Editors Preface to the English-language Version It has been a great pleasure to prepare this edition of Nine Graceful Solutions.

I have learned much from this work, and I am excited to be able to present its uniquely Russian perspectives to English-speaking readers. This is not simply a book about go, and it is neither an attempt to show how real life resembles the game nor an attempt to transfer the experiences and skills of real life to the go board. Instead, it is a treatise on the art of strategy itself, which explains triedand-tested methods by reference to warfare, politics, business, and, of course, go. The authors have delved deep into the annals of history, and have unearthed many fascinating facts, opinions and insights. While some of their claims might be questioned, there is no doubt that you will be stimulated to think more carefully and creatively about how you go about accomplishing your objectives both in real life and in go. Although I have occasionally replaced non-standard terms with words familiar to English-speaking go readers, I have generally kept true to the style of the original translation by Elena Myasnikova, both to retain the Russian flavour of this work, and also to encourage the reader to think independently and arrive at their own conclusions as to how the strategic concepts described here might be applied in go and elsewhere. However, without giving too much away, I think you will come away from this book with a new understanding of such commonly used and abused concepts as aji, yosumiru and thickness, among many others. Go ahead: change your go and change your life! Tamsin Jones Kure City, Japan March 2009

There is something interesting for everyone in this book: the student of Go will gain a new strategic vision of the game; the student of political science will learn fascinating historical facts; the manager will discover new strategies for business relationships; and the martial artist will find new forms. All these are harmoniously combined throughout the narrative. Much has been done to find the Holy Grail that helps one to win, to make the right strategic decisions, to manage campaigns, and have fruitful relationships. The authors do not claim to know the ultimate truth. Instead they simply explain a novel and refreshing approach. How can one obtain a long-time competitive advantage? He or she shouldnt be similar to others! The book The Martial Art of Strategy: Russian Style: Nine Graceful Solutions will help you to take your perception of both real-life issues and go several levels higher. Andrew Goryachkin, Development Director of Forex Club.1

Andrew Goryachkin has been in business since 1992, and considers himself to be a dexterous businessman. He is a very hearty and sincere person. Andrew Goryachkin has expanded his business from Vladivostok to Japan, Korea and China. He has played Go with business partners in these countries. Andrew likes games with analysis. He says: It is interesting not only to get new information but to share what you know with others. He is a very strong player of both go and business.

Acknowledgements The authors express thanks to Alexander Dinerchtein, 3-dan professional go player and six-time European champion, for his valuable advice for making the diagrams presented in the book interesting for players of all levels, from beginner to high dan. The authors also thank Vladimir Kirienko for his helpful remarks during the preparation of this book. Our thanks also to Elena Myasnikova and Dr Tamsin Jones for preparing the English-language version of this book.

The Martial Art of Strategy Russian Style Nine Graceful Solutions

I.A. Grishin, D.V. Donskov, M.G. Emelyanov

Contents:
Foreword Sources 1. 2. 3. 4. 5. 6. 7. 8. 9. Clarify! Keep your Eyes Open! Search for Hidden Resources! Do not Overload! Exchange! Fight Precisely and Wisely. Obtain Superiority. To be Forced - Is this the Way of the Wise? Escaping Trouble

Conclusion Bibliography Appendix: - The authors lecture by I.A. Grishin and M.G.Emelyanov - The books of the School of Martial Arts and Strategic Games Voskhojdenie

Foreword to the Russian Edition

The people of our civilization are afraid of mistakes. In many ways the presentday civilization is built on fear, including the fear of mistakes. But the strategist is not one who does not make mistakes. That is, when Taleiran and Stalin said [only the] one who does nothing makes no mistakes they were neither joking nor making excuses; they asserted the counter on its form but the same on its content thesis. E.V. Ostrovsky The title of the book is triadic. The authors do not claim to elaborate upon the theme of a martial art strategy. They act under the hierarchy of this theme. In the same way the authors do not claim to clarify the meaning of the term Russian style. The Russian style appears in design, architecture, arts, politics, business, struggle, and even in brawling. The authors act in the context of this notion. That is why the book The Martial Art of Strategy: The Russian Style: Nine Graceful Solutions explains only the third and lower level of its title. There are nine graceful solutions for getting out of the most difficult situations people can find themselves in their lives and businesses. The world of business is constantly changing. For the last several years dozens of books that claim to change this world have been issued. Do they really change? How do Microsoft, Toyota, Samsung, Acer, Citigroup, Japan Airlines develop their strategies? With the help of what strategic concepts does the government of China manage to achieve strategic growth despite overpopulation? How could Japan, so comprehensively defeated in WW2, build one of the greatest economies in the world? Lets take two books one western and one eastern as examples. These are New Tendencies in Management by the highly important consulting company McKinsey2 and a book by the Vice-President of Japan Airlines, Miura Yasuyuki, called Go and Eastern Business-Strategy. The book New Tendencies in Management starts with the article The Ten Most Important Tendencies of the Decade. It says that those who think that business success ever depends on quality of management are mistaken. The adequate choice of market, technologies, geographical location drastically influences the companys longterm effectiveness.
2

One of the largest consulting companies, and in The Big Three along with Brain & Co. and Boston Consulting Group (BCG). The company has a staff of 7300 in 90 countries. 3500 projects are developed every year. The company is the second-best in the world on capitalization.

Where do you apply your effort? Where do you spend your time and resources? Is the chosen market place3 able to earn profit? The choice where to apply attention, time, money or effort is a key factor of success, according to the opinions of the competent authors of the book, the Managing Director of McKinsey, Ian Davis, and the company Consultant, Elisabeth Stevenson. The author of the book Go and Eastern Business-Strategy, analyzing the eastern and western schools of management, asserts that western management is based on a chess model. Chess strategy is a struggle that results in mutual annihilation. The goal is to checkmate the adversarys king before your own is checkmated. In this businessmans opinion, at the heart of the eastern approach there is a strategy of effective area development based on the game of go. Developing the playing field with maximum effectiveness by two rivals is the goal of go. In his book Yasuyuki Miura, like the researchers from McKinsey, speaks about importance of place, entry point, primary positions and moves in the market.4 The famous American Expert in marketing Jack Trout5 adds that strategy is positioning, that is, the choice of the most advantageous place (position) for struggling, if one uses military language, or the most advantageous place in the market for doing business. While the western school of management is still researching approaches to the description of problems of the first move, 6 positioning in the market, the search for profitable niches in the market and ways of entering them, the eastern school of management is successfully using traditional, old-time knowledge. We are also speaking about the strategic art of I7 that has found its contemporary incarnation in the strategic game of go, also known as wei qi.8 You can find a short summary of go rules in the Appendix of this book.
3

Place denotes not only a certain geographical location but also market niche. In the world-famous book Capitalisme et Schizophrenie by the French philosophers Gilles Deleuze and Flix Guattari we can find the following comparison of chess and go: chess codes and decodes space, and go territorializes and de-territorializes it (to turn ones surroundings into a bridgehead, to widen it, by joining adjacent space to it; to de-territorialize the adversary, splitting his or her territory, to deterritorialize oneself, by transferring forces into another place). (Gilles Deleuze and Flix Guattari: Capitalisme et Schizophrenie, II : Mille Plateaux). 5 The President of the consulting company Trout & Partners, which has branches in thirteen countries, and guru of marketing. His book Positioning: Struggle for Recognizability has been re-edited twenty times. 6 New Tendencies in Management, an article in Ten the Most Important Tendencies of the Decade. 7 It is a special martial art of command, dating back for more than 5000 years, with history in China, Korea and Japan. The name I has ancient origins and its meaning is close to the meaning of the conjunction and in the Russian language. The history of how this strategic art appeared is not known. 8 Without going into details we can say that the purpose of the game is to search for the most effective way of developing space and spheres of influence. Unlike chess where the purpose is to checkmate the king as soon as possible, in go the winner is the one who has developed and kept greater space or territory. The reader might like to look at the wonderful book by Yasuyuki Miura, Go and Eastern Business Strategy, which is written in simple and understandable language, especially for the western reader. A book on go has been published in Russia called To Think and to Win: The Game of Go for Beginners (see Bibliography).
4

This ancient tradition of the art of strategy is successfully used by such giants of world business as Microsoft, Japan Airlines, LG, Samsung, Toyota Motors, Citigroup, and Acer as well as by the governments of South Korea, Japan and China.9 Examples of this art in practice can be found in Russia as well. In the USA, military and political leaders are advised to acquaint themselves with go by Pentagon experts.10 Why do great world corporations turn to the practice of a little-known ancient game? Only in the middle of the twentieth century did the western school of business-strategy start seriously studying approaches and methods of area development and management.11 Up to now the schools of spatial development and spatial reasoning are new fashionable trends rather than old and well-known ones. Strategic and logical games that are popular in the West such as chess, draughts and dominoes either do not contain the idea of space or include it only as an idea of secondary importance. Space there works as a scenery or frame that provides the games boundaries. It does not have any value in itself, but the pieces need it for moving. In contrast, in the Chinese strategic tradition the principles of development, organization and spatial development have been known since antiquity. Moreover, these theories and approaches were taken as the basis of the Chinese civilization. Essentially, the Chinese public administration started with the division of the empire into nine squares. The name of China, Zhongguo Middle Kingdom refers to a place or space. Another, poetical, name of China, Surrounding from Ten Sides, also uses the idea of space. Attention to this idea of space organization and its management runs through Chinese political and military philosophy. Everyone who has been to modern China has at least seen the level of urban density in the countrys territory. It is the same in Japan. It is nearly impossible to understand how 130 million people with one of the greatest and most highly developed technological economies can find room in an archipelago that is almost without resources. This fact is worth trying to understand and even contemplating when we think of Russia with her one-sixth share of the worlds land, her great resources and her intelligent and hardworking population. Of course, every country has its weaknesses. For example, history shows how the empire of China was by the end of the nineteenth century turned into a colony by
9

See Troy Anderson, The Way of Go: Eight Ancient Strategy Secrets for Success in Business and Life. See the monograph by David Ly Education from Stones: the Go method of Mastering the Chinese Strategic Conception of Shi, published in the series Progressive Strategic Thought of the USA (2004). 11 It is possible that attention towards strategy as an art in the West appeared in consequence to analyses of WW2s results. As everyone knows, for eleven years from 1950 the Chief of General Staff of Germany Land Arms Franc Halder headed a group of former generals and officers of the Reich troops, about 300 people. They summarized the experience of the tactical activities of the Wermacht in different theatres of WW2 by order of the military-historical branch of the USA army. Halder was awarded for this activity
10

with the highest reward of the USA obtainable by foreigners the Order For Valour.

European countries. This means that Europeans took the lead, and maybe still hold it, over China in some fields.12 Yet China is now a serious contender for world leadership. And here comes a question: what strategic technologies helped a country, which used to be underdeveloped not too long ago, achieve such a high level and speed of development. Perhaps, we cannot account for population or foreign capitals.13 By those measures, Russia, which has the richest resources and territories, already ought to have outrun comparatively poor China in economic growth. But this has not happened yet. The authors are not popularizers of Chinese strategy or eastern values, which are useful rather than harmful. The authors stand for Russias confident participation in the world market of goods and ideas. We attempt to convey effective methods and technologies of strategy to Russian readers. Besides, we invest in the researches of the Russian strategic school. This book reflects only one side of the multifold researches conducted by the authors under the auspices of the School of Martial Art and Strategic Play Ascension. However, familiarity with even only one book will probably help you see new horizons of development for you and your corporation. The strategic concepts described in this book are just a small part of the deep knowledge of strategy that the ancient art of I contains. In the book strategic concepts and graceful solutions built on their base are considered in three spheres: the art of the game of go, examples from military strategy, and examples from business and politics. The nine graceful solutions make up a toolset tested by thousands years of practice in China and Japan. Nowadays, this secret weapon from the East has its place in the minds of Russian industrialists, owing to the School of Martial Art and Strategic Playing Ascension. Up to now the West has known only about Russian punches. From now on, the nine graceful solutions will become famous thanks to Russia, the inheritor of great eastern civilizations.

The Chinese train their astronauts in Russia. One time by good fortune, two times by good fortune God forbid! Sometimes it is necessary to have some skills that was the famous Russian commander Suvorovs answer to remarks about the fortuitousness of his victories. It demonstrates the logic of such explanations of someones successes by reference to fortune.
12 13

Sources14
In the book nine strategic concepts15 are treated: 1. 2. 3. 4. 5. 6. 7. 8. 9. Clarification Alternatives Hidden Resources Superfluity Exchanges Indirect Fighting Superiority Forcing Peredryaga (Trouble)

These concepts have ancient roots and were formed in a special cultural atmosphere. The art of I, known in China as wei qi16 and in Japan as igo,17 used to be a practice subject for emperors and the great officers of state. Only in the Middle Ages did the Chinese and Japanese aristocracy and the military men among them, start learning this art. It was forbidden to practice wei qi (igo) outside the Forbidden City (China) or outside the residences of daimyo18 (Japan) for many centuries. Perhaps, that is why the art is not well-known in the West. It was and it is still quite closed for strangers. While translating these concepts into Russian, and later into English, we have tried to convey their meaning. The authors translations from Chinese and Japanese, which have become possible via our long-term researches and expeditions to the countries of the Far East, convey the concepts content quite correctly without serious notional distortion. While looking through the list of concepts the reader, perhaps, stumbled at the ninth point with the strange word peredryaga. This pause may be very useful. It is important to foresee attempts to understand familiar words quickly. How were the graceful solutions deduced from the nine strategic conceptions? The authors have got to them from within. Strategic concepts lie in a leaders way of thinking but they are used in simplified forms. Everyone knows these forms. Everyone who was brought up in Russian culture; everyone who has seen them in films or books has used them towards their colleagues, opponents or subordinates. Some people may
14

If this part seems too complex you may skip it. Here the authors are speaking about the sources of the notions.
15

By strategy and strategic the authors understand the activity of managing material, intellectual, human and other streams of a certain dimension. That is, strategic does not mean good and non-strategic does not mean bad. 16 The characters express the idea of neutralizing the enemy by encirclement to tie him. The term is over a millenium old. These Japanese characters mean surrounding game played with stones. This name is only around seven centuries old. We can trace the way of changing of the names sense and see that there was a dumping into the subject. 18 The Baronage in medieval Japan, the leaders of ruling clans in the country.
17

agree to regard them as commands that are quick, clear, understandable and realizable. Some people would like to take a trip together with the authors to the level where these commands were born. Why do we analyze strategic concepts through the prism of arts that are not popular among Russian readers? The authors of this book have been studying martial and strategic arts of the ancient East. When we speak about strategic arts we keep in mind the fact that some of them are more than 5000 years old. So we speak about very ancient strategic technologies. Moreover, China only pretends to the right of being the father of these arts.19 The authors suppose that the strategic art of I belongs to the whole Indo-European civilization, and Russia is its descendant as well.20 In the authors opinions, the use of the ancient art of strategy can be useful because it is not a question of alien values or world view. The strategic art of I trains such skills as latitude of thought, thrift and creative approach features of character for which the Russians are famous. It is interesting to mark that it is easier for a Russian to study this art than, for example, a Chinese or a Japanese. Russian children master the bases and demonstrate a great success in the growth of understanding. Asian children need much more time to study something that Russian children can accomplish in a year.21 Natural predilection for calculation22 and analytical understanding23, in combination with a sense for the entire picture of the world are features that develop very fast with the help of the strategic art of I. Are there many well-known practices for developing the strategic way of thinking? The strategic art of I is, undoubtedly, the most ancient practice of all known. While computer chess programs are hardly opposed by the best chess geniuses in the world, go programs are not capable of competing even with players of the middle level. For the foreseeable future the artificial intellect, apparently, will remain weak in the face of the most ancient strategic art. The superiority of the human mind over the artificial one is demonstrated to the fullest extent in the game of go. Of course, the authors cannot guarantee that studying go will help solve all problems in business or life. Something that is helpful for one group of people can be useless to another. Ones attitude towards go, as to any game or sport, can sometimes lead to a negative result. This happens because the ancient art is used as a competition to find out
19

Many ancient technologies came to China from northern-western territories, that is, actually from the territories of modern Russia. 20 According to the latest research the strategic art of I could have been known in Ancient Russia as the so-called Golden Tavlei an enigmatic strategic game that did not survive to our times.
21

It has been verified by the authors of the book in practice, i.e., the successes and results of the students of the School of Martial Arts and Strategic Games Voskhojdenie.
22

Measure thrice and cut once. It is easy to be wise in hindsight.

23

who is smarter. However, everyone can take responsibility and use this new knowledge for his or her benefit. If the Son of Heaven had enough time to study this strategic art does this not mean that it is able to offer a challenge, even to the very highest level?

The First Graceful Solution: Clarify! In the wake of the Battle of Borodino in 1812 Mikhail Illarionovich Kutuzov had to make a decision: either to give battle to Napoleons advancing forces in Moscow or continue retreating. What was the ultimate meaning of his decision to retreat? It might have been the main battle of the war, indeed of the 19th century. It could have brought certainty: in one battle the war would be decided. The notion of total war appeared much later, in a different age.24 Of course, a war may not end with a decisive battle, but if one side loses the bulk of its army it will be difficult for it to continue the war. At the military council in Fili (a little village near Moscow) it was decided to leave Moscow and continue to retreat, thereby protracting the war. What was the principle of this decision? It can be explained by the strategic maxim of this chapter. The Battle of Borodino was the commanders clarifying move. First of all, the battle showed the balance of strength between the French and the Russians in a real fight. Second, it helped the commander to decide between standing, and continuing to retreat and slice the striking French force over the territory of the country. Having scrutinized the results of the Battle of Borodino, Kutuzov concluded that the French forces still outnumbered the Russian troops. Therefore he decided to leave Moscow and continue exhausting the enemy with active defence. During the Russian retreat in the Summer and Autumn of 1941 Supreme High Command General Headquarters did not use such complicated strategic terms as clarification. Neither the High Command nor the troops organization would entertain them. That is why they used the simplest expressions, such as fighting to the last ditch, block-groups, patching holes, exhausting the enemy. The strategic concept of clarification is difficult to use. Although it is applied to make the factors that make up a situation stand out distinctly, in an easily understood way, clarity itself is not always an advantage. The most important principle of Art of War is do not decide without need. It means that you can always choose an efficient course of development in an open position. If you have already revealed your intentions, if you have already made a decision, settling everything for yourself and the others, it can be difficult to rewind. Once set in motion a process can be impossible to stop. Besides, it is sometimes better not to do it. While a well-chosen clarifying move can provide vital information, a badly chosen one can be a disastrous commitment.

24

It was coined in 1943 by Goebbels, the Third Reich minister of propaganda.

Here is an example of clarifying strategy in politics. At the G8 meeting in 2007 President Vladimir Putin of Russia offered the USA the use of Gabalinsky Radio Detection and Ranging equipment to monitor the potential missile threat from Iran. It is necessary to remember that the USA in their turn intended to build a similar system in the Czech Republic and in Poland. The Russian Presidents initiative was a clarifying strategy. He caused the USA to clarify their position regarding the real goals and operations of the American ABM defence system in Europe. In business, the principle of clarifying, along with the famous Three M from the cycle of the total quality control, is one of the basic management strategies of the company Toyotaol.25 Here is an example of a clarifying move in a go game:

Sketch 1 Lets consider the situation shown in Sketch 1. On the right, the six black stones outline a potential territory in the corners and on the side. Apart from the small group of three black stones in the lower left, the other edges of the board have been claimed by White. It is, however, too early to say what will be White or Black territory by the end of the game. In fact, it is not really possible to identify exactly where the borders of each sides spheres of influence lie. Still, it can be said that Blacks stones are arranged very compactly, while Whites are set out more loosely, especially in the upper part of the board. Situations like this arise from a clash of playing styles: both have their merits, and nobody can say which is better.
25

They are settled in the so-called Toyota Way (see Jeffrey K. Liker: The Toyota way: 14 Management Principles from the Worlds Greatest Manufacturer).

