A STRATEGIC PARADIGM BASED UPON “ON WAR”
WALTER O. EINSTEIN, Ph.D.
Charlton College of Business
University of Massachusetts Dartmouth
Dartmouth MA, 02747
woeinstein@comcast.net
A paper submitted to the tenth Annual Meeting of the
American Society of Business and Behavioral Sciences
Las Vegas, NV Feb 20 – 24, 2003
Management II Strategic Management
A STRATEGIC PARADIGM BASED UPON “ON WAR”
Abstract
This article illustrates parallels in the work of modern strategic management scholars as
presented in current college strategy texts with the philosophies of war as expressed by Carl Von
Clausewitz in his 18th century masterpiece “On War.” Through the use of a modern strategic
management process model and interchangeable terminology between war and business, a clear
portrait of how the activities in war mimic those in modern business strategy becomes evident.
The process of considering these two elements provides an opportunity to realize how managing
business activities really involves ideas that are not new, but only interpreted for various uses.
The article closes with a process model using war terminology to conclude that the parallels that
have been discussed really do exist and that old ideas can become new. These “old” ideas still
can be used to achieve success just as they have in the past. There is nothing new under the sun.
A Strategic Paradigm Based Upon “On War”1
There is nothing new under the sun! Modern business strategy is about trying to do
something as a firm…get market share…launch a new product…build on competencies… gain a
competitive advantage. Business leaders today face growing uncertainty and seek more than an
advantage, they must “overcome” the competition. One way to do that is to follow the common
strategic planning paradigm… “Gain the strategic advantage by being be better than the
competition.” Another paradigm is to compel our competitors to do our will. Carl Von
Clausewitz proposed such a strategy in 1793!
Carl Von Clausewitz’ enlightening philosophies of war in his 18th century masterpiece
“On War” (Von Clausewitz, 1943, 1976) 2 are so closely linked with modern business strategy
that a review to compare “ON War” with the current thinking in strategy offers an opportunity
for strategic planners to realize that war strategy is a direct parallel to business strategy. There
are lessons in “On War” applicable to the modern business environment. As one reads Von
Clausewitz’ work, it becomes apparent that many of the factors and considerations during war
times become analogous to competition as a whole and more specifically to competitive
strategies employed routinely in business processes. The similarities between war strategy and
business strategy, and war theory and business theory are of particular interest since Von
Clausewitz’ insight might enable businesses to improve their strategic skills.
In order to present the similarities of war and business strategy, some key terminology
becomes interchangeable. The term “war” used in Von Clausewitz’ work, may be replaced by
“business activity.” “Enemy” will be replaced with “competitors” and an “attack” will be called
a “business-level maneuver.” The fact that these terms are so easily interchangeable again
illustrates the comparative nature of these functions.
Almost immediately, Von Clausewitz, (1943, 19) defines war as “an act of violence to
compel the enemy to do our will.” Taken literally, this certainly does not apply to business
strategy. However, peering beyond the surface of this definition, if “business maneuver” is
substituted for “violence” and “our competitors” for “the enemy,” this definition applies.
A business maneuver should compel our competitors to do our will, can be translated to
mean that business activities, similar to war, use strategic tactics and plans that attempt to
persuade competitors (the enemy) to behave in a manner of our choice and not their own. Von
Clausewitz’ definition of war is similar to the resource allocation strategies described by Mc
Grath, Chen & Macmillan (1998). They show that in business, firms can allocate their resources
in a manner that compels competitors to also divert their resources, but to the advantage of the
1
My special thanks to Karen Raposa and Patrick Sullivan, two MBA graduate students who made many insightful
contributions to this article and to whom I dedicate the paper. May they both gain professionally from their
blending history with current business thinking.
2
Carl Von Clausewitz published the original book in 1793. Since then there have been several translations into
English. The 1943 edition was available at the University of Massachusetts library and the 1976 edition was
purchased through Amazon.com. There are significant grammar differences and modest structural differences
between the two editions. The substance of the two is the same. Only direct quotes are cited to differentiate the two
volumes.
firm. Hence, with sufficient and relevant information regarding the competitor, firms are able to
manipulate the actions of their competitor and as a result they can have higher returns.
Persuading and/or controlling competitors are the key to strategic success, but are difficult to
accomplish.
To elaborate on the notion of a parallel between war and business activities, various
modern models of business philosophies and strategies are compared and contrasted with war
philosophies and strategies. These interpretations follow the pattern of the strategic management
process compiled from various models as illustrated in Figure 1. Von Clausewitz discusses each
activity in this process as part of the imperatives of war and it will become obvious that since the
first battle ever occurred in the history of the world, the basic concepts that govern the battles
and strategies of war, govern the battles and competitive activities in business today.
Establish Direction
 Mission
 Strategic Intent
 Initiatives
Strategic
Competitiveness
 Competition
 Environment
Implementation
 Corporate
Governance
 Structure &
Control
 Strategic
Leadership
 Innovation
Analyze the
Competitor
The Balanced
Scorecard
Strategy Formulation
 Corporate Level Strategies
 Business Level Strategies
Sustained Competitive Advantage
Figure 1. The Modern Strategic Management Process (edited on 21 Jan 2006 by WOE)
Establish Direction (Intent)
Hitt, et.al. (1997) argue that competitive actions are highly influenced by environmental
elements, both external and internal. Thus, an intense evaluation of these elements is necessary
to better understand what makes a firm’s competitors act and/or react. Thompson & Strickland
(2001) present factors of the remote or external environment consisting of the socio-cultural,
demographic, economic, political/legal, technological, and global factors. These factors are
virtually uncontrollable, by a single firm, as well as by an army, but both must be aware of their
potential influence on their activities.
