Frederick Lanchester was a clever British engineer. He was one of the pioneers of the British automotive industry, but his main interest was in aviation, particularly aerodynamic theory. In my opinion, he has a good claim to be the first person to elucidate the knock-out blow concept, in his book Aircraft in Warfare: The Dawn of the Fourth Arm (London: Constable & Co., 1916) -- which also happens to be a very early example of what was later termed operations or operational research. And as I've found out recently, he's also a business guru in Japan!
Of course, it's not uncommon for writers on military strategy to have their ideas redeployed to serve commercial ends -- any large bookshop is likely to stock Sun Tzu, Karl von Clausewitz or even Miyamoto Musashi, more for the benefit of would-be captains of industry than military history buffs. And the decisions of the great commanders of history have been combed for insights into sound management practice. But this is the first time I've seen an airpower strategist used in this way.
Aircraft in Warfare introduced what are known as Lanchester's Laws. In it, he argued that in "ancient" battles (that is, before gunpowder), the number of soldiers fighting at any one time was the same on both sides -- because one soldier could physically only fight against one enemy soldier at a time. (Think of masses of infantry armed with swords, pressing up behind the thin line of men at the front actually doing the fighting.) Therefore, all else being equal, the number of casualties inflicted by each army was proportional to its size. It made no difference, then, if an army of 500 men separately fought two enemy armies of 250 men each, or one combined army of 500 men; the outcome would be the same (and very much in doubt, as the sides are equally strong in both cases).
By contrast, in "modern" warfare, combat occurs at range. This means that every soldier in an army can be in combat simultaneously; they don't have to wait until they are standing next to the enemy in order to fight them. This means that the rate (not the absolute number) of casualties inflicted by an army is proportional to its size. I'll spare you the differential equations, but what this boils down to is that the effective strength of a pre-modern army varies as the number of men, N, and that of a modern army varies as N2. (Hence Lanchester's own name for his law, the n-square law.) Taking the example of a 500-strong army again, while it would still be evenly matched against another 500-strong force, it would comfortably defeat two 250-men armies, which are each only a quarter (not half) as strong as they would be combined. (Because 2502 + 2502 = 125000 < 250000 = 5002.) In fact, the army of 500 could consecutively fight two armies of 400 and 300 on equal terms. (Because 4002 + 3002 = 160000 + 90000 = 250000 = 5002.) In other words, in modern warfare numbers count, and count much more heavily than in ancient warfare.
I'll let sporting goods mogul Katsuro Ogino explain further:
Two countries are at war, one has an air force of 100 planes and the other has only 10. Let's assume the skies are clear and that the planes and pilots are equally good. If the two forces were to meet in a dogfight, how many planes would be left after the battle?
Ninety on one side and none on the other.
Wrong. Statistical analysis suggests the result would be approximately ten losses to two. It would seem that the obvious implication for business as well as battle is that the bigger, stronger side always wins.
So, this would seem to suggest that victory always goes to the big battalions, right? Not so fast:
But what if the outnumbered side managed to knock out three or four planes? This would constitute a victory of sorts. In other words, use of tactical ploys can provide the underdog with a momentary local advantage over his superior opponent.
What do you mean by a local advantage?
Scoring in a specific area even if the overall battle is lost. For example, the commander of the smaller force tells one of his pilots to fly ahead as bait, in an effort to pull out four or five of the enemy in pursuit. If the tactic works, the remaining nine planes would outnumber the pursuers, and shoot some or all of them down, with only three or four losses of their own. Of course, the enemy might not fall for the ruse, but the point is that careful planning can improve your chances.
Lanchester himself used the example of Nelson at Trafalgar, where his fleet of 27 ships was outnumbered by the French and Spanish fleet, 33-strong. The n-square law would predict, then, a British defeat. But Nelson's ships smashed through the enemy line, splitting it into smaller groups which could be defeated in detail, thereby making the n-square law work for the Royal Navy.
OK, maybe there's something to this, and maybe there's not (operations research analysts are still interested in his ideas, at least), but how does all this help one build a commercial empire? Ogino again:
What does that have to do with the ski business?
I'll tell you. My brother (Teibu Ogino, now chairman of Victoria's board) and I inherited some property in Kanda from our father. We had always liked sking and decided to go into the business, opening our first shop in 1972, just when the sport was gaining in popularity. There were other sporting-goods stores in the area, but we managed to do pretty well and soon opened two branches in the same neighborhood.
Several years later, we were considering expanding into other big markets like Osaka and Sopporo. But one of my friends, a proponent of the Lanchester theory [consultant and author Shinichi Yano - ed] who now runs a management-consulting firm in Tokyo, said it would be suicidal to branch out too early.
"Secure your home base first," he said. "Don't spread your forces too thin; instead, concentrate on your home ground." So we kept our fourth, fifth, sixth and even our seventh shops in Kanda, where we now control abot 60% of the floor space. We also have about 60% of the sales, surpassing competitors such as Alpen and Mizuno, neither of which has more than 20% of the business in kanda.
What is your overall market share?
Victoria accounts for some 30% of ski and skiwear sales in greater Tokyo region, but probably only about 10% nationwide. Other companies such as the giant discount chain, the Daiei, sell skis and skiwear. But they also sell bread and butter and thousands of other products, too. We expect sales of about $557 million this year, but Daiei will probably pull in about 25 times as much. They would crush us if we tried to compete with them as general-purpose stores, but in the area of skis, they can't touch us.
Take our highly specialized stores in Kanda:
There is one primarily for women, one for kids, and so on. Some of our floors are devoted entirely to gloves or goggles. Customers come to Victoria because they know they'll find exactly what they want. The whole point of the Lanchester theory is to become the dominant player in your own field.
Well, that's all well and good. Dominate your home market before even thinking about taking on the big guys, focus on your core business rather than trying to compete in all areas. Sounds sensible. But what I haven't seen is what Lanchester has to do with all this. What is the justification for applying Lanchester's n-square in the business world, for which it was not developed? The struggle for market share may well be likened to a battle metaphorically, but that doesn't mean that the strength of a business can be equated to the square of the number of its stores, or its capitalisation, or its market share, or something like that. Perhaps a justification can be found in one of Lanchester Press's publications. There are some hints on their website:
There are many popular books available to the business community that purport to show how strategy based on a mixture of Sun-Tzu, Mishima, Attilla the Hun et al. seasoned with a dash of Von Clausewitz can be used as a basis of marketing strategy. However, all of these books were written before machanized warfare developed and deal only with the one-on-one combats that takes place under Lanchester's Linear Law. In reality, the art and practice of military technology has progressed somewhat since the days of the samurai warrior. A few well-aimed bursts from a machine gun will dispatch a fair-sized army of samurai warriors.
Today, sales and marketing takes place under Lanchester's N-Squared Law. Since there are always multiple participants in any given market sector. Of course there are a few special cases of one-on-one competition, such as Boeing and Airbus (the only two manufacturers of jumbo jets) and in wide screen cinema projectors (Imax and Iworks the only two manufacturers of wide screen systems). Consequently, Western marketers are going into battle with, at best, half a theory and ignorant of the power of Lanchester's principle of concentration and the N-Squared Law.
I remain unconvinced. It all seems a bit flaky to me. But I wonder if Lanchester Press would be interested in my book proposal, Strike Hard, Strike Sure: The RAF's Most Motivational Mottos and How They Can Grow Your Business ...
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