The central area of the board is unlikely to be enclosed by one of the players. 26 It is wide open to be claimed by either player. Consequently both sides will probably try to move to the centre, thereby turning it into no mans land. To understand this we can count the number of black and white stones that affect the centre. There are eight black stones. Did you notice which one we did not count? We discounted the one in the lower left corner. It is almost hidden under the white stones hanging over it, so it does not influence the central area. White also has eight stones. In the lower left corner one of the white stones is hidden under another, and so we do not count it either. Thus, we have eight against eight. The forces are equal. With such a balance of forces there will be nothing to enclose in the central area, unless one of the players makes a serious mistake. There will be only stones rising like rockets to the centre. This is what we can see at once without any special analysis. If we estimate the size of the prospective territories we will see that the white stones stretch over a greater part of the playing field than the black stones. Yet at the same time the numbers of stones are equal as the players move their stones in turns. Once played, it is forbidden to change a stones position - as life, one cannot undo ones actions27. What can we see at once? The white stones above are too widely dispersed to secure such a big area, and this is a weakness on which the black player will certainly aim to capitalize, in order to obtain the larger share of territory. But how can it be done? How can one tackle such a large formation of white stones? It seems the only way is to take away a part of this territory from the white player. That is, black should capture part of the space outlined by the white stones. But will there be enough time and resources? Will black manage to organize a viable sub-unit of black stones, for example, on the upper side just below the white stones? To answer these questions we need to study the difficulties of keeping space under control. Another important question is this: how can one play in the adversarys area with reasonable chances of survival? This is like estimating the profitability of planned investments in this or that part of a market occupied by a competitor. The player should take into consideration the fact that each stone or group on the field has limited resources.

26

Only in this position! In another game everything could be different. In some positions the centre of the field can be the most interesting area.
27

The past can be changed, maybe, only with the help of new actions in future.

Sketch 2 This stone has four lines of supply28 (in Sketch 2 they are marked with crosses), which connect it with free areas of the playing field. If these supply lines are blocked by white stones then the black stone will become a captive, like an army unit isolated from its comrades and surrounded by its enemies. It will not be able to support itself and so will be removed from the board.29

Sketch 3 The result of the encirclement is shown in Sketch 3. After the blocking of the last line of supply white must immediately remove the black stone. It is obvious that a stone cannot be put on a crossing where it does not have at least one supply line. That is, it cannot be deployed in a place that cannot support its stay. In turn, an area surrounded by white stones (as in Sketch 3) becomes the white players property, his territory on the playing field30. Of course, such territory may include two, three, ten or even one hundred points.

Sketch 4

28 29

Of course, the usual English term is liberties, but the military analogy is very helpful. Taken prisoner. 30 What profit does a player who captures a stone make? He or she gets a free point of territory and one more point for the captured stone. At the end of the game captives are placed in the players territories, reducing their size. For details see Appendix.

Two stones of the same colour occupying adjoining liberties become indivisible and become a kind of united large stone. They are bound with a common fate. They share their supply lines and fight together. The two black stones in Sketch 4 have six liberties. This means that the white player must use six stones instead of four to take this group prisoner. In other words, a larger group, with its more numerous supply lines, is more difficult to defeat.

Sketch 5 The result of a successful encirclement by white stones is shown in sketch 5. But can the black place a stone inside this white area? In fact, it is possible because the black stone will have one line of supply (sketch 6).

Sketch 6 Of course, the white can occupy this single liberty and take the foolhardy raider captive. Black cannot attempt a second raid, because there will be no liberties. It would be like an unarmed soldier leaping into a group of his enemies it would be suicide and, in go at least, suicide is forbidden. So, white and black stones have limited resources: supply lines that must be preserved and multiplied.

If one is unable to organize at least minimal support in this or that territory then sooner or later ones stones will fall prey to the opponent in same way as when a hungry, undersupplied army flees and leaves its territory in the hands of a new master.31 Similarly, a company that does not meet its commitments is either shut down and sold off or becomes the property of a new owner.

Sketch 7 The black player must consider these things when planning an intrusion into the white stones sphere of influence in the top left part (Sketch 7). If the intrusion fails and black stones are besieged they will be left with no alternatives but to survive or surrender.

Sketch 8

31

The Soviet army met this fate in the early 1990s.

In Sketch 8, the black stones are completed isolated from the rest of the board by a surrounding white group. However, its supply lines are organized in a special way. The black stones have liberties. White cannot play in either one because that would be suicide, and it would be impossible to occupy both in a single move. Blacks position is like that of an impregnable fortress which contains its own water supplies and means to grow food. These stones form a minimal inalienable territory32. It is impossible to destroy a group with such internal resources. .

Sketch 9 Is the position of stone 1 in Sketch 9 effective? Does it provide these black stones with self-sufficiency? In this case it does not, because the two adjoining liberties located inside of the group are not inalienable. A white stone can be placed on one of these fields as shown in Sketch 6. Such a play would block one of blacks supply lines. Moreover, the white player could then place one more stone on the last of the black stones liberties and remove the entire group!33 Lets leave go behind for a while and carry ourselves to imperial China. The Chinese strategic tradition, whose history spans several thousand years, has always laid special emphasis on clarification and intelligence. A famous treatise on strategy called Art of War was written by the ancient Chinese commander Sun Tzu around 700 B.C.34 It contains a special chapter devoted to the questions of intelligence and espionage. The strategic concept of clarification was used by many military strategists and politicians in China. As an example we can take the famous stratagem Present a steed to the Emperor. This story dates from the era of the first Emperor, Qin Shi Huang Di, who unified the key kingdoms of China and built the Great Wall of China. After his death the court noblemen started weaving plots to obtain the crown. Finally, Qin Shi Huangs young heir Er Shi Huang ascended the throne. The Prime Minister of the old Emperor,
32 33

The usual term for this is life or two eyes. For details see Appendix.

34

The precise date of Art of War is unknown. Historians can only assign it to some time between 700 and 400 BC.

who had tried to obtain the throne, started worrying about his fate. He decided to attempt to dethrone the new Emperor. But first it was necessary to clarify the balance of forces and special interest groups at court. To this end the Minister devised the stratagem now known as Present a steed to the Emperor.35 During one of the state councils where all key political court players were present the Prime Minister claimed that he wished to present a wonderful steed to the Emperor as a token of his goodwill. When the Prime Minister was ordered to show the gift the surprised dignitaries saw a deer with large antlers. The young Emperor exclaimed But this is a deer!, to which the Prime Minister replied Why, my Lord? It is a noble steed! The Emperor objected firmly, saying It is a deer!, but the Prime Minister insisted again that it was the best steed of the empire and proceeded to ask the Emperor about his health. Er Shi Huang jumped up and started asking his courtiers if it was a deer or a steed. Something strange happened: opinions divided. Some answered it was a steed, some agreed with Emperor. The majority could not decide how to answer. Through this clarifying move the Prime Minister managed to find out who would support him, who would not and who was uncertain. Soon they rebelled and Er Shi Huang was dethroned. The stratagem of clarification is also mentioned in another ancient and famous formula: Hit the grass in order to frighten off a snake. Lets return to the situation in Sketch 7. Can the black player use the strategy of clarification to choose an effective way of fighting with his adversary in the chosen area?

35

This situation can be called exploratory attack.

Sketch 10 For the black player direct intrusion into the corner can be the clarifying move, the goal being to find out how white intends to defend this area. There are numerous possibilities. For instance, white may try to kill the black stones, to annihilate them on the march; or he or she could decide to give up some of the corner to focus on keeping the top side. Lets explore both possibilities.

Sketch 11

If white chose to give the adversary the corner in exchange for absolute control over the top side (Sketch 11) then what should black do? Should black accept these terms? To find out what is important for the adversary at the moment is the purpose of the clarifying move. If white player is willing to give up the corner then black does not need it either. If it is uninteresting to the rival then there is no point in seizing it now. There will be time for that later! So, having left the stone in the corner, the black player will do his or her best to reduce the white territory on the top side. To identify and fight for what is really valuable to the opponent is a graceful solution36. Perhaps, such approach might seem to be too aggressive. But in this case the black player should take cues on the worth of assets from white. To take what is freely given is not the way to victory.

Sketch 12 The results of a follow-up strike by black are shown in Sketch 12. Of course, there are other possibilities. Here, the territory once claimed by white is pressed down and the marked stone has been cut off from its allies. Now the white player needs to find a way to strengthen it or unite it with a principal group. But one wonders if there will be enough time to strike back in the corner at the black stone, while managing the marked stone. The outcome depends on the players adroitness. And what if white, discouraged by the bleak prospects of Sketch 12, were to focus on keeping the corner instead?

36

This said, one should bear in the mind the possibility that the opponent might make a strategic mistake, and give up something that is actually valuable.

Sketch 13 If the white player resolved to keep the corner at all costs (Sketch 13) then black would overrun the top side. Now instead of one stone, two white stones would fall into the grip of blacks stones. Such a situation signals a major change in the top sides status. The area once controlled by white has been turned into a war zone. In military history, such a mistaken strategy was chosen by the Supreme Commander-in-Chief of Germany in 1942 when he gave the order to hold fortress Stalingrad at all costs. As a result of this poor decision the Sixth Attack Army of FieldMarshal Paulus was caught in an encirclement. On one side the army was pressed by troops outside the city, while on the other side the army fought with the Red Army forces defending the city remains.

Of course, the German troops held the city (the left top corner kept by the white stones) but in doing so they let the Soviet command concentrate shock troops and cut off a large German contingent (two marked white stones). Thus the Stalingrad trap was sprung. As a result of this defeat the Germans incurred casualties of up to 300,000. The army lost faith in their invincibility. Almost all documents record the loss of the Sixth Attack Army near Stalingrad as a national tragedy for the German nation. Furthermore, this defeat crucially affected the fate of the southern wing of the eastern front37. The beginning of the WWI is another example of this idea in action. The main parties before the war were the Triple Entente (England, France and Russia) and the
37

Manstein Erich wrote about it in details in his memoirs, Lost Victories.

Union of Central Powers. The reason for the war was a conflict of interests in the Balkans. Were the events that initiated the war just an unfortunate set of circumstances? To find out, let us suppose that the German and Austro-Hungarian strategists applied the concept of clarification. First there was a touchstone (the corner probe in Sketch 10). This was the Austrian Archduke Franz-Ferdinand, who came to Serbia to oversee manoeuvres. At that time the scheme to unite Serbia with Austria-Hungary was an open secret. In Serbia some people were in favour and some were against. What was the meaning of the Archdukes visit? How did the Serbs and detached onlookers interpret it? Of course, in Austro-Hungary they knew about the threats to the Archdukes life. There was another heir to the throne, just in case, although Franz-Ferdinands children themselves did not have rights to succession as they were born from misalliance38. If the visit had been successful and everything had gone according to the planned programme the position of Austria-Hungarys supporters in Serbia could have been strengthened. However, a radical group of young Serbs organized an attempt upon the Archduke and his wife in Sarajevo. This event clarified the situation for the Austro-Hungarian leaders and enabled them to decide on their next moves. The Serbian leadership was given an ultimatum, which they rejected. Therefore, Austria-Hungary declared war on Serbia. Now the Union of Central Powers had to clarify the balance of forces in Europe: would Russia support Serbia? Russias support would mean the Triple Ententes engagement in war. In reply to the declaration of war on the Serbs Russias Emperor Nikolay II ordered nationwide mobilization. This meant that Russia was preparing for war. At the beginning of the 20th century such an order was the equivalent of firing ballistic missiles in modern strategy. Austria-Hungary and Germany had no alternative but to declare war on Russia, and by extension on the Triple Entente.39 The details of this declaration are still controversial, but this is the rough picture. Was this only a meeting of circumstances or a deeply thought-out strategy? Lets not forget the costs incurred. As a result of the war in Europe three empires collapsed Austria-Hungary, Germany and Russia, with the loss of countless lives. Should politicians take risks when the stakes are so high? How does clarification work in business? Market researchers, test-markets and other marketing technologies are examples of clarification in action.

38 39

The archduke was married to a Czech noblewoman not of the royal blood. Germany had a bone to pick with England concerning colonial disputes in Africa and the Middle East.

Sketch 14 If we look again at this familiar position from the standpoint of a company (the black player) racing for consumers hearts (points on the board) we can learn a lot. There are not only two colours black and white in the game. The third is the colour of the playing field (in this case it is colourless) and it is a participant as well. As a matter of fact the players compete for this colour. As we can see the top side of market is a disputed territory. Why is this nominally white territory interesting to black? The reason is that it is like a warmedup market with established consumer demand for the product. On the contrary there is no market in the centre of the playing field, so it needs to be built. The white player has developed markets on the left and top sides, spending his or her resources and time. He or she has staked on advertising and promoting the product. 40 Whites stones have been placed widely with great risk. Of course, it is possible for black to leave the whole of these developed areas alone and to start developing new markets. But how will black decide? What if black considers that in this case it will be more effective to enter the proven market of the white player and take their market share? The trial stone 1 will help black to find out what kind of reception to expect in the prospective markets. The task of the probe (the market researcher) is to find out which consumers hearts those in the corner or on the side that the rival company (white) intends to keep.

40

I can hardly help saying staked stones

Sketch 15 The strategy is as follows. If the rival gives up the corner to concentrate their efforts on keeping the top side, then black will keep investments in the corner niche at the same level one stone. In this case black will start reducing the rivals market share on the top side, assisted by the strong position in the upper right. Expansion of market share is more beneficial than racing for the small market in the top left, which is now heavily occupied by the white player. Notice that, at first, black hinders the rivals possible expansion of the market into the centre by making white defend what they already have. After that, black enters the market from the strong consumer base on the right, reducing whites market share to a great extent. At the same time the situation in the left corner is still uncertain. It is not completely clear what each player has there.

Sketch 16 If white keeps the corner by encircling the black stone and eating it, then in the end he or she risks losing everything in the market of the top side. To repeat, the crucial point of the conception of clarification is to act in the market spheres that are valuable for the adversary while leaving other spheres for the future. Let the rival (if they consider it necessary) reassess their priorities and pass to those areas which used to be of little value. By all means allow the opponent to indulge in directionless changing of priorities. This, at first sight simple, strategy is not always understood by managers making serious competitive decisions. They continue to invest in markets that bring so little profit now and in future that they are not interesting even to potential rivals. What are such managers guided by? Are they guided by the fact that we placed there our stones (initial trial investments) and have not lost them?41 Of course, even in Go a placed stone can be encircled and removed only with the course of time. This is why there is an illusion of effectiveness. It occupies some place in the market; money and time have been invested in it! However, it is important not only to see your own stones but to analyze the space that they affect. If there is no territory the stone only distracts ones attention. As a result territory and its quantity define the effectiveness of the positions built up earlier in the game. A salutary example of such ineffective action against the market was the strategy of the Russian car industry in the 1990s and 2000s. In spite of everything large factories continued turning out products that did not meet customers needs. For nearly two decades this strategy got away with everything and domestically produced cars
41

A barren flower is a bright and fragrant flower attracting attention. It does not bear fruit but attracts as many insects as other flowers.

were sold. However, over time the situation deteriorated. Sales forecasts in 2007 showed that by that stage domestic producers had lost the Russian car market. In 2007 foreign firms took 80% of the market while AvtoVAZ got 9% of the market and less than 1% went to other domestic factories. Clarification for the leaders of domestic motorcar construction could have been the aim of sales in the Russian market during last 10 years. However, no serious steps apart from attempts at administrative locking and keeping the market were taken.42 As a result the market was seized by competitors without any organized resistance from domestic producers. Lets look at the result: Everything has been taken. Did the national car industry show the art of strategy? The answer is that there was no strategy at all. What does change of ownership which happened several years ago tell us? Does not it reveal the ideological bankruptcy of the former leadership of the Russian car industry? These conclusions explain contemporary analyses of the distribution of market shares. One possible strategic course for the Russian car industry might have been cooperation with foreign producers; that is, the handover of a part of the market to them (as shown in sketch 15)43 and receiving resources for the development of other market segments44.

Summary: 1. Clarify! This is a simple but very meaningful and easily understandable guide for action in areas of foreign influence45. 2. Clarification as a method is widely used in many spheres such as business, politics and war. Sometimes this method is called provocation. 3. The main point of the graceful solution called clarify is the variety of followups that can be chosen on the basis of the opponents decisions. The principle is to find out what is valuable for your rival. 4. This may lead to sacrifice. Sometimes sacrifice is necessary when performing tests. Each action is an investment of time and resources. One should be ready to stop further investments in areas that the adversary grips tightly. To follow does not mean to obey or to fall under control. To follow means to accompany. In accompanying it is important to feel the energy of adhesion46.
42

It is similar to an attempt to scythe down the adversarys stones through single-minded play. What will this strategy lead to? Will it not lead to your own stones being mown down in other playing fields? 43 The position of stone 2.
44

For example, a cheap peoples car specially adapted to Russian roads. It is often called exploratory attack.

45

46

Sketch 10. Blacks operation starts with the attachment at 1. You can learn more about energy at seminars conducted by the authors of this book. It is difficult to describe some unfamiliar kinds of energy using words alone but it is easy to demonstrate.

Question for self-directed learning: Can white also use the concept of clarification against the black stones on the right side (Sketch 17)?

Sketch 17

The Second Graceful Solution: Keep Your Eyes Open!

The strategic concept of alternatives helps one to make a decision when there are two or more equally promising options. How can one make the right choice? The concept is used for planning actions in several places united by a common strategy47. During the campaign of 1943 Kurskaya Duga48 was part of a vast front line that stretched from the Black Sea to the White Sea. The Eastern front constituted a common space49. In other places, such as the Leningrad front, the Red Army did not have any alternatives as there was only one task. The task at the Leningrad front was to relieve the city. In contrast to Leningrad and Volkhov, Kurskaya Duga was a place where the Red Army command had a strategic choice, either to advance or to hold the line. These alternatives were a matter of great anxiety for Stalin, who was Supreme Commander-inChief. In the opinion of Russian command both alternatives were acceptable for the Red Army; however, they could both have had unpredictable consequences. So what did the Soviet military leadership do in this situation? They found a graceful solution: not to choose but to keep their eyes open by waiting for the adversarys choice. Whilst alternatives remained at the Kurskaya Duga front the Red Army command made no decisions about advancing but carefully watched the German troops actions instead. The alternatives were as follows: if the German command abandoned their advance on Kurskya Duga the Red Army would attack using it as route to the west bridgehead. But if the German command decided to launch an offensive operation the Red Army would meet the enemy at previously prepared defensive positions. Having abdicated responsibility for taking the decision on advancing in this direction, the Soviet command were able to focus on other tasks. These included the accumulation of forces, organizing back areas, intelligence, guerilla movements, and forming and training sub-units. They saved time50 and, secondly, they saved the resources of strategy (spiritual, emotional and intellectual strength)51 that are always
47 48

The situation is considered within its context in extended scale but not locally or separately. See Grishin I.A. and Emelyanov M.G. Russian-German Strategy. 49 In its turn for Germany the Eastern front was a partial front along with the Western front, and confrontations in the Mediterranean and the Atlantic. 50 Saving time provides opportunities to do something else, possibly something very important. In go, saving time means an opportunity to play toward a goal, to change something. Saving time is therefore of inestimable value. 51 The famous ancient Chinese strategist Zhuge Liang showed that the resource of strategy is limited by the example of his last war. Zhuge Liang could not storm a fortress which was being defended by another great ancient Chinese strategist, Sima Yi. All Zhuge Liangs stratagems were met in advance. Sima Yi did not take the bait. For example, Zhuge Liang sent to Sima Yi a message and a coffer. Sima Yi burnt the message without reading it and ordered his men to throw away the coffer. As a result Zhuge Liang could not sleep, for he was trying so hard to find the victory formula. So, stayed awake for 100 days and reached deaths door. His personal resource of strategy was exhausted. In the face of death he prepared one last stratagem for withdrawing the army from the attack lines and gave it to his assistants.

spent on taking such decisions as attack. After all, the costs of a mistake might have been unbearable. If in the short-term prospects the alternatives produced equal results nobody could guarantee that there would not appear some unanticipated negative effect over the coming months, years or decade. So let the competitor choose! Anyway, let us suppose that in some current situation two or more possibilities appear to offer equally beneficial and understandable short-term prospects. Nobody knows what is going to happen afterwards. If the opponent chooses then we, at least, save pains and time instead of wasting them on performing complex calculations, and on soul-searching reflections on our experiences. This should not, however, be confused with indecisiveness. If unpredictable negative consequences do not appear later we get an equal result as expected. Therefore we economize on strategy and time. This is a very important economy as only strategists and leaders have the resource of strategy. But are there many who are both strategists and leaders? In the operation near Kursk the Russian command behaved strategically as they chose defence in response to the Germans choice to attack52. The German command shouldered the burden of decision. The memoirs of the German commanders reveal what these stresses were like. Heinz Guderian, Inspector General of the Vermacht armored forces, wrote down his talk with Adolph Hitler after a conference at headquarters. On the agenda there again was the question: whether to attack or to defend near Kursk. The generals opinions were divided. Guderian and Model were totally against attack, while FieldMarshal Erich von Manstein adopted a very complex position (at that time he had tensions with Hitler on strategic issues in the war). Manstein said that it was possible to attack immediately as it should have been done two weeks before, but if it took a long time to decide then the attack should be abandoned. Hitlers palace guards such as Chief of Staff of Supreme Command of Armed Forces Wilhelm Keitel and Chief of Staff of Land Forces Carl Zeizler insisted on attack in any case. Hitler had to take the final decision. Guderian describes his talk with Hitler: After the conference I took Hitler by his arm and asked him if I was permitted to speak my mind. He agreed and I started persuading him to abandon the attack at the Eastern front as he definitely understood the difficulties we had to face that time. I finished with the question: Why dont you want to open an attack in the east this year? Hitler replied You are totally right. At the thought of this attack I start having a stomach ache.53
Through this last stratagem Zhuge Liangs army left the lines so skillfully that Sima Yi was sure the army was led by Zhuge Liang, even though through spies the rumour of the Masters death had come to him.
52

It is necessary to take into account that the period between the moment of taking a decision about attack and the moment of putting it into action may be more than a week. Troops prepare an attack with a given speed that may be calculated. Several weeks were spent by the German army in preparation for the Kursky attack operation Citadel. 53 Guderian, H.: Erinnerungen eines Soldaten, Heidelberg, 1951.