An evaluation of the external or remote environment according to Von Clausewitz means
that armies must be aware of the three key human components of influence involved in decision-
making that include concerns of civilians, concerns of the commander and his army, and
concerns of the government. Concerns that rise from civilians affected by war are analogous to
concerns of employees and other stakeholders who must handle changes that result from
strategic business maneuvers. The concern of commanders and armies is comparative to those of
the CEO and senior executives in a firm. Finally, the government and lawmaker influences
during war are similar to the policies and rules within a firm. All of these components will
influence how decisions are made by commanders in war and by executives in business.
The task or internal environment consists of four key elements that a firm wishes to
control. “Firms attempt to understand their external environments by gaining information about
competitors, customers, and other stakeholders in the external environment” (Hitt, et. al. 1997, p.
42). These include “competitors,” called the enemy by Von Clausewitz; “customers,” called
allies; “creditors,” usually seen as the total military force of a nation; and “employees,” who are
represented by the officers and men. . Controlling these elements involves understanding what
the firm does well and then comparing the internal strengths and weaknesses to the competitors.
This involves conducting a value chain analysis, a company capability profile, and a strategic
position and action evaluation.
An effective value chain analysis can result in a firm creating a unique way to perform its
activities that will make it extremely difficult and costly for its competitors to imitate. (Porter,
1998) In order for this to happen, the establishment must perform a company capability profile to
assess its internal environment for particular strengths and weaknesses that must be addressed.
Finally, a strategic position and action evaluation takes into account the firms financial strengths
and competitive advantages with respect to the strength of its industry and the overall
environmental stability. In fact “the strategic-management process is based on the belief that
organizations should continually monitor internal and external events and trends so that timely
changes can be made as necessary.” (David, 2001, p 7) A combination of evaluating remote
environments and using the above-mentioned tools to compare and contrast task environments
among competitors would enable a firm in business and an army in war to strategically position
itself for success.
Developing strategic business maneuvers requires a firm to decide upon and clearly state
its strategic intent. Without intent and purpose, actions have no direction or focus. This can be
life threatening in war and detrimental to a firm’s strategic position. Von Clausewitz describes
the focus of an establishment as its strategic intent. And that intent must be determined in order
to decide upon appropriate actions. Intent shapes long-term goals and ideas about where a firm
wants to be positioned under ideal circumstances. (Hitt, Ireland, & Hoskisson, 1997) It does
allow for creativity along the way since external conditions change over time. However,
strategic intent is in place to propel leaders and subordinates in directions that support the vision
of the organization. Von Clausewitz, (1943) clearly illustrates how to control or conquer
competitors when he states how a firm must have a clear target “in order to direct tactics at
points that will do the most harm” (p. 22). Strategic intent is imperative for successful battles
and effective competitiveness.
Mission Statements
A mission statement in business and war is imperative for established employees and
troops to understand the purpose of the firm’s business activities. Barney (1997) shows that a
well written, concise mission statement provides long-term direction and indicates where a firm
intends to be positioned in the future. Von Clausewitz (1943) supports the need for a clearly
stated mission statement when he explains how “weak motives to action will ultimately allow an
army to be swallowed up by its opponents” (p. 13). A mission statement must explain the
purpose of the establishment and identify the goals of its operations within that establishment.
An overall strategy for a firm should be created based on objectives that can be derived from the
mission statement. Von Clausewitz (1976) defines the mission statement of war quite succinctly;
“the aim of warfare is to disarm the enemy” (p. 85). In business, organizations today develop a
‘vision statement’ which answers the question: What do we want to become?” (David, 2001)
Like in business, war requires a mission statement that defines what is to be achieved by
engagements and what is the desired end result.
Goals and Philosophies
Once a mission statement has been established, the goals and philosophies of an
organization can be determined. The mission explains “what” a firm intends to do, but the goals
illustrate “how” the firm will accomplish the “what” of the mission statement. In business
activities, as well as war activities, all members involved must be aware of what they are aiming
to conquer. Without a clear target, there is no steady direction of force. Harrison & St. John,
(2002) show that forces become scattered and the establishment becomes weak. Von
Clausewitz, (1943) explains how “a lack of focus results in chance and uncertainty that leads to
the need for rapid changes in plans” (p.33). Von Clausewitz (1976) also talks about the need for
focus not only with the lower levels of the organization but also in terms of the top-level leaders
as well. “Incredible though it sounds, it is a fact that armies have been divided and separated
countless times, without the commander having any clear reason for it, simply because he
vaguely felt that this was the way things ought to be done” (p. 240). Ongoing changes in plans
lack the clear aim that comes from providing goals and philosophies that can propel a firm to
reach a specific target. Goals can affect organizational structure, leadership style, climate,
motivation, and behavior and are therefore critical to the overall success of all strategic activities.
