The Art of Strategy

1. The Art of Strategy “Those who are victorious plan effectively and change decisively. They are like a great river that maintains its course, but adjusts its flow…    They have form but are formless, they are skilled in both planning and adapting and need not fear the result of a thousand battles for they win in advance, defeating those that have already lost.”  Sun Tzu 

2. “How you think determines what you think. The method of thought effectively determines the outcome. It is not the right answer that you seek, but it is the right set of questions” the right set of questions

3. The first example that I would use is how many American companies look at strategic planning.  Generally one sentence defines a significant amount of their thought:   How do I sell a certain product to a target audience, through what method of execution, and at a profit?

4. When NAFTA first passed, many people looked upon it as being a significant opening between the United States, Mexico, and Canada.  But it was primarily a trade agreement and as a trade agreement it primarily provided opportunity. It did not create significant operational vehicles that would help in the execution of trades or businesses. 

5. Assembling a team is critical, but the vision of the overall consultant is key, as is yours. In Mexico, for example, Chinese wish to do large infrastructure projects, but usually wish a large Chinese component of work.  Long term success usually means balance with local partners, making money with them, not from them.  What theory you hold guides your consultants because they want your business.

6. Dr. Felipe Ochoa’s Thoughts for Mexico Identify government sensibilities in specific projects Sensibilities of the local culture Suggest shared participation on industrial infrastructure projects for a win-win situation. What not to intend to do in Mexico How to find a reliable and effective alliance The provision of world-class support from market surveys and feasibility studies. Identification of potential areas of interest for foreign companies.

7. When you enter the United States it is a far different situation.  Where in China much of the structure is governmental, you have many more formal relationships between existing entities.  In the United States the concept of governmental involvement is to do only those things that the private sector does not do, and the organizations with which youmeet thatrepresent the governmental entities to help build trade are not active participants themselves.

8. The banking system in the United States is unique in many ways. To understand it you must realize that in the 1920’s and 1930’s, after the Great Depression, banking was divided into investment banking which dealt with securities regulated by the Securities and Exchange Commission, and commercial banking which was regulated by the Federal Reserve, the Federal Deposit Insurance Corporation, and state regulators. These two were kept apart and developed independently. Investment banking dealing with securities involved different legal rules and regulations and focused greatly on full disclosure and understanding for buyers. Commercial banking was primarily the gathering of deposits that could be loaned, as well as the provision of a number of services in transferring money and accounting services. Because commercial deposits were insured by the FDIC which was anticipated to lead to government liability, commercial banking activities were heavily regulated to guaranty the soundness of the system

9. To build a team to assist with this in the United States you have certain specific areas that become very important.  If you find the right “wraparound” consultant that brings together expertise, he will need assistance. But consultants can be a danger as well as a benefit. Shakespeare noted “Beware of your advisors.”  Many consultants have their own undisclosed agenda and you must be certain you have common goals.

10. The three areas of power: economics, politics, and culture are all very important considerations. Politics, which is better defined as government with its regulations, is an area that you must have an extremely good law firm. America is a legal system with much less ability to grant official exceptions.

11. Where you as CEOs of companies cannot necessarily come to America often, it is very helpful to have several Executive Vice Presidents that look at the market that can be brought into it with time to spend to make the friendships to understand the considerations and to take back the expertise to evaluate others.

12. A point I have emphasized is that if Chinese companies do business to a high ethical standard abroad, they usually meet and deal with people with similar standard. If you seek men of convenience, you will have relationships long term with men of convenience and not conscience.

13. Presently there are many imbalances being created in the world because of the trade deficit of the United States with China.  It is not unlike the trade deficit that America experienced with the Mid-East when oil prices first jumped in the early 70’s. 

14. Fundamentally, the best strategy to take when you deal anywhere in the world is to understand that people are normally not for you or against you, but are for themselves.  As such, you need to put forth the opportunity that you bring, the importance of it and most importantly the sincerity and focus on integrity with which you wish to operate.  Every country in the world has good people and bad people.  The problem is how to sort them out, and once you have determined their integrity then you must find their level of competence, and that level of competence includes the ability to look conceptually at how all things fit together rather than simply from their level of expertise.  Whenever a person is trained in one expertise it dominates their thought process.  A lawyer thinks differently from an engineer. So recognizing and combining these different perspectives gives a mental picture closer to reality.

15. But most important of all is that honest men are usually not greedy, they make money with people. You get the type partner you seek. Fairness is best for the long run.  That does not mean not to negotiate hard, the Chinese do, but I have always felt that good because it also shows you intend to pay. But if you negotiate a good deal with a bad person you have little. 

16. I hope these thoughts have given you some ideas of how you might structure an approach, and I would be happy to provide you copies of whatever supplementary information I have covered that you might desire.  You can reach me through “message to author” on the website www.thelanguageofconscience.com which gives much more detail to these thoughts.