Why the Prussian Way is a Great Way of Operating Businesses and Teams

My LinkedIn column has always been a brand of unfiltered true opinions of mine, focusing on "what it is" and practicality instead of cheerleading and conforming the popular but useless buzzwords in public media these days. Today the topic is about my philosophy and doctrines of operating businesses, teams, and especially in a dynamic environment.

Contents:

• I. Introduction
• II. The Baseline of the Prussian Way in Operations:
• III. The Prussian Way of Operations, People and Organizational Management
• IV. The Prussian Way of Recruitment and Human Resource Development
• V. Graf von Moltke and the Prussian System of Options and Choices
• VI. The Economic Context, Prussian Nature of Philosophies, and View of Arguments
• VII. Summary of the Prussian Way:
• VIII. The Modern Day Prospect

I. Introduction

As someone who spent the last 11 years studying, experimenting and taking actions in real business practice upon, the Prussian methodologies especially Prussian military methodologies, as well as their application in the 21st century business world, I believe that the Prussian way is probably the most effective way of operating any business and team in a dynamic and "uncertain" environment in modern time. Although "Prussian" is not a popular term these days, it is at least not some useless buzzword out there, and its wisdom never faded along with time or land.

The "Prussian way" can be categorized into the following fronts:

1. Prussian way of operational and strategic maneuvers
2. Prussian way of organizational and people management
3. Prussian way of education
4. Prussian way of economics and philosophy

For the purpose of focusing on what's relevant to businesses, startups and teams, we won't be discussing the parts related to the Prussian way of education today. Perhaps I will write an article advocating it at a future time.

So what are the unique aspects about the Prussian way? Why is it relevant to the 21st century business world?

It takes a whole introduction to explain through the economic context, but in short, the background was that due to geographic and historical constraints, the Prussians faced an environment of uncertain and multi-front existential threats, the scarcity of resources of finances, goods and people in comparison to its neighbors like France and Austria in the 18th and 19th century. Except for big tech like Amazon and Google, this is likewise the case for most of businesses and especially tech businesses in the 21st century.

We will discuss in the following chapters in regards to the unique aspects of the Prussian way.

II. The Baseline of the Prussian Way in Operations:

Because of this historical-economic context of its nature, the Prussian way focused on dynamic operational flexibility and strategic maneuvers in wars, or "Bewegungskrieg", by concentrating limited resources and focus on outflanking its counterpart in a rather short period of time, instead of an war of attrition. This was especially the case after the Battle of Austerlitz, severely defeated by Napoleon. The defeat at Austerlitz was the real birth place of the Prussian General Staff and von Clausewitz, both of which became the pillars of the Prussian way.

In today's business environment, businesses and especially tech startups face the same kind of uncertainties and fundamental disadvantages of scarcity of resources, in comparison to ones like Apple and Google. Passion and marketing alone cannot win real games beyond raising some initial rounds of funding, just like the "Schlaa!" kind of bravery from Napoleon III's side fell short in 1870. Concentration of forces and resources, and the overall flexible operational guidelines, are the keys of the Prussian way of operating businesses.

III. The Prussian Way of Operations, People and Organizational Management

Speaking of both the Prussian way of operations and the Prussian way of people and organizational management, we cannot avoid the mention of Auftragstaktik, which unifies both aspects methodologically. The key of Auftragstaktik isn't letting people do whatever they want, nor is it strict and inflexible micro management like the stereotypes against Prussians in urban legends. Auftragstaktik unifies and has a balanced integration between disciplines and flexibilities. From all the way in the top management, as the Prussian General Staff HQ, the overall mission objectives were always briefed and rigidly studied at all levels. The lower level management and staff were responsible for carrying them out to their fullest. What's unique about Auftragstaktik in comparison with the British style of command-and-control methods, is that in Auftragstaktik lower level management and staff are allowed and expected to take different course of actions in real time when they deem the situation necessary - such as when the troops were in existential danger or with opportunities to achieve an encirclement of the counter parts, so long as their actions were aligned with the overall mission objectives. Prussian officers and soldiers were all trained and expected to take personal initiation from every level in uncertain and unpredictable situations.

As far as people and organizational management, the Prussian way focused on an integration and coexistence of meritocracy and aristocratic humbleness. Comparing with Austria and France in that era, meritocracy gave Prussians the edge to promote and focus the most elite human resources in the critical theaters of the battlefront. For example, General Steinmetz, without a Junker background, was promoted to almost the highest rank in the army because of his achievements. Likewise, he was substituted after sub-par performance in the first stage of the Franco-Prussian war. As another example, the Battle of Tannenberg was the brain child of an ethic French. "Aristocratic humbleness" means that, while respecting bona fide human relations and prestige, the Prussian way of mindset views Aristocracy not as something for bragging, but as duty and the god-given nature one carries from birth.

