the martial art of strategy - russian style

8/2/2019 The Martial Art of Strategy - Russian Style

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Editors Preface to the English-language Version

It has been a great pleasure to prepare this edition ofNine Graceful Solutions. I have

learned much from this work, and I am excited to be able to present its uniquely Russianperspectives to English-speaking readers.

This is not simply a book about go, and it is neither an attempt to show how real liferesembles the game nor an attempt to transfer the experiences and skills of real life tothe go board. Instead, it is a treatise on the art of strategy itself, which explains tried-and-tested methods by reference to warfare, politics, business, and, of course, go. Theauthors have delved deep into the annals of history, and have unearthed manyfascinating facts, opinions and insights. While some of their claims might bequestioned, there is no doubt that you will be stimulated to think more carefully andcreatively about how you go about accomplishing your objectives both in real life and

in go.

Although I have occasionally replaced non-standard terms with words familiar toEnglish-speaking go readers, I have generally kept true to the style of the originaltranslation by Elena Myasnikova, both to retain the Russian flavour of this work, andalso to encourage the reader to think independently and arrive at their own conclusionsas to how the strategic concepts described here might be applied in go and elsewhere.However, without giving too much away, I think you will come away from this bookwith a new understanding of such commonly used and abused concepts as aji,yosumiruand thickness, among many others.

Go ahead: change your go and change your life!

Tamsin JonesKure City, JapanMarch 2009


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There is something interesting for everyone in this book: the student

of Go will gain a new strategic vision of the game; the student of

political science will learn fascinating historical facts; the manager

will discover new strategies for business relationships; and the

martial artist will find new forms. All these are harmoniously

combined throughout the narrative.

Much has been done to find the Holy Grail that helps one to win,

to make the right strategic decisions, to manage campaigns, and

have fruitful relationships. The authors do not claim to know the

ultimate truth. Instead they simply explain a novel and refreshing

approach.

How can one obtain a long-time competitive advantage? He or she

shouldnt be similar to others!

The bookThe Martial Art of Strategy: Russian Style: Nine GracefulSolutions will help you to take your perception of both real-lifeissues and go several levels higher.

Andrew Goryachkin, Development Director of Forex Club.1

1 Andrew Goryachkin has been in business since 1992, and considers himself to be a dexterousbusinessman. He is a very hearty and sincere person. Andrew Goryachkin has expanded his businessfrom Vladivostok to Japan, Korea and China. He has played Go with business partners in these countries.

Andrew likes games with analysis. He says: It is interesting not only to get new information but to sharewhat you know with others. He is a very strong player of both go and business.


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Acknowledgements

The authors express thanks to Alexander Dinerchtein, 3-dan professional

go player and six-time European champion, for his valuable advice for

making the diagrams presented in the book interesting for players of all

levels, from beginner to high dan.

The authors also thank Vladimir Kirienko for his helpful remarks during

the preparation of this book.

Our thanks also toElena Myasnikova and Dr Tamsin Jones for preparingthe English-language version of this book.


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The Martial Art of Strategy

Russian StyleNine Graceful Solutions

I.A. Grishin, D.V. Donskov, M.G. Emelyanov

Contents:

ForewordSources

1. Clarify!2. Keep your Eyes Open!3. Search for HiddenResources!4. Do not Overload!5. Exchange!6. Fight Precisely and Wisely.7. ObtainSuperiority.8. To be Forced - Is this the Way of the Wise?

9. Escaping Trouble

ConclusionBibliographyAppendix:

- The authors lecture by I.A. Grishin and M.G.Emelyanov- The books of the School of Martial Arts and Strategic Games Voskhojdenie


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Foreword to the Russian Edition

The people of our civilization are afraid of mistakes. In many ways the present-

day civilization is built on fear, including the fear of mistakes. But the strategist is notone who does not make mistakes. That is, when Taleiran and Stalin said [only the]

one who does nothing makes no mistakes they were neither joking nor making

excuses; they asserted the counter on its form but the same on its content thesis.

E.V. Ostrovsky

The title of the book is triadic. The authors do not claim to elaborate upon the theme ofa martial art strategy. They act under the hierarchy of this theme. In the same way theauthors do not claim to clarify the meaning of the term Russian style. The Russian styleappears in design, architecture, arts, politics, business, struggle, and even in brawling.The authors act in the context of this notion. That is why the bookThe Martial Art ofStrategy: The Russian Style: Nine Graceful Solutions explains only the third and lowerlevel of its title. There are nine graceful solutions for getting out of the most difficultsituations people can find themselves in their lives and businesses.

The world of business is constantly changing. For the last several years dozens of booksthat claim to change this world have been issued. Do they really change?

How do Microsoft, Toyota, Samsung, Acer, Citigroup, Japan Airlines develop theirstrategies?

With the help of what strategic concepts does the government of China manage toachieve strategic growth despite overpopulation?

How could Japan, so comprehensively defeated in WW2, build one of the greatesteconomies in the world?

Lets take two books one western and one eastern as examples. These are NewTendencies in Managementby the highly important consulting company McKinsey2 anda book by the Vice-President of Japan Airlines, Miura Yasuyuki, called Go and Eastern

Business-Strategy.

The book New Tendencies in Managementstarts with the article The Ten MostImportant Tendencies of the Decade. It says that those who think that businesssuccess ever depends on quality of management are mistaken. The adequate choice ofmarket, technologies, geographical location drastically influences the companys long-term effectiveness.

2One of the largest consulting companies, and in The Big Three along with Brain & Co. and Boston

Consulting Group (BCG). The company has a staff of 7300 in 90 countries. 3500 projects are developedevery year. The company is the second-best in the world on capitalization.


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Where do you apply your effort? Where do you spend your time and resources? Is thechosen marketplace3able to earn profit?

The choicewhere to apply attention, time, money or effort is a key factor of success,according to the opinions of the competent authors of the book, the Managing Directorof McKinsey, Ian Davis, and the company Consultant, Elisabeth Stevenson.The author of the bookGo and Eastern Business-Strategy, analyzing the eastern andwestern schools of management, asserts that western management is based on a chessmodel. Chess strategy is a struggle that results in mutual annihilation. The goal is tocheckmate the adversarys king before your own is checkmated.

In this businessmans opinion, at the heart of the eastern approach there is a strategy ofeffective area development based onthe gameof go. Developing the playing field with

maximum effectiveness by two rivals is the goal of go. In his book Yasuyuki Miura,like the researchers from McKinsey, speaks about importance ofplace, entry point,

primarypositions and moves in the market.4

The famous American Expert in marketing Jack Trout5 adds that strategy ispositioning,that is, the choice of the most advantageous place (position) for struggling, if one usesmilitary language, or the most advantageous place in the market for doing business.

While the western school of management is still researching approaches to thedescription of problems of the first move, 6 positioning in the market, the search for

profitable niches in the market and ways of entering them, the eastern school ofmanagement is successfully using traditional, old-time knowledge. We are alsospeaking about thestrategic art of I7 that has found its contemporary incarnation in thestrategic game of go, also known as wei qi.8 You can find a short summary of go rulesin the Appendix of this book.

3Place denotes not only a certain geographical location but also market niche.4

In the world-famous bookCapitalisme et Schizophrenie by the French philosophers Gilles Deleuze and

Flix Guattari we can find the following comparison of chess and go: chess codes and decodes space,and go territorializes and de-territorializes it (to turn ones surroundings into a bridgehead, to widen it, by

joining adjacent space to it; to de-territorializethe adversary, splitting hisor her territory, to de-

territorialize oneself, by transferring forces into another place). (Gilles Deleuzeand Flix Guattari:Capitalisme et Schizophrenie, II : Mille Plateaux).5 The President of the consulting company Trout & Partners, which has branches in thirteen countries, andguru of marketing. His bookPositioning: Struggle for Recognizability has been re-edited twenty times.6 New Tendencies in Management, an article in Ten the Most Important Tendencies of the Decade.7 It is a special martial art of command, dating back for more than 5000 years, with history in China,Korea and Japan. The name I has ancient origins and its meaning is close to the meaning of theconjunction and in the Russian language. The history of how this strategic art appeared is not known.8 Without going into details we can say that the purpose of the game is to search for the most effectiveway of developing space and spheres of influence. Unlike chess where the purpose is to checkmate theking as soon as possible, in go the winner is the one who has developed and kept greater space orterritory. The reader might like to look at the wonderful book by Yasuyuki Miura, Go and EasternBusiness Strategy, which is written in simple and understandable language, especially for the western

reader. A book on go has been published in Russia called To Think and to Win: The Game of Go forBeginners(see Bibliography).


