Guerilla actions as small business strategy: out-witting is more competitively responsive than out-spending.

Byus, Kent ; Box, Thomas M.

ABSTRACT

Small and medium-sized firms face disadvantages in the dynamic global market place today. The authors suggest that "fast cycle decision making"--the application of Col. John Boyd's OODA Loop philosophy can create economic advantages that will allow the smaller firm to aggressively compete against much larger rivals. Fast cycle decision making suggests deception, rapid response and being able to "turn inside" your opponent's decision cycle. It is of interest to note that this version of guerilla warfare is now embodied in the United States Marine Corp's new doctrine of Maneuver Warfare.

INTRODUCTION

Erich Fromm in his seminal work Man for Himself (1947) posited the following on the nature and character of man. He writes, "Reason, man's blessing, is also his curse; it forces him to cope everlasting with the task of solving the insoluble. Man is the only animal that can be bored, that can be discontented, and that can feel evicted from paradise. Man is the only animal for whom his own existence is a problem which he has to solve and from which he cannot escape." General Gordon Sullivan, former Army Chief of Staff, suggests in his book Hope is Not a Method, that "the essential character of strategy is that it relates ends to means" (Gordon and Harper, 1996). Finally, it is often reported that Sun Tzu in the Art of War claimed that "all strategy is based on deception, with the expert approaching his objective indirectly." The authors of this manuscript propose that in business there exists a basic dilemma of gaining economic victory in the shortest possible time; incurring the lowest possible costs; while suffering the fewest delays and set-backs. Accordingly, the nature of business produces a requirement for a planning mechanism that drives decisions, creates spontaneous innovation, and produces administrative comfort within the methodical processes generally associated with business strategy. This is particularly true for small and medium-sized enterprises (SMEs). Those firms have, characteristically, severe resource constraints as compared to their large competitors and so their strategies and related tactics have to be quick, disruptive where possible, and more than anything else correct. Frequently there is no margin for error.

As considered in this manuscript, the rapid transformation of the market place from an oligopolistic domestic to the highly competitive monopolistic global has brought about an emergent use and study of guerrilla tactics. It is suggested by the authors that guerrilla actions that can increase entrepreneurial opportunism and result in the inability dominant "behemoth" institutions to SMEs when resolving market-based problems. It is reasonable to assert that the effective use and understanding of these varied and unconventional techniques gain greater and more comprehensive discussion in the decision making of SMEs with the inclusion of a specific, rapid response decision model. The purpose of this article is to initiate the creation of general theories of an otherwise random set of actions, conveniently referred to as guerrilla--a term that in many circles conjures images of disreputable bandit maneuvers that destroy order and impede objective-driven performance.

Guerrillas are decision makers. The desired economic result of this decision making is market disequilibrium and a reduction of the dominance of larger, more resourced organizations. Guerrilla activities are also effective opportunities to introduce innovation, provide economic prosperity, and create jobs. Guerrilla activities are inherently entrepreneurial in nature. Schultz (1980, pp. 439) described entrepreneurial decision-making activity as creating "disequilibria that are inevitable in the dynamics of modernization and economic growth." It is the disequilibria of the guerrilla that has the potential to produce greater value, more robust innovation, and that enhances the return on investments by SMEs. This paper suggests that there exists with guerrilla tactics a specific decision-making process that is very much in concert with entrepreneurial excitation. In general, guerrilla tactics are proactive decisions that are asynchronous, rapidly developing measures that are taken to both survive and thrive in highly competitive and economically hazardous conditions.

BRIEF HISTORY OF GUERILLA WARFARE

The term "Guerilla" means small war, the diminutive of the Spanish word guerra (war). The use of the diminutive suggests significant differences in number, tactics and scope between the guerrilla army and the formal army it opposed. The word was coined in Spanish to describe the nature of their opposition to Napoleon's regime and came to be used to describe any similar type of conflict. Clearly, guerilla warfare preceded Napoleon by centuries. The Fabian strategy applied by the Roman Republic against Hannibal in the Second Punic War was an example of guerrilla warfare. Likewise, Hungarian peasants facing the Mongols after the Battle of Mohi used guerilla tactics as did the 19th century Balkan population in conflict with the Ottoman Empire.