In a standard Prussian nature, initiations were taken both from top-down and bottom-up, balanced perfectly between centralization in mission objectives, and decentralization in details and initiations since the days of Frederick the Great. Prussian high ranking officers took pride in getting hands dirty and staying close to the front line. For example, Prince Karl, already a high ranking general, personally led his troops to the critical position at the Battle of K?niggr?tzer that led to the victory of the battle and the war with Austria. Erich von Manstein often personally went to the frontline to measure the thickness of Soviet tank armor after battles.

In the 21st century business environment, Auftragstaktik is a superior and effective way of managing businesses and especially tech businesses. It is almost impossible for the CEO or top management to micro manage every aspect of a sophisticated business, nor is it possible for staff to carry out exactly what's planned on paper and succeed by "doing what's told" in most of cases, except government contracts or sectors like big healthcare or banking, when redtape and upfront contractual specifications are necessary. For example, in most tech businesses, it is impossible for the CEO or CRO to directly manage every deal detail directly, and it is for business development and sales folks to operate under the overall mission objectives and general guidance while using personal initiation to seek and capture opportunities. As another example, in most of tech businesses, it's impossible for the VP of Engineering or VP of Product to specify every detail in engineering or product specification or solutions, and it is for engineers, designers and data scientists to use their initiation to solve problems under the overall mission objectives and guidelines to carry out the fullest of their capacities - so long as the results make sense. The Prussian way, and especially Auftragstaktik, puts priority and emphasis on staff initiation, rather than bureaucratic measures.

For businesses to excel, it is a must to recruit, train and organize a team of dynamic and versatile staff with solid foundations, plus great character and initiation. It is quite common to hear how politics got in the way at many companies, large or small, to the degree of being some sort of contagious corporate disease. The Prussian way, in a balanced approach, would be aligning people's interests and focus their talents on shared business interests rather than bureaucratic political interests against each other. That's how to build highly effective and efficient teams and organizations in a challenging and competitive business and especially tech business world, given that tech businesses are always facing uncertain and dynamic challenges in their nature.

Similar to the nature of Prussian military, in the business world today, leaders are expected to get their hands dirty and strive in the frontline from time to time along with the soldiers as well. The balance and integration between top-down and bottom-up approaches, the balance and integration between centralization of mission objectives and the decentralization of applying expedients, has becoming increasingly important to stay in lead positions of the business world. We've often seen tech company CEOs and executives personally getting to know the clients' needs, painpoints, and some critical details that affect the lifelines of a business. We've also seen CEOs get into technical and product details when necessary to observe or get their hands dirty for getting things done, without over-micro managing when they don't have to. It is the case with Elon Musk, as it is the case with a list of other leaders in tech. Israel IDF, the closest resemblance to the Prussian way in the modern day world, always has its officers stay and lead in the forefront of battles and actions, and has high mortality rate among officers but high victory rate also. It has been the tradition since the days of Moshe Dayan and Ariel Sharon, and why Israel IDF is so effective.

IV. The Prussian Way of Recruitment and Human Resource Development

The Prussian way of people and organizational management has rigid requirements on staff quality, especially in regards to discipline, personal character, and initiation. Inaction and complacency is always referred as the worst of all behaviors. Erich von Manstein always emphasized "a perfect personal character" as the top criteria of choosing and promoting general staff officers.

In today's environment, the difference between the top-tier engineers and top-tier tech companies or startups and the rest engineers isn't necessarily that top tier engineers code better or can solve tougher algorithmic problems. It is the ability to take personal initiations in solving problems, rather than just being coders to carry out "what's told", and sometimes to drive product development under the overall mission objectives. At the same time, I've seen engineers from a trillion dollar company doing very silly petty things outside that even dish washers wouldn't do, which tells us that the best quality talents aren't always on the biggest ships. We need staff with both a near perfect character and tireless personal initiation, or capable engineers could be doing "silly" things out of their ego, such as hiding code, doing something against the mission objectives, or even sometimes malicious things -- such as some Chinese engineers who stole code from American autonomous-driving companies to sell elsewhere. Anything else can be taught, but character and temperament cannot.

V. Graf von Moltke and the Prussian System of Options and Choices

Speaking of the Prussian way, we cannot leave out the great von Molke the Elder, or whom I often refer as Graf von Molke or the Great von Molke - my ultimate professional role model and the greatest Prussian General Staff officer of all time. The Great von Molke's most significant methodological paradigm is to turn the management of warfare into a system of options and choices, and to play out these choices towards the Prussians' favor. The stereotypes out there tend to refer Prussians as people with no humor, but the Great von Molke had a long history of personal curiosity and humor in cultures across the world, languages, etc. Likewise, Hans von Seeckt, arguably the greatest Prussian General Staff officer after the Great von Molke, also had a sense of humor and nature of curiosity about the world out there. No matter what I am working on, how focused I am, or how stubborn I can be from time to time, I always required myself to remain humble and curious about the world beyond what I already knew and beyond my own domains.