Clearly, Von Clausewitz has supported all the key functions that are necessary to bring
together the focus, aim, and direction necessary for an establishment to begin to consider some
type of plan of action. Von Clausewitz actually describes strategy by explaining it as a
combination of activities that attain objectives. Thompson & Strickland (2001) state “Objectives
represent a managerial commitment to achieving specific performance targets – they are a call
for results that connect directly to the company’s strategic vision and core values” (p. 42). With
an established statement of “what” (intent and mission) a firm plans to accomplish and a
description of “how” (goals and philosophies) a firm plans to do it, it becomes necessary to
evaluate the external and internal forces affecting the firm and those who are competing against
it before creating a strategic plan of action.
Strategic Competitiveness
A critical function in war and business activities is the gathering of information. It is
imperative to gain as much knowledge as possible about the enemy and his country. This
translates to collecting detailed information about competitors and the nature of their being. The
foundation of all action and planning is built upon this knowledge. (David, 2001) However,
there is always the risk that the information is incorrect. Especially if competitors are not
publicly owned and are therefore not required to share financial information. Von Clausewitz
recommends reviewing information about the enemy with suspicion. Depending upon how the
information is obtained, a large portion of decision-making should be based on instincts, inner
senses, and judgments. In fact this reliance on ‘instincts’ can be critically important since
“managers generally operate from assumptions about their industry’s future and beliefs about
their own firms situation.” (Thompson & Strickland, 2001, p 106) A leader and commander
must be able to rely firmly on these abilities when deemed necessary. Ultimately, both Von
Clausewitz and other strategic management scholars appear to agree that planning a strategy
should include the use of a combination of concrete evidence and some instinctual or “gut”
feelings about the enemy.
Once appropriate information has been gathered, competitive action planning must be
considered. This involves a typical “what if” case scenario analysis. A firm must have a
reasonable idea of what their competitor’s actions and reactions to specific forces will be.
(David, 2001) For example, if an army is known for its ability to divide and conquer, it is more
likely to face armed competitors who are ready to respond to this type of an attack. This
behavior can involve carefully planned strategic maneuvers that create an advantage for the
establishment. On the other hand, those firms that choose to take less risk may simply use
tactical maneuvers to fine-tune their activities. (Barney, 1997) Von Clausewitz explains this as a
choice in how an establishment wishes to relate to the manner at hand and how it wishes to use
its forces toward an end. Tactical maneuvers are easier to implement and usually decrease the
likelihood of a competitive response. The type of maneuver chosen by a firm will determine the
overall outcome of the battle.
Von Clausewitz discusses the element of continuous surprise as a key force in
competitive rivalry and this theory is supported by Chen (1996, p 109) when he explains how
“the greater the number of competitive moves a firm initiates, the better its performance.” He
goes on to explain that these continuous attackers and early responders gain market share at the
expense of their competitors. Von Clausewitz (1943, p142) claims that “surprise is the means to
the attainment of numerical superiority.” The element of surprise causes competitors to expend
their forces at rates they may not have planned for and results in a loss of assets that they may
not be able to recover.
The two components that Von Clausewitz feels explain the lack of resistance by
opponents are the improbability of success and the excessive price required to pay for it. Chen
refers to these factors as resource similarity in interfirm rivalry. When a competitor attacks
another and does not face resistance, it may be due to one or both of these components. As Chen
describes it, (1996, p 14) a firm’s awareness of the resource similarity with a defender and the
defender’s capability of responding will play a key role in the firm’s decision whether to attack”
or respond to an attack.
Von Clausewitz, (1943, p 21) describes the Chen theory when he states how “when one
opponent cannot completely overthrow (disarm) another, the motives to peace will be based on
the probability of future success and the expenditures of force that will be required.” This applies
directly to how competitive forces influence business activities since competitors can only
remain in the industry if they can succeed. Without success, there is no capital, and without
capital, there is no way to invest in competitive artillery (forces). With success there is the
opportunity to leverage past successes towards future opportunities. (Barney, 1997) This
scenario will ultimately result in the disarmament of an opponent, as would be the case in war.
In war and in business it is important to divert the enemy’s resources. One such strategy
is a thrust, which is a “direct attack on a competitive arena which makes competitors withdraw
resources because they decide that further commitments to that arena will be too difficult and
expensive” (McGrath, et. al., 1998). Similarly, Von Clausewitz claims that opponents surrender
or fail to resist because they foresee the unlikelihood of success or the high costs to put forth
such effort. Both Von Clausewitz and McGrath, et. al. claim that opponents will resist or divert
resources if the probability of success is low or the costs that are incurred will exceed the
benefits.
Ultimately, there are four elements that impact the ability of an establishment to respond
to its opponents: size, speed, innovation, and quality. (Thompson & Strickland, 2001) The size
of the firm will have an effect on the overall dynamics of competitive activities. This can also
relate to the ability of a firm to respond to action in a timely manner. (Hitt, et.al., 1997) The
larger the firm, the more difficult it may be to create a quick reaction plan. It is also important
for a firm to be consistently innovative to stay ahead of competition and to exceed expectations
in the quality of its performance.