In later years, Mao's conquest of China, the relative success of the IRA against British forces and Ho Chi Minh's early battles in the Vietnam War are all examples of success of small, highly mobile forces with good intelligence against much larger conventional forces. It is of interest to note that the United States Marine Corps has developed a relatively new doctrine--Maneuver Warfare--that reflects the basics of guerilla warfare and also is based on the work of Col. John Boyd in his twenty years of consulting experience at the Pentagon (Richards, 2004, Santamaria, Martino & Clemons, 2004).

GUERILLA STRATEGY CONGRUENCE

Strategy formulation is largely an intellectual activity; the analysis of abstract relationships; the development of plans intended to produce predictable and desirable outcomes; the manipulation of mechanical processes, inventories, and logistics, within organizational competencies and culture; constrained by the scarce resources of the firm. It is reasonable to assert that entrepreneurial firms (SMEs) have fewer and more vulnerable resources than institutions or large multi-national conglomerates. Dettmer (2003) details a constraint management model definition of strategy development as "the means and methods required, satisfying the conditions necessary to achieving a system's ultimate goal." Within this context, the author(s), in alignment with Dettmer (2003), suggest that guerrilla or entrepreneurial decision making focuses resources on objectives quickly, effectively, and efficiently, with goal orientation being more long-term than near-tern guerrilla. By extension, large institutional decision making and strategy development fail in one or more of these basic characteristics. Academically, business strategy and decision formulation has largely followed an inverted hierarchical process model that is relatively inflexible and certainly long-term. However, the 21st century, globalized business environment is more complex and demands rapid change, and flexible, asymmetric decision making.

The authors suggest that decision making at the SME level is by its very nature a rapid, iterative, interactive responsibility process involving people and their dependent, independent, and interdependent relationships to the various environments (internal and external) that tend to shape, reshape, and disrupt the various elements of doctrinal strategy and policy on a painfully persistent basis. Further, because of the entrepreneurial nature of SMEs, decision making is the creation or recreation of the fundamental set of relationships characterizing an entrepreneur's or founding team's behavior: its environmental, internal and input-output parameters that often are in conflict with contemporary theories of strategic business. Accordingly, the entrepreneur, ergo nascent guerrilla, must balance the many elements of the total organization within the reality of survival and value-centered integrity and must implement decisions within time and resource constraints that can have devastating consequences if left unattended or slowly attended.

In 1991, Jerry Wind, the Lauder Professor at the prestigious Wharton School, and Alfred P. West, Jr., the Chairman and Chief Executive Officer of SEI Corporation, reported in the October issue of Chief Executive that the 21st century enterprise would be organized and managed in dramatically different ways from the firm of the 20th century. They suggested that the new paradigm would be the result of remarkable changes in the emerging global economy. Changes in the global business environment have, in retrospect, created new challenges for enterprise and decision makers alike. This fundamental shift in perspective at the global level requires different models of the decision-making process, because the consequences are dramatically more rapid and significantly more impactful. Further, all organizations will be required to adopt flatter structures, greater empowerment, and substantially more high-speed, reduced-cycle decisions at all levels. Guerrilla techniques, when examined, may provide a platform for extension and expansion of rapid, asynchronous, decision-making models.

Layered decision-making models (strategic planning models) do not provide speed, flexibility, and responsiveness needed to move more efficiently and effectively in the global environments faced by the SME. While it is important to begin with a mission orientation and move culturally through the executive strata into the root structure of the varied function of the organization, it is more critical to recognize opportunity and exploit the opportunity quickly and robustly, realizing that consequences of such actions may endanger the organization. Regardless, Sullivan and Harper (1996) emphasize that "real change takes real change." Changing critical processes is not simply making adjustments at the margin.