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This ancient tradition of the art of strategy is successfully used by such giants of worldbusiness as Microsoft, Japan Airlines, LG, Samsung, Toyota Motors, Citigroup, and

Acer as well as by the governments of South Korea, Japan and China.9 Examples of thisart in practice can be found in Russia as well. In the USA, military and political leadersare advised to acquaint themselves with go by Pentagon experts.10

Why do great world corporations turn to the practice of a little-known ancient game?Only in the middle of the twentieth century did the western school of business-strategystart seriously studying approaches and methods of area development andmanagement.11Up to now the schools of spatial development and spatial reasoning arenew fashionable trends rather than old and well-known ones. Strategic and logicalgames that are popular in the West such as chess, draughts and dominoes either do not

contain the idea of space or include it only as an idea of secondary importance. Spacethere works as a scenery or frame that provides the games boundaries. It does not haveany value in itself, but the pieces need it for moving.

In contrast, in the Chinese strategic tradition the principles of development, organizationand spatial development have been known since antiquity. Moreover, these theories andapproaches were taken as the basis of the Chinese civilization. Essentially, the Chinese

public administration started with the division of the empire into nine squares. Thename of China, Zhongguo Middle Kingdom refers to a place or space. Another,

poetical, name of China, Surrounding from Ten Sides, also uses the idea of space.Attention to this ideaof space organization and its management runs through Chinese

political and military philosophy.

Everyone who has been to modern China has at least seen the level of urban density inthe countrys territory. It is the same in Japan. It is nearly impossible to understand how130 million people with one of the greatest and most highly developed technologicaleconomies can find room in an archipelago that is almost without resources. This fact isworth trying to understand and even contemplating when we think of Russia with herone-sixth share of the worlds land, her great resources and her intelligent and hard-working population.

Of course, every country has its weaknesses. For example, history shows how theempire of China was by the end of the nineteenth century turned into a colony by

9See Troy Anderson, The Way of Go: Eight Ancient Strategy Secrets for Success in Business and Life.10 See the monograph by David Ly Education from Stones: the Go method of Mastering the ChineseStrategic Conception ofShi, published in the seriesProgressive Strategic Thought of the USA (2004).11 It is possible that attention towards strategy as an art in the West appeared in consequence to analysesof WW2s results. As everyone knows,for eleven years from 1950 the Chief of General Staff of GermanyLand Arms Franc Halder headed a group of former generals and officers of the Reich troops, about 300

people. They summarized the experience of the tactical activities of the Wermacht in different theatres ofWW2 by order of the military-historical branch of the USA army. Halder was awarded for this activity

with the highest reward of the USAobtainable by foreigners the Order For Valour.


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European countries. This means that Europeans took the lead, and maybe still hold it,over China in some fields.12

Yet China is now a serious contender for world leadership. And here comes a question:what strategic technologies helped a country, which used to be underdeveloped not toolong ago, achieve such a high level and speed of development. Perhaps, we cannotaccount for population or foreign capitals.13 By those measures, Russia, which has therichest resources and territories, already ought to have outrun comparatively poorChina in economic growth. But this has not happened yet.

The authors are not popularizers of Chinese strategy or eastern values, which areuseful rather than harmful. The authors stand for Russias confident participation in theworld market of goods and ideas. We attempt to convey effective methods and

technologies of strategy to Russian readers. Besides, we invest in the researches of theRussian strategic school.

This book reflects only one side of the multifold researches conducted by the authorsunder the auspices of the School of Martial Art and Strategic PlayAscension. However,familiarity with even only one book will probably help you see new horizons ofdevelopment for you and your corporation.

The strategic concepts described in this book are just a small part of the deep knowledgeof strategy that the ancient art ofIcontains. In the book strategic concepts and graceful

solutions built on their base are considered in three spheres: the art of the gameof go,examples from military strategy, and examples from business and politics.

The nine graceful solutions make up a toolset tested by thousands years of practice inChina and Japan. Nowadays, this secret weapon from the East has its place in theminds of Russian industrialists, owing to the School of Martial Art and StrategicPlaying Ascension. Up to now the West has known only about Russian punches. Fromnow on, the nine graceful solutions will become famous thanks to Russia, the inheritorof great eastern civilizations.

12 The Chinese train their astronauts in Russia.13 One time bygood fortune, two times by good fortune God forbid! Sometimes it is necessary to havesome skills that was the famous Russian commander Suvorovs answer to remarks about the

fortuitousness of his victories. It demonstrates the logic of such explanations of someones successes byreference to fortune.


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Sources14

In the book nine strategic concepts15 are treated:

1. Clarification2. Alternatives

3. Hidden Resources4. Superfluity5. Exchanges6. Indirect Fighting7. Superiority

8. Forcing9. Peredryaga (Trouble)

These concepts have ancient roots and were formed in a special cultural atmosphere.The art ofI, known in China as weiqi16 and in Japan as igo,17 used to be a practicesubject for emperors and the great officers of state. Only in the Middle Ages did theChinese and Japanese aristocracyand the military men among them, start learning thisart. It was forbidden to practice wei qi (igo) outside the Forbidden City (China) oroutside the residences ofdaimyo18 (Japan) for many centuries. Perhaps, that is why theart is not well-known in the West. It was and it is still quite closed for strangers.

While translating these concepts into Russian, and later into English, we have tried toconvey their meaning. The authors translations from Chinese and Japanese, which have

become possible via our long-term researches and expeditions to the countries of the FarEast, convey the concepts content quite correctly without serious notional distortion.

While looking through the list of concepts the reader, perhaps, stumbled at the ninthpoint with the strange wordperedryaga. This pause may be very useful. It is importantto foresee attempts to understand familiar words quickly.

How were the graceful solutions deduced from the nine strategic conceptions? Theauthors have got to them from within. Strategic concepts lie in a leaders way ofthinkingbut they are used in simplified forms. Everyone knows these forms. Everyonewho was brought up in Russian culture; everyone who has seen them in films or books

has used them towards their colleagues, opponents or subordinates. Some people may

14 If this part seems too complex you may skip it. Here the authors are speaking about the sources of thenotions.

15 Bystrategy andstrategic the authors understand the activity of managing material, intellectual, humanand other streams of a certain dimension. That is, strategic does not mean good and non-strategicdoes not mean bad.16 The characters express the idea of neutralizing the enemy by encirclement to tie him. The term isover a millenium old.

17 These Japanese characters mean surrounding game played with stones. This name is onlyaround seven centuries old. We can trace the way of changing of the names sense and see that there was

a dumping into the subject.18The Baronage in medieval Japan, the leaders of ruling clans in the country.


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agree to regard them as commands that are quick, clear, understandable and realizable.Some people would like to take a trip together with the authors to the level where thesecommands were born.

Why do we analyze strategic concepts through the prism of arts that are not popularamong Russian readers? The authors of this book have been studying martial andstrategic arts of the ancient East. When we speak about strategic arts we keep in mindthe fact that some of them are more than 5000 years old. So we speak about veryancient strategic technologies. Moreover, China only pretends to the right of being thefather of these arts.19

The authors suppose that the strategic art ofI belongs to the whole Indo-Europeancivilization, and Russia is its descendant as well.20 In the authors opinions, the use ofthe ancient art of strategy can be useful because it is not a question of alien values or

world view. The strategic art ofI trains such skills as latitude of thought, thrift andcreative approach features of character for which the Russians are famous.

It is interesting to mark that it is easier for a Russian to study this art than, for example,a Chinese or a Japanese. Russian children master the bases and demonstrate a greatsuccess in the growth of understanding. Asian children need much more time to studysomething that Russian children can accomplish in a year.21

Natural predilection for calculation22 and analytical understanding23, in combinationwith a sense for the entire picture of the world are features that develop very fast withthe help of the strategic art ofI. Are there many well-known practices for developingthe strategic way of thinking? The strategic art ofI is, undoubtedly, the most ancient

practice of all known.

While computer chess programs are hardly opposed by the best chess geniuses in theworld, go programs are not capable of competing even with players of the middle level.For the foreseeable future the artificial intellect, apparently, will remain weak in theface of the most ancient strategic art. The superiority of the human mind over theartificial one is demonstrated to the fullest extent in the game of go.