As we can see from this historical document Adolph Hitler felt the responsibility for the decision of such strategic scale as the approval of the operation Citadel on a physical level.54 It is worth mentioning that by the end of 1944 Hitler could hardly sign documents as his hands were trembling so much. 55 The energy of a person occupying leading positions and taking responsibility for key decisions is spent much faster and in larger quantities than managers and clerks tend to realize. That is why the concept of alternatives is an important way to save such key resources of success as the leaders personal resource of strategy. Are there many such efficient techniques for making effective decisions? The concept of alternatives can be shown most lucidly with the help of models of strategic art. Therefore, lets turn again to the game of go. .

Sketch 18 Sketch 18 shows alternative possibilities for developing the white stone. The white player can turn left (point A) as easily as right (point B). What defines possible long-term results? They can be learned by examining the other parts of the playing field. With such alternatives the white player need take no immediate steps on this side. The situation can be left alone until one of these possibilities disappears due to the adversarys actions or because equivalence has been lost because of changes elsewhere on the board.

54

This was the German name for the operation of cutting off Kurskaya Duga and encircling the Soviet troops. 55 Reichsminister of German war industry Albert Speer often met Hitler in his last months. He describes the impression that the dictator made on him: Hitler had shrunk and grown decrepit. His hands trembled, he stooped while walking and dragged his feet. Even his voice trembled and lost its strength and emotion. When he was agitated his voice strained in the way typical for old people. His skin became yellow and his face became puffy. In the last period of life his uniform, which had always been tidy, was covered in spots of food that he could not hold in his trembling hand. (Albert Speer: Erinnerungen). Speer concludes that the reason for Hitlers state was the permanent stress resulting from his activities as chief of the state waging war. It is interesting that Joseph Stalin met a similar fate. He could hardly lift his famous pipe with one of his hands.

Sketch 19 Another example is shown in sketch 19. The group of white stones located in the corner has alternative ways of establishing a base56. The white player may add a stone at point A or at point B. Both positions provide the group with minimal living space, i.e. give them winning advantage. Such groups will yield at least two units of capital (territory)57. If there is an alternative that allows solving the question of survival (profitability) in the market with equal effectiveness it is possible to use neither of these possibilities. Spare time and energy may be spent on solving urgent tasks elsewhere. Sometimes the concept of alternatives is used for assessing the merits of an intrusion into hostile territory.

56

A base might be also understood as a minimal return (profit) from the investments in this part of the playing field..
57

See sketch 8.

Sketch 20 The effectiveness of the whites intrusion (stones 1 and 3) into the space marked out by black stones on the left side may be estimated with the help of the concept of alternatives. If our action in the foreign market has three lines of further development such a project can be started. The white stones in Sketch 20 may develop towards the top left corner point A; towards the centre (to divide the business organized by the black stones into parts) point B; and towards the nearest allies on the left side - point C. So the white players project of invading and reducing the adversarys territory is bound to succeed. It is impossible to shut down all three directions! There is nothing to do but to keep eyes wide open58. If a project has simple alternatives (that is, only two lines) of further development all investments in it turn out to be risky. If there are no alternatives the risks may exceed expected benefits. Here it is possible to state a rule: one should have triple alternatives in a foreign territory or, in the words of the Prussian military theorist Moltke, three ways out of a situation59. Is it possible to act where there is a single alternative (two possibilities) or where there are no alternatives (a single way)? Of course it is possible, but the one who takes such decisions takes the responsibility for the risks. Sometimes it is impossible to take the lead in the market or win in a game.
58

In this case in three ways.

59

Moltkes aphorism strategy is a system of ways out complicates the admonition keep your eyes wide open but increases reliability of performance.

Lets consider the Gazprom strategy for the extension (diversification) of ways of gas transportation to the gas markets of Europe with the help of the strategic concept of alternatives. With only one route to the European markets through the countries of Eastern Europe Gazprom becomes the hostage of intractable transit countries. The transit countries with gas pipelines are often unable to guarantee the stability, timeliness and safety of transit deliveries through their territories.60 This means receiving less profit. What strategic principles were used by the corporate management while making decisions regarding the creation of alternative gas delivery routes to Europe? We mean the Northern and Southern gas pipelines that will be built in neutral maritime territory.

Sketch 21 In Sketch 21 we can see prepared positions on the flanks of the white invasion: the marked stones above and below stones 1 and 3. The white player has prepared the invasion, as though pouring in money and resources. Without the white stones on the flanks there would be no alternative lines of development for the invasion stones. With the help of this idea more common Gazprom strategies for expanding gas deliveries can be described. The more there are alternatives of delivery directions (east, west, south) and ways of delivery (railway, sea and pipeline), the stronger the position of Gazprom in the world gas market. The strengthening of positions both in business and go tends to result in the growth of company capitalization and an increase of controlling market share.
60

It is enough to remember the situation connected with stealing of gas from the Ukrainian territory on a national scale.

Summary: 10. Keep your eyes open when it is necessary to choose between different directions for further actions. This concept can be partly understood through the strategy of diversification, which is studied in management theory. 11. The concept works only for equal61 alternatives on the field of activity. To determine equivalence it is necessary to take into account not only a certain local region but also its flanks. 12. If the player has equal alternatives in the market they do not have to take a decision immediately, i.e., there is no strong need to decide. Therefore, the strategic rule do not decide without need can be obeyed. 13. The concept of alternatives helps the leader who makes decisions to save time the main deficit resource and their own personal resource of strategy, which are spent on taking any important decision. The aim is to transfer the burden of responsibility on to the rivals management. We should repeat that we speak only about alternatives that offer equal prospects. In the presence of more beneficial or less beneficial possibilities one should choose the more beneficial variation until it is intercepted. 14. In the case of incursion into areas of foreign influence it is optimal to have triple alternatives. Only such reserves allow escape from a vulnerable position. One could act while having simple alternatives (two variations) and even in the absence of an alternative (a one-way street). In this case it is necessary to calculate the inevitable risks extremely carefully. There is no point in acting where even a single variation is doubtful. Of course, one might count on a mistake by the opponent, but this is taking a chance and not a graceful solution.

61

Or equally dangerous

The Third Graceful Solution: Search for Hidden Resources!

The strategic concept discussed in this chapter relates to situations and positions that contain hidden resources62. Such resources are not only unexpected in themselves, but often hide other things. An example from military strategy can be taken from the period of Civil War in Russia after the Revolution of 1917. This period has until now received little analysis from the point of view of strategic art. Lets go to the south of the former Russian Empire. Crimea is the last bastion of the White Movement. One of the most outstanding strategists of the Civil War, Baron Pyotr Nikolaevich Wrangel is Head of the Government. He has a very hard task. Being isolated from the other parts of Russia, Crimea is unable to provide sufficient food and fuel for itself. It needs provisions, forage, coil and armaments. Crimea lacks a defence industry. Farming hardly provides inhabitants with grain. How to undo the intricate knot of social contradictions? The White Movement in Crimea was short of living space. There was no chance of ensuring sovereignty from Soviet Russia in such a limited territory. We analyzed the problem of life support organization by the example of Sketch 8. Baron Wrangels situation differs from this model as in Crimea there was not enough space to provide full autonomy. There was no opportunity to build on in the place having obtained inalienable territory63. The Army, as a guarantor of sovereignty, must be well supplied with weapons and food. France was ready to provide security assistance but besides the army there were inhabitants in the state64. Wrangels task was to preserve the Russian imperial way of life in Crimea. In such a strategic situation there are only four scenarios: the building of an unassailable citadel, extending living space, escape and surrender. These scenarios are well known in strategic art. It is no wonder that both in military strategy and in the game of go these are the main ways of solving such a problem. Baron Wrangel understood these possibilities quite well. Surrender at the discretion of Soviet Russia, as insisted on by British diplomacy, was unacceptable for the leadership of the south of Russia.

62

If you want to hide something, show it is an old Chinese proverb. Basil Aksyonov in his novel The Crimea Island depicts a beautiful example of autonomy.

63

64

Many people in Crimea had fled from Central Russia and the Ukraine to escape the horrors of Soviet terror.

Having taken command of the Armed Forces of South Russia during the spring of 192065, Wrangel started preparing a possible evacuation of Crimea. He knew well that although there were chances to extend living space he had to be prepared for the worst, i.e., for escape overseas. Owing to his extraordinary resolve during the preparations, the evacuation of Crimea (when it became necessary) was highly successful66. The third most preferable way extending living space by joining Crimea to some outer areas was also considered in the generals plans. In-depth analysis of the alternatives of escape or survival is a high-level strategic art. Baron Wrangel understood that in the case of failure to build an unassailable citadel or to extend living space sufficiently he would have to lead defeat. In other words he would have to lose with minimal losses. Both victory and defeat are backbreaking and require a great deal of internal and external strength. Only when striving for victory, may one take comfort in hopes for the future. If a commander leads defeat, he suffers not only the stresses usual for victorious strategy but also the emotional burden of loss. One who has suffered a defeat will understand what kind of stresses we are speaking about67. Defeat is always more arduous than victory. While working out a plan of operation for extending living space, Baron Wrangel took into account the numerical superiority of Soviet troops on the continent to his army. At the same time he took into consideration the complex strategic factor of the proportional sizes of lands held by him and those controlled by his enemy. With a little plot of Crimean land he was pitted against an adversary from the territory of the former empire. His enemies also had the energy of a new authority, the enthusiasm of its apologists and the pressure of a new ideology. With the remnants of his army Wrangel could capture living space enough for his safety but he could not keep it. That is why he started searching for a hidden resource for his invasion into the territory of the Bolsheviks. And he managed to find such a resource. In the south of Russia the Kuban Cossacks suffered from the Soviet governmental system more than others. Moreover, there had always been a strong samostiyni (independent) mentality in Kuban. For the Cossacks the totalitarian regime
65 66

Consequent to the departure of the former Commander of Armed Forces of South Russia A.I. Denikin. In Crimea there were three evacuations in the 20th century. The one conducted by Baron Wrangel was an example of perfect organization. The other two the Soviet one was in 1942 and the German one was in 1944 turned out to be tragedies. 67 The Ruler of South Russia, Baron Wrangel describes these stresses: the Kuban operation failed. Pressed to the sea in a little piece of Russian land we were forced to continue fighting against an enemy which had the vast territory of Russia. We were exhausted and had almost run out of means. Failure like a stone weighed upon my soul. I asked myself hundreds of times if I was to blame for everything that had happened; if everything had been foreseen; if the plan was correct. (Wrangel, P.N.: Notes).

of red evil spirits, as communists were called in Kuban, was more hateful than occupation by German invaders. Baron Wrangel found the right weakness in the Bolsheviks defences in the southern territories of Russia. An invasion in Kuban supported by a Cossack rebellion was likely to annihilate the communist regime and provide Crimea with everything needed for living. Wrangel even intended to organize grain export to purchase everything needed for the army and the peninsula. The cossacks were a hidden threat for the Bolsheviks. They had suffered years of repression under the Soviet government. Baron Wrangel considered the direction of expansion to Kuban to be top priority. Nevertheless, he took one more strategic step. Before the Kuban operation in spring 1920, he attacked Northern Tavria. This was a classic instance of clarification. The Bolsheviks concentrated on the fight in the northern region of Crimea and massed their main forces there. This was what the Russian commander expected. His next step was to enter Kuban. By then, the command of the WPRA (Workers and Peasants Red Army) should have defined their position in Northern Tavria. The combination of two strategic measures provided great chances to carry the White Movement forward. The Kuban operation, conducted in the winter of 1920, failed at the level of management that is, the generals and chiefs of staff who were in charge of the development and realization of the operation. Wrangel blamed himself for not conducting this most significant strategic operation by himself. The generals who had done well in other operations failed in such a complex and multi-angled position and ruined the realization of their leaders strategic plan. What was the Commander-in-Chief doing at that time? He invested much energy in re-establishing state authority in Crimea, in negotiations with international mediators about humanitarian aid and in fighting with Russian pseudo-patriotic emigrants who did everything to thwart Wrangels efforts. The success of the Crimean project turned out to be disadvantageous for the February revolution participants who escaped to foreign countries and for the fathers of Russian democracy as Wrangel received the title of Rescuer of the Motherland and the right to control the foreign bank accounts of tsarskaya Russia. Often struggling with allies can take ones last reserves of time and energy. Is it possible that a corporation sustains losses and loses the market only because of internal struggle? Do not some managers make their small out of a big corporation parasitizing on the companys body? Wrangels strategic plan can be modeled on the go board.

Sketch 22 In Sketch 22 we have tried to make a model of the Southern Front of the Civil War in spring 1920. We will not analyze territories facing outwards from Russia. In the bottom left corner there is a group of white stones holding a small space. This space is not big enough to provide life independently. Moreover, if the white player does not take any steps the black one will be able to kill the white group cleanly68. The initiative, that is sente, plays an important role in this situation. On the right there are three marked stones surrounded by groups of black stones. Presently they are essentially prisoners to the black stones. However, as these stones have not yet been removed from the board they may still present a potential threat to black. In turn, white can use them as a hidden resource in the adversarys territory.

Sketch 23
68

It can be proved by a simple game continuation.

What was Baron Wrangels plan? To solve the task successfully he needed to execute an offensive in two directions: Kuban (stones 1 and 3) and Northern Tavria (stones 5 and 7). White stones 5 and 7 are a necessary sacrifice to distract the enemy in this part of front. This is why Wrangels army seized Northern Tavria.

Sketch 24 The next step is using the strategy of hidden resources. Lets look at the bottom side in Sketch 24. After the eleventh postanovka69 black had to capture the marked white stones. In reply, 13 unites whites forces. The white stones now gain sufficient space to live. The black player cannot prevent it because of whites hidden resource at the rear. All of blacks actions are forced. This can be verified by analyzing each of blacks postanovka. If the black player plays at 10 in place of white 11 then in its turn the white stone will find itself in the place of black 10. Here we can invoke the strategic concept of alternatives. It means that for white the points occupied by black 10 and white 11 are equivalent possibilities for gaining living space. It makes no difference, from the point of view of surviving effectively, which points one takes.

69

The authors of the book have left the term postanovka untranslated. It has a wealth of special senses in Russian go terminology. In the English language there is only the word, move. However, in Russian the word move means not only placing a stone on the playing board but also a train of thought i.e., several moves connected by a common idea. For example, a corner play is a train of thought and every stone is a postanovka. At the same time the authors invoke the notion of hand, which is lacking from English go parlance. Instead they use such Japanese words as sente and gote, or the word initiative. A hand means the right to place a stone on the board. The Russian word postanovka contains important contextual meanings, such as stake (in the meaning to play with a view to somebody or something), stand (a martial arts term), and the location of a thing in some place.

However, this plan was not to be realized. The white players, that is Wrangels subordinates, made a few mistakes at the level of performance and these led to the loss of both Northern Tavria and Kuban70. In a book covering both the arts of games and business Vice-President of JAL Miura Yasuyuki describes an example of a hidden resource in the American car market.71 This hidden resource was exploited by Japanese auto makers. What did the American car market before the entry of the Japanese companies look like, in Miura Yasuyukis opinion?

Sketch 25 The American market was controlled by The Big Three 72 - a pool of auto makers selling big and expensive American cars. It is important to mention that these expensive cars were very costly to run. In Sketch 25 Miura Yasuyuki shows us the car market of the USA as claimed by The Big Three, a white stone. The hidden threat for the companies of The Big Three is the fact that in this market the niche for fuelefficient cars of moderate cost is vacant (point A). This niche is a low segment of the market. If it is occupied by Japanese manufacturers the companies of The Big Three can maintain their leadership in the market of mid-range and luxury cars. They should be induced by the appearance of new competitors to move from the corner to the side and then to the centre. Thus, the invasion of Japanese car-making companies depended on a hidden resource in the American market. It became highly relevant in the period of the Oil Shock in the mid-1970s when oil prices jumped.

70

Of course, it is hard to say for how long the alliance of Cossacks and the White Guard in Kuban-Crimea would have lasted. Who knows what additional hidden resources would have appeared with the beginning of collectivization and indeed if collectivization could have started at all under such conditions?
71 72

Go: An Asian Paradigm for Business Strategy, published in English, Japanese and Russian. General Motors, Ford, DaimlerChrysler.

American manufacturers did not hasten to occupy the niche of cheap cars. As a result, it was occupied by the Japanese.

Sketch 26 The calculations of the Japanese business strategists73 included the kind of scenario shown in Sketch 26. The Japanese planned to take the whole low-end sector having left the luxury car market (the central area) to the The Big Three. As can be seen from the sketch the central part of the market is larger by volume than the small niche of cheap cars in the corner. However, it is important to understand that any market division has mutual effects. As we can see from the sketch the American companies should have made the effort to direct both financial and temporal resources to protecting their market share from the likely challenges of their Japanese rivals. If Japanese companies invest in a market then American companies have to do the same to keep their market share. Otherwise, they risk losing it. Miura Yasuyuki establishes the fact that the American car corporations did not undertake any serious study of the Japanese companies invasion. This is how he describes it: - In The Big Three it was considered that the Japanese would leave as soon as the oil crisis was resolved, - David started realizing my idea. - Post factum it was obvious that there was a serious mistake in this judgement, - David nodded.

73

The management of Toyota Motors study the game of go.

- Why did not they try to close the Japanese into the corner of compact cars by pouring money into quality improvement in the higher market sectors in the centre? I asked. I see. After seizing the corner of compact cars, Lexus and Infiniti shot forward to the centre. - It is a nightmare for any Go player. What could The Big Three achieve with the help of joseki74 for the 3-3 75 point ? They could make the Japanese invest more stones there. That is what is going on at the moment. The Japanese are busy developing the corner in the USA, - David got my hint. Great! Force them to get into American problems. I smiled and David continued: let them carry on the business of manufacturing compact cars and the Americans will strengthen their position, having seized the initiative (sente76) in other parts of the world. - More than 50 per cent of the trade deficit between the USA and Japan goes to one sort of production - cars. If the Americans make the Japanese reinvest their trade surplus into American car-factories at least there will be many employment vacancies. Who is good and who is bad an American who goes to Mexico or a Japanese who goes to the USA? as usual I made him utter another remark. - But the Japanese corner is closed, - he said gloomily. This is a fair complaint for an American, - I agreed. Then Miura summarizes: Of course, the business problems of the American Big Three are more complicated and serious. The simplistic analogy of 3-3 joseki in go can be misleading and incomplete. Besides, the Japanese car market entry was a lucky accident that had became possible because of two oil crises rather than the well calculated strategy of placing a stone at the 3-3 point. It is obvious that another kind of strategy is needed to open the Japanese car market. One way or another I consider that this analogy with point 3-3 may be an interesting, edifying and constructive example for further business activity. As a result Japanese Lexus and Infiniti started taking the market of expensive cars. Only then the Americans raised the alarm. What were the strategic calculations, if any, of The Big Three car-makers based on? It is known that after the Japanese invasion of the USA car market they started publishing books about the coming trade war with Japan that invoked a severe image of new samurai-invaders77. Is not the
74

Joseki is a Japanese word meaning an established line of play. See sketch 26. Sente means initiative or the right to go first.