THE PRINCIPLES OF GUERILLA ACTIONS

At the most basic, guerrilla activities are the practical methods of achieving objectives that differ little from the more conventional strategic objectives. Guerrilla decisions should, in an analytical sense, compliment doctrinal strategy. Fundamentally, guerrilla decisions and activities provide greater flexibility, variability, and adjustability during the entrepreneurial struggle of most (if not all) SME existence. The long-term objectives remain constant in the long-run: (1) profitability for growth and development; (2) marketability for the purpose of creating and maintaining customer satisfaction (Levitt, 1965); and (3) organizational stability for cultural harmony and health. Still, there are few, yet basic, principles that should be introduced so that all activities are not attributed to guerrilla for the sake of dismissive expedience.

The first set of principles considered provides the framework of contemporary SME and is not intended to support any specific type of guerrilla decision. Too often guerrilla tactics in business are seen as being specifically designed to dismantle and not merely disrupt. The author(s) suggest that while there is a disequilibrium that may occur in the wake of guerrilla decisions, the intent is to formulate a more rapid decision-making and competitive response process. The principles posited are adapted from those promoted by Ernesto "Che" Guevara, the Argentine- born revolutionary, in his treatise on guerrilla warfare in 1961. They are:

Principle 1: Popularly demanded products and services can extract considerable market responsiveness when confronted by larger corporate product and service offerings.

Principle 2: It is not necessary to wait for all conditions to be strategically aligned to implement guerrilla activity decisions.

Principle 3: The local/community market-place is the best and most basic area for guerrilla activity success.

Of these three basic principles, the first directly contradicts the general business wisdom embedded in Porter's Five-Factor Model of Market profitability (1980), which suggests that the number of competitors, their size, and their commitment of resources will determine the intensity of competition. While it is imperative that the issues of viability remain foremost, the guerrilla can survive and thrive in a more structured strategic environment of larger, more dominant organizations without spending inordinate resources concentrating on the combined effect of these profitability variables. This contradiction does not negate the strategic importance of the five factors; rather the contradiction provides the impetus for action at a level that does not depend upon size or power of the participant.

The second principle provides the platform for action. While economists and strategic theorists promote the benefit of strategic alignment, the guerrilla very often possesses neither the resource capability nor the competitive position to wait. Herein it is important to assert that guerrilla activities are actions of precision and not actions of dominance. For the SME, time is critical, and decisions must be made without perfect information or strategic resources.

Together these first two basic principles provide the morale boost to empower and enable SMEs to engage selectively and decisively. Guerrilla activities help the SME decision making to crystallize more effectively around specific target markets, specific objectives, and with specific metrics of success, significantly more so than the slower, vaguer and often abstract aspects of corporate, strategic decision making.

Additionally, the third principle is fundamentally a proposition of location of action. Too often, larger, more global organizations will dogmatically opt for the large, aggregated population characteristics and forget or neglect the immense power associated with smaller, more localized communities. Actions that focus on the creation of stronger local participation can grow more predictably with greater tensile strength. This requires the SME to use patience and discipline in lieu of vast sums of otherwise scarce resources. It also requires the SME to focus its product or service attributes and benefits to a precisely defined set of demand characteristics. Moving responsively does not imply moving precipitously.

THE OODA LOOP AS A GUERILLA DECISION MODEL

OODA is an acronym for Observation, Orientation, Decision, and Action. This sequence of individual and/or organizational cognitive processes is also referred to as the "Boyd Cycle" because it is attributed to the late Colonel John R. Boyd, a pioneering jet-fighter pilot and strategic theorist with the U.S. Air Force. It was Colonel Boyd's practiced belief that combat-fighter aircraft operate and successfully achieve specific mission-essential outcomes in an ultra-dynamic, continuously evolving set of environments, and that critical to the success of the individual pilot and the entire organization was the ability of the pilot to make accurate, appropriate, and strategically responsive decisions (Boyd, 1997). The author(s) suggest that the OODA Loop model fits highly dynamic, competitive decision methods wherein the "decision maker intuitively maps operational flows, seeks ways of reducing critical path implementation time of competitive activity, and closely monitors progress" (Dickson, 1992). Entrepreneurs and guerrillas, like successful fighter pilots, enter new competitive encounters employing the mind-time-space relationship of variety, rapidity, harmony, and initiative to attain a specific objective (Spitaletta, 2003). Refer to Figure 1.

