Business and Battles: Lessons from Defeat

Military Misfortunes: The Anatomy of Failure in War, by Eliot A. Cohen and John Gooch (New York: Free Press, 1990), 296 pages, $ 22.95. In 1950, Chinese forces staged a surprise attack on U.S. forces stationed along the Yalu River in Korea. Everyone knows what happened next: suicidal waves of fanatic Chinese troops drove the American units back in disarray. But it wasn’t that simple. Units of the U.S. Eighth Army were thoroughly routed by the enemy (and not restored to fighting trim until General James Ridgeway took command after Douglas MacArthur’s recall). But the men of the U.S. Marine X Corps achieved a great victory. The two Chinese armies opposite them were cut up so badly that they were effectively put out of the war. And the marines themselves retreated in good order, bringing with them their dead, their wounded, and their gear. Why did one part of the U.S. military fare so well, while the other was almost wholly undone? In Military Misfortunes, Eliot Cohen and John Gooch answer that question insightfully. What is more, their analysis suggests provocative answers to questions they do not ask, questions that have nothing to do with the Korean War (or any other) and everything to do with the fierce economic contests now occurring throughout the world. For example, why did U.S. auto manufacturers consistently lose market share to the Japanese throughout the 1980s? Why does a leading player in the battle for electronics and computer markets believe the United States will be Japan’s “technocolony” in the 1990s? And why is the competitive advantage in biogenetics already shifting away from the United States? In business as in war, defeat is deeply rooted in the organizational dimensions of the loser’s strategy. To illustrate, consider why events along the Yalu River unfolded as they did. When the Chinese forces attacked, they followed an order of battle developed in Mao’s wars with Chiang Kai-shek. Rather than engage in massive frontal attacks, the equipment-starved but highly mobile Chinese penetrated U.S. lines off the roads and attacked at night from close in. The marines, who had served as observers with Mao’s Eighth Route Army and knew that the Chinese were not simply a poorly equipped version of the Soviet-trained and Soviet-equipped North Koreans, planned accordingly. Their tight lines and aggressive picketing were well suited to locating and responding to the Chinese threat. Organizationally too they were well prepared. The discipline of their units, reflected in such mundane matters as digging foxholes in the frozen earth each night, wearing dry socks, and cleaning weapons, was markedly superior to that of their countrymen fighting in army units. In contrast, the army’s spread-out, undermanned companies were highly vulnerable to the Chinese order of battle, and strategic bombing was of little help. What accounts for the difference? Why was the army unable to learn from the marines? And why were intelligence reports ignored? The answers Cohen and Gooch propose lie in realms that will be deeply familiar to business managers. One answer has to do with the army brass’s doctrinaire thinking, frozen assumptions that were directly reflected in their military strategy and that included false analogies with the Russians and a contemptuous assessment of their underequipped opponents’ capabilities. Another is their unwillingness to gather evidence that would challenge these beliefs, an unwillingness that was aggravated by a shortage of Chinese-speaking interrogators and reluctance to learn from a rival organization. Factor in poorly trained and inexperienced line managers, and you see a stage set for disaster. Faulty Organizations In one unhappy chapter after another, Cohen and Gooch show us large organizations ill equipped to learn from the environment before war broke out, unable to anticipate concretely how conflict might develop once it had, and—most damaging of all—unprepared to learn from results on the battlefield. Whether we study Pearl Harbor or the 1973 Arab-Israeli War or Gallipoli, the villains are familiar managerial nemeses: strategies based on outdated premises held by misinformed, inward-looking leaders; organizations rooted in bureaucratic routines required for the orderly progression of careers rather than effectiveness in the field; and generals whose skills have more to do with getting along than with winning battles. To make sense of these many causes, the authors develop a matrix of failure that allows them to chart the pathways to military disaster. Across the top are such familiar elements of management work as resource allocation and communication. Down the side are the levels of command, stretching from the White House to the tactical fighting units. Spread out in this manner, the elements of a defeat can be related to each other. More important, we see again and again that the roots of failure are embedded in the way a particular army (or navy or air force) is organized to plan and operate. At Pearl Harbor, for example, the U.S. Navy fought back against the second wave of Japanese planes, while army antiaircraft guns were virtually silent and air corps planes remained wingtip to wingtip on the runways throughout the day. Why? “Chimneylike” organizations were a large part of the answer. Socially, Admiral Husband E. Kimmel and General Walter C. Short were on excellent terms. But there were no provisions for joint planning or operations at any level below the service chiefs. Indeed, the navy did not even know what kind of alert the army was on (or vice versa) or what that would mean operationally if war came. The tragic omissions for which Pearl Harbor is notorious were deeply rooted in organizations whose respect for their own operation was greater than their respect for the enemy. The contrast with explanations that focus on failed leaders or the military mind or simple bad luck could not be greater. General MacArthur undoubtedly made mistakes in Korea. And it was surely bad luck that the Japanese learned to put fins on torpedoes so that Pearl Harbor was at greater risk. But taking away one or the other factor still leaves most of the disaster. The operating units were trained wrong and didn’t cooperate with each other. Existing intelligence was ignored at every level. Societies, not just their leaders, misunderstood the enemy. Blocked Learning Much as Alfred Chandler’s histories of Du Pont, GM, and other industrial giants help us understand corporate growth and competition, Cohen and Gooch help us focus on how organizations learn and, more particularly, on