75

76

77

In A Call to Economical Arming published in the USA during the course of the presidential campaign in 1991 the following was written: the Cold War has finished. Japan has won. Taking into consideration the euphoria reigning in the USA after the USSRs collapse, looking at this phrase we can understand what serious danger American corporations saw in the Japanese expansion into their domestic market. By the way, there was no China in the American market yet.

modern characterization as life-threatening of Chinese goods produced in the USA a similar reaction? If a player does not see hidden resources they risk losing them because of their rough actions. The loss of hidden resources impairs company capitalization. Moreover, it is necessary to study your position in the market, searching for hidden threats and destroying them. A quality control system installation may serve as an example of such a search for hidden threats. The quality control system installation in the Ulianovsk car factory led to a decrease in the number of complaints received from purchasers of SUVs. This investment into quality allowed UCF (Ulianovsk Car Factory) to eliminate the hidden threat of Western rivals seizing the market by exploiting an image of Russian cars of poor quality. Now, owing to UCFs efforts this hidden threat has been gradually disappearing and prospects of expansion within the controlled marked space are broadening. Do you need more examples of how to use a hidden resource? Posting insiders in this or that position in other companies is another example. In the future such persons will be able to facilitate an easy entry into many programmes and projects in new, previously unavailable territories. In the future such placements, which are connected with the current investments, will offer such possibilities as becoming an operator in a new market or field of activity.

Sketch 27 Ingo terms it is enough to deploy an insider in a key position. One possible example is shown in Sketch 27. Black leaves stone 1 in the white players territory,

while taking a share of the top left corner. White then continues to strengthen the top side. However, because of the presence of black 1, there is a weakness in whites position (point A), which is very dangerous in view of a possible invasion. Black 1 is a hidden resource for the black player. Owing to this stone an invasion at point A is likely to be successful if performed well, that is, provided black makes no mistakes while executing this plan.

Sketch 28 If white attempts to halt the invasion with stone 2 (Sketch 28) then black will activate the hidden resource, the marked black stone. Now white is unable to control the situation and the black group will devastate some of whites territory. To avoid such a situation white player should have arranged his or her stones on the top side in another way. In other words, the quality of a formation determines its effectiveness.

Sketch 29 As we can see from Sketch 29 white might choose another, this time indirect, way to defend the top side. This time, white waits for blacks attempt to enter the top side. The white player takes into account the presence of the black scout and watches out for attempts to use it. In contrast to Sketch 27, in which white stones are placed with a gap at point A, in Sketch 29 the white stones are arranged in another way. Instead of single group of white stones with a gap in the middle, there are now two groups separated by five points. So, white is not trying to unite the stones on the top side (compare Sketch 27) with the purpose of keeping of the whole side. Instead, white has built two fortresses that invite the adversary to enter and be greeted with flanking fire from both sides. The white formation arose from pressure on the top right black corner (the exchange of strike stones 3, 5 for the fortification-stones 2, 4, 6, and 7). White might not only profit elsewhere by harrying a black invasion, but might even be able to take the raiding party prisoner (that is, kill the invasion). Summary: 1. To search for hidden resources is important not only in military strategy but also in civil affairs. Hidden resources are possibilities or threats that ought to be taken into consideration while making strategic plans. 2. It is necessary to discover and guard hidden resources in foreign territory, and not to show them to the rival lest they take counter-measures. As for your own territory it is necessary to discover hidden threats there as soon as possible. In real life, it is helpful to conduct verification of hidden threats in the company.

Such verification is practiced by many for-profit businesses and in governments. It is conducted both inside and outside (market, environment) of an organization. 3. There are spheres of activity which may be entered only with the help of hidden resources. In this case the graceful solution is to invest in such hidden resources by forming them in foreign territory.

The Fourth Graceful Solution: Do not Overload!

Amateurs say to themselves and others:Better more than less. Professionals hide behind the word reinsurance. And what do busy people of action say? They say: do not overload yourself and others. The doubling of functions is used in some complex systems, machines and programs. This technique works in these specific spheres. But is it possible to follow such an approach in business? Surely refusing a rational economy of limited forces and resources would incur some loss in effectiveness and in the modern world this means lagging behind ones rivals. History provides numerous examples of superfluity producing unhappy results. Lets consider the development of the railway system in Tsarist Russia. In the second half of the 19th century Russia faced a shortage of railways across virtually the whole empire. At that time railways provided the main cargo routes in Europe and the USA. Government advisers concluded that this shortage of railways was the main factor that held back development in Siberia and the Far East and, perhaps, development of the economy as a whole. Within the limits of imperial industrial policy the building of railways became what we would now call a national project. Investments in infrastructure were considered to be a perfect way to modernize industry in the country. It was believed that the growth of industry would contribute to the development of a Russian village 78. The basic point of the railway development project can be stated as follows. At the close of the 19th century the Russian government set itself a task: the development of industry. This was to be the engine of growth for the whole economy79. Railways were not only intended to connect the country as a whole by providing access to the resources of Siberia and the Far East. The state planned to gain a multiplier effect from its efforts in railway building. The project was meant to stimulate the iron industry, and the heavy engineering and building industries at the same time. Besides, it was supposed that the railways and the infrastructure connected with them would attract big business and qualified staff to distant regions of the country.

78

The lack of traffic infrastructure is felt even now in 21st century Russia. Developing the traffic network in Russia will be one of the key infrastructure projects of the coming years. This is why it may be helpful to turn to past experience of realizing infrastructure projects of a similar scale in the Russian Empire.
79

This task can be compared with national projects within the framework of the plan of doubling the GDP of new Russia.

The peculiarity of the Tsarist governments approach was the hidden funding of industry in the form of superfluous financing of orders. The government quite often overpaid factories up to twice the market rate80. The intention of such indirect financing was to support the young Russian industry. However, this superfluous financing actually made the railways very expensive. It was estimated that the total sum invested was nearly twice the market rate. How can the effectiveness of such a protectionist policy be evaluated? On the one hand the state spent its resources ineffectively. On the other hand the money was not sent abroad but invested in home industries which produced goods for home consumption. And, after all, the railways were built. The effectiveness of such a policy might be evaluated with the help of the strategic concept of superfluity. According to this idea it is necessary to view the effectiveness of each action against the whole playing field and in long-term perspective (that is, until results appear). In the case of the railways the playing field was the countrys entire economy and the time frame was defined by the completion of the project and by the appearance of real effects on the economy. Of course, some areas benefited from superfluous financing. But there were probably also sectors that did not receive the resources needed for development. The question is this: did the Russian state have surpluses or was the policy carried out under a resources deficit? In go, a player who has a surplus of resources may act ineffectively but ultrareliably. In such a case this policy is justified. There is even a proverb that advises such action: the rich man does not look for quarrels. However, when resources are scarce, a superfluity of actions in one local area must lead directly to a loss of effectiveness elsewhere. Such a policy is likely to result in development as a whole lagging behind. As economists specializing in the beginning of the 20th century have shown, the industrial modernization of Russia was often conducted at the expense of agriculture. The intention was that superfluous investments would lead to an increase of production. Unfortunately, the deflection of resources away from agriculture led to the erosion of purchasing power among the countrys population. Russian industry was uncompetitive in the world markets, and fell into a crisis of overproduction81. Consequently,
80

The former Minister of War and general in the Russo-Japanese war, A.N. Kuropatkin, wrote in his monograph Russian Army that in 1898-1900 when cast iron cost in factories 62-65 kopecks, the treasury paid for rails 1 ruble 12 kopecks and later when cast iron fell in value to 40-50 kopecks the price paid for rails was increased to 1 ruble 25 kopecks. Such generosity was the reason for the prices in southern factories where rails not for the treasury cost 85-87 kopecks and those for the treasury 1 ruble 25 kopecks. Annual overpayment for railway equipment reached no lower than 15 million rubles [300 million dollars in todays values]. Besides, about 3 billion dollars were given as so-called non-registered loans for the development of firms of the railway branch.

superfluous state investments either went straight into industrialists pockets or were invested in the production of practically unsaleable goods. In the end the Governments plan did not work for the economy as the whole. Ironically, the strategy of superfluity failed to realize the principal goal to which it was directed. That is, Russia failed to establish a lead in economic development over its international rivals. There was no forestalling. There was a crisis of overproduction, and so superfluity appeared in a new form. There was no need for such superfluous products to solve the task set. This was an example of the ineffective over-concentration of means. In go terms, they made a little out of the big. It was a violation of effective strategic principles. In go any form of superfluity is regarded as a loss of effectiveness. Of course, this is very high-level thinking. The goal is to learn how to avoid unnecessary losses and strive for 100% effectiveness. In modern management this is known as lean production82 or kaizen83, an approach which originated in Japan. Thus, superfluous investments in the railways at the close of the 19th century did not yield any of the expected effects for the Russian economy, but at least very expensive railways were built84. It is interesting that Japanese management advises that superfluity be rejected as a mode of operation, recommending instead that one acts as economically as possible85. In the opinion of Japanese entrepreneurs, this enables additional resources to be directed toward supereffective investments. Acupuncture shows a similar approach, in which influence upon an organism has punctated and addressed character. In medicine, the difficulty in applying this approach is the fact that not every medical specialist knows where the crucial spots of the human body are and how to exercise integrated effects on the organism (by the combination of several spots). Such minute precision or accuracy requires a masterly approach.
81

See statistical data and extracts from research into the economic situation in Russia given by Kuropatkin in his book Russian Army. 82 For more on lean production see Womack, J.P. and Jones, D.T.: Lean Thinking. 83 Continually striving for perfection. For further explanation, see Masaaki Imai: Kaizen. 84 Having analyzed the current state of affairs in the empire by the year 1910, Kuropatkin concluded: the government failed in building the railways and in their operation: the building of the railways was too expensive and their operation caused damage on many roads. In Russia they had examples of a very economic construction of railways in Finland. The railways built under General Annenkovs leadership Polesye and Central Asian could serve for the Ministry of Lines of Communication and Finance builders as examples of quick and cheap railways. The building of railways in America, where they took all measures to reduce the prices of the railways and expedite the building and [where] as traffic advanced they improved rails, enlarged passing places and water supply, did not seem to our engineers edifying. Our railways turned out to be very expensive, although many costs could have been avoided.
85

In other words store is sore.

The game of go cultivates such mastery86 in a person. Mastery enables the achievement of very high rates of effectiveness and work within complex supereffective technologies and models. An example from another sphere is digital high-precision machinery, which requires highly educated workers who are able to cope with complex equipment. Of course, we can reject supereffective but complex and expensive technologies which might require additional investments in the education of people. The argument between the idea of area fire and that of the high-precision weapon is likely never to be settled. However, where the price of every shot is very high, there is a need for thrift and supereffectiveness. After all, it was emperors, not peasants, who studied the strategic art of go. In the modern world supereffectiveness is studied first of all by businessmen and chief managers, while at the lower levels of management and performance such ideas and technology are likely to be unprofitable. As an old Chinese saying puts it, do not make the tiger catch mice. The game of go provides a graceful way to examine the strategic concept of superfluity.

Sketch 30 Consider sketch 30. White has formed a new group on the right side. Previously, there were no white stones on the right side. Now the black player has to find a
86

Of course, if there is nothing about utilitarian sports-emulative approach.

response. The graceful solution is to restrict the new, hostile structure while developing territory in the right side of the board. How can this be done? If black player had more stones on the right side he or she would be able to start forcing the rival out of the area through severe measures. But black does not have sufficient stones on this side to force out the rival. Whites investments on this side are almost equal to blacks, that is two and three stones, respectively. Therefore, the main factor here is the initiative (sente). Since both players forces on the right side are equal direct conflict will only lead to mutual strengthening. If a strike does not destroy it strengthens, according to the principles of martial arts87. If a direct strike does not lead to the destruction of the white stones on the right 88 side , it will be necessary to apply a graceful solution. For example, it is possible to influence the two white stones indirectly. If one does not manage to defeat the enemy by weakening them it is possible to make them superfluously strong. A superfluity of strength is actually as bad as being weak. Superfluous strength does not yield enough benefits to justify its existence. The problem of locked power in Russian electroenergetics provides an example of ineffective superfluity. For instance, the productivity of some large Russian atomic power stations turned out to be superfluous, literally locked at the stations, because of the low capacity of the networks served.89 A master contemplating overly strong stones that do not exert sufficient power can see that they lose their effectiveness because stones cannot be moved!90 However, the locked-in, frozen energy of such stones provides the opportunity to see similar problems in other processes and phenomena and to find graceful solutions. To force the rival to pour in superfluous investments by playing unnecessary stones is a form of indirect, invisible attack. On the surface, it would seem that this attack helps the adversary by making them stronger.91 An invisible attack leads to invisible victory. Invisible victory is the situation in which the adversarys affairs are going worse than yours.

87

Ideally a strike must disable ones adversary. Avoiding superfluous impact on the enemy the fighter saves force and time. Moreover, the adversary is likely not to allow a second strike.
88

This results from the balance of forces as analyzed above.

89

At his appearance at Rosatom on 16th March 2007 Deputy Prime Minister of Russia S.B. Ivanov stated that it is not enough just to build an electric power station. The main point is to make the station, when connected to the centers of consumption, able to work at capacityKola Atomic Power Station is able to produce at 3.5 billion kW/h more that it does now and could provide with electricity not only the Murmansk region but contiguous constituent units of the north-western Russian Federation. However, owing to the insufficient capacity of the network infrastructure this energy so needed by the north-west part of the country is locked at the station. (Vestnik Atomproma, April 2007). 90 An observer who is not a Master will not notice such hidden losses of effectiveness. 91 This is why such attack is invisible.

Invisible, indirect attack is a high level strategic art. The ancient Chinese commander Sun Tzu wrote about such levels of strategy in his treatise Art of War: To fight one hundred times and to win one hundred times is not the best of all possibilities; the best of all is to subdue the enemy without fighting.92

Sketch 31 Black stone 1 (Sketch 31) threatens the flank of the white group. The threats are either to cover (point A) or erode (point B). Both would endanger the stability of the two white stones.

92

Sun Tzu: Art of War.

Sketch 32 The proper response is to raise the side by playing at 2. This is correct but it causes superfluity in the white formation. According to go theory, it is necessary to extend three spaces from a line of two stones. In this case, the single white stone ought to stand one place further away. But who could have foreseen that the black players plan was so subtle? The proper answer is not always a solution, i.e., an effective answer. This statement requires attention and analysis. A wrong answer is always ineffective. Yet, a right answer may be either effective or ineffective. Why? Because there are always several answers and their effectiveness is often determined by time and place. The difference between correct and solution can be demonstrated with the example of target practice. To hit the target is correct, but to land in gold is a solution. The choice of an effective, solving action can be made only by way of complex analysis of the text and context, i.e., the unique properties and circumstances of a problem at a specific time. In the case of Sketch 32 the text is the strike by black 1 at the flank of the white group and the threats described above (erosion and covering). The context is provided by the other flank, namely a single stone that has already taken up position. Taking into consideration the two flanks of the group, the white player can either reject the right answer strengthening the stone by sending in reinforcements (white 2) and thereby over-strengthening the whole group or have ineffective stones. As stated above, the organization of the white stones in Sketch 32 is too dense, and therefore ineffective. Therefore, such stones should be placed more widely.

To what may an ineffective, superfluous formation lead? Ineffectiveness tends to accumulate. With 3, black ruthlessly presses on the other flank, and so this flank also needs support.

Sketch 33 The white player has strengthened the second flank with a correct but even more ineffective reply, stone 1 (Sketch 33). In contrast, black happily strengthens the flank by protecting the wide, right side. Strengthening of the blacks by stone 2 is both correct and effective. Please note that the space covered by two white stones in Sketch 30 and the space controlled by four white stones in Sketch 33 do not differ in volume. At the same time the black player has got the right top corner and a large area on the right side (though there is a hidden threat in the corner the possibility of an incursion at the 3-3 point). If we compare visually the areas that both players have claimed using the same number of stones we will see that the black player has achieved incomparably more than white. Yet the white player was playing correctly! Everything was done according to the rules but a loss of effectiveness is evident. The one who understands the difference between correct but ineffective, incorrect but effective and correct and effective decisions is able to make much more impact in their activities, both in go and in real life. Which answer is both correct and effective for the white player in this situation?

Sketch 34 The play at white 2 (Sketch 34) is a correct and effective answer. It is based on the strategic concept of exchange. The white player is effectively inviting black to follow through by playing at point A. In return white gets into the corner (point B), threatening to take it away from black. The latter now has to work out what is more beneficial for him: to retreat, keeping the corner; or to continue the plan of putting pressure on white stones. In that case he would have to abandon the corner.

Sketch 35 The correct and effective answer for the black player (Sketch 35) is that defending the corner is more valuable than attacking the side (it is cheaper to keep the territory in the corner). In turn, whites correct and effective answer is to withdraw immediately with stone 4. This way white leaves behind the weakened marked stone (it has only two supply lines, and so is at half-strength). White also leaves in reserve a hidden threat of invasion (point A) in the black camp. This will disappear only after the capture of the marked white stone. It is ineffective to capture immediately in this situation, although the idea of capturing is not in itself a mistake. The most effective action for black is to support the single stone in the bottom right corner. If you have a look at the board as a whole you will see that this stone is isolated because of the white formations in the background. For now the white encirclement is only faintly visible but it has already happened and needs to be dealt with. It will be too late to fight back should the white stones reach the corner gate. Such a late reaction would show up the black players lack of strategic analysis.

Sketch 36 If the black player goes for an obvious profit and captures the weak white stone as shown in Sketch 36 then white will sacrifice it (white 2) and take the initiative over the whole of the lower part of the board. While all blacks stones are concentrated on the top side, white develops three sides: the bottom, the right and the left. Sacrifice and further development through white 4 provide an example of the strategic concept of peredryaga, which shall be discussed later. The white player is

ready to continue sacrificing. For instance, there is one more marked white stone. It is pressed to black stones and cannot yield any benefits. Moreover, it spoils the balance of influence for white.93 By sacrificing it, white can obtain freedom of action, that is, the initiative94. This resource is always valuable! On the whole the white players strategy has led to the global superfluity of the black stones being concentrated only on one side while the three other sides are being developed by white. Actually, this is strategic defeat for the black player. The white players invisible victory has taken place. Now white only has to bring the money home, to make the victory visible and expressed in stones. That is, to add ownership to management. In the world of business the most famous advocates for avoiding superfluity are Japanese companies. No doubt, they learned this idea from the art of go. Lets not forget that most of economic and political elite are descendants of samurai families. Go used to be an integral part of aristocratic education in Japan together with such martial arts as judo, kendo and aikido. Many presidents of corporations, owners of big business and politicians in modern Japan have studied the game and taken black belts in it (that is, they have reached the dan levels). The concept of lean production and minimizing losses is an example of the realization of go ideas in business. The most familiar example for the western reader is the car maker Toyota. However, this approach is typical of Japanese economics. The Japanese use the example of Toyota because this company has achieved substantial advances in external markets. In Japan and China they consider that there are three stages of mastery. The highest is when the Master has succeeded beyond the sea. Toyota has succeeded in the markets of Europe and the USA. Therefore, this company is held up as an example of mastery shown in management. We are not going to dwell here on the well-known concepts kaizen and lean production. If you are interested in them, there are many books devoted to these subjects. Summary: 1. The graceful solution is to unload your forces and load competitors. A leader who exhausts their partners or subordinates with long talks harms their business. 2. The main point is to search for ways of avoiding superfluity in ones own actions, investments and expenses. Unload goods in storage, negotiations and your stones.

93

- .

94

The stone goes from being weak to being removed from the board. This improves the balance of influence and enables white to take the initiative.

3. On the other hand superfluity can be used as an invisible weapon against the adversary. If the opponents actions are superfluous they lose effectiveness and as a result speed of development. Quite often such indirect influence brings more benefit than direct confrontation. 4. In go each decision may be divided into three categories: incorrect, ineffective, and effective. Studying this will greatly help you in evaluating your own and someone elses actions. 5. It is necessary to learn not to overload not only in the local situation but also in its background; to view text and context in every situation. Such an approach allows the seeing of the integral picture of a process or phenomenon. Especially it concerns such invisible things as superfluity and the loss of effectiveness connected with it.

