Sun Tzu’s Five Factors as a Strategy Analysis Framework

Written by

Sergio Caredda

Posted on

May 8, 2020

Edited on

May 13, 2020

Sun Tzu’s

The Art of War is traditionally attributed to a military general from the late 6th century BC known as “Master Sun” (Mandarin: “Sunzi”, earlier “Sun Tzu”). However, the dating of some of its parts is doubted. There have been several historical sources and commentaries for the text that we today consider truly The Art of War.

It is constituted of 13 chapters, which address the general definition of a strategy, up to the usage of tactics such as spies. Read by generals, business people, sports coaches and strategists, the book has a widespread influence, especially for the first couple of chapters. It still is a book about war, and this is probably one of its limits, especially when considering that one of the messages that many holds out of reading it is that victory is based on deception. Seeing Strategy as an opposition of forces and a battle is an issue as we have seen. However, the book itself still treasures some general principles we should consider.

Hence the saying: If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.
Sun Tzu, The Art of War

The Five Fundamental Factors

Translations vary a lot about how these five factors are represented in modern English, and some authors have been tweaking the meanings of some of these a bit too much. However, the five factors, all in all, allow representing a full map of the current scenario to be considered. And they can be easily used to create a comprehensive Business Analysis Framework. Let’s see them together.

Tao/Dao (道): as a term, is tough to translate (even for Chinese) because Taoism thinks the essence of the universe is not describable. Thus it intentionally keeps it as general as possible. It is commonly interpreted as “morality” in this context as Sun Tzu elaborates it in subsequent texts saying “Tao causes the people to be in complete accord with their ruler, so that they will follow him regardless of their lives, undismayed by any danger”. In an organisational context, we can probably translate it with Purpose in its broadest sense.
Meteorology (天): it literally refers to the weather, and describes the forces that act upon the environment. Its meaning can, therefore, be enlarged to refer to all the external factors we cannot control, including the “rules of the game”.
Topography (地): it literally means the likes of positions, distances & terrain. This is one of the elements where interpretations are more “discording” in a business strategy context; in general, we can, however, refer to it as the environment in which our organisation operates.
Commander (将): probably needs the least explanation, as it refers to the management system and Leadership of the organisation.
System (法): means laws and discipline in Sun Tzu’s context. In an organisational context, should include the organisation itself, with its operations and governance. It is sometimes translated also as “methods”, precisely to underline this aspect, which is why we should also consider incentive systems and culture as part of the analysis.

The Five Elements can be arranged into a visual that displays them into a circle. There is not a definite prevalence of one onto the other elements; they all influence each other. In the past, there has been an entire discussion on the disposition and representation of these elements.

Fig.1: Sun Tzu’s Five Factors for Strategy Analysis

Why is it useful for Strategic Analysis

The main reason why this framework is useful for Strategic Analysis is straightforward: typically, as we have seen, Strategy Definitions have been aligned on loosely defining the objectives (although we have already seen this is not the aim of Strategy), and then often move directly into the Plan. A few frameworks (like PESTLE) have been looking at the Topography. But few offer a genuinely full map of what is existing.

A typical example is that of what is defined as “Systems” is often overlooked and assumed as a consequence of a Strategy Definition, rather than an element to be contemplated when the Strategy is described. All of these elements influence the Strategy and can be affected by the Strategy itself (with the sole exception of the Meteorology). The Value of Sun Tzu’s Five Factors lies here: using a circular mindset, typical of the Oriental culture and Taoism, as opposed to the linear way of thinking we have in the west.

The one overarching element of this framework is that it is based on a profound knowledge of the environment, the external forces that shape it, the competition but also your internal organisation. As in the quote mentioned above, not knowing yourself is probably the biggest problem in defining a Strategy.

Moreover, this framework can help in shaping what we have seen, defined as Strategy as Learning. Imagine building a system where all these elements are not just an occasionally analysed when the Strategy is set, but preferably continuously, focusing on picking up the weak signals and early warnings of the changing environment. It can become the focus of a continuous movement of learning and adaptation.

How to define the Strategy?

After describing the five factors, Sun Tzu presents seven considerations that should be made (and suggests doing so “by comparison”, de-facto being probably the first suggesting Benchmarks as a way of analysis).

(1) Which of the two sovereigns is imbued with the Tao?
(2) Which of the two generals has most ability?
(3) With whom lie the advantages derived from Meteorology and Topography?
(4) On which side is discipline most rigorously enforced?
(5) Which army is stronger?
(6) On which side are officers and men more highly trained?
(7) In which army is there, the greater constancy both in reward and punishment?

Again, the idea of the Strategy defined as a mere battle between two opponents is not what we should consider in a business context. But it’s interesting to notice that these considerations can guide reasoning also today. (1) Who in the market has the most robust Purpose and better alignment? (2) Where is Leadership better displayed? (3) Who has the better capability of exploiting current forces in the environment? (4) Who has the best Operating Model in place? (5) Who has the best financial strength (6) Where are the best skills available? And what’s the training model? (7) Where is there better consistency in rewards and incentives?

What comes immediately to mind is that these are not traditional questions for the definition of a strategy. We tend to look too much at the financials, not at the organisation capabilities.

This is where probably the pure modernity of this approach comes through: its focus on the skills of the actors involved in the environment.

Conclusion

It may seem weird to resort to a model that is more than two millennia old. However, with so many people continually referring to it, I thought it would be good to consider it and check what value this could have in a modern perspective. By moving away from the idea of a “battle”, I do think that Sun Tzu’s The Art of War offers to valuable lessons that any modern strategist needs to consider:

A strategy is not a linear process, but rather a circle of constant learning and adaptation.
A strategy is about focusing on the overall capabilities of our organisation in relationship with the other actors in the environment.

As we consider more and more our companies as living organisations within an ecosystem (one of the primary Purpose of the visual guide that I presented as Organisation Evolution Framework), I think this tie with the ancient past can be beneficial for our understanding, especially in a VUCA environment where constant learning is key.

What do you think?