First: empathy with the adversary (know the enemy)
On October 27, 1962, at the height of the Cuban missile crisis, Kennedy received two consecutive messages from Kruschev, one after the other. The second before the first could be answered.
The first message (soft) essentially said: “If you promise not to invade Cuba, we will not install missile nuclear heads in Cuba.”
The second (hard) read: “If you attack we will retaliate. Dare not.”
Kennedy was inclined to answer the second message in strong terms, because he was convinced that nothing but sheer force would lead the soviets to withdraw the missiles.
It was then that at a White House meeting,
Thompson added: “Kruschev does not wish war, but he is very proud and he has not enough strength within the politburo to survive a humiliating withdrawal. He is searching for something to say to the Soviet people to save face: ‘see, I got the Americans to promise not to invade Cuba’.” (Indeed a major shift in US policy, which formerly led to the Americans once trying to invade Cuba – Bay of Pigs – and murder Castro twice, under Einsehower and Kennedy)
Kennedy did indeed answer the soft message and it led to the solution of the crisis. This was done in opposition to the military, which wanted to invade Cuba anyway, saying that war, both with Cuba and the Soviet Union, was inevitable; and so, the earlier the better, to take advantage of US superiority.
In 1992, McNamara met Castro who said to him:
1. “At the time of the crisis back in October 1962, Cuba already had 160 nuclear missiles pointed at the US (Americans mistakenly thought they were just on their way to Cuba, thus the blockade)”
2. “In the case of an attack on Cuba, Kruschev and I had agreed to launch them”
Therefore, according to McNamara, the world avoided a nuclear war by a ‘hair’s whisper’. And the credit must go to a man (Thompson) who, knowing his adversary well (Kruschev), was able to put himself in his shoes and see the world through his eyes.
In management, few things are as important as this: to empathise with the competition. If a company defines its mission as ‘a car for every purse and purpose’ (General Motors), we can count on a broader market coverage than if a mission is defined as ‘the ultimate driving machine’ (BMW).
If a competitor’s fundamental competence is in optoelectronics technology, for example Sharp, it will naturally manufacture calculators, microwave ovens, CDs, PC screens, cockpit instruments, and so on – all products that share that special skill. But, if a firm’s special competence is in lens grinding, for example Canon, then it is to be expected that from video cameras, it will move onto producing Xerox machines and lithography equipment.
Both Yamaha and Honda started by manufacturing low price motorcycles. But since Honda saw itself as an engine manufacturer, it moved into cars, tractors, lawn mowers, small plane engines, and so on.
Yamaha? Well, given it saw itself as satisfying leisure requirements, it moved into pianos, guitars, ski equipment, tennis rackets, and so on.
How can firms get to know their competition? By creating a ‘shadow cabinet’, which dedicates itself to producing short periodic reports on the following topics: strategy, values and competence, thereby forecasting the competitors’ future moves.
As Sun Tzu once said: “If your enemy knows you better than you know him, you will always be in danger. If you know each other equally as well, you have a 50 per cent chance of victory; but if you know him better than he knows you, in 100 battles you will never find yourself in danger.”
Second major lesson that McNamara learned: the importance of facts and statistics
When leading the Air Force Statistics Office during War World II, McNamara discovered that 20 per cent of planes aborted their attack missions over Germany and flew back.
McNamara went over the flight reports and discovered that it was all baloney. The real reason was fear: on average, four per cent of the planes were shot down.
General Lamey then issued an order saying that any false flight report would lead to trial by court martial. The percentage of aborted missions dropped instantly to…almost zero per cent.
When working for Ford, McNamara was stunned by the sales success of the VW Beetle. He asked why? Answer: “We think…we believe…the clients are foremost European emigrants.”
McNamara asked for a market research study. Result:Beetle owners were mostly college professors, lawyers and doctors, between 25 and 35 years old. Why? Again came the answer: “We think…we believe…that it is mostly a question of status, of European glamour.”
McNamara ordered a further investigation. Result: a large portion of consumers want smaller cars, which are more discreet and easier to manoeuvre and park. When Ford launched a compact model for this segment, the Falcon, it became one of its greatest successes ever.
Indeed, as Peter Drucker says, in any decision one must start with the facts: what do we really not know? And what do we know? How important are the facts we ignore? And to what alternative decisions can what we know lead us to?
President F. D. Roosevelt had a saying displayed on his desk: “In God we trust; all others please bring us facts.” Why? Because opinions are a travesty of facts. They change the real for the virtual and thus create a direct path…to disaster.
By Dr JORGE A. VASCONCELLOS E SÁ
PhD Columbia University
Jean Monnet Professor
at the University of Lisbon