The Fifth Graceful Solution: Exchange!

The idea of exchanging one product for another is the basis of both commodity economy and market economy. An operations-to-value-added chain is developed using the idea of exchange as well. Where does clear profit come from? It comes from the difference between the prices of goods in the market. Is an ideal market, where all players make exchanges without mistakes in product price determination, likely to exist? Should one seek it or would lack of profit shut down entrepreneur activity? In go the goal is to divide the playing field between the players so that each gets no less territory than his or her opponent. If neither commits an error the field will be divided into equal parts. The art of efficient, profitable exchange plays an important role in present-day business. It especially applies to exchange trade, where prices are literally generated in the protagonists minds. What happens in a company whose shares are sold in exchange? Quite often trade places of cause and effect95. By exchange one is able to obtain much. Especially, exchange becomes relevant when lagging behind the competitor. Where is it possible to take the lead but on a turn? The arena of exchanges requires experience, flair and intuition, and even good fortune. Usually the real cost of assets cannot be determined exactly as there are many side factors: political, economic, social, ecological and cultural. It is impossible to take everything into account. On a small scale unavoidable inaccuracies do not play any significant role, but on the grand stage of the world even 0.01% is of great consequence. In contrast to production, where everything is more or less transparent, foreseeable and countable, exchange is interesting because the decisions involved are almost always subjective. It means that through the factor of human error it is possible to make something out of nothing, as the ancient treatise 36 Stratagems puts it. Sometimes this something can be very big. Otherwise, how can we explain the fact that the management of the largest energy company, Enron, with a turnover of 100 billion dollars, took conceivable and inconceivable risks to extract surplus profit from thin air or, more precisely, from peoples minds? It is hard to believe that the company was run by hungry or inadequate people. The art of exchange can defeat the art of cold calculation, even when very precise. Nobody can cancel human psychology. This is why one who studies the
95

There was a succession of corporate scandals in the USA in the early 2000s. The bankruptcy of the energy company Enron was the greatest financial failure in US history (with average sales of 100 billion dollars the company occupied the 7th place in the list of the greatest companies in the magazine Fortune2000). The management of the company garbled annual accounts, obscured losses and indulged in various machinations in order to prevent their share prices from falling on the stock market.

strategic concept of exchange and uses it in their business manages to accomplish a great deal. As an example we may take George Soros. In 1992 his fund Quantum became the most active participant of speculative currency transactions with the pound sterling. The pound was under high macro-economic pressure. The UK economy was out of order, recession was approaching and the currency unit, according to expert opinion, had to depreciate in the event of mass intentional selling. How did Soros act? For several months he was buying the British pound while trying not to draw attention to his operations. By September his assets in sterling amounted to 9 billion dollars. The sudden emission of this enormous sum into the market unbalanced the British currency and the pound started tumbling. Over several months it collapsed from 0.92 pounds to the dollar to 1.5 pounds (for first two days it went to 1.77 pounds). Then Soros bought cheap pounds in greater sums than he had sold. The difference amounted to a billion pounds. It is interesting that this exchange was realized in the market FOREX, which is now available to everyone.96 History has left us famous examples of exchanges. One of them is the legend about Napoleons proposal to Alexander I to swap his councilor M.M. Speransky for a kingdom in Europe. The strategic concept of exchange is widely used in diplomacy and intergovernmental dealings. For instance, the WTO accession is accompanied by complex undercover trading in which whole branches of national economies can be exchanged. How can one tell if an exchange is beneficial or not? Should we use mathematical models, or rely upon reason, intuition and experience? How to choose at a profit? One of the authors of this book, while holding a seminar, asked the attendees this question: You are sent to China, when suddenly your boss calls and asks you to buy an authentic scroll with the calligraphy needed for the company. You have one day to find a suitable scroll. How will you define if it is authentic or imitation? How much are you going to pay for it? How are you going to bargain? This unexpected example confused the course participants. In reply the top managers of the company, who had invited him to hold this seminar, only suggested that they go to experts. There are no experts, you are to choose. What then? Then we dont know what to do they replied. Buying somebodys experience is not a bad decision. The main point is not to make a mistake when choosing an expert! So you have to choose in any case. The art of choosing, the art of trade and the art of exchange are the same arts as found in calligraphy, painting and music. You need to be delicate to master them! Work
96

FOREX has many interesting features: for instance, one can sell for a sum which one does not even have in ones account (this is called marginal trade).

on your taste in art, on your flair! Going this way you will grow not only professionally but will also develop personally. It is not enough to learn how to master arts only with the help of go. It is impossible to master an art without studying some other arts at the same time. You should not be afraid of taking lessons from musicians, actors, and players. Play! Play as much as possible. Play with your children, play go, play all the games you are shown. Great people were often great players. Do not be afraid of following their example. For example, go practice provides priceless experience, while at the same time you need not risk anything important, such as a career. Go is a game, a model of life, but not life itself. There are examples of the owner of a big business making the decision to sell his or her shares (or the whole business) in order to invest in a new project. For instance, leaving the iron or steel industry to enter heavy engineering, or moving from hydrocarbon production into the sphere of entertainment or sports. Where does the desire to exchange a profitable business for new assets with which one will have to start from scratch come from? Lets view this situation through the prism of the eastern strategic tradition. There is an ancient diagram called Yin-Yang Tao. This diagram shows how every process slows down when reaching the height of its development.

Diagram: Yin-Yang Tao It is a pleasure to contemplate the inter-development of the two colours. The larger the area the colour takes in the diagram, the slower its speed of growth. The smaller the area the colour takes, the more rapidly it seems to grow. What can we understand as area? For example, it can be the volume of a companys capitalization or its share in the market. The diagram illustrates the slowdown of growth with increase in volume. What conclusions can the owner who understands this principle draw? They can see that their business is at the height of its capitalization and its growth is slowing down for a variety of objective causes. Once they entered this business with a single

unit. Their business has grown very fast and now they can boast 10,000 units. Now they can take this 10,000 and invest it in another project which is in its infancy, and which is still developing dynamically. It is not difficult to forecast how the 10,000 units will multiply at the peak of a new projects capitalization. Of course, this example is an intentional simplification but we consider that its basic logic is sound. There are no specific difficulties except for such nuances as, for example, determining the proper time to exit the current business and to search for another point of capital application. In go, the theory dealing with this and similar problems is drawn from the strategic concept of exchange. It can also be called differentiation.97

Sketch 29 Sketch 29 shows the interaction of two colours in the top right corner. Now, the frame is not a circle divided in two by a wavy line, but the familiar matrix of possibilities within the 361 factorial. Analyzing the players actions we can conclude that the white player asks the black player for the top right corner. For this purpose white played at 3. In fact, the corner has been practically taken under control by the white player. What remains for the black player? Should he or she just put up with it? The concept of exchange is based on the following principle: Give up in order to get; or even more firmly: Do you want it? It is already yours! The latter strategic principle, perhaps, is one of the most potent techniques of all. The black player might give his competitor the corner. In return he or she will take control over the organization
97

This term comes from the school of the military art and strategic game Voshojdenie/Ascension.

of the corner by white stones and will also receive a special non-material asset influence.

Sketch 30 The result of the exchange is shown in Sketch 30. The white player has got the corner. The black player, at first sight, has not enclosed anything totally. But that is not true. By leaving the spoils in the corner to white the black player has obtained time and influence. How can this be proven? Lets use strategic positional analysis. The numbers of black and white stones are equal but they form contrasting patterns. What can be said about the five stones that have just developed the right corner? What is certain is that these five stones are busy keeping the corner and perform no work elsewhere. In other words, the white stones are blind to the other parts of their world because they are shut into the corner by black stones. If you look at the board as a whole you will see that the white players interests are represented by two stones to the left and the white stone at 11, which strikes out into the right side. The others are concentrated into the right corner and do not influence 98 the playing field. In contrast, the black stones watch over the playing field. There are eight of them. Three versus eight these are good odds for the black team, arent they! The black player has achieved a significant advantage in influence while white hardly leads in territorial possessions.99 So the main assets of the black player are now
98

Pressed between black stones on the top side the solitary white stone does not have to be counted as such stones do not exert any influence. To exert influence one has to be strong. Influence is impact plus strength.
99

Blacks territorial possessions in the bottom right corner are not inferior to whites top right corner, even though they are more lightly defended (by only two stones).

concentrated in a special latent form while the white players assets have already been revealed. What can we see now? In this game, black has scored a knock-down. Why? Because the black has used the principle Do you want it? It is already yours! to exchange the corner White coveted for something more valuable. Which is more profitable: the revealed form of assets or the latent one? There is no unambiguous answer. Owing to the complexity of profit determination there appears to be a time and place for both holding and exchanging.

Sketch 31 The black player can realize his or her invisible influence, for example, as shown in Sketch 31. Here, black captures the lions share of the top side. The white players right corner is worth about ten points, but blacks side amounts to dozens. Whats more, its likely to grow towards the centre. Why do they dislike Russian businesses in Europe? Perhaps, it is because of this dishonest overcapitalization? But surely Russian businesses have perfectly a good right to buy large assets in European markets! While western Europeans work in the white corner, not far from them appear huge black capitals, as though from thin air. This is how the Russian graceful solution works. Of course, the black players development in Sketch 31 is the consequence of a well thought-out and objective strategy.

Whether or not the black player will manage to keep hold of such large revealed areas is a question of his or her mastery. But if you cannot or do not know how to hold on, then do not use complex strategy. Your place is in the corner. Of course, the white player will contest the opponents right to such superprofits. Blacks problem is that, like white, they have revealed their abilities and resources. It is difficult to take anything away from white because everything is compact and tightly guarded. As for black, he or she has a great area which will have to be defended against likely encroachments. Chances are that the black players area on the top side will be reduced. Nevertheless, there is no doubt that black will take profit from it. This is an example of a derivative: the selling of coal in exchange for influence; the conversion of influence into assets. You may ask why black needs to reveal influence. The problem is that with every move, the position gradually becomes more and more fixed. It is possible to reach a moment when there will not be enough space to make the invisible visible, to convert influence into real territory. This is the risk for one who possesses invisible assets. There is always a chance that they cannot be turned into specific capital units or territory in time or at a profit. In such a way an investor on a stock exchange has to fix profit selling securities. The main complexity of the strategic concept of exchange lies in such risks. However, a strategy aimed only at influence or territory is possible, but this too requires considerable skills. Lets look at a game between two famous Japanese professionals as a further example, this time of a more complex exchange.100

100

The black player is Go Seigen, 7-dan and the white player is Karigane Junichi, 8-dan. October 1941, Japan.

Sketch 32 In Sketch 32 we can see the simultaneous application of two strategic concepts by the black player: the concept of forcing (black stones 1,3,5) and the concept of superiority (black stone 9). They are unified by the idea of a big exchange, which is shown in the following sketch.

Sketch 33

Black exchanges the three stones adhered to the white fence in the bottom left corner for a superior position towards the right. He favours the new black stones at 11, 13, 15 and 17 over the sacrificed ones. The sacrificed stones linger in the white camp as a hidden resource. They threaten to cut off the white stones (10, 12, 14 and 16) on the bottom side and then to destroy them (A and B are potential cutting points). This is an example of exchanging certain assets, which have already played their part, for influence. Note that there is only one stone on the right side of the field.101 The black player has managed to make the adversarys formations superfluous at this stage of the fight. There are ten white stones concentrated against three black ones. Moreover, the three black stones still pose a hidden threat, which can be activated by the black player for at an advantageous moment. The threefold numerical advantage of the white army does not produce the desired effect because the white position contains internal defects. In fewer than 20 moves both players have used five strategic concepts linked together by a common strategy: forcing, superiority, hidden resource, exchange and superfluity. Is this not a graceful solution? Effectiveness is achieved by combining several strategic concepts they gain force through synergism. However, when applied separately they might not be so effective. Here is another excellent example.

Sketch 34 Sketch 34 shows a great exchange from which the white player has taken eight black stones (three black stones in the upper left were captured earlier) and part of the
101

Ratio of stones that are directed to the centre is ten to three in favour of the blacks.

territory on the top side. In return the black player has obtained a superior position in the centre, and dominating influence on the right and on the side. This is a good exchange for black, isnt it? It is not easy to see the breadth and depth of such a plan. However, this is the reason people buy luxury go boards for prices exceeding 100000 euros for their offices and, having set up such positions, contemplate the oceanic plans of the saints of go. Why did aristocrats in China and Japan practice the strategic art of go? In the same way one who excels in martial arts can prevail even against several enemies, one who gains mastery in a strategic art gains a serious advantage over those who do not. Do many people in modern Russia have a masterful understanding of strategy? And are there many aristocrats in modern Russia? And are there many go boards in modern Russia? A mistake belongs in the realm of practice. Making mistakes is very expensive. But mistakes are inevitable. The fewer mistakes there are and the sooner they are revealed and eliminated the more likely a business will succeed. It is no accident that servicemen practice staff and field maneuvers. To study war is important but expensive. It has always been like this. This is why war is a very expensive event. You can read about the experiences of the Red Army and its commanders during the Russo-German war of 1941-1945 in historical literature. The losses sustained by the Red Army against the well trained troops of Germany were enormous. Russia is still been enduring the effects of these irreplaceable losses. Business, Russia, 2007. Lets read the thoughts of a large-scale exchange participant:
First of all there are investments into share capital. We spent 270 million dollars on purchasing the factory Rouge Industries (SNA). Now, in their reports investment bankers put this asset at between 1 and 2 billion dollars. So that was a very good bargain. Secondly, it is necessary to understand ways of conversion and payback of the investments. We always buy only those assets which we understand how to restructure in advance. For example, today two thirds of the investments in SNA the company pays itself and only one third is paid by the parent company Severstal. However, a few years ago we bought this asset with a negative yield. It was not considered to be cheap as nobody believed that the factory would emerge from bankruptcy. But we managed to do it The third criterion is the minimal riskiness of a bargain102

Returns on investments, understanding how to develop an asset and minimal risk are the criteria that the company Severstal uses, according to the extract above. What does a player get after an exchange? To be precise, how will they develop the asset? Where will be the derivatives? It is impossible to estimate the advantage of the exchange without an understanding of these challenges.

102

Interview of Assistant General Manager of Severstal-group V.A. Mahov [29].

Sketch 35 If we return to the position replicated in Sketch 35 we will see how these criteria work. First of all, the return from the black stones on the top side is obvious. Because of these stones the black player can develop this side to its limit (stones 1 and 3). Please recall that the black wall appeared in reaction to the formation of the group of white stones in the corner. On the other hand, it is important to understand that if the black player does not know how to realize influence and keep hold of large and regained territories the exchange will be useless. Then the black player would be considered to have lost the right top corner for no compensation. Should one act with minimal risk or should one take risks? Go teaches one to reckon ones position in every certain situation. It is interesting to ask yourself this: if you lag behind the leader, in what should you invest first of all? In territory or in influence? In tangible assets or in the invisible? The answer is that you should invest in the invisible or in what is hard to estimate. For example, suppose you invest in influence. If you lag behind then the speed and risk associated with it are the only means to contest the lead and achieve parity or leadership. And if you are rich and hold the lead, what should you do? Exchange? No, you should forget about exchanges. You should make yourself forget the very idea itself, and seek neither exchanges nor quarrels. You should act safely.

Summary:

1. Exchange! You should have employees to whom you can give such a command. In their turn they should know what to do. The problems of choice and the connected problems of evaluating profit following exchanges and bargains will be solved by them in accordance with their abilities. The art of exchange provides unquestionable advantages to one who masters in it. 2. The strategic concept of exchanges involves derivatives. In short it comes to the three following principles: Give in order to get, Do you want it? It is already yours! and To make large out of small. The strategic art of go can teach you how to master these and other principles of effective exchange. 3. This strategic concept invokes both visible (tangible) and invisible (intangible) assets. The authors call them possession and influence. The art of exchange is to convert one into the other while making capital gains. 4. If you take the lead over your competitor it is better to act without exchanges. If you lag behind you should take risks, invest in the invisible and in that which is hard to evaluate, in order to force the leader to exchange as much as possible.

The Sixth Graceful Solution: Fight Precisely and Wisely!

Why fight? What should you when your objectives can be fulfilled only by moving against the stream or outside some process or other? Go straight on through? What kind of stream might it be? Pressure from competitors? Downward trends in the market? Economic depression in the region or in the specific field? Political uncertainties? Of course, one can move against the stream. But such movement also demands excess pressure. And what if the stream is stronger than the combined energy of willing managers and the corporation? What then? I can fight. Why fight precisely? It is enough to use force! Why make it more complicated? Why should I learn that? In Chinese martial arts there is a legend of an archer who shot and killed an eagle. His Master said to him: One arrow one eagle. That's OK, the archer responded, I shot thrice and I killed it. You killed it indeed, said the Master, But you've shown no mastership. So what? So, the hearts of millions belong only to those who can hit the heart. You aimed at an eagle, which is never enough. Moreover, others might say that it took you twenty shots to hit the eagle, instead of three. That way, three becomes twenty. One can crush a brick or break a plank. It's not easy. It's mastership, in its way. But Bruce Lee once said: A plank doesn't counter-attack! Not only did he say that, but he demonstrated it also. As a result, the hearts of millions belong to him. What does it mean to fight smart? Is there a way of fighting precisely? How can the student learn to use direct and sideways actions? What are the limitations to both ways? The idea of indirect (sideway) action is clearly stated by the formula one retreating wins. To whom or what should one retreat? Why do that? What should we do if the objective is directed against the stream - against the trend? In the case of indirect methods this is perfectly normal. One just has to wait a little for the stream direction to change by putting away the primary objective and finding a secondary one.103 Waiting will be pleasant as you will enjoy the view of your competitors bodies floating down the stream due to their straight methods ineffectiveness against the stream.

103

There is an alternative one can control the stream itself. The art of such control is considered to be the ultimate level of mastership. Are there many such masters among your enemies?