what their managers have to do to help them learn. For individuals, learning means changing one’s basic assumptions and preferred approaches to solving problems. For organizations, it means changing the routines and procedures that guide and regulate corporate activity, communication, and the use of new information. These include the authority structure reflected in the organization chart, the measures used to assess performance and track the external environment, the ways in which people are recruited, trained, and promoted, and the procedures for formulating and approving plans and budgets. Shortly before the 1973 Arab-Israeli War, for example, Israeli Chief of Staff David Elazar noted approvingly that “Israel’s tankers, paratroopers, and airmen share a common faith: each group is convinced it can win the next war without the help of the other… What results from that spirit is that each arm develops its own ‘philosophy of battle.’” But the structure that had served the Israelis well in the past contributed to their defeat in 1973 because it blocked them from understanding how this war might be fought. Separate command structures for tanks, infantry, and air corps made it especially hard for the Israeli forces to imagine all the possible ways in which antitank weapons might be used in a combined Egyptian attack. For Elazar, the Israelis’ defeat in the Sinai taught a costly lesson. The importance of “combined operations and the combined task force,” he noted after the war had ended, “present what I consider to be one of the major lessons…on the tactical and operational level.” A less costly method, as the authors point out, is organizing to learn before the fact—for example, by studying history. In the U.S. military, only the oddballs spend time as historians. But both the German and the Soviet armies people their general staffs with officers who have spent some time studying military history, and business leaders might well consider their model. What better asset for a future leader, after all, than a deep understanding of how his or her company got to be where it is and how it fights best—and worst. Thorough knowledge of competitors is equally advantageous. Yet in my experience, few companies truly study their rivals to learn why they have succeeded or failed. Instead, a competitor’s success is attributed to short-term accidents or a willingness to price below cost, while one’s own success is taken as evidence of good management. Unfortunately, neither practice nor convention encourages executives to study failure. Audits of strategic initiatives that might sort out cause and effect are perceived as the basis for reward or punishment, not as a way to learn about new market needs or changes in the basis of competition. The climate that attributes organizational success or failure to the actions of an individual leader chokes off examinations that might reveal other reasons for good or bad performance. That is why a change in strategy so often requires a change in leadership—reassessment of the competitive environment is tantamount to an expression of self-doubt. Finally, much as grade schools promote students every year to make room for those behind, companies like to give raises regardless of performance. And as long as no one studies failure, the fiction that no one has failed can survive. Blocked Anticipation For Cohen and Gooch, the right kind of learning is learning that helps with the critical management task of anticipation. All that good intelligence can be expected to do is describe the enemy’s current state and its preferred approach to operations. Good soldiers—and managers—then use that intelligence to think through how their organizations might fare in battle. Whether they succeed quite often depends on the way “doctrine” colors their thinking. For the U.S. military, doctrine is “a tool with which to coordinate the myriad activities of a complex organization.” It is the tactical techniques necessary for success on a modern battlefield: the way the order of battle is constructed, how units move, how different weapons are used together, and so on. The problem with doctrine so defined is that it can blind its adherents to new circumstances and unfamiliar initiatives. As the authors point out early on, “Every war brings to the surface areas of warfare that may form an intelligible whole but that do not—for a variety of reasons—come under the purview of [the] preexisting military organization… Immense obstacles to recognizing and coping with such mismatches always exist.” In corporate life, this sort of doctrine exists in policy manuals. Think about General Motors, seemingly trapped in the wisdom of Alfred Sloan now enshrined as “doctrine.” Practices that once fostered successful operations now keep the company from recognizing profound changes in its markets and new ways to organize production. In contrast, the Soviets define doctrine as “a system of scientifically sound guiding views which are officially adopted in one or another state and concern the essence, goals, and nature of a war, the preparation of the nation and the armed forces for it, and the methods of waging it. The political bases of a military doctrine disclose the sociopolitical essence of modern wars.” To see what this means in practice, consider World War II and Vietnam. By focusing on goals, politics, and society rather than on tactics, this definition of doctrine helps us understand how the United States could recover from such terrible defeats at the beginning of World War II and, conversely, how it could inflict such military damage on the North Vietnamese and lose. President Roosevelt waited until the Japanese attack provided a true political mandate for sacrifice before committing U.S. troops. In contrast, President Kennedy and his advisers acted early in pursuit of abstract geopolitical objectives in an arena in which there was little popular support or understanding. As a result, Lyndon Johnson discovered that the Gulf of Tonkin was no Pearl Harbor and that the U.S. military success in the Tet Offensive was a sociopolitical defeat. Applying this definition of doctrine to business, we can paraphrase the Soviets to say that “the political bases of a business strategy disclose the sociopolitical essence of modern global economic competition.” The sentence is a mouthful, but it says a great deal about why many U.S. companies find it so difficult to confront with success foreign competitors operating in different social and political environments. Indeed, it may be the only way to explain why many U.S. managers discussing Japan focus