Disruption and Insurgencies – Part 1 – A Comparison

Discussion about the influence of disruptors is popular.  CNN’s 2017 list of 50 identifies 31 unicorns[1], a total of $44 billion in VC, and a market value of $239 billion.

But this post isn’t just about disruptors.  It is the parallels between disruptors and insurgencies that interests me – and the So What?  Although the Afghanistan campaign was launched under the auspices of Article 5, counter-insurgency has been the driving force for NATO’s raison d’etre since 9/11 (although rumblings from the near east in the short-medium term, and the potential of the Far East in the long term have provided some recent temperance).

I am not comparing Uber, AirBnB, Netflix etc with insurgents!  But their methodologies are similar.  Insurgencies are predicated on offering citizens of the space that they operate in alternate products – this could be in the form of shadow governance, moral leadership, and justice.  These alternate products would have no value if they weren’t needed – in the parts of Afghanistan that the government does not control many locals appreciate the ability of an organisation to come and settle disputes (a judiciary), deal with criminals (a police force), provide education (madrasses), and so on.

Disruptors do the same thing – although often they often do so in Blue Ocean space. Uber’s success was driven by frustration with cartel-esque pre-GPS practices of taxi-drivers; AirBnB’s by providing a personal experience that is so often absent from chain hotels (how many hotels have generic centralised websites which facelessly manage all their bookings?); Udacity’s by enabling the attainment of relatively cheap and recognised education qualifications to support increasing demands by employers for skills that are being offered with dubious quality with opaque pricing arrangements by universities.

I find real parallels in the way that disruptors and insurgents are funded.  Both have embraced alternate methodologies that sit outside of traditional means.  Both use cryptocurrencies –  disruptors are often spurred on by the innovative and ground-breaking nature of their founders to enhance their appeal to the type of customer that it wishes to attract; insurgents relish in the difficulty in tracing it. Both groups avoid cash.  Insurgents have a further method of money movement, making use of traditional hawalas that sit outside of government scrutiny.

External funding is similarly unconventional.  Many disruptors have developed from Kickstarter campaigns and venture capitalist investors; insurgents are often funded by the illicit drug trade.  Both types of organisations receive income from wealthy individuals.  Insurgents receive additional funding from supportive states; some disruptors from established companies.  In all cases these are far removed from the traditional methods of raising capital for a company.  But in the same way that insurgents often eventually come to the negotiating table and accept some traditional ways of doing business, many disruptors do eventually decide to float, or get acquired by established businesses.  By this time, however, the disruption has been caused.

Further similarities can be found in the leadership of both groups.  The leaders of both elements are often inspirational and held in high reverence by followers, whilst at the same time their behaviour can be morally questionable (see Uber…). Both types of group seek to increase their customer base, often through well-concentrated and planned public relations exercises. Disruptors want to increase their market share, whilst insurgents will attempt to gain everything from popular support to more territory.

In sum the parallels are clear, and in Part 2 I will look at what militaries can learn from how businesses have dealt with this challenge.

Summary of key comparisons between industry disruptors and insurgents.
Summary of key comparisons between industry disruptors and insurgents.

 

[1] A start-up company with a value of over $1 billion (Investopedia).

The role of instinct in decision-making

‘Great strategies, like great works of art or great scientific discoveries, call for technical mastery in the working out but originate in insights that are beyond the reach of conscious analysis’ (Kenichi Ohmae, The Mind of the Strategist, p. 4)

‘[A commander] can comprehend the complexity of a situation in ways that defy the visual and audible’ (General Stanley McChrystal, Team of Teams)

Great leaders in the fields of military and business share many things (as this blog will continue to investigate…), and of particular importance is the ability to have a developed instinct that they trust and are comfortable exploiting.  The quotations above, although relating to business and military strategy respectively, are interchangeable between the disciplines.

The military put a lot of stock into their ability to intuitively read the battlefield.  Malcolm Gladwell’s ‘Thin-slicing’, Daniel Kahneman’s ‘system one’ analysis, ishin-denshin, Clausewitz’s fingerspitzengefühl, and Napoleon’s coup d’oeil are recognised and accepted concepts. Commanders exploit their intuition and move themselves around the battlefield to best get a feel for it; in Vietnam General Westmoreland would go forward to subordinate HQs to get ‘the feel of the situation’; General Zhukov placed himself in the command trench of his subordinate, General Chuikov, during the Soviet advance onto the Seelow Heights in April 1945; Field-Marshall Slim estimated that he spent a third of his time visiting subordinate units (although this was also driven by his love for his men and his modest understanding that his presence raised morale); and Major-General Maurice Rose risked and lost his life by pushing forward during 3rd US Armored Division’s assault onto Paderborn around the same time.  Where a commander best locates himself is a continually discussed topic, and one factor to consider is how he can best understand the challenge before him.

Business leaders are similar.  As Martin Lindstrom points out in his article ‘Instinct is the most important leadership skill’, Rupert Murdoch reads his papers every day, Ingvar Kamprad would often spend time on the tills at IKEA, and Sam Walton would regularly walk the aisles in Walmart. Those who subscribe to Lean Six Sigma methodology understand the importance of spending time at the Gemba.

Explaining the benefits of intangibles such as instinct, however, is difficult to anyone that has not experienced it.  This quality does not come easily; as John Masters writes in The Road Past Mandalay, it is ‘either there, by a stroke of genetic chance, or more usually, is deposited cell by cell on the subconscious during long years of study and practice’.