Of course, the authors cannot guarantee that studying go will help solve all problems

in business or life. Something that is helpful for one group of people can be useless toanother. Ones attitude towards go, as to any game or sport, can sometimes lead to anegative result. This happens because the ancient art is used as a competition to find out

19 Many ancient technologies came to China from northern-western territories, that is, actually from theterritories of modern Russia.20 According to the latest research the strategic art ofIcould have been known in Ancient Russia as theso-called Golden Tavlei an enigmatic strategic game that did not survive to our times.

21It has been verified by the authors of the book in practice, i.e., the successes and results of the studentsof the School of Martial Arts and Strategic GamesVoskhojdenie.

22 Measure thrice and cut once.

23It is easy to be wise in hindsight.


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who is smarter. However, everyone can take responsibility and use this newknowledge for his or her benefit. If the Son of Heaven had enough time to study thisstrategic art does this not mean that it is able to offer a challenge, even to the very

highest level?


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The FirstGraceful Solution: Clarify!

In the wake of the Battle of Borodino in 1812 Mikhail Illarionovich Kutuzov hadto make a decision: either to give battle to Napoleons advancing forces in Moscow orcontinue retreating. What was the ultimate meaning of his decision to retreat? It mighthave been the main battle of the war, indeed of the 19 th century. It could have broughtcertainty: in one battle the war would be decided. The notion of total war appearedmuch later, in a different age.24

Of course, a war may not end with a decisive battle, but if one side loses the bulkof its army it will be difficult for it to continue the war.

At the military council in Fili (a little village near Moscow) it was decided to

leave Moscow and continue to retreat, thereby protracting the war.

What was the principle of this decision? It can be explained by the strategicmaxim of this chapter. The Battle of Borodino was the commanders clarifying move.First of all, the battle showed the balance of strength between the French and theRussians in a real fight. Second, it helped the commander to decide between standing,and continuing to retreat and slice the striking French force over the territory of thecountry.

Having scrutinized the results of the Battle of Borodino, Kutuzov concluded thatthe French forces still outnumbered the Russian troops. Therefore he decided to leaveMoscow and continue exhausting the enemy with active defence.

During the Russian retreat in the Summer and Autumn of 1941 Supreme HighCommand General Headquarters did not use such complicated strategic terms asclarification. Neither the High Command nor the troops organization would entertainthem. That is why they used the simplest expressions, such as fighting to the lastditch, block-groups, patching holes, exhausting the enemy.

The strategic concept of clarification is difficult to use. Although it is applied tomake the factors that make up a situation stand out distinctly, in an easily understood

way, clarity itself is not always an advantage.

The most important principle of Art of War is do not decide without need. Itmeans that you can always choose an efficient course of development in an open

position. If you have already revealed your intentions, if you have already made adecision, settling everything for yourself and the others, it can be difficult to rewind.Once set in motion a process can be impossible to stop. Besides, it is sometimes betternot to do it. While a well-chosen clarifying move can provide vital information, a badlychosen one can be a disastrous commitment.

24 It was coined in 1943 by Goebbels, the Third Reich minister of propaganda.


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Here is an example of clarifying strategy in politics. At the G8 meeting in 2007President Vladimir Putin of Russia offered the USA the use of Gabalinsky RadioDetection and Ranging equipment to monitor the potential missile threat from Iran. It is

necessary to remember that the USA in their turn intended to build a similar system inthe Czech Republic and in Poland. The Russian Presidents initiative was a clarifyingstrategy. He caused the USA to clarify their position regarding the real goals andoperations of the American ABM defence system in Europe.

In business, the principle of clarifying, along with the famous Three M fromthe cycle of the total quality control, is one of the basic management strategies of thecompany Toyotaol.25

Here is an example of a clarifying move in a go game:

Sketch 1

Lets consider the situation shown in Sketch 1.

On the right, the six black stones outline a potential territory in the corners andon the side. Apart from the small group of three black stones in the lower left, the otheredges of the board have been claimed by White. It is, however, too early to say whatwill be White or Black territory by the end of the game. In fact, it is not really possibleto identify exactly where the borders of each sides spheres of influence lie. Still, it can

be said that Blacks stones are arranged very compactly, while Whites are set out moreloosely, especially in the upper part of the board. Situations like this arise from a clashof playing styles: both have their merits, and nobody can say which is better.

25

They are settled in the so-called Toyota Way (see Jeffrey K. Liker: The Toyota way: 14Management Principles from the Worlds Greatest Manufacturer).


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The central area of the board is unlikely to be enclosed by one of the players. 26 Itis wide open to be claimed by either player. Consequently both sides will probably tryto move to the centre, thereby turning it into no mans land. To understand this we

can count the number of black and white stones that affect the centre. There are eightblack stones. Did you notice which one we did not count? We discounted the one in thelower left corner. It is almost hidden under the white stones hanging over it, so it doesnot influence the central area. White also has eight stones. In the lower left corner oneof the white stones is hidden under another, and so we do not count it either. Thus, wehave eight against eight. The forces are equal. With such a balance of forces there will

be nothing to enclose in the central area, unless one of the players makes a seriousmistake. There will be only stones rising like rockets to the centre.

This is what we can see at once without any special analysis. If we estimate thesize of the prospective territories we will see that the white stones stretch over a greater

part of the playing field than the black stones. Yet at the same time the numbers ofstones are equal as the players move their stones in turns. Once played, it is forbidden tochange a stones position - as life, one cannot undo ones actions27.

What can we see at once? The white stones above are too widely dispersed tosecure such a big area, and this is a weakness on which the black player will certainlyaim to capitalize, in order to obtain the larger share of territory. But how can it be done?How can one tackle such a large formation of white stones? It seems the only way is totake away a part of this territory from the white player. That is, black should capture

part of the space outlined by the white stones. But will there be enough time andresources? Will black manage to organize a viable sub-unit of black stones, forexample, on the upper side just below the white stones?

To answer these questions we need to study the difficulties of keeping spaceunder control. Another important question is this: how can one play in the adversarysarea with reasonable chances of survival? This is like estimating the profitability of

planned investments in this or that part of a market occupied by a competitor.The player should take into consideration the fact that each stone or group on the

field has limited resources.

26 Only in this position! In another game everything could be different. In some positions the centre of the

field can be the most interesting area.27 The past can be changed, maybe, only with the help of new actions in future.


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Sketch 2

This stone has four lines of supply28 (in Sketch 2 they are marked with crosses),

which connect it with free areas of the playing field. If these supply lines are blocked bywhite stones then the black stone will become a captive, like an army unit isolated fromits comrades and surrounded by its enemies. It will not be able to support itself and sowill be removed from the board.29

Sketch 3

The result of the encirclement is shown in Sketch 3. After the blocking of thelast line of supply white must immediately remove the black stone.

It is obvious that a stone cannot be put on a crossing where it does not have atleast one supply line. That is, it cannot be deployed in a place that cannot support itsstay. In turn, an area surrounded by white stones (as in Sketch 3) becomes the white

players property, his territory on the playing field30. Of course, such territory mayinclude two, three, ten or even one hundred points.

Sketch 4

28 Of course, the usual English term is liberties, but the military analogy is very helpful .29 Taken prisoner.30 What profit does a player who captures a stone make? He or she gets a free point of territory and one

more point for the captured stone. At the end of the game captives are placed in the players territories,reducing their size. For details see Appendix.


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Two stones of the same colour occupying adjoining liberties become indivisibleand become a kind of united large stone. They are bound with a common fate. Theyshare their supply lines and fight together. The two black stones in Sketch 4 have six

liberties. This means that the white player must use six stones instead of four to take thisgroup prisoner. In other words, a larger group, with its more numerous supply lines, ismore difficult to defeat.

Sketch 5

The result of a successful encirclement by white stones is shown in sketch 5. Butcan the black place a stone inside this white area? In fact, it is possible because the

black stone will have one line of supply (sketch 6).

Sketch 6

Of course, the white can occupy this single liberty and take the foolhardy raidercaptive.

Black cannot attempt a second raid, because there will be no liberties. It wouldbe like an unarmed soldier leaping into a group of his enemies it would be suicideand, in go at least, suicide is forbidden.