exclusively on managerial hierarchy and the supportive role of the government while discounting their rivals’ commitment to their work force and country and their disciplined devotion to the task of management. The idea that strategy has a sociopolitical dimension also explains why every corporate strategy must be unique. For there to be one best or generic strategy for all the companies in a market, there would have to be a homogeneity in organizations that just does not exist. Strategy is social and political because it must reflect a consensus among those with the power to manage organizations about what objectives ought to be pursued and how. GM cannot learn the lessons of its joint venture with Toyota as long as its major engineering staff and top management believe that massive automation is the best way to reduce the cost of developing and making a car. In turn, well-developed corporate strategy helps managers anticipate problems because it focuses attention on the unique ways in which a particular company operates and how it is likely to react to the thrusts of competitors as both deal with a changing environment. Anticipation involves a willingness to understand competitors’ strengths and customers’ desires. I will never forget hearing the head of design at an elite U.S. auto-components manufacturer explain why I wouldn’t like the firm ride and tight steering of an Audi. How can he or his company possibly learn what new products customers will want if their strategy precludes listening? Blocked Adaptation Cohen and Gooch’s final pages deal with adaptation during battle and the important facilitating role leaders play in the process. “By encouraging the development of initiative,” they write, “troops can be trained to make the most of opportunities which present themselves on the ground—this was precisely the basis of the excellence of the German field armies in both world wars. But in all armies…it is the commander’s job to spot an opening and then to capitalize on it.” How leaders are trained and selected and the norms that govern their relations with subordinates have a great deal to do with successful adaptation. Is there a tradition of continuing education? Is the staff given ready access to new technology and to the line? Are resources devoted to intelligence, and are the messengers listened to or killed? The answers to these questions determine how mismatches between situation and plan are dealt with and how obstacles to learning are circumvented. Charisma and energy are not enough. Great leaders need the skill to help their organizations change premises in midbattle. This is why the critical role of command means more than some metaphysical belief in “good leaders.” It requires the capacity to learn and learn again. George C. Marshall, the great U.S. Army general, captured this aspect of leadership in describing his experiences during World War II. As a young man, he noted, he had received an education based on roads, rivers, and railroads. Then in the early years of the war, he had to acquire another based on oceans and had to “learn all over again.” How many managers have the wisdom to recognize when circumstances have changed profoundly and they have to learn all over again? Today, especially, when we are celebrating the importance of organizational capability to achieve corporate goals, it is critical to remember that just as strategy should shape structure, so structure—our organization, information systems, personnel systems, and overall work environment—should shape strategy. If the way a company is organized to earn on a day-to-day basis inhibits its ability to learn, then it is highly vulnerable to misfortunes (in kind if not degree) such as those Cohen and Gooch describe. To illustrate, consider briefly the disastrous performance of the Big Three auto producers from 1975 to 1985, as described in recent books and articles in the business press. For many years, their strategies did not reflect either the changing demands of consumers or competitors’ dramatic improvements. Equally important, they did not appreciate the critical relationship between the cheap, low-end part of the market and the benefits of cumulative experience to a well-organized, adaptive manufacturer. At the same time, Detroit’s leadership perceived the values reflected in changing buying patterns and government regulation as evidence of consumers’ and government’s ignorance. Even worse, the division managers saw one another and the workers as the enemy. Functional operations were divided into uncommunicative, rivalrous fiefdoms, while manufacturing was mired in antiquated union-management relations. Organization, career and compensation systems, financial management—all reinforced parochial views. Ford, on the brink of bankruptcy, sought a revolutionary bottom-up transformation of the company using the only resource it had left, its people. Ironically, at GM, a powerful balance sheet supported an $ 80 billion investment in technology and hid the lesson that everything had to change, especially the work environment and the selection and development of people. Whether the Big Three’s education from their marketplace failure is complete is not clear. Change is not over, and the competition is not standing still. What we can look for is organizational evidence of learning. Are there strategic audits to understand whether projects served well or poorly? Are the findings disseminated or locked up where they won’t offend? Are studies underway to predict Toyota’s, Nissan’s, and Honda’s next moves as the Japanese market flattens, the European market closes, and U.S. consumer debt evolves? Is market research providing intelligence on why consumers are so fond of particular cars and so turned off by others? Fast-moving, fast-learning companies have organized themselves to answer all these questions. Business failures cannot compare with the horrors of war. Corporate annals have no images as chilling as that of Britain’s Field Marshal Douglas Haig who sent tens of thousands to die on the battlefields of France during World War I because he did not know that the muddy, obstacle-filled terrain made the aggressive charges he kept ordering impossible. But business failure takes its own toll in lost jobs and weakened communities. That is why the lesson Military Misfortunes teaches is so important. In every dimension of management, we must keep learning what has happened, anticipate what may come next, and adapt quickly when—as is inevitable—we are surprised.

Business and Battles: Lessons from Defeat

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