Since war is comparative to business activities, and the enemy is the competitor,
competition is the overall driving activity. Competition sparks the need for valuable business
activities; and without an enemy, there is no war. When a competitor exists, there is a need for
activity improvements or a firm will lose its strategic position and be out of the game. Ongoing
improvement of business activities is key to staying on top of competition and requires consistent
forward motion and change. As Von Clausewitz stated, (1943, p 240) a competitor must “always
keep his enemy in view and must be aware of his enemies position at all times.” According to
Porter’s five forces, competing forces can be in equilibrium when there is no threat of entrance to
or exit from the industry (Porter, 1998). However, competition fluctuates within industries based
on the actions each firm takes against others. Von Clausewitz, (1943, p 158) said it well when
he claimed that “whoever has forces in place and allows them to lie idle while others are fighting
is a bad manager of forces and should be using all forces to the fullest of their capacity” to
remain in the game.
Formulate the Strategy
According to Von Clausewitz, the only way to overthrow an enemy is to disarm him.
Competition will not cease to exist as long as competitors have ammunition and artillery.
Competitive strategies are driven off of this concept and generally fall in two categories, growth
and competitive according to Harrison & St John (2002). “Growth strategies are concerned with
increasing the size and viability of the company over time.” “Competitive strategies, on the other
hand, are concerned with how the firm intends to position itself” ( p 58). In war, both of these
types of strategies are concerned with disarming the enemy. Understanding this concept means
that as a competitor, a firm must maintain motives and valuable activities that prevent it from
being swallowed up. Lack of knowledge about opponents and their potential and plans can result
in disarmament and loss of power.
An underlying intent of all competitors must be to implement different techniques that
increase the need for opponents to expend their forces. This is also seen in business with the need
for multiple strategies and plans to attain success. “In effect, an organization’s strategic plan is a
collection of unified and interlocking strategies.” (Thompson& Strickland 2001. p 70)
In war, Von Clausewitz explains three maneuvers for accomplishing this: invasion, direct
tactics, and wearing out, all of which can be applied to business. A full-blown invasion on a
competitor’s territory can be implemented without intent for even obtaining ownership. The
purpose of the invasion may be to simply do damage in a general way that will have a long-term
affect on the competing firm. On the other hand, direct tactics involves choosing points in an
opponent’s territory that will do the most harm. In business, this would involve understanding
your competitor’s value chain activities well enough to know what areas you as a competitor
could improve upon that would do the most long-term damage to your opponent. There are two
ways to damage your opponent in the context of the value chain analysis. One “is to perform an
activity in a manner that is superior to competitor’s performance or perform an activity that
competitors cannot complete.” (Hitt, et.al., 1997, p93)
Above all, Von Clausewitz finds wearing out of the enemy to be the most effective. This
involves continuous action including evaluating value chain activities within one’s own firm on a
consistent basis. With continual improvement, competitors will be pressed to constantly try to
catch up and will not be able to exceed the abilities of the attacking firm. The most effective
strategy may be one that takes numerous approaches.
Both modern theorists and Von Clausewitz stress the same long-term effect of strategy in
war as in business: to disable, neutralize and win over the enemy or competitor. Von Clausewitz
emphasizes the need to disarm the enemy. On the other hand, today’s strategy writers state that
in global competition, a competitor quite often desires to exhaust or divert the resources of a
competitor. Like Von Clausewitz’ maneuvers of invasion, direct tactics and wearing out,
McGrath, et. al. (1998) proposes the ideas of thrusts, feints, and gambits in the business world.
Thrusts, as previously mentioned, are attacks by a firm on a competitor, which leads the
competitor to remove resources from an area that is a competitive strength to the firm. The
competitor withdraws resources because otherwise the strategy would be too complex or costly.
Therefore, the firm maintains its competitive advantage.
A feint is a resource allocation strategy in which the firm attacks an important area of the
competitor, but not as critical to the firm, so that the competitor redirects resources away from
the firm’s vital area and into the less critical area. One again, the firm is attempting to capture the
market share in its vital area (McGrath, et.al., 1998).
A gambit involves a firm pulling resources out of a particular area so that the competitor
therefore pushes resources into this area in an attempt to gain an advantage. This is done with the
intention that the competitor withdraws resources from the firm’s vital area, which therefore
enables the firm to capture the competitive advantage in its target area since there is now less
competition (McGrath, et.al., 1998). Clearly, both Von Clausewitz and McGrath want the
opponent to expend their resources and people.
The three branches of business that Von Clausewitz explains as functions of war are
tactics, strategy, and marching/implementation. These are the actual processes required to
develop, control, and promote new activities. They are also required to improve upon existing
activities in order to maintain a competitive advantage.
Von Clausewitz describes tactics as the process of individually arranging and conducting
engagements, and strategy as combining engagements to attain objectives. Jay Barney
(1997)defines both strategies and tactics in much the same manner. He defines tactics as “actions
that firms undertake to implement their strategies” and strategy as a “means through which firms
accomplish mission and objectives” (p. 11). He also discussed marching as the actual execution
of a strategic plan and the actual instrument of strategy. The combination of all three of these
forces directly relates to strategy formulation and implementation.
If tactical measures actually relate to the manner in which forces are used, then Von
Clausewitz is actually describing the need to formulate strategies based upon whether the
establishment is at the business unit level or one of the troops in war, or if it is at the corporate
level or the government itself in war. This is the key to designing strategies that affect those
forces that will have the most impact on the firm.