So, white and black stones have limited resources: supply lines that must bepreserved and multiplied.


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If one is unable to organize at least minimal support in this or that territory thensooner or later ones stones will fall prey to the opponent in same way as when ahungry, undersupplied army flees and leaves its territory in the hands of a new master.31

Similarly, a company that does not meet its commitments is either shut down and soldoff or becomes the property of a new owner.

Sketch 7

The black player must consider these things when planning an intrusion into thewhite stones sphere of influence in the top left part (Sketch 7). If the intrusion fails and

black stones are besieged they will be left with no alternatives but to survive orsurrender.

Sketch 8

31 The Soviet army met this fate in the early 1990s.


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In Sketch 8, the black stones are completed isolated from the rest of the board bya surrounding white group. However, its supply lines are organized in a special way.The black stones have liberties. White cannot play in either one because that would be

suicide, and it would be impossible to occupy both in a single move. Blacks position islike that of an impregnable fortress which contains its own water supplies and means togrow food. These stones form a minimal inalienable territory32. It is impossible todestroy a group with such internal resources.

.

Sketch 9

Is the position of stone 1 in Sketch 9 effective? Does it provide these blackstones with self-sufficiency? In this case it does not, because the two adjoining libertieslocated inside of the group are not inalienable. A white stone can be placed on one of

these fields as shown in Sketch 6. Such a play would block one of blacks supply lines.Moreover, the white player could then place one more stone on the last of the blackstones liberties and remove the entire group!33

Lets leave go behind for a while and carry ourselves to imperial China. TheChinese strategic tradition, whose history spans several thousand years, has always laidspecial emphasis on clarification and intelligence. A famous treatise on strategy called

Art of Warwas written by the ancient Chinese commander Sun Tzuaround 700 B.C.34 Itcontains a special chapter devoted to the questions of intelligence and espionage.

The strategic concept of clarification was used by many military strategists and

politicians in China. As an example we can take the famous stratagem Present a steedto the Emperor.

This story dates from the era of the first Emperor, Qin Shi Huang Di, whounified the key kingdoms of China and built the Great Wall of China. After his deaththe court noblemen started weaving plots to obtain the crown. Finally, Qin Shi Huangsyoung heir Er Shi Huang ascended the throne. The Prime Minister of the old Emperor,

32The usual term for this is life or two eyes.33 For details see Appendix.

34

The precise date ofArt of Waris unknown. Historians can only assign it to some time between 700 and400 BC.


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who had tried to obtain the throne, started worrying about his fate. He decided toattempt to dethrone the new Emperor. But first it was necessary to clarify the balance offorces and special interest groups at court. To this end the Minister devised the

stratagem now known as Present a steed to the Emperor. 35

During one of the state councils where all key political court players werepresent the Prime Minister claimed that he wished to present a wonderful steed to theEmperor as a token of his goodwill. When the Prime Minister was ordered to show thegift the surprised dignitaries saw a deer with large antlers. The young Emperorexclaimed But this is a deer!, to which the Prime Minister replied Why, my Lord? Itis a noble steed! The Emperor objected firmly, saying It is a deer!, but the PrimeMinister insisted again that it was the best steed of the empire and proceeded to ask theEmperor about his health.

Er Shi Huang jumped up and started asking his courtiers if it was a deer or asteed. Something strange happened: opinions divided. Some answered it was a steed,some agreed with Emperor. The majority could not decide how to answer.

Through this clarifying move the Prime Minister managed to find out whowould support him, who would not and who was uncertain. Soon they rebelled and ErShi Huang was dethroned.

The stratagem of clarification is also mentioned in another ancient and famousformula: Hit the grass in order to frighten off a snake.

Lets return to the situation in Sketch 7. Can the black player use the strategy ofclarification to choose an effective way of fighting with his adversary in the chosenarea?

35 This situation can be called exploratory attack.


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Sketch 10

For the black player direct intrusion into the corner can be the clarifying move,the goal being to find out how white intends to defend this area. There are numerous

possibilities. For instance, white may try to kill the black stones, to annihilate them onthe march; or he or she could decide to give up some of the corner to focus on keeping

the top side. Lets explore both possibilities.

Sketch 11


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If white chose to give the adversary the corner in exchange for absolute controlover the top side (Sketch 11) then what should black do? Should black accept theseterms? To find out what is important for the adversary at the moment is the purpose of

the clarifying move. If white player is willing to give up the corner then black does notneed it either. If it is uninteresting to the rival then there is no point in seizing it now.There will be time for that later! So, having left the stone in the corner, the black playerwill do his or her best to reduce the white territory on the top side. To identify and fightfor what is really valuable to the opponent is a graceful solution36.

Perhaps, such approach might seem to be too aggressive. But in this case theblack player should take cues on the worth of assets from white. To take what is freelygiven is not the way to victory.

Sketch 12

The results of a follow-up strike by black are shown in Sketch 12. Of course,there are other possibilities. Here, the territory once claimed by white is pressed downand the marked stone has been cut off from its allies. Now the white player needs to

find a way to strengthen it or unite it with a principal group. But one wonders if therewill be enough time to strike back in the corner at the black stone, while managing themarked stone. The outcome depends on the players adroitness.

And what if white, discouraged by the bleak prospects of Sketch 12, were tofocus on keeping the corner instead?

36

This said, one should bear in the mind the possibility that the opponent might make a strategic mistake,and give up something that is actually valuable.


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Sketch 13

If the white player resolved to keep the corner at all costs (Sketch 13) then blackwould overrun the top side. Now instead of one stone, two white stones would fall intothe grip of blacks stones. Such a situation signals a major change in the top sidesstatus. The area once controlled by white has been turned into a war zone.

In military history, such a mistaken strategy was chosen by the SupremeCommander-in-Chief of Germany in 1942 when he gave the order to hold fortressStalingrad at all costs. As a result of this poor decision the Sixth Attack Army of Field-Marshal Paulus was caught in an encirclement. On one side the army was pressed bytroops outside the city, while on the other side the army fought with the Red Armyforces defending the city remains.

Of course, the German troops held the city (the left top corner kept by the whitestones) but in doing so they let the Soviet command concentrate shock troops and cutoff a large German contingent (two marked white stones). Thus the Stalingrad trap wassprung. As a result of this defeat the Germans incurred casualties of up to 300,000. Thearmy lost faith in their invincibility. Almost all documents record the loss of the SixthAttack Army near Stalingrad as a national tragedy for the German nation. Furthermore,this defeat crucially affected the fate of the southern wing of the eastern front37.

The beginning of the WWI is another example of this idea in action. The mainparties before the war were the Triple Entente (England, France and Russia) and the

37 Manstein Erich wrote about it in details in his memoirs,Lost Victories.


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Union of Central Powers. The reason for the war was a conflict of interests in theBalkans.

Were the events that initiated the war just an unfortunate set of circumstances?To find out, let us suppose that the German and Austro-Hungarian strategists appliedthe concept of clarification.

First there was a touchstone (the corner probe in Sketch 10). This was theAustrian Archduke Franz-Ferdinand, who came to Serbia to oversee manoeuvres. Atthat time the scheme to unite Serbia with Austria-Hungary was an open secret. In Serbiasome people were in favour and some were against. What was the meaning of theArchdukes visit? How did the Serbs and detached onlookers interpret it?

Of course, in Austro-Hungary they knew about the threats to the Archdukes

life. There was another heir to the throne, just in case, although Franz-Ferdinandschildren themselves did not have rights to succession as they were born frommisalliance38.

If the visit had been successful and everything had gone according to theplanned programme the position of Austria-Hungarys supporters in Serbia could havebeen strengthened. However, a radical group of young Serbs organized an attempt uponthe Archduke and his wife in Sarajevo.

This event clarified the situation for the Austro-Hungarian leaders and enabledthem to decide on their next moves. The Serbian leadership was given an ultimatum,which they rejected. Therefore, Austria-Hungary declared war on Serbia. Now theUnion of Central Powers had to clarify the balance of forces in Europe: would Russiasupport Serbia? Russias support would mean the Triple Ententes engagement in war.

In reply to the declaration of war on the Serbs Russias Emperor Nikolay IIordered nationwide mobilization. This meant that Russia was preparing for war. At the

beginning of the 20th century such an order was the equivalent of firing ballistic missilesin modern strategy. Austria-Hungary and Germany had no alternative but to declare waron Russia, and by extension on the Triple Entente.39The details of this declaration arestill controversial, but this is the rough picture.