[FIGURE 1 OMITTED]

Decomposition of the OODA Loop procedure within general theories of entrepreneurship and the three principles of guerrilla decision activities that are articulated herein may provide valuable insight into the decision-making specifications and benefits associated with SMEs, entrepreneurial enterprise, and guerrilla strategy. This understanding may also assist curriculum developers in the rapidly emerging field of entrepreneurship and guerrilla marketing education. While Boyd did not intentionally focus on speed of decision making in highly dynamic, high-risk environments, he posited that with training, combat pilots could gain "a competitive advantage from quickness over the entire loop" (Boyd, 1997). The OODA Loop is an interactive (decision maker with environment), non-sequential process that provides remarkable stability in making critical decisions in environments that are constantly changing, modifying, and morphing in largely unpredictable ways. Boyd developed the OODA Loop concept, which is similar to the global business environment in that it underscores the need for combined rapidity, initiative, harmony, experience, culture, tradition, and variety or what he termed the "time, mind, and space" concept of decision making in action. In highly competitive environments where the consequences are literally survival, Boyd believed that an adaptive, individually responsive decision process would provide greater success and accomplish complex missions more predictably. Boyd's OODA Loop was formulated to be consistent with the centuries-old strategy philosophy of Sun Tse updated for the 21st century, "Work to defeat the enemy's plan, rather than the enemy's forces" (Griffith, 1963).

When considering the appropriateness of the OODA Loop process within the guerrilla entrepreneur's decision making, one must recognize that Boyd believed that "the business of life is life itself, which cannot be accomplished without survival and is more effective if prosperous" (Spitaletta, 2003). Accordingly, the first and most important priority is the survival of the SME, followed closely by the ability of the firm to independently sustain and prosper. In a practical sense, for the process to be operational, the critical elements of the OODA Loop must first undergo scrutiny to assess the viability within business contexts. From Boyd's theory of maneuver warfare, entrepreneurial enterprise can adopt the concepts of shaping the environment, adapting to the changing form of competition, coping with uncertainty, using time as an ally, and degrading the competitor's ability to cope (Hammond, 2001).

Observe: The observe component is the 360-degree lens wherein real-time data enters the sensory awareness of the decision maker. These raw, untransformed bits are ubiquitous, without specific form, and do not, at this early stage, provide any substantive decision-specific information. The usability of these various phenomena is at best speculative. These data enter the decision maker's cognitive sensors as a set of otherwise unpredictable and therefore uncontrollable circumstances and unrecognized, externally generated, "stuff." These are rapid, various, successive, foreign, and potentially threatening to the survival if left unrecognized, unattended, and unresolved. This "rush" of data stresses the ability to make critical decisions unless the decision maker possesses a well-trained or highly intuitive guidance ability to maintain for-the-moment, and a process that can be exploited to create productive survival in the face of otherwise threatening events. This requires a well-formed observation ability that integrates and catalogs incoming data at a rapid yet manageable rate, preparing the data for information processing in a coherent prioritized manner. These data include (1) outside information, (2) unfolding circumstances, (3) unfolding interactions with the environment, and (4) components of an implicit guidance control.

Orientation: Perhaps the most critical of the model components is "Orientation." While observation provides the data, it is orientation that shapes and filters the data into usable decision-sensitive information. This shaping function provides context, urgency or currency, and dimensionality to the phenomena. The entrepreneur's ability to perform this filtering and prioritization activity flows from the set of interdependent attributes that may be available at any given moment. When faced with a decision situation, the combined effects of genetics, culture, tradition, heritage, expertise, experience, analytical skills, and synthesis engage to formulate a "plan of action." While intuitively obvious that during the heat of battle, it is nonetheless requisite for the entrepreneur to engage this process quickly or risk a loss of innovative leadership.

Decide: Feeding forward from the orientation component, the decision maker must determine possible courses of action, evaluate possible consequences, make critical selections, and decide. Entrepreneurial decision making can be enhanced through experience, training, schooling, and innate ability (Schultz, 1980). Accordingly, decision heuristics are the result of the orientation associated with the individual or organizational elements responsible for making decisions: implicit and explicit.