For example, if the government or corporation (parent company) is formulating a
strategy, it will be focusing on an overall goal that will benefit the interests of its most important
stakeholders, including the shareholders of a corporation. “Each of these stakeholder groups
expects those making strategic decisions in a firm to provide the leadership through which
valued objectives will be accomplished.” (Hitt, et.al., 1997, p 25) This expectation requires
decision-making that will affect all troops or business units governed by the parent firm. The
choices of an overall grand strategy at this level may include retrenchment, stability, or
expansion dependent on the various stakeholders. The choice will be based upon the goal of the
corporation or government and will ultimately trickle down to affect the business units or troops.
The troops or individual business units will formulate their strategies based on those
individuals or groups that they are serving and the actual needs of those groups. Once a group
has been identified as a target group with a need, the establishment must find a way to position
itself to succeed in that arena. However, there may be competing groups within any one
situations and “these groups’ objectives often differ from one another, sometimes placing
managers in situations where trade-offs have to be made.” (Hitt, et.al., 1997, p 25) In business,
this will include cost strategies or differentiation strategies, and in war, this will include stable
ongoing strategies or surprise attack strategies. The proper choice of a strategy can provide a
competitive advantage in business and in war.
Implement the Strategy
As in war, the implementation of tactics and strategy in business is critical. In fact
implementation of strategies is critical, Successful implementation is driven by a combination of
corporate governance, structure & control, and strategic leadership. Without governance,
constraints and controls being placed on an organization, implementation of strategy becomes
difficult to manage. In addition, strategic innovation and leadership play a critical role in
determining the success or failure of implementing strategy.
Corporate governance.
The ability of a business to be successful in implementation is driven to some degree by
its form of governance. The text Strategic Management Competitiveness and Globalization, Hitt,
et.al., (1997) highlights the importance of the relationship between successful implementation
and corporate structure. “Selecting the organizational structure and controls that result in
effective implementation of chosen strategies is a fundamental challenge for managers,
especially top-level managers” (p 346). Clearly, the link between governance and
implementation is a critical issue to consider.
Additionally, there are other questions to consider. Who are the stakeholders of a
particular business or army? What is the agenda of those stakeholders? In a business, the board
of directors and the major shareholders may drive the strategic direction and implementation of
the strategy. “The central role of the board of directors in the strategic management process is to
critically appraise and ultimately approve strategic actions plans.” (Thompson & Strickland,
2001, p 27) Within an army, the rules of the engagement and implementation of the strategy is
also driven by an important stakeholder.
Within business, the governance body generally has a strong incentive to monitor
management closely, review and ratify decisions, and set CEO compensation. These members of
the governance body are composed of insiders, related outsiders and outsiders. These decisionmakers approve new expenditures and approve significant strategic direction changes.
In war, the same types of decision-makers approve the assets and strategic direction a
general can use to wage battle. Von Clausewitz describes this when he talks about the size of the
army. “In practice, the size will be determined by the government. This decision marks the start
of the military activity – it is indeed a vital part of strategy – and the general who is to command
the army in the field usually has to accept the size of his forces as a given factor.” (1976, p 231)
As with business, those controlling authorities allocate assets for the implementation of war,
whether it is the board of directors, president of the country or the king.
Structure & Control.
Within the business environment there are many forms of corporate governance that have
evolved over time to meet the needs of the strategic environment. In fact it is considered vital to
match an organization structure to the execution of strategy. (Thompson & Strickland, 2001)
Jeffrey Harrison closely paraphrases this when he says, “an organization’s structure should be
designed to support the intended strategy of the firm” (Harrison & St John, 2002, p. 102). The
organization forms vary by the type of needs the organization faces as it competes in the market.
The organizational form could be simple where there is one head of the organization that makes
all the decisions and assesses the outcomes of the decisions.
Von Clausewitz talks about this structure when he talks about strategic decision making
in war. “The strategist must go on the campaign himself. Detailed orders can then be given on
the spot, allowing the general plan to be adjusted to the modifications that are continuously
required. The strategist, in short, must maintain control throughout.” (1976, p 207) In business
and war, there is a need for the generals to be intimately aware of and have first hand knowledge
of the battlefield. This parallels the simple structure of organizational design that many
businesses have used to manage strategy. However, as many businesses have come to learn it is
difficult to manage strategy as new markets are entered and the organization grows. As new
markets are entered the need for a change in structure of the organization may become apparent.
It is important to keep in mind that “an organizations structure should be designed to support the
intended strategy of the firm” (Harrison & St John, 2002, p 102). The larger the organization
and the more diverse the markets, the more difficult it is to effectively manage with a simple
structure.
There are other choices for functional structures within business. The structure is the
design of the organization that allows it to make war. The functional form and the cooperative
form are two examples of structures that exist in business and have utility in the military. The
functional structure is readily seen in organizations with vice presidents of finance, production,
accounting etc. reporting to the CEO of a company. This is also readily seen in military
structures with the commanding general having various functional units reporting to him. Each
reporting senior officer in the general’s command is the equivalent of a vice president of a
functional unit. This is needed due to the complexity of the engagement as the forces expand.
Von Clausewitz (1976) talks about this complexity when he says that strategy is simple.
“Everything in strategy is simple, but that does not mean that everything is easy” (p 209). If the
simple structure is employed then one commander is responsible for all facets of each
engagement. Von Clausewitz (1976) continues by saying “Great strength of character as well as
great lucidity and firmness of mind, is required in order to follow through steadily, to carry out
the plan, and not be thrown off course by thousands of diversions” (p 209). The complexity of
numerous engagements is why more complex structures exist in both business and war. The
simple structure although quite effective for smaller engagements or battles needs to be enhanced
to a more complex structure as the size of the war grows. Hitt, et. al. (1997) describes the
evolution of business structure when he says, “Strategic competitiveness can be attained only
when the firm’s selected structure is congruent with its formulated strategy” (p 347). As in
business, the structure and organization of armies must be in line with its selected strategy.