Was this only a meeting of circumstances or a deeply thought-out strategy? Letsnot forget the costs incurred. As a result of the war in Europe three empires collapsed Austria-Hungary, Germany and Russia, with the loss of countless lives. Should

politicians take risks when the stakes are so high?

How does clarification work in business? Market researchers, test-markets andother marketing technologies are examples of clarification in action.

38

The archduke was married to a Czech noblewoman not of the royal blood.39Germany had a bone to pick with England concerning colonial disputes in Africa and the Middle East.


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Sketch 14

If we look again at this familiar position from the standpoint of a company (theblack player) racing for consumers hearts (points on the board) we can learn a lot.There are not only two colours black and white in the game. The third is the colourof the playing field (in this case it is colourless) and it is a participant as well. As a

matter of fact the players compete for this colour.

As we can see the top side of market is a disputed territory. Why is thisnominally white territory interesting to black? The reason is that it is like a warmed-up market with established consumer demand for the product. On the contrary there isno market in the centre of the playing field, so it needs to be built. The white playerhas developed markets on the left and top sides, spending his or her resources and time.He or she has staked on advertising and promoting the product. 40 Whites stones have

been placed widely with great risk. Of course, it is possible for black to leave the wholeof these developed areas alone and to start developing new markets. But how will blackdecide?

What if black considers that in this case it will be more effective to enter the

proven market of the white player and take their market share? The trial stone 1 willhelp black to find out what kind of reception to expect in the prospective markets. Thetask of the probe (the market researcher) is to find out which consumers hearts thosein the corner or on the side that the rival company (white) intends to keep.

40 I can hardly help saying staked stones


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Sketch 15

The strategy is as follows. If the rival gives up the corner to concentrate theirefforts on keeping the top side, then black will keep investments in the corner niche atthe same level one stone. In this case black will start reducing the rivals market shareon the top side, assisted by the strong position in the upper right. Expansion of market

share is more beneficial than racing for the small market in the top left, which is nowheavily occupied by the white player.

Notice that, at first, black hinders the rivals possible expansion of the marketinto the centre by making white defend what they already have. After that, black entersthe market from the strong consumer base on the right, reducing whites market share toa great extent. At the same time the situation in the left corner is still uncertain. It is notcompletely clear what each player has there.


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Sketch 16

If white keeps the corner by encircling the black stone and eating it, then inthe end he or she risks losing everything in the market of the top side.

To repeat, the crucial point of the conception of clarification is to act in the

market spheres that are valuable for the adversary while leaving other spheres for thefuture. Let the rival (if they consider it necessary) reassess their priorities and pass tothose areas which used to be of little value. By all means allow the opponent to indulgein directionless changing of priorities.

This, at first sight simple, strategy is not always understood by managersmaking serious competitive decisions. They continue to invest in markets that bring solittle profit now and in future that they are not interesting even to potential rivals. Whatare such managers guided by? Are they guided by the fact that we placed there ourstones (initial trial investments) and have not lost them?41 Of course, even in Go a

placed stone can be encircled and removed only with the course of time. This is why

there is an illusion of effectiveness. It occupies some place in the market; money andtime have been invested in it! However, it is important not only to see your own stones

but to analyze the space that they affect. If there is no territory the stone only distractsones attention. As a result territory and its quantity define the effectiveness of the

positions built up earlier in the game.

A salutary example of such ineffective action against the market was thestrategy of the Russian car industry in the 1990s and 2000s. In spite of everything largefactories continued turning out products that did not meet customers needs. For nearlytwo decades this strategy got away with everything and domestically produced cars

41

A barren flower is a bright and fragrant flower attracting attention. It does not bear fruit but attracts asmany insects as other flowers.


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were sold. However, over time the situation deteriorated. Sales forecasts in 2007showed that by that stage domestic producers had lost the Russian car market. In 2007foreign firms took 80% of the market while AvtoVAZ got 9% of the market and less

than 1% went to other domestic factories.Clarification for the leaders of domestic motorcar construction could have been

the aim of sales in the Russian market during last 10 years. However, no serious stepsapart from attempts at administrative locking and keeping the market were taken.42 As aresult the market was seized by competitors without any organized resistance fromdomestic producers. Lets look at the result: Everything has been taken. Did thenational car industry show the art of strategy? The answer is that there was no strategyat all. What does change of ownership which happened several years ago tell us? Doesnot it reveal the ideological bankruptcy of the former leadership of the Russian carindustry? These conclusions explain contemporary analyses of the distribution ofmarket shares.

One possible strategic course for the Russian car industry might have beencooperation with foreign producers; that is, the handover of a part of the market to them(as shown in sketch 15)43 and receiving resources for the development of other marketsegments44.

Summary:

1. Clarify! This is a simple but very meaningful and easily understandable guidefor action in areas of foreign influence45.

2. Clarification as a method is widely used in many spheres such as business, polit-ics and war. Sometimes this method is called provocation.

3. The main point of the graceful solution called clarify is the variety of follow-ups that can be chosen on the basis of the opponents decisions. The principle isto find out what is valuable for your rival.

4. This may lead to sacrifice. Sometimes sacrifice is necessary when performingtests. Each action is an investment of time and resources. One should be ready tostop further investments in areas that the adversary grips tightly. To follow does

not mean to obey or to fall under control. To follow means to accompany. In ac-companying it is important to feel the energy of adhesion46.

42 It is similar to an attempt to scythe down the adversarys stones through single-minded play. What willthis strategy lead to? Will it not lead to your own stones being mown down in other playing fields?43 The position of stone 2.

44 For example, a cheap peoples car specially adapted to Russian roads.

45 It is often called exploratory attack.

46 Sketch 10. Blacks operation starts with the attachment at 1. You can learn more about energy at

seminars conducted by the authors of this book. It is difficult to describe some unfamiliar kinds of energyusing words alone but it is easy to demonstrate.


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Question for self-directed learning: Can white also use the concept of clarificationagainst the black stones on the right side (Sketch 17)?

Sketch 17


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The Second Graceful Solution: Keep Your Eyes Open!

The strategic concept of alternativeshelps one to make a decision when there aretwo or more equally promising options. How can one make the right choice? Theconcept is used for planning actions in several places united by a common strategy47.

During the campaign of 1943 Kurskaya Duga48was part of a vast front line thatstretched from the Black Sea to the White Sea. The Eastern front constituted a commonspace49. In other places, such as the Leningrad front, the Red Army did not have anyalternatives as there was only one task. The task at the Leningrad front was to relievethe city.

In contrast to Leningrad and Volkhov, Kurskaya Duga was a place where theRed Army command had a strategic choice, either to advance or to hold the line. Thesealternatives were a matter of great anxiety for Stalin, who was Supreme Commander-in-Chief. In the opinion of Russian command both alternatives were acceptable for the RedArmy; however, they could both have had unpredictable consequences.

So what did the Soviet military leadership do in this situation? They found agraceful solution: not to choose but to keep their eyes open by waiting for theadversarys choice. Whilst alternatives remained at the Kurskaya Duga front the RedArmy command made no decisions about advancing but carefully watched the Germantroops actions instead. The alternatives were as follows: if the German command

abandoned their advance on Kurskya Duga the Red Army would attack using it as routeto the west bridgehead. But if the German command decided to launch an offensiveoperation the Red Army would meet the enemy at previously prepared defensive

positions.

Having abdicated responsibility for taking the decision on advancing in thisdirection, the Soviet command were able to focus on other tasks. These included theaccumulation of forces, organizing back areas, intelligence, guerilla movements, andforming and training sub-units. They saved time50 and, secondly, they saved theresources of strategy (spiritual, emotional and intellectual strength)51 that are always

47

The situation is considered within its context in extended scale but not locally or separately.48 See Grishin I.A. and Emelyanov M.G. Russian-German Strategy.49 In its turn for Germany the Eastern front was a partial front along with the Western front, andconfrontations in the Mediterranean and the Atlantic.50 Saving time provides opportunities to do something else, possibly something very important. In go,saving time means an opportunity to play toward a goal, to change something. Saving time is therefore ofinestimable value.51 The famous ancient Chinese strategist Zhuge Liangshowed that the resource of strategy is limited bythe example of his last war. Zhuge Liang could not storm a fortress which was being defended by anothergreat ancient Chinese strategist, Sima Yi. All Zhuge Liangs stratagems were met in advance. Sima Yidid not take the bait. For example, Zhuge Liang sent to Sima Yi a message and a coffer. Sima Yi burntthe message without reading it and ordered his men to throw away the coffer. As a result Zhuge Liangcould not sleep, for he was trying so hard to find the victory formula. So, stayed awake for 100 days

and reached deaths door. His personal resource of strategy was exhausted. In the face of death heprepared one last stratagem for withdrawing the army from the attack lines and gave it to his assistants.