This is why China has the strongest tradition of using sideways methods. The Yellow River taught the Chinese one important distinction. It is the Chinese who invented the idea of moving along with the stream. The strategist's only remaining task is to drive the boat as the stream does not belong to him!104 The advantage is that resources and manpower are saved. The result is that the objective becomes achievable.105 The ultimate ideal of super-effective strategy is nonaction. Non-action does not mean doing nothing. It is a special kind of action for when there are no visible resources or manpower expenses. This line of conduct was a guideline for the Chinese Supreme Ruler the Emperor.106 The ancient Chinese strategist Sun Tzu wrote in his Art of War that the one who masters war, can capture an enemy army without a fight; can capture an enemy stronghold without a siege; can crush an enemy state without deploying his troops there for a long time. He who preserves everything intact can contend for supreme power in China. That is why one can have profit without blunting his weapon; this is the main rule of strategic attack. [23] The idea of non-action is very ancient indeed. How can such ideas be of any use to a contemporary politician, businessman or leader? There has been a growing interest in Sun Tzu's ideas and the Chinese strategy school in Western countries in recent years. This was caused by the confrontation between American and Japanese management styles in the 1970s. As you may know, the Japanese model was the winner. Nowadays, it is hard to find anyone who has never heard of the Japanese system of quality control, decreasing expenditure and saving time. Why is it so important to combine fighting methods? Direct or indirect action alone is worthless in comparison combined action. The key is to choose the most promising move according to the situation. That means that one should have several tricks up ones sleeve in order to progress to mastership. A strategist must be able to tie knots when necessary, untie them when necessary and cut them when necessary. In every kind of fight there is a straightforward, tank107 style that is guided by the principle wall against the wall. Isn't this style typical for Russian business? It has worked so far! But delicate decisions, meanwhile, work for competitors and with greater effectiveness, it should be mentioned. There is also the problem that delicate decisions are invisible to the naked eye. An example of direct action is completing the distance by increasing speed - to crush a brick, to cut the Gordian knot. An example of sideways action is decreasing the
104 105

According to this approach, objectives are set taking into consideration the stream's direction. Because more than a single objective is fulfilled. 106 He does nothing but there is nothing undone. 107 The infamous Grozny New Year assault proved its utility or, to be more precise, uselessness.

speed, maneuvering and looking for a shortcut. Japanese businessmen say, invoking the idea of maneuver, falling behind? Take a detour! Where can one overtake an opponent in a race - on a straight or at a curve? The probability decreases at the curve. This is because of the sharp increase of forces affecting both car and driver. Could the next step for western-style management be to pay even more attention to the Chinese ideas of non-action and control over non-control, and to follow the Japanese ideas of kaizen and careful production? Isn't the practice of power delegation (which became fashionable in Russia recently) quite similar to it? Direct and indirect actions are best reflected in the fighting arts and military strategy. The straightforward western sports motto Faster, Higher, Stronger! can often be supplemented by the eastern Slower, Lower, Weaker! Did you know this second motto? If not, don't you think you've missed something? According to the strategic art of I, the greatest effectiveness is gained by combining direct and indirect methods, whereas used alone they can lead to onesidedness and, therefore, vulnerability.108 Military strategic history offers many examples of the successful use of sideways methods. German strategy in WW2 was based on fast breakthroughs by tanks and motorized squads. What was the basis for it? Germany had an army which outnumbered those of its enemies. In their campaigns in Poland, France and Russia, German tanks found and broke through the weak points of the enemy's defences. They destroyed headquarters and assembly grounds. Therefore, the enemy's troops lost coordination and could not resist Germany's attacks. A boxer who misses a punch temporarily loses control and cannot resist for some time. You should note that once the German troops faced a strong defence they tried to outflank it by pushing on various points of the front-line. The excellent application of tactical sideways fighting is what marked the German commanders in this war. The strategy of blitzkrieg is to inflict several super-effective direct attacks. The only problem is to provide the necessary speed and hitting power for such attacks.109 It is also important to ensure cooperation with the other corps, for example, aviation. This straight-ahead and simple strategy of crushing with a single hit, combined with flexible tactics, led to success for Germany during the first period of the Russian-German war of 1941-1945. In 1941, the Red Army lost almost three quarters of its personnel (including those captured, wounded and killed), 90% of its aviation, more
108

What is there in Russian fighter aircraft that surprises Western competitors and attracts their jealousy? Maybe, it is the right combination of direct and sideways capabilities? In the latest designs of our air force, the ideas of direct (high speed) and sideways (thrust vector) are brought to life. This combination provides unique military characteristics. 109 Speed and hitting power are the key requirements for offensive combat according to Alexander Suvorov's Art of Victory.

than 100% of its tanks (compared with its pre-war amount) and the greater part of a European territory with a population in excess of 70 million people. But then the natural limitations of this strategy revealed themselves. A direct action is mostly short-run and local. It cannot be applied over a long war over large territories or when solving matters of superior importance. Meanwhile, it demands visible results as it consumes a great many resources. It can become impossible to strike again if the first strike was insufficient properly to beat the enemy. A direct action must be fast, effective and problem-solving. The intention of the German commanders in their war against the USSR was to make that kind of crushing strike. The Red Army was supposed to retreat to the Urals by the winter of 1941. It is worth mentioning that German headquarters didn't take the possible failure scenarios into consideration. Why? Probably because a specific strategic formula, Victory or Death!, was applied. This was defined and used by the unbeatable Russian field marshal Alexander Suvorov. It hadn't, however, been researched in the strategic literature.110 After losing the battle for Stalingrad the German army not only lost parity with the Red Army but also confidence in their own invincibility. 111 Moreover, many German elite troops, the Wehrmachts knockout punch, were killed in this battle. Erich von Manstein, one of the Third Reich's leading strategists, proposed a sideways strategy in the critical period of the war (1943-1944). His proposals were to provide strategic defence. The army should not hold some specific areas or locations but instead should be prepared for both attack and retreat (according to the military situation). The idea was to retreat from positions where the Russians had concentrated their armies. It only made sense to advance on those areas where the Germans had an advantage. The Field Marshal proposed evading the Red Army (which by now had greater resources and power) and to take advantage of the Russians' mistakes and movements. Such a strategy of constant precise hits, evasion and surprise attacks was supposed to cut down the growing power of the Red Army. One should bear in mind that, according to Manstein, victory could not be guaranteed. A draw was the best result they could achieve. Meanwhile, the USSR applied the idea of industrial war, i.e., the idea of maximizing direct action. This was a clear and obvious strategy. The war was supposed to come to the industrial stage (following the peasant one). Millions of bullets, fired at the Germans, would do the work. Bullets don't retreat and don't have to be persuaded. They must be manufactured, delivered, shared and shot at the enemy. Such an approach was quite demanding and, of course, not always effective. The very idea of the strategy was to face every strike of the enemy with excessive force and, by facing it, crush it with the combined power of aircraft, artillery and armoured vehicles. But what if the
110 111

At least, the authors do not know any cases of such research. The Red Army always exceeded the SS and Wehrmacht in troop numbers. However, the Germans were superior in their combat characteristics.

German army could have rejected its strategy of direct attacks and applied something more sophisticated? Who knows, would there have been enough resources for the Red Army to be the strongest everywhere and at all times? The risks of such strategy might have been experienced by the Russians. The idea of sideways fighting is to divert the enemy from the crushing direct strike he prepared to another, weaker area of his competence. In such a case, he would have to re-gather his strength in order to perform both direct and alternative actions. When one succeeds in controlling the enemy in this way, one may return to the original position (before the diversion) but with fresh powers and new stunning opportunities. How can a lightweight boxer defeat a heavyweight? He would be crushed in a direct confrontation. But the lightweight possesses several advantages: he's faster, more flexible, and has more endurance. Of course, weight is a highly influential factor in the power and penetration of a punch, but so also is speed. How can this approach be applied in business? For example, what about the Stock Exchange? The most frequent mistake of the stock gambler is to play against the market. This is like fighting against a super-heavyweight boxer. Consider FOREX. What were most traders doing during 2007? They were selling Euros against the dollar. Meanwhile, Euro had been and is still growing. Some thought that the trend was about to dimock, while others started fighting only in order to measure strength. The daily turnover of FOREX is 2 trillion dollars (which is three times Russia's GDP). Can one succeed in fighting such power through direct action? Even having an army of millions of dollars? Could there be a graceful solution? How about closing one's own positions and trying to play elsewhere? Anywhere but not in the exchange. Probably, it is best to wait for competitors reactions and to rejoin the market after finding the right direction. Let's return to 1943 and imagine we are in the middle of the German-Russian war. Who could recognise the trend in 1943? The idea of strategic defense was not supported by the German headquarters. The evidence of those close to Hitler indicates that he was in favor of simplistic plans such as defending until the very last bullet. It is curious that he tested its efficiency both when struggling for power and in the first confrontations in the Western European territories.112 It is hard to say why Hitler decided not to change his strategic approach when leading Germany into a crisis. Is it easy to change for a 50-year old man who has reached the very peak of power and who is burdened with the great responsibilities of state? The Battle of Kursk was for the Germans a fatal encounter with the Red Army. The USSR, which by 1943 exceeded Germany in all kinds of resources, had prepared enormous defensive perimeters reaching up to 150 kilometers in length! There were
112

Some German generals, including Manstein, joked that this strategy was something the German dictator had learned from Stalin.

hundreds of kilometers of equipped trenches, antitank hedgehogs, minefields, barbed wire, emplacements, strong points, tank-proof areas and sighted firing-points. The Red Army built up a defensive area of such length that it could neither be flanked nor broken. It had no weak points. Despite the protests of Manstein, Guderian and Model, the German commanders decided to break straight though the Soviet defences from two strategic directions. The USSR defeated Germany in this battle. Soviet troops continued defending against the German attacks and counter-attacked after the SS and Wehrmacht troops slowed down. Although they counter-attacked, they also repeated the mistakes of the enemy, which enabled the German troops to get used to pattern of these assaults. This is why the counterattack was so difficult near Orel and Belgorod. Overall, the remaining units of the Wehrmacht and the SS were destroyed in the indecisive battle, breaking only between 9 and 35 kilometers of the Soviet defensive lines. After the failure at Kursk the German army retreated, only holding defensive points. It might seem that the USSR victory could be considered evidence of the longterm efficacy of direct strategy. This would be true were it not for the facts of history. This strategy showed its inefficiency during the Cold War. The result was the disintegration of the USSR. The USA possessed many more resources, connections and ideas. The strategy of asymmetric response, which is now being spoken about in modern Russia, is an example of a sideways, indirect strategy. But will it be possible to develop and realize it? Let us analyze the idea of an asymmetrical blow with the help of go. Masterly go is permeated by the idea of combining the direct and the indirect. But we shall stop at the strategic concept of indirect struggle. It is interesting that the Japanese term for it, ko, is related to the Russian. The word ko originates from the Sanskrit word kalpa, which denoted a very long period of time.113

Sketch 36

113

In Hinduism this period is 4300 billion years. The word reached Japan via Buddhism, and uses an obscure kanji reading specific to that religion. As a matter of fact, ko is nowadays usually printed in katakana in Japanese go literature.

Sketch 36 shows how an indirect struggle can arise in go. The left stone marked with a circle has only one supply line (one liberty). If a white stone occupies point A the black stone will be immediately removed from the field, as shown in the central part of the sketch. The result is shown on the right. Now the white stone itself has only one supply line, and if a black stone were to occupy point B then the white stone would be removed from the field. The situation would return to the position of the left part of the sketch. Such a struggle with mutual captures in this area could last for a long, long time. Therefore there is a rule to regulate such situations. According to this rule, the black player cannot play at point B. Such a move would return the situation to the position shown in the left portion of sketch. That is, it would lead to the repetition of the position. The repetition of position is forbidden by the rule. Therefore, the black player must play at some other point. Of course, the white player could then occupy point B, ending the struggle. If black values this area and wants to continue the struggle then there is nothing else but to play an intermediate stone in such a place that the opponent must respond. After diverting the opponents attention black would regain the right to occupy point B and remove the marked white stone. Now the restrictive rule would work against the white player. So in the case of endless struggle continued participation is possible only through playing elsewhere. Owing to this rule a situation of indirect struggle known as a ko fight arises in which the players have to strike diversionary blows in different parts of the field that seem to bear no relation to the main area of dispute. We will now look at example from a game between two of the most revered professionals, which took place in Japan in August 1939.114

114

The players were Kitani Minoru, 7-dan, (black) and Go Seigen, 7-dan.

Sketch 37 In Sketch 37 there is a marked stone on the right which has only one liberty. Next to it there are four black stones that also have only one liberty. Above the black stones there are thirteen white stones that have only two remaining supply lines. If the black player takes at point A the thirteen white stones will be down to their last breathing space. There is only way to save them: to recapture the second liberty with the help of a ko fight. So, point A is the place where a ko fight is likely to arise. The value of the fight can be calculated like this: 14 white stones + 14 points under them115 (we do not count point A because it will be occupied by a black stone) + 4 black stones + 4 points under them + 1 adjacent point = about 37 crossings of territory.116 If the black player captures the white stones he will get 28 points of profit (14 captive stones plus the points they once stood on) and will prevent the white stones capturing his own group of four stones with their connected points. So, through an indirect struggle black has the chance to obtain up to 38 points. If white were to gain the upper hand in this endless struggle and capture four black stones then he will get about 10 units and preserve his own group of fourteen stones, thereby denying black 28 points of territory.

115

According to the Japanese rules for calculating the games result every captured stone is worth one point of territory (the crossing on which it stood) and one point in itself. So at the end of the game the prisoners are placed in the players respective territories, making them smaller and easier to count. You can read about this in more detail in the Appendix.
116

Crossings of territory might seem a slightly strange term. However, lets recall that in business a crossing is often one of the most profitable locations. A shop at a crossroads will bring more profit that a similar shop in a less accessible place.

Of course, the black player, Kitani, 7-dan, is in the more advantageous position as he threatens to capture the big white group in the event of a local victory. His opponent, Go Seigen, 7-dan, can at best hope only to keep his stones alive. In state finances there is a secret rule: an expenditure saved is a profit. Therefore, if he won the ko fight, white may count as profit the fact that he has avoided losing his stones. However, to accomplish this he will have to give up something in another part of board, as at this moment the fate of the thirteen white stones depends on the result of the ko fight. But all that is only speculation, as now it is the black players turn to move. The opportunity to gain 38 points by means of indirect struggle is at stake.

Sketch 38 Black can start the struggle by capturing the white stone (Sketch 38). Now the thirteen white stones are left with only one liberty. The four black stones have for their part obtained one more liberty. Can white occupy point A immediately, immediately retrieving what was taken away? No, white cannot, as that would lead to a repetition of the position in Sketch 37. What should white do? Should he accept the loss of his stones? That would mean defeat. It remains for him to start trading by threatening the opponents interests in other parts of the field. For example, the play at white 2 threatens life of the five black stones in the corner. If the black player captures the thirteen white stones then white will continue the attack at the bottom right and capture the whole corner, along with the black stones in it. How much would that cost black? Five black stones mean 10

points of the territory, which can be added to the empty crossings, a further 8 points. Moreover, black will be denied the 2 units of territory he was holding. So, the corner is worth 20 points, which would partly compensate the loss of 28 points and allow the white player to maintain leadership over the board as a whole. 8 points are not enough for the black player to pull ahead (28 20 = 8). Blacks plan is to use the ko fight to access the white players area at the upper left. That would give chances to steal dozens of crossings from white. The white player will have to pay dearly to keep his fourteen stones on the right. He is likely to lose the same 28 points, but at the upper left, where as yet no black stones have appeared.

Sketch 39 In the actual game the black player, Kitani, 7-dan, used the strategic concept of clarification by dropping into the top left corner (Sketch 39). Only after that did he start the ko fight. The goal is to take away a part of the territory at the upper left by creating a formation of black stones right under the white stones. If the white player puts down this rising he will lose his stones to the right. Hard choice As discussed above, White 4 was a threat to capture the black corner. Kitani, 7dan, defended his corner with 5, thereby allowing his opponent to recapture at 3 to continue the ko fight. Black does not need the white stones. Black is interested in the possibility of restructuring his opponents area. Having purposely started the indirect struggle black gains access to previously unavailable areas.

Sketch 40 The result of the indirect struggle is shown in Sketch 40. Go Seigen, 7-dan, recaptured at 6, restoring the second liberty to this group. In response, Kitani, 7-dan, struck an indirect blow by switching to the upper left with stone 7. If white had answered this diversion, black player would have retaken the ko, once again putting the sword to the thirteens throat. Did white have any hidden threats in other parts of the playing field divisible by the possible losses to the right? White decided to close the ko fight. To this end, he captured the four black stones with stone 8. However, this meant losing control over the situation in the top left corner. Black added one more stone there to obtain a tactical advantage, having entered without resistance. Rescuing his large group cost white player the top left corner. Before the indirect struggle this corner seemed inaccessible. Now the rivals have taken over, and their power will only grow. It is impossible to suppress somebodys power in one stroke, it requires time. It is difficult to fight somebodys power if you do not respond to its initial appearance in a timely fashion. Thus, we can see how indirect struggle allows one to do the impossible. Without doubt this can involve very complicated calculation. It is not helpful to act by rule of thumb. One needs exact calculation and comparative analysis of all possible profits and losses. Besides, it is necessary to ascertain how many places there are on the board that can be involved in indirect struggle. For example, it is disadvantageous to have one or more unstable groups as the opponent will strike blows at them, compelling defence. Of course, when the opponent has more weaknesses indirect struggle is appropriate. The balance of weaknesses and

hidden resources over the whole field is of fundamental importance for indirect struggle. Miura Yasuyuki gives his interpretation of indirect struggle through the example of the air transport industry. Here is a passage from his book Go and Eastern businessstrategy:
After WWII the company SAS (Scandinavian Airlines), opened the Polar Route between Europe and Japan through Anchorage (with one intermediate stop). This innovation by SAS in air-technologies made the traditional Southern Route unnecessary for passenger traffic between Europe and Japan. Then in 1967 Japan Airlines succeeded in opening another route through Siberia but only after long and hard negotiations with the Russian authorities. Flight time decreased. However, we faced financial problems. As the Russians insisted on an intermediate stop in Moscow Japan Airlines had to be satisfied with 33% instead of 50% of the air-transportation market. Unfortunately, the Russians provided too little passenger traffic to cover hidden expenses. To get profit from this bargain it was necessary to get from the Russians the right of nonstop flight for reasonable compensation. A ko situation arose. What ko threat should be used to solve this problem? Our threat was simply to increase the number of polar flights while keeping the number of Siberian flights minimal. Finally, the Russians had to resolve the struggle for the right to fly over Moscow, by exchanging it for the only ko threat they had: monetary compensation. Today everyone can enjoy nonstop flights through Siberia between the main airports of Europe and Japan. The polar flight practically had to cease operation after it served as a ko threat for us. Who was responsible for such delicate and difficult negotiations? It was Asada Shizuo, a player ranked at 6-dan, and the President and General Manager of Japan Airlines in those days. Later he became Chairman of the Nihon Kiin, the Japanese Go Association. [26]

The situation of endless redistribution of property is one of worst evils for business in every country. Perhaps, it is impossible to find a state without any restrictions concerning such redistribution. However, some disputes over assets (similar to a ko fight) occur anyway. They arise within the limits of the existing rules of the game of the market, as the situation of indirect struggle can arise within the limits of the rules of go. What is an indirect threat in such a struggle? Sometimes it is an attempt to take control over a rivals assets in another business, or a mutually invited check-up, or a PR attack. There are more civilized forms of indirect struggle too - for example, competing with a rival at an auction or when enabling state documentation. Is it possible that the fate of a project or even a business is determined in the course of a backdoor fight between two departments that seem to bear no relation to that project or business? Indeed, the territory of these departments can turn into opportunities for the players concerned in the struggle over a project or business. The transient political struggle around the Treaty on Conventional Forces in Europe is similar to the situation of indirect struggle. How can one see this international situation? The main point of Russias claims to its treaty partners (to some NATO members) is that the participating countries either do not implement the treaty or have not ratified it. While Russia has unilaterally implemented the terms of the treaty its partners claim that the ratification will be possible after Russia closes its bases in

Georgia and Transnistria.117 Though this demand was not documented in the terms of the adaptive CFE Treaty, for the western countries ratification of the treaty and the closure of the Russian bases are connected. There arises an endless struggle in the form of an endless circle. Russia demands the absolute implementation of the CFE Treaty, but her partners say that it is impossible because of external reasons: the bases have not been removed from the territories of Georgia and Moldavia. Perhaps, Russia and its partners have complex positions around the CFE Treaty. The very treaty itself is a point of ko struggle, the visible area of conflict. In July 2007 Russia took the decision to suspend the implementation of the treaty. In go terms, this is an example of an indirect blow. Why do we draw such a conclusion? Russias purpose is not to withdraw from the treaty but to achieve its implementation by all the participants. The unilateral moratorium adopted by Russia changes the position in the international political game. Now Russias partners have two ways of development: either to break the vicious circle, by agreeing with Russia in one way or another, or to eliminate the problematic situation, i.e., to abandon the CFE Treaty. Perhaps, Russias partners will find their own indirect blow, delaying the resolution of this ko struggle. There are several interesting facts connected with the situation of perpetual struggle. If during a game three ko fights arise simultaneously the game cannot be finished. There is no repetition of the position and the players can break recapture each ko in turn without violating the rules. Such a situation arose between the Japanese masters Honinbo Sansa118 and Kashio Rigen119 in the 16th century. This historic game was observed by the warlord Oda Nobunaga, who had set it as his goal to unify Japan under his rule.120 A triple ko arose in the game, which played a great role in Nobunagas strategic preparation for the battle. The masters never finished the game and it was taken as a sign. The next day one his commanders betrayed Oda Nobunaga and he had to end his own life by seppuku in order not to be captured by traitors. Since then a triple ko struggle has been regarded as a bad omen. After Nobunagas death his power was inherited by Tokugawa Ieyasu, who founded a new dynasty of Japanese shoguns.

117

These were established under bilateral agreements between Russia and Georgia, and Russia and Moldavia, signed in Istanbul in 1999, before the signing of the agreement for the CFE Treaty. 118 The founder of the leading Go House or School called Honinbo (the name refers to the place where Sansa lived). Honinbo and the other three schools maintained and developed the ancient strategic tradition of go. 119 Sansas rival for promotion among the go-loving aristocracy in Japan. His disciples founded the Hayashi House. 120 His ally was the founding shogun-to-be of unified Japan, Tokugawa Ieyasu.