In many respects superiors make decisions. The degree that this is the case depends upon
the structure of the organization. Some firms encourage empowerment and autonomous
decision-making while others depend upon top-down management. For decisions that are
critical to the long-term success of a firm, consultants may be necessary to assure an objective
view and critical assessment of the company’s activities. Von Clausewitz encourages the use of
consultants in war since it is nearly impossible for leaders to set themselves apart from the
destructive environment they encounter during battle. This is usually the case in business as
well. It is extremely difficult for leaders in a firm to critically evaluate the operations they may
have been responsible for creating; especially if these activities are no longer beneficial and may
actually be the cause of the firm’s demise.
Strategic Leadership
As in war and business, strategic leadership is a critical component of successful strategy
implementation. “One make or break determinant of successful strategy implementation and
execution is how well management leads the process” (Thompson & Strickland, 2001, p 348).
Strategic leadership is the driving force behind strategic change and represents the means by
which one achieves strategic change. We believe strategic leadership is the ability, the right, and
the method of control to anticipate, envision, maintain flexibility, and empower others to create
strategic change…willingly. David (2001) adds: “Leadership includes developing a vision of the
firm’s future and inspiring people to work hard to achieve that vision” ( p 135). Strategic
leadership is what allows an army to overcome adversity and succeed in the face of difficult
odds.
Those in command of the business unit must not only possess “genius”, according to Von
Clausewitz, but must have a “degree of genius” that can support ongoing mental and moral
development. Von Clausewitz refers to “genius” in his literature to literally mean intelligence,
fortitude, and common sense. Von Clausewitz (1943) explains how “a leader cannot be merely a
genius, but must also have the “courage” to take action and make change” (p 32). Plans must be
changed quickly when uncertainty exists and this cannot occur without courageous and genius
leadership.
An illustration of the need for courageous and genius leadership is expressed by Von
Clausewitz (1943) in the following statement: “Resolution springs only from an act of the
intellect, which makes evident the need for daring, and determines thereby the will” (p 34).
Without a leader in business strategy who is able to problem solve using untraditional methods,
if necessary, others in the organization will have no desire to be concerned with fixing the
problem either. This poses a threat to the entire establishment because if employees lose their
enthusiasm, it becomes the responsibility of the leader to spark excitement again. According to
Von Clausewitz, if the leader loses motivation, the entire battle will be lost. David (2001) shows
that: “Motivation explains why some people work hard and others do not” (p 134).
Also, if a CEO or manager is not motivated, it will be impossible to motivate the troops
and the battle against competitors will surely be lost. Hitt, et. al. (1997) support this statement
and in fact argues that “the ability to manage human capital may be the most critical of the
strategic leader’s skills” (p 383). Ultimately, a strong, intellectual, genius mind is necessary in a
leader, but it must also be balanced by emotional strengths. Directing, commanding, and guiding
employees requires influencing their emotions to get them to act and react in ways that will
contribute to the mission of the firm. “Effective strategic leaders meaningfully influence the
behaviors, thoughts, and feelings of those with whom they work” (Hitt, et. al., 1997, p 383). The
ability of a leader to effectively engage their troops or employees as obstacles arise is critical.
Von Clausewitz (1976) talks about courage and the difficulties of war when facing
adversity. “There is hardly a worthwhile enterprise in war whose execution does not call for
infinite effort, trouble, and privation; and as man under pressure tends to give in to physical and
intellectual weakness, only great strength of will can lead to the objective.” He further states that
strategic leadership represents a step towards building perseverance in the face of adversity.
“Perseverance in the chosen course is the essential counterweight to pressures of war” (p 227).
Strategic leadership is what allows the counterweight to weight heavily.
Clearly, a critical aspect of strategic leadership is the outcomes associated with it. In fact,
as reported by Thompson & Strickland (2001) “one make or break determinant of successful
strategy implementation and execution is how well management leads the process” (p 218). Von
Clausewitz (1976) describes these outcomes when he talks about the moral imperatives and
military virtues that result from strategic leadership. The moral elements are “the skill of the
commander, the experience and courage of the troops, and their patriotic spirit” (p 218) These
moral imperatives are the result of strategic leadership and its ability to empower individuals and
teams to willingly create strategic change. Von Clausewitz gives another example of the
importance of strategic leadership when he talks about the military virtues. Von Clausewitz
(1976) describes the “individual who is steeped in the spirit and the essence of this activity; who
trains the capacities it demands, rouses them, and makes them his own; who applies his
intelligence to every detail; who gains ease and confidence through practice, an who completely
immerses his personality in the appointed task” (p 219) This type of influence and power over an
individual is not a result of luck. These results are the result of strategic leadership that can be
seen both in business and the military. Many CEO’s have been able to create a vision and
mission that is based in sound logic and rationale. However, when a vision and mission is
combined with strategic leadership their firms can reach unparalleled heights.