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spent on taking such decisions as attack. After all, the costs of a mistake might havebeen unbearable.

If in the short-term prospects the alternatives produced equal results nobody

could guarantee that there would not appear some unanticipated negative effect over thecoming months, years or decade. So let the competitor choose! Anyway, let us supposethat in some current situation two or more possibilities appear to offer equally beneficialand understandable short-term prospects. Nobody knows what is going to happenafterwards. If the opponent chooses then we, at least, save pains and time instead ofwasting them on performing complex calculations, and on soul-searching reflections onour experiences. This should not, however, be confused with indecisiveness.

If unpredictable negative consequences do not appear later we get an equal resultas expected. Therefore we economize on strategy and time. This is a very importanteconomy as only strategists and leaders have the resource of strategy. But are there

many who are both strategists and leaders?

In the operation near Kursk the Russian command behaved strategically as theychose defence in response to the Germans choice to attack52. The German commandshouldered the burden of decision. The memoirs of the German commanders revealwhat these stresses were like.

Heinz Guderian, Inspector General of the Vermacht armored forces, wrote downhis talk with Adolph Hitler after a conference at headquarters. On the agenda thereagain was the question: whether to attack or to defend near Kursk. The generalsopinions were divided. Guderian and Model were totally against attack, while Field-Marshal Erich von Manstein adopted a very complex position (at that time he hadtensions with Hitler on strategic issues in the war). Manstein said that it was possible toattack immediately as it should have been done two weeks before, but if it took a longtime to decide then the attack should be abandoned. Hitlers palace guards such as Chiefof Staff of Supreme Command of Armed Forces Wilhelm Keitel and Chief of Staff ofLand Forces Carl Zeizler insisted on attack in any case. Hitler had to take the finaldecision.

Guderian describes his talk with Hitler: After the conference I took Hitler byhis arm and asked him if I was permitted to speak my mind. He agreed and I started

persuading him to abandon the attack at the Eastern front as he definitely understood thedifficulties we had to face that time. I finished with the question: Why dont you wantto open an attack in the east this year? Hitler replied You are totally right. At thethought of this attack I start having a stomach ache.53

Through this last stratagem Zhuge Liangs army left the lines so skillfully that Sima Yi was sure the armywas led by Zhuge Liang, eventhough through spies the rumour of the Mastersdeath had come to him.

52 It is necessary to take into account that the period between the moment of taking a decision about attackand the moment of putting it into action may be more than a week. Troops prepare an attack with a givenspeed that may be calculated. Several weeks were spent by the German army in preparation for the

Kursky attack operation Citadel.53 Guderian, H.:Erinnerungen eines Soldaten, Heidelberg, 1951.


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As we can see from this historical document Adolph Hitler felt theresponsibility for the decision of such strategic scale as the approval of the operationCitadel on a physical level.54

It is worth mentioning that by the end of 1944 Hitler could hardly signdocuments as his hands were trembling so much. 55The energy of a person occupyingleading positions and taking responsibility for key decisions is spent much faster and inlarger quantities than managers and clerks tend to realize.

That is why the concept of alternatives is an important way to save such keyresources of success as the leaders personal resource of strategy. Are there many suchefficient techniques for making effective decisions?

The concept of alternativescan be shown most lucidly with the help of models

of strategic art. Therefore, lets turn again to the game of go..

Sketch 18

Sketch 18 shows alternative possibilities for developing the white stone. Thewhite player can turn left (point A) as easily as right (point B). What defines possiblelong-term results? They can be learned by examining the other parts of the playing field.

With such alternatives the white player need take no immediate steps on thisside. The situation can be left alone until one of these possibilities disappears due to theadversarys actions or becauseequivalence has been lost because of changes elsewhereon the board.

54 This was the German name for the operation of cutting off Kurskaya Duga and encircling the Soviettroops.55

Reichsminister of German war industry Albert Speer often met Hitler in his last months. He

describes the impression that the dictator made on him: Hitler had shrunk and grown decrepit. Hishands trembled, he stooped while walking and dragged his feet. Even his voice trembled and lost itsstrength and emotion. When he was agitated his voice strained in the way typical for old people. Hisskin became yellow and his face became puffy. In the last period of life his uniform, which had always

been tidy, was covered in spots of food that he could not hold in his trembling hand. (Albert Speer:Erinnerungen). Speer concludes that the reason for Hitlers state was the permanent stress resultingfrom his activities as chief of the state waging war. It is interesting that Joseph Stalin met a similar fate.

He could hardly lift his famous pipe with one of his hands.


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Sketch 19

Another example is shown in sketch 19. The group of white stones located in thecorner has alternative ways of establishing a base56. The white player may add a

stone at point A or at point B. Both positions provide the group with minimal livingspace, i.e. give them winning advantage. Such groups will yield at least two units ofcapital (territory)57.

If there is an alternative that allows solving the question of survival(profitability) in the market with equal effectiveness it is possible to use neither of these

possibilities. Spare time and energy may be spent on solving urgent tasks elsewhere.

Sometimes the concept of alternatives is used for assessing the merits of anintrusion into hostile territory.

56 A base might be also understood as a minimal return (profit) from the investments in this part of theplaying field..

57 See sketch 8.


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Sketch 20

The effectiveness of the whites intrusion (stones 1 and 3) into the space markedout by black stones on the left side may be estimated with the help of the concept ofalternatives. If our action in the foreign market has three lines of further developmentsuch a project can be started.

The white stones in Sketch 20 may develop towards the top left corner pointA; towards the centre (to divide the business organized by the black stones into parts)

point B; and towards the nearest allies on the left side - point C. So the white playersproject of invading and reducing the adversarys territory is bound to succeed. It isimpossible to shut down all three directions! There is nothing to do but to keep eyeswide open58.

If a project has simple alternatives (that is, only two lines) of furtherdevelopment all investments in it turn out to be risky. If there are no alternatives therisks may exceed expected benefits. Here it is possible to state a rule: one should have

triple alternatives in a foreign territory or, in the words of the Prussian military theoristMoltke, three ways out of a situation59.

Is it possible to act where there is a single alternative (two possibilities) or wherethere are no alternatives (a single way)? Of course it is possible, but the one who takessuch decisions takes the responsibility for the risks. Sometimes it is impossible to takethe lead in the market or win in a game.

58 In this case in three ways.

59

Moltkes aphorism strategy is a system of ways out complicates the admonition keep your eyes wideopen but increases reliability of performance.


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Lets consider the Gazprom strategy for the extension (diversification) of waysof gas transportation to the gas markets of Europe with the help of the strategic conceptof alternatives.

With only one route to the European markets through the countries of EasternEurope Gazprom becomes the hostage of intractable transit countries. The transitcountries with gas pipelines are often unable to guarantee the stability, timeliness andsafety of transit deliveries through their territories.60This means receiving less profit.

What strategic principles were used by the corporate management while makingdecisions regarding the creation of alternative gas delivery routes to Europe? We meanthe Northern and Southern gas pipelines that will be built in neutral maritimeterritory.

Sketch 21

In Sketch 21 we can see prepared positions on the flanks of the white invasion:

the marked stones above and below stones 1 and 3. The white player has prepared theinvasion, as though pouring in money and resources. Without the white stones on theflanks there would be no alternative lines of development for the invasion stones.

With the help of this idea more common Gazprom strategies for expanding gasdeliveries can be described. The more there are alternatives of delivery directions (east,west, south) and ways of delivery (railway, sea and pipeline), the stronger the positionof Gazprom in the world gas market. The strengthening of positions both in businessand go tends to result in the growth of company capitalization and an increase ofcontrolling market share.

60

It is enough to remember the situation connected with stealing of gas from the Ukrainian territory on anational scale.


