Winning in an Uncertain World by Thinking like the Mongols

What history teaches us about the difference between risk and uncertainty

Shields up!” Thousands of ironclad legionnaires heed the call, raising their guard in unison. Nobody panics. Calmly, they wait for the coming clash with the barbarian horde like we wait for the ice-cream truck. The Barbarians’ deafening roars reverberate off this wall of iron moments before the horde’s bulky weapons collide with the well-rehearsed, synchronized counter-offensive of the legionnaires.

You can find scenes like this in countless movies. Russell Crowe’s portrayal of General Maximus in Gladiator comes immediately to my mind, but you may have your own fixation. The Roman army represents every manager’s wet dream and is the foundation of corporate structure today. It was, arguably, the greatest army in the history of the world. Legionnaires, after all, exemplify strength and honor, qualities that most companies aspire to emulate:

“If you think of your company as an army, fighting for the hearts and pockets of the consumers, wouldn’t you want to be like the Romans?”

My hope, though, is that by the end of this article I can convince you that for today’s tech companies, venerating a business strategy analogous to how the Roman army conducted its military operations can have dire consequences. While the Roman military strategy worked effectively in risky, but predictable environments, it’s the uncertain environments you, as a startup founder or executive in a tech company, need to concern yourself with. For many industries — especially tech-related industries — the world functions anything but predictably. Rather, the world is in a state of constant creative turmoil — ongoing advances in technologies, shifting customer needs, competitive offerings, or ceaselessly changing industry structures are just part of the every day. In such a world, there is no defensible rationale behind facing an unknown enemy with a rigid force, even if General Maximus were in command.

Discipline vs Organized Chaos

Let’s get back to the question we left unanswered above:

“If you think of your company as an army, fighting for the hearts and pockets of the consumers, wouldn’t you want to be like the Romans?”

Say you’re an exec at one of today’s hottest tech startups. Wouldn’t you want your team outperforming their contemporaries just like the legionaries from the best professional army the world has ever known once did? After all, the commanders of the Roman legions seem to have fully recognized what the ingredients for successful management are. It is no coincidence, then, that we can recognize their tactics still being deployed by today’s most respectable companies. They include:

  • A top-down management structure issuing orders that must be followed precisely.
  • A complex, but rigid hierarchical organization. Like todays corporations, at its peak the Roman army was grouped into many layers, each with dedicated managers.
  • The importance of specialization. One’s job is focused within a specific area of expertise — a common theme running through both the Roman army and today’s companies.
  • Dependency on existing infrastructure and limited supply lines. The Roman commanders, like any good operations executive, understood the importance of supplies and they invested heavily in infrastructure to extend their lines as far as possible. Back in the day that meant roads, forts and aqueducts.

All worked together to create an army that won again and again, mainly as a result of their superb organization. Most of their victories revolved around instilling their brand of discipline on true chaos. The coordination of their efforts is what impresses and inspires any leader today. But as impressive as the Romans were, let’s keep in mind that they operated in well-defined environments. The Mediterranean was both familiar and stable — Etruscans, Greeks, Carthaginians, Persians, or Goths rarely had the ability to surprise our Italian friends — just like some of today’s traditional markets. In environments with limited risk for disruption, the basis of competitive advantage is known and non-malleable: superior scale (be bigger than your competitors) and/or superior capabilities (be more organized than they are). For these reasons, you would be right to emulate the Roman strategy when selling basic manufactured goods, but wrong to do so when you want to disrupt a specific vertical using technology.


Now let’s look at the Mongols, a group that, unlike the Romans, are mostly ignored by the modern media and many historians. Chroniclers of the time make them look more like escaped orcs from the World of Warcraft universe than master strategists. Mongol missions have been depicted as savage assaults perpetrated by backward and barbaric peoples against many of the most ancient and developed centers of human civilization. Depending on the civilization from whose city walls a historian recorded these encroaching Mongol “hordes,” they were either depicted as the scourge of Islam, devils bent on the destruction of Christianity, persecutors of the Buddhists, or defilers of the Confucian traditions of China.

But remember how Microsoft executives used to describe Linux, or how Apple executives arrogantly dismissed Amazon’s Echo? You know you must be doing something right when your competitors dismiss you with a smile, at once fake and terrified, drawn across their faces. The Mongol’s, no doubt, would eventually provoke similarly depressed smiles to draw across the faces of the generals who led armies against them.

It’s easy to see why Mongols caused so much grief. Put yourself in the shoes of a European military commander: You are leading a massive army; you have knights in heavy, shining armor; you rely on complex organizational structures refined over thousands of years. Who could challenge you?

