Sun Tzu’s Art of War in Business: Momentum and PMF

There are many concepts in Sun Tzu’s Art of War that are applicable to management. As an entrepreneur, when I was reading the chapter on “Momentum and Strength,” I felt particularly touched: “Isn’t this just Product-Market Fit (PMF)?”

The onset of troops is like the rush of a torrent which will even roll stones along in its course. (激水之疾，至於漂石者，勢也)

Straight to the point

From the viewpoint of a business manager, when looking at Sun Tzu’s “Momentum and Strength” in the Art of War, I believe the most crucial sentence is:

The clever combatant looks to the effect of combined energy(勢), and does not require too much from individuals.
(善戰者，求之於勢，不責於人)

The term “勢” is the essence of the whole article. But it is difficult to accurately translate into English, and there may not be a precise word that captures its full meaning. It can be understood as a combination of both “momentum” and “trend.” Additionally, in this particular context, it also conveys the concept of “potential energy”, meaning the tendency of something to happen.

For example, if today’s market lacks potential customers, suppliers, channels, and the right atmosphere, no matter how many resources you invest in promoting your product, it will be futile.

However, it’s important to clarify that in this context, “individuals” refers to “soldiers,” or from a business perspective, “employees.” It does not mean that talent is truly unimportant. Therefore, following the previous statement, Sun Tzu added the following sentence:

Hence his ability to pick out the right men and utilize combined energy.
(故能擇人而任勢)

The role of the boss or manager is to select individuals based on the momentum and subsequently place them in appropriate positions.

In summary, what is “勢”?

If we carefully examine the essence of “勢”, it can be described simply as “the pursuit of maximum benefit.” Why do we say this? Let’s explain through several cases:

I. The Trend of Claw Machine Stores in Taiwan

Traditional claw machine cabinets are mostly placed on the roadside, similar to vending machines, with fewer standalone stores. Consider the following scenario:

1. Store Owner: Need profitability. But facing high rental costs, operational expenses, and machine investment costs, posing high risks.
2. Customers: Seeking entertainment, having a desire to play claw machines.

Although customers may have this demand, the costs for the store owner are high, making the motivation to invest less significant.

Starting from 2016, the claw machine industry introduced the business model of “Subleasing by Venue Owners”. The scenario changed as follows:

1. Venue Owner: Seeking for profit. Only needing to prepare the venue and machines, they rent out the machines to “Machine Owners.” As long as the income exceeds the rental and utility costs, they can make a profit. They can even secure reservations for machines in advance, confirming future income and significantly reducing risks.
2. Machine Owner: Seeking profitability, they are potential store owners who may not be able to shoulder the risks associated with operating an entire store. However, by paying a comparatively modest monthly fee to rent a machine from the venue owner, they can readily embark on a venture in “micro-entrepreneurship”.
3. Customers: Seeking entertainment, having a desire to play claw machines.

As a result, claw machine stores have sprung up everywhere nowadays. And this is precisely due to the synergy of the interests (勢) among the “Venue Owners”, “Machine Owners”, and “Customers”. Their interests are the “potential energy” I mentioned previously, which were waiting for the right scenario to be released.

II. The Trend of Supplementary Classes for the Civil Service Examination

There was a time in Taiwan when not as many people were interested in taking the civil service examination. The scene during that period was as follows:

1. Civil Service Jobs: The salary was comparable to that of private enterprises, but the environment was relatively conservative.
2. Private Sector: The economic outlook was optimistic, with opportunities abound.

Later, the economic growth slowed down, wages stagnated, and young people couldn’t feel the same level of opportunities. As a result, civil service positions became a relatively safe and advantageous option. Supplementary classes for the civil service examination flourished as a natural consequence.

To summarize:

Human needs are the “勢”.

Businesses, on the other hand, strive to achieve a “balance” through their “business models,” “products,” and “incentive program”.

Methods of Engaging with Momentum

People naturally gravitate towards the most beneficial opportunities. The key to success lies in discovering the mode or product that both customers and potential collaborators find appealing. This harmonization of interests and the achievement of equitable distribution of benefits is often referred to as Product-Market Fit (PMF), or in simpler terms, the ability to sell effectively.

The primary responsibility of a business manager is to identify and manipulate this momentum. As stated in Sun Tzu’s Art of War:

When he utilizes combined energy, his fighting men become as it were like unto rolling logs or stones.
(任勢者，其戰人也，如轉木石。)

Wood, stone, and gravity already exist; a skilled commander merely manipulates them, allowing the stone to roll downhill. In the realm of business management, how can we manipulate momentum? Here are two common approaches:

1. Business Model: As seen in the earlier example of the claw machine, a well-designed business model reduces friction among stakeholders and increases attractiveness to the extent that it becomes “easily operational.” This creates new markets and value that did not exist before.
2. Organizational Design: In addition to coordinating the interests of the company and external stakeholders, one must also consider the well-being of internal employees (such as salary, autonomy, and learning opportunities) through the design of a sound organizational system. Poorly designed systems can prevent talent from being rewarded and allow mediocrity to thrive, resulting in a lack of interest from external talent (as it does not align with their interests). Therefore, designing an organizational system that caters to the interests of employees and maximizes the benefits for both the company and its talent is the crucial responsibility of a business manager after achieving PMF.

Conclusion

Wrapping up, as a business manager:

We don’t fight the market and human nature.

“Greed” is a part of human nature. The more people desire, the greater the momentum. Utilize it wisely to find a win-win (or even win-win-win) solution.