And resource must be put into developing it; when the USMC Combat Development Command was established in 1999 it had the remit of ‘identifying, developing and cultivating appropriate intuitive combat decisionmaking [sic] skills at all levels’ (General Krulak). Of course, one could argue that there is evidence of bias at play; Effort Justification Bias dictates that people and organisations favour what they have personally invested in; as such the military may over-inflate the role of instinct.

Perhaps instinct is no longer an appropriate quality in a modern world which ‘requires that decisions be sourced’ (Gladwell). Gerd Gigerenzer agrees, and has outlined here some of the techniques that executives use to de-risk their decisions, many of which (he says about 50%) are made on gut instinct. And intuition can be dangerous; in stressful situations – such as combat – men are ‘more likely to act irrationally, to strike out blindly, or even to freeze into stupid immobility’ (Norman Dixon’s classic book On the Psychology of Military Incompetence should be mandatory reading for all officers every time they get promoted). Retaining a dispassionate decision-maker that is removed from the front line, perhaps even sat in Patton’s swivel chair, helps ensure that challenging choices are made with a cool and rational head.

The ultimate achievement, when the planets align, is of course when the independently gathered data support a gut feeling.  Whether it is intelligence on enemy movements or an accurate analysis of market segmentation, if the data that are delivered to a decision-maker agrees with what his instinct is already telling him – when the head aligns with the heart – then more often than not the decision he makes based on this will be the right one. And this matters to Ohmae or McChrystal.

 

Addendum: McKinsey have a great piece on Gut Instincts here.

The Mind of the Strategist

Kenichi Ohmae’s management classic The Mind of the Strategist does a far better job of concisely summarising some of the parallels between the two worlds of military and business than I ever could:

‘It should be clear now, I hope, why I have chosen to compare business strategy with military science.  There is important common ground between the task of the military strategist on the one hand and the key strategic activities of middle and top management on the other: grasping the state of the market, objectively assessing the strengths and weaknesses of one’s business, changing direction with flexibility when required, and calculating the amount of profit or loss likely to result from each management action.  Both the business strategist and the military planner are prone to be trapped by perfectionism.’

There are plenty more analogies in his book.

The Importance of Simplicity

The Importance of Simplicity

“[W]e believe that the underlying cause of the recent slowdown has been the ongoing, long-term rise of complicatedness.”  (Reinhard Messenbock, Yves Morieus, Jaap Backx, and Donat Wunderlich, ‘How Complicated is your Company?’, Boston Consulting Group.)

“Everything in war is simple, but the simplest thing is difficult” (Carl von Clausewitz, On War, Book 1, Ch 7.)

It is important to recognise the difference between Complex and Complicated. I consider a complex problem to be the same as a Wicked problem; there is no clear-cut solution, there are numerous levers that can be pulled, levers often owned by people that sit outside of the established hierarchy, often with unpredictable secondary and tertiary impacts on a wide variety of stakeholders, many of whom want opposite things but have similar levels of influence. In comparison a complicated problem is something that may have a lot of steps, but can be fixed. Given the tools, materials, and a detailed-enough instruction manual I could probably build a high-quality computer (I’ve never built a computer in my life). However, I couldn’t design a new OS to replace iOS. General McChrystal does a good job of examining the difference in Team of Teams.

The second point is that one of the fundamental principles of war is Simplicity. As the Dead Prussian’s quotation alludes to, the nature of conflict has within it enough fog and friction from external actors (by which I mean external to your organisation, although they may still be friendly forces) to make even simple activities hard enough. From the outside it might appear that moving an Armoured Infantry Company’s worth of vehicles (c. 18) from A to B is an easy job. It isn’t. Before departing one must plan for every eventuality, including, but not limited to, breakdown, direct fire attack, indirect fire attack, IED, getting lost, getting separated, having orders changed, having some of the route put out of bounds, having a flanking force stray into your AO and not knowing about it, being re-tasked and so on… any of which can even impact on getting to the line of departure in the first place. In sum, there is enough challenge inherent within the activity that any additional layers of process (such as additional checks) that get placed on top should only be produced if there is a clear reason to do so.

BCG’s article ‘How Complicated is Your Company?’ demonstrates that there are clear parallels with the business world. Their Complicatedness Survey chart demonstrates that those companies with above-average profit margins and above-average revenue growth are the ones that are the least complicated. Nugatory complicatedness has a number of negative effects which contribute to lower profits and growth. Although (potentially) providing necessary layers of assurance – which for an organisation such as the military which operates with public money may be more necessary than for partnerships – it leads to: increased Cost of Quality; lack of trust; lack of agility and flexibility; empowerment of process experts over output experts, and more.

Lean thinking can help, but it must be couched in a holistic view, driven by the top. Operators – those creating the output – should not be held back, but should be enabled by those that understand which boxes to tick and which forms to fill in. There is often little that can be done about the environment that we’re operating in. Today it is necessarily complex – Mary Kaldor’s ‘Old Wars’ have (largely) gone. In the business world and in the military we must continue to aggressively pursue simplicity, reduce process, reduce unnecessary layers of bureaucracy, and remain agile enough to not only respond to changes and development, but lead them.

Overview

This blog serves as a consolidation of my journey around Burch’s Consciousness / Competence model as I make the leap from 16 years of military service to a second career in the private sector.  As I began broadening my reading to encompass business articles, books, and magazines I have realised that parallels between business and military life are nearly-ubiquitous.  Leadership lessons from the military are commonplace; here I want to get into some deeper analysis.  The goal is a selfish one; consolidation of my experience and confirmation that the delta is not as big as I once thought.

More to come – for now follow me on Twitter for updates.