Your first contact with the Mongols would be of little concern. First contact would be with nothing more than a few of their archers giving you some trouble. And they would look nothing like what you’d associate respectable warriors as looking like. No armor. No heavy weapons. Just short people with strange faces reminiscent of cattle herders. You would send your “professional” army out to repel them, and the strangers would turn tail and run.

Cowards!

Ballmer dismissing the iPhone

Btw: we can witness comparable scenarios unfolding today. Not to pick on Microsoft to much, but let’s just remember for a second how Steve Ballmer greeted the iPhone!


The episode would repeat itself a few times, each time making you feel good about your professional soldiers. But you would soon discover that a more significant horde would rise to challenge you. They would not fight like anyone you’ve ever encountered. There would be no perceived order in how these horsemen fought. Instead, they would ride chaotically all around the field shooting their arrows, never facing you, their enemy, in the honorable battle formations you deemed that they should.

Devils!

But they would kick your ass. You and everyone else who stood in their way.


And it’s this army that your high-tech startup should emulate. Why? Well, for one thing, because the Mongols managed to conquer nearly all of continental Asia, the Middle East and parts of Eastern Europe. Yes, the Romans prevailed against the Greeks, the Carthaginians, the Barbarians and the Persians — but all of these were known dangers. The Mongols won against enemies that were not only vastly more numerous, but completely unknown to these riders from the steppe. Your startup exists in the world not much unlike how the Mongols existed:

  • It navigates a sea of uncertainty. Its enemies are for the most part unknown. You, like them, could face recessions, incumbents moving into your space or struggle to recruit needed talent.
  • Your resources, too, are limited. That’s actually an understatement. Your startup looks nothing like the Roman army most managers look to replicate. On the contrary…

Risk vs Uncertainty

The Roman and the Mongol military strategies are examples of how to deal with risk and uncertainty respectively. Most people confuse risk and uncertainty and use them interchangeably. But they are extremely different, and understanding their differences is at the core of good strategic thinking.

Risk can be measured and accounted for. For the Roman army, the Barbarians posed a major risk. So were their salves, the Persians, and the Carthaginians each major risks in their own rights. But these were still known rivals. In the business world, risks can be best represented by Porter’s five forces:

  1. Existing competitive rivalry between suppliers
  2. Threat of new market entrants
  3. Bargaining power of buyers
  4. Power of suppliers
  5. Threat of substitute products (including technology change)

Like the threats faced by the Romans, these risks can be analyzed, and a company can develop complex strategies and tactics to better position itself in a situation that would maximize its chances of winning. Certain industries are clearly better suited to play the positioning strategy game. Automotive, Fuel or Retail are largely industries where a classical approach to strategy is the right choice to make.

Uncertainty is a different beast altogether, though. For starters it cannot be measured. This means that spending a great deal of effort predicting the future and positioning oneself for it is a waste of time. For most of their history, the Mongols lived isolated lives. They had little to no contact with the grand civilizations of their time. How could they plan to defeat the Teutons when they had no idea the Teutons even existed, let alone knowing nothing of the Teuton’s fighting style or what kinds of weapons they used?

Most startups face similar situations. They live in an uncertain world where all one has to work with are trends. A classical approach would have been terrible for most of the Silicon Valley-type successes. Take the messaging space, for instance — a space that seems to be the hottest battlefield in the tech world. The use-cases are mainly unknown. The incumbents and new market entrants are for the most part black boxes: Microsoft gets back into the messaging space by acquiring Skype. A few years later WhatsApp becomes a phenomenon. Now Snapchat is the new cool kid on the block. Meanwhile, WeChat acts like a platform changing how people interact with companies in Asia. How can positioning be of any help in this space? Strategize that!

As most business literature and training is shaped by classical thinking, applying the Roman method is thus the default management technique. It’s hard to point fingers, though, as the planning myth is quite engraved in our brains and constantly reinforced by movies, TV shows and comic books. However, relying on complex and rigid organizational structures is the worst strategy when a company is competing in the uncertainty game.

Conclusion

The right answer for a startup — and the greatest lesson it can learn from the Mongols — is to embrace uncertainty. The leaders of startups today need to brainwash themselves to think differently and practice instead a learning-based agile organizational structure. And not just in the engineering department, either, where developers can play with concepts like sprints and stand-ups, while the grownups plan the future using Harvard-infused crystal balls.

When the numbers are unknown and you are facing a turbulent sea of uncertainty, your focus should be on the method rather than the ends. If you find yourself facing an unexpected and powerful challenge, will your organization change and adapt fast enough to respond to the threat? Or will it double down on its existing organizational structure and simply brace for impact? Is your group agile like the Mongol army or rigid like the Roman legions?

To be continued ….