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Thursday, August 5, 2010

No. 15: Military Strength is Proportionate to the Square of Troop Strength

A medium-sized supermarket chain headquartered in Tokyo filed for court protection. The biggest reason for its failure is that it extended the battle line too much. In the height of its prosperity, it had 20 outlets in four prefectures instead of operating 20 outlets in one prefecture. A medium-sized supermarket chain can hardly compete with nationally known big supermarket chains that have lots of outlets across the country in an extended battle line. Of course, you can find not a few medium-sized chains that compete successfully with national chains, but you have to note that they are successful because they are pursuing customer-oriented marketing in a geographically limited trade area.

Nobunaga Oda (1534-1582) accompanied by 3,000 soldiers defeated Yoshimoto Imagawa (1519-1560) accompanied by 30,000 soldiers in 1560. This is the “Battle in Okehazama” characterized by the famous phrase “A small number of soldiers defeated a large number of soldiers.” However, knowing well that the winning was a very lucky one, Oda never tried again to fight against an enemy that had two times the troop strength he had. Even the world-famous Napoleon never tried to fight against an enemy with two times the troop strength he had.

It is important to know that military strength is proportionate to the square of troop strength. That is, the ratio of one to two in troop strength is one to four in military strength. It is, therefore, advisable for a medium-sized company to limit the trade area geographically and compete with big companies in a geographically limited trade area. In business, troop strength can be defined as the number of employees, market share, sales, and capital of a company. That is, if your competitor has two times bigger market share as you have, it is hardly possible for you to beat the competitor. Suppose Toyota has 40% share, while Nissan has 20% share. The ratio of military strength of these companies is one to four not to one to two. It is hardly possible for Nissan to beat Toyota under the same business environment.

Japan has the Edo period (1603-1868) that was extremely peaceful. During this nearly 270 years of peaceful period, Japanese seemed to have abated the awareness of battle and cultivated somewhat strange aesthetic feeling about battle. They became impressed with the battle that an army with a small number of soldiers provoked against an army with a large number of soldiers. This aesthetic feeling culminated in extolling undauntable warlords like Nobunaga Oda and peaked at the end of the Japanese-Russo War (1904-1905) in which Japanese navy defeated overwhelmingly powerful Russian navy in the Japan Sea, and the overconfidence finally ended in the disaster in 1945.

The Zero fighter was unquestionably the world’s best fighter in the early stage of World War II. With its excellent maneuverability and powerful weaponry, it could down up to three Grumman F4F Wildcats should an ace pilot like Saburo Sakai maneuver it. But it is totally impossible for one Zero fighter to down four Grumman F4F Wildcats. What should the pilot of the Zero fighter do? Run away immediately.

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