Summary: 1. If you are going to fight then do it subtly and wisely! Indirect struggle is one of the main strategic methods. Together with direct action it forms an important strategic combination, direct-indirect. 2. The principle of indirect action is to divert the adversarys attention to another part of the playing field. It is a contextual action. At the highest levels of government in Ancient China they preferred indirect actions. This is reflected in the idea of non-action as a special form of a super-effective action. The principle of indirect action was the basis for many martial arts in China and Japan. 3. Taken separately, both direct and indirect actions have their strengths and weaknesses. Greatest effectiveness can be achieved by using them together. For example, in military strategy it is important to use both principles. It was a mistake by the German strategists of WW2 to reject indirect strategic action because of time and resources deficits. However, a strategy founded only on indirect action can be vulnerable as well. Indirect action is not a panacea. What is the disadvantage of such an approach? It requires a noble and versatile mind, and more time to plan operations. 4. The art of go lies in using the direct-indirect combination. In this chapter we investigated the situation of indirect struggle arising from ko. 5. Indirect struggle is an integral part of strategy. True strategy is a great height to which only a Master can ascend. It is an art for winning the hearts of millions.

The Seventh Graceful Solution: Obtain Superiority!

What do we mean when we speak about superiority? For example, one can outdistance the opponent, that is, take the lead. Or one can surpass in strength or in size. The notion of superiority refers to possessing the greater preponderance, and this is a strategic advantage. Superiority is a great advantage in a parameter or a group of parameters. How does superiority appear in business? Does it appear in market leadership or leadership in a field? Or, maybe, is it manifested in the possession of advanced manufacturing technologies or in the volume of capitalization?

Superiority means to be without a rival

By the beginning of WW2 the German Army was considered to be the most organized and well trained, surpassing all its possible adversaries in Europe in quality of organization, training and equipment. Its superiority was reckoned on in the war preparations of the strategists of the Third Reich and taken into consideration by the generals of the Wehrmacht while projecting operations.121 For example, superiority in organization and arms coordination was opposed to the numerical superiority of the Red Army, which had practically unlimited human reserves. Being without rival the German Army defeated all its adversaries in Europe and only the protracted resistance of the whole world managed to overwhelm it.122 In military theory the strategic conception of superiority was embodied in the notion of force concentration. In Art of War the Ancient Chinese Commander Sun Tzu wrote the following about the use of superiority:
If I show my adversary a form not possessing this form I will keep wholeness and my adversary will divide into parts. Keeping wholeness I will make one; having divided into parts the adversary will make ten. Then I will attack his one with my ten. There will be many us and few of the adversary. [23]

In go, the strategic concept of superiority can be equated to a density of formation that gives the quality of superiority to one side.

121

F. Galder, Chief of General Staff of land forces, wrote about the importance of using of the German troops superiority in his Military Diary. In his words the German troops superiority in organization and controllability enabled them to slide over the numerically superior Red Army. [4] 122 In other words, superiority of a new level.

Sketch 41 In Sketch 41 there are nine white stones to the right. They form a dense wall that separates some black stones from their allies. These nine white stones work together and have superiority. As we can see, there are only three black stones against them on the left. Moreover, the black stones are widely dispersed. How can one use superiority? Superiority means that the nine white stones have great influence, in this case, towards the bottom side. The extent of their influence, as yet unrevealed, reaches as far as the two black stones in the corner. The single black stone on the side is located so close to the powerful white wall that it can be said to lie within whites sphere of influence.

Sketch 42 If the white player does not understand or does not know how to use superiority he or she might play at 1 (Sketch 42). This faulty action would concede the bottom side by allowing black to consolidate at 2. Now the ten white stones on the right become superfluous, that is, over-concentrated. Notice that this is the fault of the owner or manager of the white stones. A go proverb reminds us that we should not build territory near thickness.123 Why not? The building of territory has its speed limit. That is, for each move one can
123

The English term thickness means a strong position, without weaknesses. Creating densely packed formations such as whites in Sketch 41 is one way to obtain thickness.

claim between 4 to 6 units of territory on average, like investing in government stocks that bring a small, but quite stable, fixed income. White 1 allows the opponent to halt the realization of the white position. In other words, the white player makes a little territory out of his or her great superiority. Such an ineffective act recalls the famous joke that the mountain has brought forth a mouse.124 One should expect to get a lot more from a mountain! It is profitable to use superiority indirectly, by obtaining such derivatives as time. Time allows opportunities to act in other parts of the playing field. The direct taking of territory, like withdrawing cash from a savings fund, often fails to realize the whole hidden potential of superiority. A famous European politician of the past went by the following rule: the higher a leader rises in the system of administration the more spare time they should have. By this he proposed to evaluate the effectiveness of a managements organization. In modern business this principle is continued in the idea of authority delegation. Organization should be developed in such a way that the leader is released from previous organizing processes, let alone new ones. This is how skilled organizers obtain additional spare time for their leader. In this approach it appears as a result, derived from capital or from the corporation. A corporation whose organization has effectively harnessed the time and effort of specialist organizers can show superiority not only to an individual leader but to a corporation that has greater resources (in go terms, more stones). By adding extra lifetime to the leader, it frees extra time for itself as such expenses are almost always mutual. This is similar to when you do not place an extra (intermediate) stone in the field and thereby gain for your stones a double degree-of-freedom instead of a single one. The leader can turn free time into greater capital. As an example of neglecting ones own superiority we can use the steps taken by the car factory UAZ. The factory established its brand in the Soviet era through manufacturing off-track vehicles. For the residents of the USSR, the UAZ brand became a symbol of overcoming all obstacles and circumstances. The Soviet army purchased UAZs, and at this time the Soviet defence industry had an air of invincibility. In 1974, the popular UAZ-469 was the first off-road vehicle to conquer the Elbrus. Land Rover emulated this only after twenty years. Ulianovsk SUVs occupied the niche of the special military car, the unpretentious workhorse. UAZs were called car-tanks. Despite the traditional disadvantages of UAZ, poor economy and low convenience, the car won an image of reliability. Of course, it would break down but almost every problem could be fixed there and then with the help of ordinary tools. And this was very important in Russia, with her taiga, mountains and northern climate.
124

The original Latin is parturiunt montes, nascetur ridiculus mus. The reader might like to reflect here that the ancient Romans, too, were superb military strategists.

The UAZ SUV used to be without a rival among cars that can go everywhere. Demand for such a moderately priced and practical car was always been high in the Russian countryside. In the period of perestroika the quality of these cars declined. There was a fall in sales. In the mid-1990s there was a scaled reform in the factory that touched even lineup. Instead of the UAZ-496, the new UAZ Patriot became the leader. The fundamental difference of the new model was that it was intended as a car for life, a comfortable and impressive city SUV for successful Russians. This step meant for UAZ a departure from the unique but narrow niche of affordable, specialized car into the wide and blurred field of city cars. And if earlier in peoples minds UAZ had competed only with Land Rover, now it had to contend against such grandees of the world car industry as Toyota, Mitsubishi, Nissan, and Chevrolet. Did UAZ have a construction and design solution that could attract the attention of its intended market? The new UAZ occupied the price range of city SUVs: from $16000 to $20000. But instead of the usual UAZ-design the customer saw only a copy of a jeep. The UAZ peculiarities as a super-rugged car were not only lost in terms of city motoring, they were actually taken as disadvantages or defects. The repositioning of the UAZ from the car for war to the car for life led to the loss of the unique values of the brand and the loss of its historical place as a moderately priced car for hard work. The Ulianovsk factory cannot compete with the big names of the world car industry, especially in a market segment that is new to it. Foreign SUVs will be always without rival in the Russian market. This is why UAZ had to compete with manufacturers of SUVs from China. But it was bound to lose in the competitive struggle with them after losing the reputation obtained in the Soviet times. In 2006 the Russian market for SUVs was the largest in Europe. Over two hundred thousand such cars were sold in Russia in that year. According to the experts the market volume is likely to grow up to six hundred and fifty thousand in the coming years. Sales volume leadership in the segment of moderately priced SUVs is held by foreign manufacturers: Chevrolet Niva, Hyundai Tucson, Toyota RAV4, Nissan X-Trail and Suzuki Grand Vitara. In 2006 the UAZ Patriot did not enter the top five in sales volume. What are the dynamics of UAZ production and sale? According to the factorys data the volume of sales growth for its production amounts to only 1%. However, the market showed a climb of 33% for the same period. Dealers are unwilling to deal with UAZs. The $2000 margin does not cover parking expenses for a car that stands on sale for months and then when it is sold is likely to be returned because of a breakage within a fortnight. It is better to sell any jeep with a margin of $500 than a UAZ with any margin. It is a fiasco, a strategic fiasco in the market. In fact, by 2006 UAZ returned to producing of SUVs of the

previous design (UAZ Hunter), perhaps after evaluating the almost zero sales dynamics of their production. What graceful solution can be offered to UAZ? In the authors opinions, the car factory only needs to focus its efforts on the rehabilitation of its position in the corner of special cross-country vehicles. It should abandon attempts to come up with modern city SUVs. In this market sector UAZ does not need any high-end technologies or fashionable aesthetic features. The UAZ was developed by great designers, American engineers of the WW2 period. This design became a symbol of victory over the enemies of Russians. In these cars military drivers chauffeured the officers of the most powerful army in history down the streets of Europe. This triumphal design is worth seeing. It should be understood and loved. First of all the UAZ manufacturers should focus their efforts on redesigning their SUV as a car for complex and demanding driving conditions, on re-establishing the brand of an eternal car. UAZ SUVs could occupy their unique historical niche using superiority built up over many years. Otherwise UAZ will have to struggle for positions at the end of the list in a new market dominated by a great number of strong and experienced rivals. It is not difficult to predict the result of such a competitive struggle. Another example of neglecting superiority is the sale of raw materials (timber, oil, fishing quotas, ore). Something that can be used as superiority for earning big profits in the future (by several steps) is sold at once - for money. Of course, the one who sells receives a fair price for their goods but its size cannot compare with what could have been made through a more long-term strategy for the realization of these materials. However, this requires looking ahead. Often it is necessary to perform a complex set of actions, to make additional investments, or even to take risks to fulfill the real potential of your superiority. In the art of go, cotton-picking ways of realizing ones advantages in one step are the domain of children or beginners. Does this have anything to do with strategy? No, it does not. One does not need nine stones to get the territory that the white player takes with postanovka 1 (Sketch 42). Three stones are enough. It means that the other six stones have become superfluous. This decision has been taken by the white player, under no pressure from black. How could they take such an inappropriate decision? The people who make such decisions do so because they cannot work with such invisible resources as influence, superiority, weaknesses, initiative and time. And this is not the complete list of invisible resources.

Sketch 43 The graceful decision is to cut off the flank of the black position with postanovka 1 (Sketch 43). Following the black players attempt to evacuate the isolated stones white will first lean on the black corner,125 forcing black to defend it (we will analyze the related strategic concept later). The nine white stones to the right do not need additional strengthening, but only now are they starting to work at full capacity, giving their owner the most valuable of resources time. The white player uses this time to set up a new group on the bottom side, thereby laying waste blacks hopes of making territory there.

Sketch 44 Having being forced to defend the corner and to extend it into the centre, black finds his or her two marked stones surrounded from two sides (Sketch 44). Now these two stones need the help of a real master-strategist, for nobody else could handle stones in such a complicated position. What will be the train of the masters thoughts? First of all he or she will probably examine the white stones on the left for weaknesses. It is very difficult to find a specialist of such a high level. One would needs to rouse their interest and make a suitable payment. He or she would need time and money (stones). So, are you impressed?

125

Stone 3 in Sketch 43.

Now we can see that the entire bottom side has become a problem for the black player. Two of his or her stones are surrounded by fifteen enemies (to the nine stones that stand to the right, six ones have been added on the left). If you compare this result with Sketch 42 you will easily see how many opportunities the white player wasted in the earlier example. In fact, the losses are enormous. Superiority, like any other invisible resource, can be very effective, but it is likely to lead to great waste if used incompetently. Of course, it is possible not to study the art of managing the invisible, and to deal only with things visible to the naked eye. However, sometimes it happens that everything visible has been taken by the opponent. What should one do then? The person, who can manage invisible resources, can do things that may seem impossible. The description of this art is beyond the scope of this book, and so we cannot give full attention to it.

Sketch 45 In Sketch 45 we can see a fragment of a game between two 18th century wei qi masters of imperial China. The black players policy shown in plays 1 and 7 (3 and 5 are forced defensive measures). It is an example of using the strategic concept of superiority. It might seem that the two black stones surrounded by white ones need to be saved as soon as possible. However, masters see not only the two weak stones but the twelve black stones that form an excellent wall. Such a wall has a huge superiority. It allows the black player to ignore the strengthening of the white group in the big area to the left that was claimed by black stones. There are fourteen black stones against five white stones, so the black player has

a threefold numerical superiority. The black stones are organized without weaknesses. As for the white stones, their arrangement shows a few gaps. The two black stones surrounded by whites still have six liberties, which is a crucial safety factor. Therefore the black player can continue developing his positions on the upper left as though indifferent to his opponents actions beneath. It is important to understand that only a very skilled master can afford such neglect, for example, one holds a high dan grade. A beginning oligarch could engage either such a master to manage this position or an ordinary manager, who should be advised to hurl all efforts into supporting the two stones. The first option is more effective and less risky, but of course, the master must explain to the oligarch his or her plans for future action. The appearance of the white stones and their siege of the two black stones are obvious to all. Something that is not obvious is the great superiority of the black players position in the area of the walls influence. If this superiority were not proven through extensive development (black stones 1 and 7), then what point would there be in arranging the black stones so densely? One should engage stones in action, constantly checking whether they work efficiently or stand idle. Every advantage can be lost in the course of time. Sooner or later invisible resources need to be materialized. Otherwise, they can disappear invisibly! They need to be controlled no less so than visible assets. At the beginning of the 20th century the Russian Empire had a great superiority over other European countries in agriculture. Wheat was its main export. However, some economists in those days considered that exporting foodstuffs from a country in which the greater part of population lived meagerly was merely an attempt to earn a little money quickly instead of building a domestic national wealth creation system. The debate was not about cessation of wheat exports but rather about how to limit them, to stake on the processing of wheat by the population of the country. The Russian researcher and scientist Zhukovsky wrote in his monograph Population and Agriculture that by exporting annually17 million sheaves of wheat and 18 million sheaves of rye
we support at least 17 million foreign workers in different European states, instead of supporting our workers. Besides exporting [food], at the same time we export our garbage, with which we could feed our cattle, export our fertilizers and our soil. [15]

Do not these words written one hundred years ago match the contemporary policy of natural resources export? The creation of industries with a high added-value system in Russia could be an example of the successful realization of our superiority in natural resources. Of course, in the case of the strategic concept of superiority it is necessary to make long-term calculations. Such calculations are always complicated as they require

not only serious analysis but an understanding of how the situation will develop in the future. Moreover, such calculation involves great individual liabilities that are often even punished by the very economic system. Long-term calculation is always a risk and intellectual super-effort. As they say, a commander does not sleep at nights while there is a war on. He does not sleep because he has a lot to do. He does not sleep because his personal generator of strategy will, intellect, strength, courage works at capacity, burning the lifetime of the commander. Martial and strategic arts were developed to accustom people to acting at capacity and to train them to live under a regime of physical and intellectual activity. Such arts require education, and so they can be taught only in the course of specific training. Otherwise, martial and strategic arts would not have survived to the present day. However, these arts have been practiced up to now by millions of people all over the world. How did the post-war economy of Japan develop? At that time it was almost a bare field. It would have been possible to purchase cheap, outdated equipment from other countries to restore some industry. However, the Japanese used another strategic plan. They purchased the most advanced technologies, and these provided a lead over all existing economies. An existing economy is very hard to renew as it is like changing wheels while the car is moving. What does advanced technologies mean? It means that neither consumers nor manufacturers are familiar with them. It is therefore necessary to invest also into the reeducation of millions of workers. In Russia we know how it is difficult to rebuild the system of education, especially using innovative methods. At first the Japanese invested almost all resources into the new, advancing their economy. This was a risk as they had to balance these investments against an almost total lack of resources inland. The first post-war generation of Japanese created the economy of their country realizing that only their children would see the results. And the result is modern Japan, a country that has become a byword for superb quality and the most advanced technologies and products, and which takes second place among all countries on the volume of its GDP. Of course, the Japanese economy has many problems, but these are not the problems of the outsider but of the leader. Certainly, the USA supported the Japanese economy but everyone understands that this support was not charitable. Japans dependence on the USA is very heavy. However, the Japanese know how to manage resources effectively even when they are borrowed (the Japanese borrowed not only capital but also the time embodied in new technologies). Does this not epitomize the art of strategy?

Summary:

1. It is important to ascertain in what you surpass your rivals. Search not only among explicit but also among such implicit assets as influence, determination, will, strength, and hidden potential. Having found your superiority achieve a competitive advantage with its help. 2. By use of superiority one can obtain additional time, which is one of the most important resources. Time can be used for organizing projects and undertakings in both adjacent and distant areas of activity. Capital can be turned into free time, and new free time can be turned into larger capital. 3. Superiority requires long-term realization, that is, gradual conversion into capital. Superiority cannot be realized effectively in a single step. Long-term realization involves risk and complexity and so requires additional investments. First of all it requires intellectual capital in the form of the development and realization of a strategy. The economies of Japan (advanced technologies) and China (population involved in production) are examples of the successful use of the strategic concept of superiority.

The Eighth Graceful Solution: To Be Forced - Is This the Way of the Wise?
Every structure accumulates various weaknesses while under construction. The main point of the strategic concept of forcing is to play on these weaknesses and achieve additional development by forcing yourself or the opponent to defend them. To be forced into doing what you want to do anyway is a graceful solution which can be recommended to you and your company. One of the rules of strategic art says: Do not decide without need. If you can force the opponent to make a premature decision, he or she will start losing effectiveness. An example of forcing was the position of the European powers towards the Russo-Turkish wars of the 18th and 19th centuries. According to the Russian politician and General A.N. Kuropatkin, during the in wars in southern Russia in the 18th century, and from 1854 to 1856 and from 1877 to 1878 the main forces of the Russian army were forced to concentrate at the western boundaries instead of being directed to the battleground. This was because the countries of western Europe were threatening to invade the European part of Russia.126 Since Russia could not use her full strength in the south it was impossible to meet the difficulties there quickly and effectively. More than that, quite often, because of the pressure from European powers, Russia was forced into signing almost useless peace treaties. One example was the treaty of peace signed at Berlin in 1877 under the direction of European countries.127 Even during the Russo-Japanese war of 1904-1905 Russia had to keep the strongest troops at the western boundary because of the confrontation with Austria in the Balkans. To the Far East were sent only scanty numbers of poorly trained troops. This was arguably the reason for Russias defeat.128 Another example of forcing is the USA policy for creating a Ballistic Missile Defense System in Europe. The USA strategists force Russia to react adequately to new threats (for instance, aiming missiles at objects in Europe), which negatively influences the relationship between Russia and the EC. Thus the USA hinders collaboration among European countries. In turn, this strengthens the USAs position in the world. The USA
126

In Russian Army, A.N. Kuropatkin writes that since the 18th century, when Catherine the Greats plans for uniting Moldavian princedoms and when parts of the Greek project began to be realized, beginning from the war with Turkey, Russia had to leave the main part of its troops at the western boundary for fear of hostile actions by neighbors. Russia began two wars with the Turks in the century of Catherine the Great and four wars with the Turks in the 19th century while lacking forces for this reason. 127 Among the key goals of the war were to answer the Bosporus Question, and to capture Constantinople. However, because of the threat of war with England this operation was rejected, although troops were near the city. 128 Kuropatkin, the commander of the Russian troops in this war, and who deeply felt its faults, concluded that this was the reason.

actively uses the strategic concept of forcing for its own benefit by exploiting weaknesses in the contemporary world order. In go, forcing means an action that is not advantageous to ignore. Usually the answer to it is predictable.

Sketch 46 In Sketch 46 there is an example of interaction between two stones in the corner and on the side. It is the white players turn to place a stone. Before capturing black stone 3 (by playing at A) white could force black into the superfluous strengthening of his or her stones.

Sketch 47 First of all, white places a stone in the corner (Sketch 47). White 1 threatens to move into point A, which would lead to the dissection of the black stones and a change

of control in the corner. Therefore black has to occupy point A, merging the stones into a monolithic structure.

Sketch 48 The next stage is Shown in Sketch 48. Now the white player strikes on the other flank, threatening to capture one black stone. The black player is again forced to connect it to the main group.

