Business is Battle: Seize the Commanding Heights!

Yoshito Hori, president of GLOBIS University, managing partner of GLOBIS Capital Partners, shares his views from an entrepreneur's perspective.

The Russo-Japanese War of 1904–1905 started when the Japanese Navy attacked the Russian fleet in Port Arthur on the Liaodong Peninsula in northeastern China.

What were the Japanese and Russians doing fighting one another in a third country? Well, at that stage in its history, foreign powers had overrun large parts of China.

The Russians had been in control of Port Arthur since 1897. The port’s strategic location, and the fact that it was ice-free all year round, made it the perfect base for the Russian Pacific Fleet.

A few years ago, I went to visit Port Arthur, or Lüshun as it’s now called. Being a history buff, one of the first places I went to look at was 203 Meter Hill, a 203-meter-high hill that overlooks the harbor.

203 Meter Hill played a pivotal role in the war between the Russians and the Japanese. It cost the Japanese two-and-a-half months and thousands of lives to capture the hill—but it was regarded as strategically priceless.

Why? Because as soon as the Japanese had control of 203 Meter Hill, they were able to bombard the Russian Pacific Fleet in the harbor at will and won control of Port Arthur in less than a month.

And why this digression into military history? I want to illustrate a simple point. In battle, winning control of the “commanding heights” is key to victory.

The commanding heights are the same thing as competitive advantage in business: establishing a dominant position that makes winning easier.

I see business competitive advantage as being made up of five components.

Let’s take a look.

1. Economies of scale

The benefits of scale are obvious. The biggest company wins by dint of sheer size. That could be Samsung in D-RAM memory manufacture; Foxconn in contract manufacturing; or Harvard as an MBA school.

2. Economies of scope

Scale is important, but successful companies need scope too. Samsung, for instance, makes LCD displays, smartphones, TV, PCs and batteries, in addition to D-RAM memory. The same is true for Harvard, which branched out from basic MBA courses into other fields like executive education and publishing.

3. Economies of speed

Again, scale and scope alone aren’t enough to guarantee success. A big business that moves too slowly will be overtaken by its rivals. Japanese electronics manufacturers Sony and Panasonic are cases in point. They both had scale and strength, but still lost out to Samsung, which was managed in a speedier, more top-down style. My motto is: There is no such thing as “right” speed for a business. The only right speed is “faster than the competition.” (I discussed my ideas for speeding up organizations here.)

4. Economies of communication

A business also needs to communicate its brand and values to its customers effectively. Harsh truth: In business, the facts never speak for themselves. You have to work to get your message through and be noticed. If nobody knows about your company or its products/services, to all intents and purposes they do not exist. (My four rules for effective communication are here.)

5. Economies of being global

Japan accounted for around 10% of global GDP in 1990. That figure has fallen to just above 5% now, and will keep declining as Japan’s population shrinks and ages. There’s a similar (though less marked) trend in the USA, whose global GDP share has sunk from over 27% in 1950 to under 20% now. What’s the lesson here? Companies that only serve their shrinking domestic market are doomed to shrink with it. You have to take advantage of the global economy. Again, Samsung is a great example here. In 2013, the company generated an astonishing 90% of total sales outside its home market of Korea!

At GLOBIS, the business school I set up in 1992, we have tried to build up competitive advantage based on the “five economies” model.

Having launched in 1992, GLOBIS is now bigger than the business schools of three of Japan’s top universities, combined. (That’s scale.)

We generate twice as much revenue from corporate education and executive programs as from MBA courses. (That’s scope.)

Our university competitors had first-mover advantage, but our speedy decision-making enabled us to move faster than them. (That’s speed.)

We consciously positioned GLOBIS as a “different animal” in education and have always promoted ourselves through every form of media, as well as word of mouth. (That’s communication.)

Students from almost 50 countries have taken our English-language MBA and we recently opened Shanghai and Singapore offices. (That’s being global.)

If you cannot seize the “commanding heights,” you’ll end up in a trench warfare scenario, grinding out slow, painful gains against your competitors.

So my “five economies” certainly provided me with a very practical framework for building strong competitive advantage.

What about you?

What are your strategies for seizing the commanding heights in the battle of business?

Let me know.

(Photo: Shutterstock / elwynn )


Mr. Yoshito Hori established GLOBIS Management School in 1992 and GLOBIS Capital Partners in 1996. In 2003, GLOBIS started its original MBA program which, in 2006, received accreditation from the Japanese Ministry of Education and gained “university” status. GLOBIS started a part-time MBA program in English in 2009 and a full-time MBA program in English in 2012.

A Harvard MBA graduate and former Sumitomo Corporation employee, Mr. Hori founded the Entrepreneurs’ Organization (EO) Japan Chapter in 1995 and became the first board member from Asia in charge of Asia Pacific region in 1996. He also served on the World Economic Forum (WEF)’s New Asian Leaders Executive Committee and Global Agenda Council on New Models of Leadership, as well as the Harvard Business School Alumni Board from 2005 to 2008. Currently, Mr. Hori is a board member of the Keizai Doyukai (Japan Association of Corporate Executives), and serves as co-chair of WEF’s Global Growth Companies.

In 2008, he launched the G1 Summit – a Japanese version of the WEF’s annual Davos forum. This led to the foundation of G1 Summit Institute in 2013, which Mr. Hori serves as Representative Director.

Just days after a huge earthquake struck northeast Japan in March 2011, Mr. Hori launched Project KIBOW to support the rebuilding of the disaster-affected areas. The following year Project KIBOW was incorporated as the KIBOW Foundation, which Mr. Hori serves as Representative Director.

An avid enthusiast of the Japanese game Go since age 40, Mr. Hori has been Director of the Nihon Ki-in (Japan Go Association) since June 2013.

Since October 2013, Mr. Hori has hosted a weekly TV program in Japan called Nippon Mirai Kaigi (Japan Future Conference). He has authored several books including Visionary Leaders who Create and Innovate Societies, Six Dimensions of Life, and My Personal Mission Statement.

Mr. Hori received his BS in Engineering from Kyoto University and his MBA from Harvard Business School.

He is an avid swimmer and enjoys spending time with his family, especially his five sons.

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