Without strategic leadership many engagements are lost and many businesses have
floundered. However, many businesses have succeeded and thrived in the absence of strategic
leadership. Von Clausewitz (1976) reinforces the idea of success in describing strategic
leadership and the many components that help to define it. The importance of strategic
leadership can be seen quite clearly in examples throughout On War. Strategic leadership is
guiding the firm towards it mission and getting individuals to strive to achieve grander results.
“An army that maintains its cohesion under the most murderous fire; that cannot be shaken by
imaginary fears and resists well founded ones with all of its might; that proud of its victories,
will not lose the strength to obey orders and its respect and trust for its officers even in defeat;
whose physician power, like the muscles of an athlete, has been steeled by training in privation
and effort; a force that regards such efforts as a means to victory rather than a curse on its cause;
that is mindful of all these duties and qualities by virtue of the single powerful idea of the honor
of its arms – such an army is imbued with the true military spirit” (p 220).
This type of spirit is not created without strategic leadership. It is a concept that is clearly
important both in business and the military. A final point regarding leadership involves elements
of an external nature that must not be slighted. In war, the commander must not allow himself to
become immune to the losses of surrounding enemy troops. In business, leaders must pay
careful attention to losses that their competitors sustain. By allowing oneself to become immune
to factors affecting competitors, leaders may be unprepared for a tragedy aimed at their own
establishment. Leaders must prevent themselves from becoming immune to factors surrounding
them as a key to their own survival in war, as well as in business.
Innovation.
Another important component of the implementation portion of strategy is innovation.
Thompson & Strickland (2001) maintain that it is the ability of the organization to consider new
alternatives and new approaches to overcome maneuvers or attacks by rivals. In business, there
are always new products and challenges facing any company. A Company that fosters a spirit of
innovation taps into a greater level of skill in its employees. Von Clausewitz (1976) agrees with
the importance of innovation when he talks about different battlefields. War “has evolved
methods that are common to most armies, and that no longer even allow the commander scope to
employ special artifices” (p 218). He is talking about open country warfare and its lack of
innovation and the resulting relatively level playing field. However, like business, wars are also
fought in more difficult terrain. When the engagement is moved to mountainous terrain,
innovation is critical to success. “The commander’s talents are given greatest scope in rough
hilly county” (p 218). Without innovative approaches, engagements would be implemented
poorly as open country strategies and tactics are employed in the wrong military backdrop.
Innovation allows an organization to reward and foster new approaches and creative
thinking. This focus on innovation and improvement is the hallmark of many new management
concepts and ideas like continuous improvement and TQM. Thompson& Strickland (2001)
show that. “Surveys indicate that over 95 percent of manufacturing companies and 70 percent of
service companies have used some form of quality improvement program” (p 386).
Von Clausewitz (1976) describes innovation when he talks about boldness within an
army. Boldness or innovation in business can have profound affects on the success or failure of
an engagement. “More can be achieved with an army drawn from people known for their
boldness, an army in which a daring spirit has always been nurtured, than with an army that lacks
this quality” (p 225). Boldness must be nurtured but in addition, it must be tempered as well.
“Only when boldness rebels against obedience, when it defiantly ignores an expressed command,
must it be treated as a dangerous offense” (p 224). Boldness can be described to some degree as
innovation, but innovation must be managed as well. Innovation is a critical component of
implementation. It allows an army to reassess and take chances. It allows an army to change
tactics to its advantage.
Implementation requires some measure of control, as well as strategic leadership and
innovation. Within the parameters of an establishment’s mission, goals, philosophy, and
objectives, standards must be established and performance must be measured and compared with
others performing similar activities. These control standards must be qualitative and quantitative
in nature and senior leadership must encourage and enforce these standards through adequate
administrative processes. Harrison & St John (2002) present evidence that: “Some of the most
successful companies of our time are operating in low-growth, moderately profitable industries
and are pursuing strategies that are not unique. The reason for their extraordinary success is their
attention to the details associated with strategy implementation” (p 96). Clearly, implementation
plays a critical role in successful strategy.
Strategic Competitiveness.
There are many different characteristics of war that can be used to gain competitive
advantage and enhance strategic competitiveness. Von Clausewitz illustrates many of these
characteristics in various descriptions of war. What is interesting to look at is how they also
directly relate to tactics and strategies that a company may employ to gain competitive
advantage.
Superiority of Numbers.
Von Clausewitz talks about superiority of numbers as a common element of victory.
Every day there are businesses moving forward with tactical plans to put more sales
representatives in the field than their competition. In effect, blunting the ability of rival firms to
get its message out and to effectively control the market. This is also seen with large
monopolistic firms overwhelming smaller firms in business. However, as we see in business,
small upstarts have been successful in the face of overwhelming odds. Von Clausewitz (1976)
echoes this sentiment when he describes the forces of Frederick the Great. “At Leuthen Frederick
the Great, with about 30,000 men, defeated 80,000 Austrians (p 229). Similar to Frederick the
Great, some modern day companies have been able to skillfully use their talents to capture
markets and business segments.
Von Clausewitz (1976) recognizes this very point and talks about sheer size or numbers
is not in of itself a recipe for success. “Superior numbers, far from contributing everything, or
even a substantial part, to victory, may actually be contributing very little, depending on the
circumstances”(p 229).
