Sun Tzu Art Of War In Business | Starbucks | Uber vs Didi Chuxing

When it comes to war, timing is everything. And, as it turns out, timing is everything in business too. I’ve been looking at the lessons entrepreneurs can learn from a book written in China in 500BC and, would you believe it, it can teach us a lot about running a business. As surprising as it is, the parallels in fighting a war over 2,000 years ago and starting a business in the modern world are quite something.

Sun Tzu summed up military strategy when he said: “Move not unless you see an advantage; use not your troops unless there is something to be gained; fight not unless the position is critical”. He made the point that, in battle, it’s important to know when to make your move. Use your experience and instinct to know when the time is right. Sometimes waiting is the best tactic. And, of course, we know that applies to being an entrepreneur as well.

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Chinese-American business consultant Chin-ning Chu made this point more recently. She said: “Being in sync with universal timing gives you momentum, and momentum gives you power. Waiting until the right time to do something is like running with the wind at your back.” 

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I’ve got two examples to share with you, and they both involve China. Don’t worry, we aren’t looking at battles that raged there a couple of millennia ago. Nope, we’re looking at modern China and the problems Western companies face when they try to enter the market there. Some, like Starbucks, are successful. Others, like Uber, are left scratching their heads and wondering where they went wrong.

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In January 1999, Starbucks opened its first store in Beijing. It now has over 4,000 outlets in 150 cities in the country. So how did an American coffee shop chain become so successful in a traditionally tea-drinking culture? Well, they got their timing right. In the late 90s, a middle class was starting to emerge in China and Starbucks was there to offer a Western coffee-drinking experience. The company did its market research and then some to make sure they got it spot on. They didn’t view China as one homogenous country, they realised that China of the north is very different to the south, urban areas are completely different from more rural locations. They didn’t advertise through mass media, which could have been perceived as an insult to the local tea culture. They picked high-traffic and obvious locations to showcase their offerings. For a global brand, Starbucks went local and that, along with timing, was key to their success.

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Let’s contrast that with the fortunes of Uber. In 2016, after two years and $2billion of losses, Uber agreed to sell its Chinese business to local competitor Didi Chuxing. For this, Uber received a 20 per cent minority share in its rival, a $1billion equity investment from the firm and was left with a very red face indeed.

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Uber isn’t the only American firm to have trouble cracking China. Facebook, Amazon and Google have never quite managed it. Robert Salomon, associate professor of international management at the New York University Stern School of Business, reckons there are many reasons. The differences in the political and legal systems are staggering, and even the way both countries do business is markedly different. In China, business and personal relationships combine, whereas in America, business remains business. It’s impossible for US companies to conduct themselves in the way they do at home.

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I’d like to think Didi’s bigwigs had read The Art Of War, and taken this bit of advice from it. Sun Tzu said: “When you surround an army, leave an outlet free. Do not press a desperate foe too hard.” And that’s exactly what they did with Uber when they gave it the chance to leave the Chinese market in the deal they reached. If Uber could go back and change one thing, surely they would have teamed up with Didi from the start, instead of trying to compete with them. Their knowledge of the market would have been the difference and I bet Uber would have succeeded.

They say a week is a long time in politics – and goodness me, don’t we know that all too well just now – but it’s also an eternity in business. My advice, and the advice of Sun Tzu, is bide your time. If you pick the perfect moment, it could mean the difference between success and failure. And talking of the perfect moment, I reckon now would be the perfect time to hit that subscribe button, and get signed up to my YouTube channel and discover lots more entrepreneurial advice and tips.