Implicit decisions emerge as the workings of the unconscious mind, leading to actions based on feelings and tacit knowledge running under a form of automation, guided by hidden beliefs, internalized values, or perhaps strongly established habits. Some are explicit, and others are implicit. Explicit business decisions are more classical to the strategy formulation process. These include decisions regarding investment in a production plant, increase in personnel, price changes, product positioning, etc. In formal strategic planning and decision models, explicit decisions gain access to available process resources, meaning management time, process/approval framework, analytical support, risk assessment, cost/benefit calculation, sensitivity deliberations, etc. This OODA loop model serves the implicit decision with similar methodological purpose because it relies on the innate as well as the formal: explicit decisions tend to be influenced more by orientation and reorientation process, and implicit decisions tend to rely on culture, heritage, and experience. Regardless, decisions made require action to be taken.

Act: Entrepreneurial/guerrilla enterprise decides to pursue or not pursue a course of action based on the incentives or consequences that are perceived as associated with the investment of skills and resources (Rosen, 1983). Actions that are predicated primarily on harvesting incentives provide opportunity, while actions that are tied to avoiding adverse consequences are generally considered to be defensive. Actions taken are on one hand the end of one loop and on the other hand the beginning of another related loop because the effect of the actions taken produces outcomes, predictable and unpredictable, that produce new observations and require different orientations, which require new or adjusted decisions, which again require action. The OODA loop closes and reopens simultaneously. This opening and simultaneous closing tends, over time, to make the OODA loop resemble more a spiral that draws closer with each sequential pass. This tightening reduces decision cycle time, improves the predictability of successive decisions, and provides the organization with the ability to drive down the decision making to the most beneficial level.

DISCUSSION

Many strategy experts advocate that the strategic decision-making process should be deliberate and methodical (Andrews, 1971). This suggests that strategic business decision making in the 21st century can continue to depend on management models that appear to ignore the reality idea that strategy must emerge from situations, such as the 3M Corporation's Post-It notes. In this regard, Mintzberg (1994) suggests that there is a distinct difference between strategy formation and strategic planning, just as there is in the heat of battle a distinct difference between tactical engagement and doctrine. SME guerrilla activities in a highly dynamic and competitive global setting require decision-making models that allow strategy to emerge spontaneously at least as often as it is deliberately planned.

The model herein described to accommodate both the spontaneous and the preplanned is the OODA loop or Boyd Cycle. This four-step process, repeated and repeated, provides the decision maker with the ability to make more specific decisions, in a more rapid period of time. While Boyd did not specifically set out to reduce cycle time, he quickly acknowledged that the process provided the framework for such reductions. Additionally, an integrated use of this process provides the decision maker (entrepreneur or fighter pilot) with the highly desirable ability to get "inside" the competition's OODA Loop. This counteractive ability is especially useful when business specifically targets a competitor, as illustrated when a local, independent retailer or producer identifies and then encourages coupon redemption (regardless of source), or when Voices for Choices targeted SBC (now AT&T) as a greedy and unethical corporation (Bocij, 2002).

OODA loops can describe how an SME guerrilla decision deploys rapidly developing asymmetric strategy and then by the iterative process inherent in the loop or cycle can adjust the strategy to meet the changing conditions surrounding the initial decision. Further, when needs arise, the OODA loop can be circumvented by performing the orientation and decision steps first. This would provide the flexible SME with the ability to

predetermine courses of action when circumstances are observed. These types of tight cycles are found today in automated stock trading programs (Nichols et al, 2000). The results are potentially devastating to the traditional financial planning company and just as potentially rewarding to the guerrilla trader, such as Scott Trade.

This paper has posited three basic principles of guerrilla strategy, and it has introduced the OODA loop concept into the entrepreneurial decision-making discussion for SME strategy. As globalization and world politics continue to expand opportunities, there will also be an expansion of the competitive pressures that require more agile strategy development and more efficient, effective, and accountable decision making. The smaller enterprise that is able to shrink the decision cycle can expand opportunities while reducing threats to survival and growth. When trained and implemented, today's guerrilla-shaped entrepreneur, just as today's jet fighter pilot, will gain competitive superiority faster.

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Kent Byus, Texas A&M University--Corpus Christi

Thomas M. Box, Pittsburg State University