However, at a certain point sheer size does have the tendency to overcome even talented
smaller upstarts. “Superiority varies in degree. It can be two to one, or three or four to one, and
so on; it can obviously reach the point where it is overwhelming” (p 229). As with business,
distinguishing factors between firms can make a difference in an engagement, but superiority of
numbers carries a significant weight. Von Clausewitz drives the point home for the importance
of superiority of numbers when he sums up the chapter by saying; “we believe we have shown
how significant superiority of numbers really is. It must be regarded as fundamental – to be
achieved in every case and to the fullest possible extent” (p 232).
Concentration of forces in space.
Similar to superiority in numbers, the concentration of forces is critical in war. This
concept is similar to the business concepts of a concentration on core competencies and the
leveraging of strengths. A company should concentrate its time, effort, and resources in segments
of the business in which it has relative strengths versus the competition. On the battlefield, Von
Clausewitz (1976) makes the same argument when he describes the need “to be very strong, first
in general, and then at the decisive point” (p 240). Almost exactly Von Clausewitz in his strategy
of “there is no higher and simpler law of strategy than that of keeping one’s forces concentrated”
(p 240) describes leveraging strengths. In other words, there is no higher law than leveraging
your strengths against the opportunities on the battlefield. In fact Von Clausewitz warns about
the danger of allowing one’s focus to move away from strength. Clearly, Von Clausewitz
believes as many business strategy models show; leveraging strength will build a competitive
advantage in war.
Unification of forces in time.
Von Clausewitz also talks about the unification of forces in time as a way to garner
competitive advantage in the arena of war. For example, in business it has been said many times
that the first six months of a product launch will determine its fate. As a result, it would be smart
to have as large a product launch in the initial phase as possible. The resulting infusion of
business would be a result of this significant investment of resources. Von Clausewitz (1976)
makes the same argument when he talks about the unification of forces in time. “All forces
intended and available for a strategic purpose should be applied simultaneously; their
employment will be the more effective the more everything can be concentrated in a single
action at a single moment” (p 246). As in business, war strategy should gather all forces for the
engagement at hand to drive competitive advantage.
Conclusion
In this paper we have shown the parallels between the basic theories of strategic
management and the philosophies of war as expressed by Carl Von Clausewitz in his 18th
century masterpiece “On War”. In the business world there are numerous types of strategic
models used to define how a company should create competitive advantage. These various
models use different terminology and phraseology to attempt to give direction in the murky
world of big business. Von Clausewitz over two hundred years ago defined a model for how
armies and countries should compete as they engage in the murky world of war. What we have
shown is that virtually all of the same aspects of Von Clausewitz’s war model apply to the
business world of today.
The business model we examined uses components like intent, mission statements, and
goals and philosophies. The mission explains “what” a firm intends to do, but the goals illustrate
“how” the firm will accomplish the “what” of the mission statement. This business model closely
mimics Von Clausewitz thoughts when he defines how armies should provide direction and
vision for its troops. Like in business, war requires a mission statement that defines what is to be
achieved by engagements. Once a company or army determines the mission and goals that will
guide it in its military engagements or business tactics the next step is to take a look at the
environment that they are operating in. What external and internal factors are facing the
business? What are our competitors doing to drive our agenda away from our goals? Von
Clausewitz asks the same questions but in the context of war. What external armies and internal
resources are facing our engagements? What are our enemies doing to drive the battle to a
different theatre of war than what we want?
Establish Direction
 Mission
 Strategic Intent
 Initiatives
Implementation
 Political
Governance
 Structure &
Control
 Military Spirit /
Leadership
 Innovation
Strategic
Competitiveness
 Competition
 Environment
Enemy
Analysis
Inter-Country
Rivalry
Strategy Formulation
 Sovereign Country Level Strategies
 Theater of Operations Level Strategies
Military Strength
&
Sustained Superior Military Power
Figure 2. The Von Clausewitz model translated into modern terms. (edited on 21 Jan 2006 by
WOE)
After scanning and analyzing the environment, companies need to build the components
of strategy formulation. Strategy formulation in and of itself is not enough. As a result, strategic
business models do not stop at this point but move further to put definition around the important
aspects of implementation. The implementation piece of strategic business models becomes
critical for businesses to consider as they move forward.
Over two hundred years ago Von Clausewitz recognized both the importance of strategy
formulation and implementation on the battlefields of war. Von Clausewitz spoke of
implementation quite extensively in an attempt to define how armies can gain a competitive
advantage as they move forward in their strategies. We have made the case that the same
implementation tactics and moves that can drive competitive advantage on the battlefield can
drive competitive advantage in business.
Once again we return to the strategic management process that has been used to
demonstrate the parallels between business and war. The modern strategic management process
model we presented as Figure 1. has been rewritten in Figure 2. to show that Von Clausewitz
looked at the process of war in the same way.
Numerous models and consultants have designed strategic planning models that try to
capture the essence of these competitive advantages. Our model talks about corporate
governance, structure & control, and strategic leadership as key drivers of success in business
today. Von Clausewitz also spent significant time delineating these same ideals and concepts but
in military terminology.
Much of what Von Clausewitz wrote concerning strategy in war boils down to a
significant quote from his book. Von Clausewitz (1943) defines strategies or tactics in war as “an
act of violence to compel the enemy to do our will” (p 19). This quote from Von Clausewitz can
be rewritten to fit into modern business strategy: “A business maneuver should compel our
competitors to do our will.” We have made the case that what was defined as effective strategy
over two hundred years ago in war is used to define effective business strategy today.
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