The Mongol Horde and Modern Business Strategy
Mention the "Mongol horde" of medieval warrior Genghis Khan, what comes to mind? Webster's definition of horde, "a teeming crowd"—that is, the image of mass, bigness.
But that's as wrong a historical interpretation as can be imagined. As business writer David Rogers pointed out in the June 1988 issue of Success magazine, the Mongols, on their way to conquering the greatest contiguous land mass ever controlled by one government, consisted of "a group of freelance bandits," whose basic building block "was a man on a small horse." The horsemen who were almost always outnumbered, "could sprint to a point of attack, change direction at a second's notice or disburse to muster up later. The key principle was the autonomy of the small unit; it was big enough to mount an offensive, but small enough to retreat quickly."
Maneuverability, then, was the hallmark of the Mongols' strategy in war. As a basis for business strategy, it is discussed brilliantly in a new, unpublished paper by Swedish business professor/researcher Gunnar Hedlund. His "Milking Cows versus Going Hunting: Conceptions of Corporate Strategies" attacks the Boston Consulting Group's use of farm-animal metaphors—for instance, "cows" to be milked (for profit) and "dogs" to be turned into dog food (that is, businesses to be "harvested" or divested). Hedlund contends that BCG's metaphors, a cornerstone of business strategy thinking in the 1970s, are poorly aligned with forces at work today.
He contrasts what he calls an "A-mode" of strategy, based on the agricultural model of civilization, with an "H-mode," which takes us back to earlier times, when hunter-gatherers dominated the land. Hedlund argues that the new competitive context is more analogous to the H-mode civilization than to the A-mode. He examines the two models along four dimensions.
First, Hedlund considers the environment: Is it stable or chaotic? "[T]he whole thrust of the agricultural revolution," he says, "was to make the environment predictable. The fight was against the hazards of relying on the fluctuating supply of wild animals. ... True, there would be good and bad crops, but with foresight, technology, and storage of food, difficulties would be overcome."
By contrast, "the situation of the hunter-gatherer ... is unpredictable. Last year there was plenty of caribou in the West; this year it may be in the East, and very little of it." Hunters therefore, don't waste time making predictions; they know they have minimal control over their environment.
What has this to do with corporate strategy? Everything, according to Hedlund: "The idea that you can know what is around the corner of time is the foundation of most planning systems. Even though the track record of forecasts is dismal, firms continue to work as if prediction were possible."
Hedlund then moves from environment to strategy, counterposing "harvesting a location" (the A-mode strategy) with "search by locomotion" (in the H-mode). When the agricultural mentality held sway, people sought large plots to take advantage of scale. Strategically, farmers would find a good position and remain there, defending themselves "against the attacks of the barbarians from the mountains, and making peace or cartels with their neighbors."
On the other hand, "[t]he H-mode of strategy builds on locomotion. It is crucial to be able to move, to search for new opportunities, to use the good years, not to horde, but to go over to new mountains, to try another type of net ..." Hedlund draws an analogy to today's mercurial business environment, declaring that niche-creation and differentiation strategies are the most likely paths to survival.
The third dimension, after environment and strategy, is structure. Hedlund compares the familiar "hierarchies" of the A-mode with the "flexible bands" that dominated the H-mode. Traditional bureaucratic structures, which presuppose knowledge of what the organization will have to do in the future, won't work in today's uncertain environment. Silicon Valley, Hedlund reminds us, bears little relation to the Nile Valley.
The final differentiating dimension is leadership. H-mode leaders were heroic, yet egalitarian—and true strategists. In the hunting tribes, leaders had to be expert hunters who had performed proven feats, in order to know what to do as well as to be able to inspire fellow hunters. While Hedlund characterizes the relationship between leader and follower in the H-mode as one of "joint pursuit," he points out that in the agricultural mode, "[t]here is more distance between the serf and the feudal lord than between the most inferior and the leader of a hunting band. Slavery thrives best in large-scale agricultural settings. Humans are merely resources."
Summing up, Hedlund speculates that "this analogy is much more than an amusing but idle exercise. All firms in the industrialized world are struggling with the drastic changes in their environment. ... The message is the same for all: You cannot predict or control the environment. No established position is secure, and nurturing the capacity for change, on the basis of distinct and unsurpassed skills, is the only guarantee for a chance of a decent continued life."
Hedlund's analysis is on target. Revising our models and mind maps is an essential step in creating compelling visions and effective strategies to deal with today's and tomorrow's chaotic circumstances. The striking metaphor of the mobile hunter may well be at the root of effective strategic leadership in the future. Thinking about the difference between milking cows and galloping on small horses is no academic exercise.
(c) 1988 TPG Communications.
All rights reserved.