Sketch 49 Black recovers unity and secures his or her stones, and so the white player begins the operation of capturing the remaining black stone (Sketch 49). What is the result of whites application of the concept of forcing? The marked white stone is a hidden threat in the corner. It distracts the black stones, forcing black to pay close

attention to a corner that is theirs anyway. The threat is to use the white stone to set up a viable group in the corner. The black stones have formed a shape suggestive of an American stealth plane. Such a grouping only looks impressive. In fact, these six stones have only five breathing spaces (liberties). They are actually organized highly ineffectively, as six stones ought to have twice as many liberties. Moreover, these stones do not have absolute control over the corner. In future the whole corner is likely to come under dispute.

Sketch 50 Here is a further example. The organization of the black stones shown in Sketch 50 is more effective, as this time the black stones hold the corner territory, not permitting the white stone to survive. However, it is impossible to move the stones. This sketch, demonstrating a more effective arrangement for black, proves that the black stones shown in Sketch 47 will work ineffectively for the rest part of the game. Was it possible to avoid such an ineffective formation? The black players actions were forced, that is, they were necessary for keeping the existing balance of forces. Yielding to the opponent could lead to a fatal weakening of the black stones. In this case, the ineffective formation was a consequence of the black players strategy, which had been unsuccessful since the beginning.

Sketch 51 Sketch 51 shows a position in which white can use the strategy of forcing on a larger scale. If the white player takes over the corner, he or she will have to consider the subsequent strengthening of blacks external position.

Sketch 52 Therefore, before invading the corner (Sketch 52), the white player forces their opponent to defend the right side (white 1 forces black to answer at 2). The black player is forced to defend the right flank to prevent the white player cutting off a stone, dividing blacks position. However, after the defensive postanovka at black 2, white too is forced to invade the corner (white 3), as the black zone has now been defined and there is a need to reduce it. Black cannot prevent white from seizing the corner territory. All black can do is to force white to make life, using the time spent to obtain external influence.

Sketch 53 Sketch 53 shows the outcome of this forcing operation. From blacks viewpoint, the marked stone ought to be where whites stone is standing, stretching into the centre. With such a powerful wall nearby the position of the marked stone is too low. Therefore, the marked stone has been rendered ineffective. Of course, to answer all forcing moves obediently is not a way of victory. It is necessary to seek for alternative possibilities in the strategic concept of forcing. To be sure, this is not always possible.

Sketch 54 In Sketch 54 the black player is trying to force the opponent to connect at A. Black is threatening to separate the white stones. However, on this occasion the white player has an opportunity to turn the forcing maneuver to their own advantage. How can this be done?

Sketch 55 The white player stands up on the right side (Sketch 55), at the same time inviting the adversary to realize the threat to cut into point A.

Sketch 56 If the black player accepts this invitation the white player deftly gives up one stone (Sketch 56). Owing to this little sacrifice, white strengthens his or her position on the right side while blocking the black stones path to the centre.

Sketch 57 Another example of resisting a forcing play is shown in Sketch 57. The white player was trying force black to connect at point A. However, black struck a counterblow from outside by using their local superiority. Now black threatens to capture white 1. Whites threat to separate the black stones by playing at A is now harmless.

The separation of an adversarys forces for the purpose of annihilating them was the tactic of the German troops in reply to the counterblows of the Red Army. However, in these purposely set up confrontations, the separating forces themselves found themselves encircled, like the white stone in Sketch 57. There are some classic situations in which your opponent will be grateful, indeed will thank you for playing a forcing move.

Sketch 58 In Sketch 58, white forces at 1, but this only helps the black player to restore communications. At the same time, the white stone finds itself adhered to a powerful black wall. Now the white stone has almost become an ally of the black player as its effect has been to strengthen blacks position. Blacks reply deprives white of the opportunity to separate the black stones. For sure, white forced the black player to react - but here black was happy to obey! Was not it the same when the claims and actions of some politicians from eastern European countries concerned with gas deliveries to Europe led to the strengthening of Russias position? This strengthening was manifested in the construction of several new gas pipelines, both around these countries and in a new direction - to the East. With the help of the following sketches we will analyze the strategy of provoked forcing. Is this not the very same strategy that the USA likes to use to get what it wants?

Sketch 59 In Sketch 59, black wishes to secure control over the right side and to restrict the white stones in the right bottom corner. What strategy can be used in this case? Does the strategy of forcing work here? The answer is yes, it does. What if black could induce white to make black block whites stones? That would be a graceful solution, wouldnt it?

Sketch 60 The play at 1 forces white to answer at 2 (Sketch 60). Otherwise, the group of white stones is practically doomed. In turn, white 2 compels black player to cover the area to the right with 3. From outside it seems that the black player has become a victim of forcing, but this is not so. In fact, black has forced white to force black into playing at 3. The black player has gracefully achieved their goals. To be forced it can be the way of the wise! Can we, using this example, see the USA policy toward Iraq in a new light? The USA Administration put pressure on the authorities of Iraq, forcing them to resist. This resistance was connected with the need of the Iraqi regime to ensure their survival. In reply to this the USA were left with no alternative but to use force in order to remove threats to their security from an undemocratic sponsor of terrorism. In a similar way, they follow a similar strategy of fomenting political and humanitarian catastrophe, which forces them to act towards its elimination. Summary: 15. One can force everybody: both opponents and even oneself. 16. Forcing can involve a hidden agenda. For example, not every forcing weakens or leads to a loss of effectiveness. There are cases when forcing is profitable for the one who is forced. Quite often it makes one defend those places which need to be defended.

17. One should use the strategy of forcing, and not allow the adversary to foist ineffective decisions upon oneself. That is, the possibilities for resisting should be considered in every case. 18. The strategy of provoked forcing is used to force the adversary to make us do what we want to do anyway.

The Ninth Graceful Solution: To get off peredryaga

The Russians say peredryaga.129 It means that one is highly unlikely to find a way out of the situation without any losses. The Japanese call the art of worming out of a difficult situation shinogi. It would be great to get out of water with a dry skin, a Russian might add. It is difficult escape with a whole skin but the result is worth it. The ability to apply this conception belongs to the high master level. It is an elusive art, and its explanation often sounds like this: We got lucky! It is hard not only to get out of trouble. It is difficult to understand that you are in trouble. How can one see trouble as it is? A Chinese legend, which is called the stratagem of open city gates, survives to this day. The warlord Shu-han Zhuge Liang arrived in the town Sichen to transport supplies kept there. Suddenly, couriers started coming to him. They reported that the hostile commander Sima Yi was approaching Sichen with a large army of about 150000 warriors. By that time Zhuge Liang had no commanders. The only staff consisted of civilian officials. Half of his 5000 soldiers had left with supplies. There were no more than 2500 warriors in the town. When the officials heard this news they were in panic. Zhuge Liang went up to the city wall and observed the surrounding countryside. The sky near the horizon was covered by clouds of dust. Take down and hide flags and banners from the city wall. Each warrior must stay at his position. Keep silence! Anyone who makes a sound will be beheaded. Open wide all four city gates! Near each one twenty soldiers disguised civilians must sweep the streets when the army of Sima Yi approaches. No one must act without permission. I have prepared a stratagem, Zhuge Liang ordered. Then he put on a cloak of crane feathers and a silk cap and went to the city wall escorted by his henchmen. Having fumigated himself with incense he started playing the zither. Meanwhile the scouts of the enemy advance-guard had reached the city wall. Nobody could decide whether to go farther. Hastily they returned and reported to Sima Yi what they had seen. He laughed distrustfully. Then he ordered his troops to stop and went ahead to look at the town. He saw a smiling Zhuge Liang, sitting in clouds of fragrant smoke. On his left there was a henchman, who was holding a precious sword, and on his right another held a large fan. Near the city gates were about twenty broad-shouldered citizens with lowered heads - they were obviously in disguise who were sweeping the road. When Sima Yi saw it he started thinking. Having returned to his troops, the warlord ordered the advance-guard and rear-guard to change places and turned his army to the north, back towards mountains. Father, why have you called off the troops? asked his son.
129

Peredryaga means something like trouble. It is like batting on a sticky wicket.

Zhuge Liang is famous for his foresight and caution. He has never done anything risky. Today the gates were wide open. This means that there was some kind of a trick. If my troops had entered the town they would have fallen victims to a stratagem that I had not managed to foresee. It was preferable to retreat, replied Sima Yi. Sima Yis army went away. Seeing this, Zhuge Liang started to clap. Sima Yi is a great warlord. Today he brought 150000 warriors, but seeing you, the Councilor of the Shu-Khan state hastily retreated. Whats the reason? asked the officials. That man proceeded from the fact that I always try to act prudently and never take risks. Having seen the open gates, he concluded that I had a host of warriors in ambush. That is why he retreated. To tell the truth I am not a supporter of reckless actions but today I was searching for salvation and didnt have a choice, explained Zhuge Liang. The astonished officials bent their heads and exclaimed: The Councilors stratagem couldnt have been seen even by spirits. But for his help we would have surrendered the town and escaped! We have only 2500 warriors. If we had surrendered the town and escaped we wouldnt have got very far. Sima Yi would have captured us, replied Zhuge Liang. This stratagem might be called bluffing. However, the idea behind the strategic concept of peredryaga is deeper than mere bluffing. It is based on precise calculation, including, of course, an understanding of the adversarys psychology. The main task solved by this strategic concept is self-preservation. In other words, the question is not about profit maximization but about loss minimization. As an example from military history we can take the situation around Stalingrad in 1942. The Sixth Attack Army under the command of Frederick Paulus was isolated by the Red Army. Field-Marshal Erich von Manstein, the commander of the Don group of armies, which included the Sixth Attack Army, described the situation in detail. The trapped German group was completely cut off from its sources of supply. Facing the winter of 1942-3 the army had to decide whether to fortify the ruined city and rely on supply by air or to attempt to break out. The army of 300000 troops needed 550 tons of various supplies every day. To deliver them would require 225 U-52 heavy aircraft. In good weather conditions it was possible to make two flights per day, which would halve the number of aircraft required. However, it is difficult to imagine a squadron of more than 100 heavy aircraft that could fly a sortie every day for several months! Moreover, in winter weather conditions are not always good enough even for one flight. In Field-Marshal Mansteins opinion, Germany did not have sufficient resources to execute such an operation.130
130

E. von Manstein: Lost Victories.

Trapped near Stalingrad, the army couldnt provide for its survival over winter. The city was destroyed. It was burned and ruined and practically unsuitable for wintering. What tasks could be set for such an army? Field-Marshal Manstein considered that the only right decision would be to try to break out of the encirclement and save the army from annihilation. Of course, retaining possession of any part of the Stalingrad front was out of the question. Furthermore, lack of fuel meant leaving behind some materiel and heavy stores. Erich von Manstein supposed that the only way out of this situation would be the rescue of the Sixth Attack Army with minimal losses. At the same time the operation was more than risky. Hitler agreed this was the way out, but decided to hold Fortress Stalingrad using all available forces. That clashed with the views of the sixth army commander. Mansteins plan was as follows: the Fourth Tank Army would attack from outside the trap. While it exploited a strike the Sixth Army would start attacking. FieldMarshal Manstein wrote:
I have minutely examined the reasons for which the commander of the Sixth Army didnt use the last chance to rescue the army As said above, it was impossible simply to disregard all the arguments with which he strengthened his decision. Nevertheless we did have a chance to rescue the army. The last chance. Not to use it even if it was risky meant refusing an attempt to rescue the armyUndoubtedly, it was a hard question for Paulus and his conscience: whether it was possible to start an operation that would inevitably lead to abandoning Stalingrad, and which was counter to Hitlers clear cut will.

Besides the ethical problem, the commander was thinking about the iniquitous risks that he had to accept carrying out an order with a group of armies. The breakthrough could lead either to the rescue of the army or its annihilation. If they couldnt manage to penetrate the front line of the mousetrap after the first attack, if the army were to get stuck mid-way, and if the Fourth Tank Army couldnt manage to move any further ahead; or if the adversary managed to overrun the forces screening the breakthrough from the flanks and rear, the fate of the Sixth Army would be easy to predict. The Sixth Army had to solve the hardest task. It had to go towards the Fourth Tank Army fighting on all four sides, forming something like a solid square. At the same time there was a risk that its advance would break down or that the adversary would roll up its rear-guard or flank. This task had to be fulfilled by the troops that were exhausted because of lack of food and who were almost immobile. It was really difficult to get out of the kind of trouble in which the Sixth Attack Army found itself. The question was about saving the army from annihilation and captivity. History shows that the decision about breaking out of the encirclement was made by Marshal Paulus too late. The army was doomed to annihilation, and besides it

was given the task of opposing the enemy, the force of the Red Army, for as long as possible. Getting out of trouble is always connected with loss and sacrifice. At the same time there cannot be any question of capturing and holding any territory. It is often necessary to rely on several strategic concepts when using the stratagem of getting out of peredryaga in go.

Sketch69 An example of the strategic concept of trouble is given in Sketch 69. The white player has the task of reducing the fortified region formed by the black stones. There are two black stones to the rear of the white stone, which looks to the last open direction toward the centre of the playing field. The white stone is the black stones zone, so the white player will have to get out of this situation through skilful handling. What strategy can this player craft? White should use several strategic concepts: alternatives, superfluity, hidden resources, forcing, clarification and exchange. There are three possibilities for the white stone. Two are the attachments at points A and B, and the third is moving to the centre. At the same time the white player is ready to sacrifice a part of his or her army to facilitate the rescue of the main units. The white player can aim to sacrifice while inflicting superfluity on the black formations.

Sketch70 In Sketch70 we can see one of the possible ways in which the situation might develop. The white player uses 3 and 5 to make the adversary defend the corner before heading toward the centre with 7. There is a possibility that black might cut off stone 7 from the marked white stone. This possibility is placed there advisedly. It is a provocation. The white player is trying to clarify how the adversary intends to continue the struggle, taking into account the possibility of being cut.

Sketch71

If the black player realizes the threat of cutting (black stone 1 in Sketch71), then white will sacrifice three stones and get a better position in comparison with the previous one. In its turn the black formation will become over-concentrated, since the black player has used ten stones to round up three white ones. As a result the white player is driven back from the corner, where the black player has got strengthened territory. Moreover, three white stones have been lost. What has the white player got in return? In return white has built up a strong formation facing towards the centre. Is the exchange equal? You might be surprised when we say that the white player has got even more than black that is, more when we take into account the initial investments. Likewise Field-Marshal Manstein proposed to withdraw units of the Sixth Army from the strengthened region of Stalingrad, sacrificing part of his materiel and some territory in order to strengthen the southern wing of the Eastern front and form an effective defence in the operational area of the Don group of armies. Of course, the situation involving the entrapment of the Sixth Attack Army was more difficult than any model, including the model situation of trouble (peredryaga) shown in Sketch 69. However, the essentials in both cases remain the same: the impossibility of gaining stability by standing at a halt; and the necessity of searching for a way out of trouble, by sacrificing some territory and even sub-units; minimization of probable losses in order to save the body of the organization (the army or main stones); and forming an efficient defensive line in a new, safer area. If we turn to Sketches 70 and 71 once again, we shall be able to count the number of strategic concepts put to use: alternatives, superfluity, hidden resources, forcing, clarification, exchange, and superiority. They are unified by the common plan of getting out of peredryaga and by the graceful solution manifested in the light and elegant shape of the white stones.

Sketch72 If the black player forces another scenario on to the adversary (Sketch 72), the white player will use similar principles: sacrifice, and the intentional creation of weaknesses (marked with crosses) as a provocation for future exchanges. The story about the destruction of the Second Attack Army commanded by A.A. Vlasov at the Volkhov front in the summer of 1942 provides an example of what dangers intentionally drawing into trouble can entail. The Second Attack Army had the task of capturing the city of Luban, south-east of Leningrad, and to sever the highway and railway connections from Chudovo to Leningrad. The main goal of Red Army actions at the Volkhov front was to unblock Leningrad. The operation took place in January 1942. The troops of the Second Attack Army were moving along marshland, which was virtually unguarded by German forces because of its impassability. As a result, several divisions made their way into snow-covered marshes, leaving a narrow corridor behind. Near the village of Myasnoy Bor the corridor narrowed to 3-4 meters in width. This corridor was used for supplying many thousands of people. German troops put up resistance from their strongholds, forcing out the army which had intruded into marshes. So the Red Armys troops were moving westward and north-westward. In the east, where Luban was located, the advance wasnt successful. The main effort of German command was focussed on the narrow neck in the region of Myasnoy Bor, with the aim of encircling the Second Attack Army. The Volkhov mousetrap was created in March 1942 when the German forces severed the narrow neck of the supply line.

As a result the Second Attack Armys troops found themselves under the threat of annihilation. It was possible to get out of this trouble by means of the immediate withdrawal of the units making their way in the region of Myasnoy Bor. However, the command of the Volkhovskoy front decided to use the weakened army in the combat operation to capture Luban. Only in May 1942 did the command decide to withdraw the army and retreat. There was no question of abandoning materiel and heavy stores - everything had to be taken. By the end of June about only 6000 people had managed to break out, without armaments. The army had been almost annihilated and the army commander Vlasov had been captured. Gross losses came to about 400000 people. They didnt manage to escape with a whole skin, in the same way as the Russian armored squadron that fell into the trap of Tsushima during the Russo-Japanese war, didnt manage to do so. It is worth recalling that in autumn 1942 the reformed Second Attack Army was annihilated again by German troops under the command of Field-Marshal Manstein. The Field-Marshal mentioned in his memoirs that he would never hold an offensive operation in the region which had been chosen by the commanders of the Red Army. To keep his forces, Erich von Manstein ordered them to shoot down the encircled adversary with self-propelled assault guns. The Soviet Command threw weakened troops into the fray over and over again instead of realizing their weaknesses and strengthening their forces. The results of such a strategy were always the same. In go terms, this means the encirclement and capture of weak stones. Weak stones are always encircled and captured. This is a law for weak stones, unless they become strong, of course. But that is a different story. When you are in trouble it is necessary to minimize losses and even to sacrifice something. But first of all it is important to realize it!131 As it can be seen from the incident with the Second Attack Army described above the command of the Red Army were twice in the same situation and twice made the wrong decision. Instead of disentangling they continued fighting. Is not the destruction of an army sufficient proof of the incorrectness of the decisions? Loss of stones is proof of ineffective decisions in go and loss of capital means the same in business. Examples of successfully getting out of trouble can be found when analyzing the experiences of Russian companies. Here is one such example. After the crisis in 1998 the purchasing capacity of people declined. At the same time many companies that had taken loans in foreign currency were almost unable to pay off debts because the weakness of the ruble. There was a closed circle: people couldnt purchase because of a lack of money and companies needed money and so couldnt follow the market trends and decrease prices.
131

Were the commanders of the Red Army able to sacrifice, retreat and make decisions without defying Supreme High Command General Headquarters?

This situation was to be found in many consumer markets. The cosmetics market, where the leaders were foreign companies, was no exception. Many players found themselves in trouble. This trouble was to cause most foreign companies to leave the market, this being the only way that their crisis managers could find. The Russian companies had to stay as they had nothing to leave for. One of these companies decided to scale down prices and sell at a loss. Such a strategy, at first sight, meant loss of effectiveness. The companys existence was at stake, and so it was decided to make sacrifices. Subsequent events demonstrated the appropriateness of this decision. The company didnt lose the market, and even developed it. The company increased sales, which enabled it to pay off debts and become a leader in this field. Of course, this strategy was more than risky. However, Field-Marshal Manstein had this very strategy in mind when he wrote
Not to use [this chance] even if it was risky meant refusing an attempt to rescue the army

Summary: 1. The strategic concept of peredryaga is one of the most complicated. It offers solutions to initially adverse situations. Its application is based on combining several different strategic concepts. 2. Getting out of peredryaga offers self-preservation as the main goal. That means not to maximize effectiveness as was case with the previous graceful solutions, but to minimize loss. At the heart of this conception is the art of defeat132. 3. Getting out of peredryaga almost always means some sacrifice and slight development, while leaving some weaknesses. The concept carries a great risk. This is no surprise as the initial situation is adverse. The successful application of this concept requires high strategic artistry. So we advise not to get into peredryaga.

132

Sometimes it is possible to turn a defeat into a draw or even a win. Erich von Manstein, for instance, suggested that the Reich military authority should proceed from such a strategy when it became obvious that it was impossible to win the war. Mansteins idea was to draw.