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Summary:

10. Keep your eyes open when it is necessary to choose between differentdirections for further actions. This concept can be partly understood through thestrategy of diversification, which is studied in management theory.

11. The concept works only for equal61 alternatives on the field of activity. Todetermine equivalence it is necessary to take into account not only a certain localregion but also its flanks.

12. If the player has equal alternatives in the market they do not have to take adecision immediately, i.e., there is no strong need to decide. Therefore, the

strategic rule do not decide without need can be obeyed.13. The concept of alternatives helps the leader who makes decisions to save time

the main deficit resource and their own personal resource of strategy, whichare spent on taking any important decision. The aim is to transfer the burden ofresponsibility on to the rivals management. We should repeat that we speakonly about alternatives that offer equal prospects. In the presence of more

beneficial or less beneficial possibilities one should choose the more beneficialvariation until it is intercepted.

14. In the case of incursion into areas of foreign influence it is optimal to have triplealternatives. Only such reserves allow escape from a vulnerable position. Onecould act while having simple alternatives (two variations) and even in theabsence of an alternative (a one-way street). In this case it is necessary tocalculate the inevitable risks extremely carefully. There is no point in actingwhere even a single variation is doubtful. Of course, one might count on amistake by the opponent, but this is taking a chance and not a graceful solution.

61 Or equally dangerous


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The Third Graceful Solution: Search for Hidden Resources!

The strategic concept discussed in this chapter relates to situations and positionsthat contain hidden resources62. Such resources are not only unexpected in themselves,

but often hide other things.An example from military strategy can be taken from the period of Civil War in

Russia after the Revolution of 1917. This period has until now received little analysisfrom the point of view of strategic art.

Lets go to the south of the former Russian Empire. Crimea is the last bastion ofthe White Movement. One of the most outstanding strategists of the Civil War, BaronPyotr Nikolaevich Wrangel is Head of the Government. He has a very hard task. Being

isolated from the other parts of Russia, Crimea is unable to provide sufficient food andfuel for itself. It needs provisions, forage, coil and armaments. Crimea lacks a defenceindustry. Farming hardly provides inhabitants with grain. How to undo the intricate knotof social contradictions?

The White Movement in Crimea was short of living space. There was no chanceof ensuring sovereignty from Soviet Russia in such a limited territory. We analyzed the

problem of life support organization by the example of Sketch 8. Baron Wrangelssituation differs from this model as in Crimea there was not enough space to providefull autonomy. There was no opportunity to build on in the place having obtainedinalienable territory63.

The Army, as a guarantor of sovereignty, must be well supplied with weaponsand food. France was ready to provide security assistance but besides the army therewere inhabitants in the state64. Wrangels task was to preserve the Russian imperial wayof life in Crimea.

In such a strategic situation there are only four scenarios: the building of anunassailable citadel, extending living space, escape and surrender. These scenarios arewell known in strategic art. It is no wonder that both in military strategy and in thegame of go these are the main ways of solving such a problem.

Baron Wrangel understood these possibilities quite well. Surrender at thediscretion of Soviet Russia, as insisted on by British diplomacy, was unacceptable forthe leadership of the south of Russia.

62 If you want to hide something, show it is an old Chinese proverb.

63 Basil Aksyonov in his novel The Crimea Islanddepicts a beautiful example of autonomy.

64

Many people in Crimea had fled from Central Russia and the Ukraine to escape the horrors of Sovietterror.


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Having taken command of the Armed Forces of South Russia during the springof 192065, Wrangel started preparing a possible evacuation of Crimea. He knew wellthat although there were chances to extend living space he had to be prepared for the

worst, i.e., for escape overseas. Owing to his extraordinary resolve during thepreparations, the evacuation of Crimea (when it became necessary) was highlysuccessful66.

The third most preferable way extending living space by joining Crimea tosome outer areas was also considered in the generals plans.

In-depth analysis of the alternatives of escape or survival is a high-level strategicart.

Baron Wrangel understood that in the case of failure to build an unassailable

citadel or to extend living space sufficiently he would have to lead defeat. In otherwords he would have to lose with minimal losses. Both victory and defeat are back-

breaking and require a great deal of internal and external strength. Only when strivingfor victory, may one take comfort in hopes for the future. If a commander leads defeat,he suffers not only the stresses usual for victorious strategy but also the emotional

burden of loss. One who has suffered a defeat will understand what kind of stresses weare speaking about67. Defeat is always more arduous than victory.

While working out a plan of operation for extending living space, BaronWrangel took into account the numerical superiority of Soviet troops on the continent tohis army. At the same time he took into consideration the complex strategic factor of the

proportional sizes of lands held by him and those controlled by his enemy. With a littleplot of Crimean land he was pitted against an adversary from the territory of the formerempire. His enemies also had the energy of a new authority, the enthusiasm of itsapologists and the pressure of a new ideology.

With the remnants of his army Wrangel could capture living space enough forhis safety but he could not keep it. That is why he started searching for a hiddenresource for his invasion into the territory of the Bolsheviks. And he managed to findsuch a resource.

In the south of Russia the Kuban Cossacks suffered from the Sovietgovernmental system more than others. Moreover, there had always been a strongsamostiyni (independent) mentality in Kuban. For the Cossacks the totalitarian regime

65 Consequent to the departure of the former Commander of Armed Forces of South Russia A.I. Denikin.66 In Crimea there were three evacuations in the 20 th century. The one conducted by Baron Wrangel wasan example of perfect organization. The other two the Soviet one was in 1942 and the German one wasin 1944 turned out to be tragedies.67 The Ruler of South Russia, Baron Wrangel describes these stresses: the Kuban operation failed.Pressed to the sea in a little piece of Russian land we were forced to continue fighting against an enemywhich had the vast territory of Russia. We were exhausted and had almost run out of means. Failure like a

stone weighed upon my soul. I asked myself hundreds of times if I was to blame for everything that hadhappened; if everything had been foreseen; if the plan was correct. (Wrangel, P.N.:Notes).


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of red evil spirits, as communists were called in Kuban, was more hateful thanoccupation by German invaders.

Baron Wrangel found the right weakness in the Bolsheviks defences in thesouthern territories of Russia. An invasion in Kuban supported by a Cossack rebellionwas likely to annihilate the communist regime and provide Crimea with everythingneeded for living. Wrangel even intended to organize grain export to purchaseeverything needed for the army and the peninsula.

The cossacks were a hidden threat for the Bolsheviks. They had suffered yearsof repression under the Soviet government.

Baron Wrangel considered the direction of expansion to Kuban to be toppriority. Nevertheless, he took one more strategic step. Before the Kuban operation in

spring 1920, he attacked Northern Tavria. This was a classic instance of clarification.

The Bolsheviks concentrated on the fight in the northern region of Crimea andmassed their main forces there. This was what the Russian commander expected. Hisnext step was to enter Kuban. By then, the command of the WPRA (Workers andPeasants Red Army) should have defined their position in Northern Tavria. Thecombination of two strategic measures provided great chances to carry the WhiteMovement forward.

The Kuban operation, conducted in the winter of 1920, failed at the level ofmanagement that is, the generals and chiefs of staff who were in charge of thedevelopment and realization of the operation. Wrangel blamed himself for notconducting this most significant strategic operation by himself. The generals who haddone well in other operations failed in such a complex and multi-angled position andruined the realization of their leaders strategic plan.

What was the Commander-in-Chief doing at that time? He invested much energyin re-establishing state authority in Crimea, in negotiations with international mediatorsabout humanitarian aid and in fighting with Russian pseudo-patriotic emigrants who dideverything to thwart Wrangels efforts. The success of the Crimean project turned outto be disadvantageous for the February revolution participants who escaped to foreign

countries and for the fathers of Russian democracy as Wrangel received the title ofRescuer of the Motherland and the right to control the foreign bank accounts oftsarskaya Russia.

Often struggling with allies can take ones last reserves of time and energy. Is itpossible that a corporation sustains losses and loses the market only because of internalstruggle? Do not some managers make theirsmallout of a bigcorporation parasitizingon the companys body?

Wrangels strategic plan can be modeled on the go board.


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Sketch 22

In Sketch 22 we have tried to make a model of the Southern Front of the CivilWar in spring 1920. We will not analyze territories facing outwards from Russia.

In the bottom left corner there is a group of white stones holding a small space.This space is not big enough to provide life independently. Moreover, if the white

player does not take any steps the black one will be able to kill the white groupcleanly68. The initiative, that issente, plays an important role in this situation.

