sense of the situation of a competitor is beneficial in considering collaborative arrangements that allow both firms to weather difficult moments and be mutually beneficial in the long run.

Lesson 5. Renew Yourself

Musashi said, “Renewal means that when you and your opponent are at the height of combat, nothing is going right and there is no progress, be of a mind to throw off your original plan intention and start entirely anew. Take on another rhythm and see your way to victory.”

Deadlocks can occur in battle for numerous reasons, including:

• each side is familiar enough with the offensive capability and options of the other side to make advancing difficult
• it will take the expenditure of a large amount of resources to make even a small strategic or tactical gain
• there may be advantages in keeping things as they are.

In these situations, if there is no significant change, the situation will likely remain the same until the resources or the will of one of the parties changes.

This applies in business because companies can fall into a revenue or operational rut and, despite making efforts for a significant period, do not advance. This organizational gridlock is not value-neutral, because churning resources without making progress can leave firms in a progressively weaker position.

On these occasions, Musashi advises is that firms should not be afraid to try a completely different approach. The approach may not work, but trying something new will often free up the firm to see new approaches that may ultimately lead to better results.

Conclusion

This article set forth five principles from The Book of Five Rings and illustrated how to apply them in business. The following articles will show how to apply principles from the remaining scrolls of the book.

The version of the Book of Five Rings referenced in this article was translated by Matsumoto Michihiro and William Scott Wilson. I have made some changes to the English translation based on my own interpretation of the Japanese text.

The image for this article, a samurai on horseback with a bow and arrows, was taken from here.