In the 21st century business world, when the study of probabilities, game theories and artificial intelligence maturate and improve, the von Molke School of business management as a system of options and choices has a bright future. For example, in the quantitative financial markets, as the Chief Strategist of my boutique quant analytics firm Prussian Analytics, I draw the overall operational plans and mission objectives on each trade campaign, whereas I've been starting to train people with no experience or with experience to take on the "trader" role in the Auftragstaktik setting, in a system of options and choices under overall mission objectives. Like wars, public financial markets operate similarly in some ways. The only difference is that we don't have a counterpart to "encircle" or "annihilate", but only ourselves and our self-deceptions to beat. As another example, on a number of occasions, I've purposely tried hard to put Auftragstaktik the von Molke's way into startup practices. I faced a lot of challenges in terms of staff capability, mindsets, and budgets, but fundamentally it's not a problem of Auftragstakik but the environment. At any tech or financial institution, or a startup, with the right environment and resources, I'm confident that we can achieve many great successes the Prussian way.

VI. The Economic Context, Prussian Nature of Philosophies, and View of Arguments

As I mentioned at the beginning of this article, the Prussian way became the way it is, is not because of genetic difference or any mythology, but because of the historical-economic context Prussians faced in the 17th and 18th century. Thus, behind the Prussian way there's the backing of Prussian economics and philosophy. Due to limitation of space and time, today I will not write further deep into these fronts. As a summary, the Prussian way was backed by a booming economy in the pre-industrial revolution and during the early decades of industrial revolution, when the Ruhr industrial region with rich coal resources boomed. Equally important, the Prussian way was backed by the Prussian philosophy, such as Emmanuel Kant and Hegel, the Prussian Virtues, and the humbleness of believing that quality and excellence, along with duties and responsibilities, are born, and not made. Thus whatever work and achievements we do, including the work ethic, persistence and intelligence we possesses, is rather a part of fundamental quality of ourselves, a duty, god-given, rather than acquired by ourselves. This mindset puts down the unnecessary ego and makes us focus on our duties and responsibilities.

Upon the Prussian aristocratic humbleness and its implicit open-mindedness, it is not uncommon to see Prussian General Staff officers or officials argue loudly regarding subject matters, sometimes yell and slap their hands on table, in order to get things right, even in the case of Otto von Bismarck in front of Graf von Moltke and the Kaiser. It's purely regarded as professionalism and loyalty to their duties in the Prussian nature, and Prussian officers would rarely let subject matter arguments in the way of personal relations and friendship.

Likewise, although we should keep professional confrontation to its minimum, especially between subordinates and management, when it's necessary for achieving the overall mission objectives, if staff have to argue they should be permitted to safely argue with honesty and sincerity, much better than "acting" respectful but being complacent. It's not uncommon to see modern day American business leaders and executives relentlessly argue over subject matters, for the same goal of professionalism and loyalty to their duties, rather than personal ego or pettiness. In the case of Israel, it is even more common to see frequent and constant arguments and loud challenges in meeting rooms, but only to focus on subject matters without damaging personal relations.

VII. Summary of the Prussian Way:

With all the above said, nothing will ever replace rigid disciplines and hard work, together the persistence to prevail and to make others prevail together. Without the Soldier King - Fredrich the Great, there would've been no "Prussian way" to start with.

In summary, the superiority of the Prussian way in the business and organizational management applications include but aren't limited to the following:

1. Rigid discipline but also operational flexibility
2. Mission objective-oriented, less bureaucratic
3. Aligns staff personal initiation while respecting authority and the overall objectives
4. Aligns, integrates and optimizes both the top-down approach and the bottom-up approach
5. Balances centralization and decentralization to perfection, without hypes of one versus another
6. Encourages upper management to get hands dirty and lead from the forefront from time to time, but without over-micromanaging
7. Aligns meritocracy and bona fide duties of aristocratic humbleness
8. Highly adaptive in different industries and sectors of dynamic and uncertain environments
9. Helps underdogs and ones with a scarcity of resources to achieve much beyond their face value
10. Methodologically treats businesses and operations as a system of options and choices, highly scalable
11. Economically thrift, while philosophically rich and humble
12. Practical, self-examining, and aging-resistant

VIII. The Modern Day Prospect

Even though modern day popular methods in the business world, such as the 80/20 rule, pomodoro method, and agile methodologies, each resembles some parts of the Prussian way in operations and businesses, none of them ever systematically and methodologically achieved the same significance as what the Great von Molke and Auftragstaktik achieved 150 years ago. The closest resemblance of the Prussian way in the modern world is the Israel IDF, which is of course the world's most effective military, of which I am also a big fan of.

When I am given sufficient resources, I'd like to apply the Prussian way of operating a business and teams again, and to unleash its effectiveness and efficiency to achieve great successes with those who believe in me, whether it's in financial markets, in venture capital, or in tech enterprise/startups.