On the right there are three marked stones surrounded by groups of black stones.Presently they are essentially prisoners to the black stones. However, as these stoneshave not yet been removed from the board they may still present a potential threat to

black. In turn, white can use them as a hidden resource in the adversarys territory.

Sketch 23

68 It can be proved by a simple game continuation.


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What was Baron Wrangels plan? To solve the task successfully he needed toexecute an offensive in two directions: Kuban (stones 1 and 3) and Northern Tavria(stones 5 and 7). White stones 5 and 7 are a necessary sacrifice to distract the enemy in

this part of front. This is why Wrangels army seized Northern Tavria.

Sketch 24

The next step is using the strategy of hidden resources. Lets look at the bottomside in Sketch 24. After the eleventh postanovka69black had to capture the markedwhite stones. In reply, 13 unites whites forces. The white stones now gain sufficientspace to live. The black player cannot prevent it because of whites hidden resource atthe rear. All of blacks actions are forced. This can be verified by analyzing each of

blackspostanovka.

If the black player plays at 10 in place of white 11 then in its turn the white stonewill find itself in the place of black 10. Here we can invoke the strategic concept ofalternatives. It means that for white the points occupied by black 10 and white 11 areequivalent possibilities for gaining living space. It makes no difference, from the point

of view of surviving effectively, which points one takes.

69The authors of the book have left the term postanovka untranslated. It has a wealth of special senses inRussian go terminology. In the English language there is only the word, move. However, in Russian theword move means not only placing a stone on the playing board but also a train of thought i.e., severalmoves connected by a common idea. For example, a corner play is a train of thought and every stone isapostanovka. At the same time the authors invoke the notion ofhand, which is lacking from English go

parlance. Instead they use such Japanese words as sente and gote, or the word initiative. A hand meansthe right to place a stone on the board. The Russian word postanovka contains important contextualmeanings, such as stake (in the meaning to play with a view to somebody or something), stand (a

martial arts term), and the location of a thing in some place.


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However, this plan was not to be realized. The white players, that is Wrangelssubordinates, made a few mistakes at the level of performance and these led to the lossof both Northern Tavria and Kuban70.

In a book covering both the arts of games and business Vice-President of JALMiura Yasuyuki describes an example of a hidden resource in the American carmarket.71This hidden resource was exploited by Japanese auto makers.

What did the American car market before the entry of the Japanese companieslook like, in Miura Yasuyukis opinion?

Sketch 25

The American market was controlled by The Big Three 72 - a pool of automakers selling big and expensive American cars. It is important to mention that theseexpensive cars were very costly to run. In Sketch 25 Miura Yasuyuki shows us the carmarket of the USA as claimed by The Big Three, a white stone. The hidden threat forthe companies of The Big Three is the fact that in this market the niche for fuel-efficient cars of moderate cost is vacant (point A). This niche is a low segment of themarket. If it is occupied by Japanese manufacturers the companies of The Big Threecan maintain their leadership in the market of mid-range and luxury cars. They should

be induced by the appearance of new competitors to move from the corner to the sideand then to the centre.

Thus, the invasion of Japanese car-making companies depended on a hiddenresource in the American market. It became highly relevant in the period of the OilShock in the mid-1970s when oil prices jumped.

70 Of course, it is hard to say for how long the alliance of Cossacks and the White Guard in Kuban-Crimeawould have lasted. Who knows what additional hidden resources would have appeared with the beginningof collectivization and indeed if collectivization could have started at all under such conditions?

71

Go: An Asian Paradigm for Business Strategy, published in English, Japanese and Russian.72 General Motors, Ford, DaimlerChrysler.


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American manufacturers did not hasten to occupy the niche of cheap cars. As aresult, it was occupied by the Japanese.

Sketch 26

The calculations of the Japanese business strategists73 included the kind ofscenario shown in Sketch 26. The Japanese planned to take the whole low-end sectorhaving left the luxury carmarket (the central area) to the The Big Three. As can beseen from the sketch the central part of the market is larger by volume than the smallniche of cheap cars in the corner.

However, it is important to understand that any market division has mutualeffects. As we can see from the sketch the American companies should have made theeffort to direct both financial and temporal resources to protecting their market sharefrom the likely challenges of their Japanese rivals. If Japanese companies invest inamarket then American companies have to do the same to keep their market share.Otherwise, they risk losing it.

Miura Yasuyuki establishes the fact that the American car corporations did notundertake any serious study of the Japanese companies invasion. This is how hedescribes it:

- In The Big Three it was considered that the Japanese would leave as soon asthe oil crisis was resolved, - David started realizing my idea.

- Post factum it was obvious that there was a serious mistake in this judgement,- David nodded.

73 The management of Toyota Motors study the game of go.


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- Why did not they try to close the Japanese into the corner of compact cars bypouring money into quality improvement in the higher market sectors in the centre? Iasked.

I see. After seizing the corner of compact cars, Lexus and Infiniti shotforward to the centre.

- It is a nightmare for any Go player. What could The Big Three achieve with the help ofjoseki74 for the 3-3

point75? They could make the Japanese invest more stones there. That is what is going on at the moment. The Japanese are busy developing the

corner in the USA, - David got my hint. Great! Force them to get into American problems.I smiled and David continued: let them carry on the business of manufacturing

compact cars and the Americans will strengthen their position, having seized the

initiative (sente76) in other parts of the world.- More than 50 per cent of the trade deficit between the USA and Japan goes to

one sort of production - cars. If the Americans make the Japanese reinvest their tradesurplus into American car-factories at least there will be many employment vacancies.Who is good and who is bad an American who goes to Mexico or a Japanese whogoes to the USA? as usual I made him utter another remark.

- But the Japanese corner is closed, - he said gloomily. This is a fair complaint for an American, - I agreed.

Then Miura summarizes: Of course, the business problems of the American Big Threeare more complicated and serious. The simplistic analogy of 3-3 joseki in go can bemisleading and incomplete. Besides, the Japanese car market entry was a lucky accidentthat had became possible because of two oil crises rather than the well calculatedstrategy of placing a stone at the 3-3point. It is obvious that another kind of strategy isneeded to open the Japanese car market. One way or another I consider that this analogywith point 3-3 may be an interesting, edifying and constructive example for further

business activity.

As a result Japanese Lexus and Infiniti started taking the market of expensivecars. Only then the Americans raised the alarm. What were the strategic calculations, ifany, of The Big Three car-makers based on? It is known that after the Japaneseinvasion of the USA car market they started publishing books about the coming trade

war with Japan that invoked a severe image of new samurai-invaders77

. Is not the

74Joseki is a Japanese word meaning an established line of play.

75 See sketch 26.

76Sente means initiative or the right to go first.

77 In A Call to Economical Arming published in the USA during the course of the presidentialcampaign in 1991 the following was written: the Cold War has finished. Japan has won. Taking intoconsideration the euphoria reigning in the USA after the USSRs collapse, looking at this phrase we canunderstand what serious danger American corporations saw in the Japanese expansion into their

domestic market. By the way, there was no China in the American market yet.


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modern characterization as life-threatening of Chinese goods produced in the USA asimilar reaction?

If a player does not see hidden resources they risk losing them because of theirrough actions. The loss of hidden resources impairs company capitalization.

Moreover, it is necessary to study your position in the market, searching forhidden threats and destroying them. A quality control system installation may serve asan example of such a search for hidden threats.The quality control system installationin the Ulianovsk car factory led to a decrease in the number of complaints received from

purchasers of SUVs. This investment into quality allowed UCF (Ulianovsk Car Factory)to eliminate the hidden threat of Western rivals seizing the market by exploiting animage of Russian cars of poor quality. Now, owing to UCFs efforts this hidden threathas been gradually disappearing and prospects of expansion within the controlled

marked space are broadening.

Do you need more examples of how to use a hidden resource? Posting insidersin this or that position in other companies is another example. In the future such personswill be able to facilitate an easy entry into many programmes and projects in new,

previously unavailable territories. In the future such placements, which are connectedwith the current investments, will offer such possibilities as becoming an operator inanew market or field of activity.

Sketch 27

In go terms it is enough to deploy an insider in a key position. One possibleexample is shown in Sketch 27. Black leaves stone 1 in the white players territory,


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the martial art of strategy - russian style

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