Introduction

The long and harsh winter is finally over, and we have, at long last, arrived at the inflection of spring.

In retrospect, 2022 was nothing if not full of disruptions: International affairs constantly shifting, global economic downturn, all the while the long-term effects of the pandemic continue to linger. These macroeconomic factors have had massive effects on both individuals and firms, and many are still reeling from the consequences. With this knowledge, how should we proceed in 2023? Should we remain conservative and passive, or be aggressive and fight?

The most precious asset of any company: the confidence of their leadership. Come hell or high water, year in and year out, they must remain steadfast, regardless of how frequently they are struck down, or how daunting the storm ahead appears. Whilst embroiled in turmoil, it is that confidence that will lead them through the uncertain, to chart a clear path through the storm while still identifying and seizing opportunities as they arise, all the while pursuing sustainable and impactful change. All change creates instability, pressure, and uncertainty; press forward despite it all to manifest countless unforeseen new opportunities.

To rouse firms left frozen by the pandemic, and build up their confidence to create everlasting change, Kmind held its 10-billion strategy workshop 5 times in the latter half of 2022. Over 600 executives and entrepreneurs attended to understand this new strategic perspective, especially in regard to overcoming competition. Inspired by what they learned, attendees across all types of industries officially partnered with Kmind and began their journey towards explosive and sustainable growth.

The source of our confidence stems from our unique strategic lens – a blend of top western and eastern strategic theory. The eastern half of the equation tends to be more difficult to quantify than its western counterpart; on the surface, it appears too subjective and situational to build a foundation upon, certainly meaningful and insightful, but seemingly directionless and vague. Upon closer examination however, its universal applicability across all business settings will be revealed, allowing companies to unearth “certainty within uncertainty”. Using this derivation of eastern and western strategic theory, Kmind has already elevated 9 clients to market leaders in the span of just a few years and hopes its discoveries will further drive global strategic theory innovation.

Gleaming Strategic Insight from Ancient Chinese Philosophy

All things eventually find themselves returning to their roots. Regardless of time or place, there are always those who look to past to learn from humanity’s greatest thinkers, seeking to apply traditional schools of thought to modern-day issues. Kmind is no exception to this – what fuels our clients’ continued development is our constant pursuit of non-traditional angles of transformation and innovation, directly inspired by wisdom derived from the Axial Age.

The Axial Age, from 800 B.C. to 200 B.C., is an era in which all major ethnic groups of mankind began the exploration of intellectual civilization and philosophy at roughly the same time. China’s Confucius, Laozi, and other philosophers provided the wisdom that formed Confucianism and Taoism. Socrates, Plato, and other ancient Greek scholars built the foundations of European philosophy. Shakyamuni of ancient India opened the door of Buddhist thought. The prophets of ancient Israel built the building of Jewish wisdom. These sages of the Axial Age created a treasure trove of human wisdom and laid the spiritual foundation of mankind.

For Chinese Wisdom, our initial building blocks were Confucianism and Taoism – the two schools working in tandem to further philosophical development. Later, in the Han Dynasty, Buddhism was introduced, and gradually adopted throughout the Sui and Tang Dynasties. China is the only ancient civilization that has remained uninterrupted in its cultural development. Throughout its history of endless cultural struggles and turmoil, there has remained steadfast and everlasting wisdom.

It is from these empirical truths and wisdoms that companies can find the key to everlasting development. For example, Confucius said that “man, uncertain of his fate, cannot act nobly”, meaning that we must realize that life is marred by uncertainties, and acting nobly in this case is embracing and properly utilizing every unforeseen opportunity that arises. Therefore, for a firm to establish “certainty” in a world of chance and opportunity, their success hinges upon identifying, valuing, and utilizing these unforeseen opportunities. Laozi describes “the way of opposition”, as an intuitive eventuality of movement and change: head in one direction long enough, and you will be forced to turn back. Success can be found in going against the trend, returning to one’s roots, being both complimentary and opposite, and pursuing change and development. Therefore, when analyzing your problems and situation, look beyond the present state of things, and search for forces of opposition to find your solution. Once you desire opposition, you are primed to materialize true strategic differentiation. Though many corporate dilemmas appear complicated and unique in nature, they can be solved with wisdom at the conceptual level, and lead us to clear, implementable solutions.

Kmind has manifested these transformations across several industries. For example, in China’s infant formula industry: trust in domestic brands had been thoroughly ravaged by health scandals, leading to a market exclusively dominated by foreign brands. Yet, Kmind boldly positioned them against foreign competition with the slogan “more suitable for Chinese babies,” and led the relatively obscure domestic company to outperform all foreign competition, breaking through 20 billion RMB annual revenue in 2021 and firmly establishing market leadership. A similar underlying theme unfolds with other clients, such as Bosideng’s transformation from aged & outdated to mainstream & fashionable in China’s down jacket industry, or Yadea finding an opportunity to elevate the electric bike industry during peak COVID (with social distancing) through their message of “one person, one bike, travelling safely”.

Even in China, instances of these concepts being applied in the business world are relatively uncommon. This is a direct result of China’s economic reforms over 40 years ago, Chinese corporations have achieved rapid development through vigorous studying of western business theory and are now firmly entrenched in their success. Due to

prevalent past success, much of the Chinese business world have forewent the study and application of Eastern wisdom in favor of solely pursuing western business management theory. However, now that most of the competition has caught up with each other, and now that everyone competes using the same methods, western methodologies can no longer guarantee the same rapid development they used to. If firms can grasp the core differences between Eastern wisdom and Western theory, they will be able to leap out of the current ‘rut’ of the corporate world, and create companies that will go down in legend.

Unleash Strategic Potential by Combining the West and the East

Eastern and western theory each have their own merits and distinct features from both a strategical and operational standpoint. However, this does not mean they are not compatible with each other – rather, combining the two sides will give you the best of both worlds, leading companies to both higher internal efficiency and stronger external influence.

Western Theory: Founded in Numbers, Revolving Around Rationalism

Philosophy stems from the Greek word “philosophia”, translating to a “love of wisdom.” Ancient Greece is the birthplace of numerous great western minds (Thales, Heraclitus, Pythagoras, Socrates, Plato, Aristotle, etc.), as the first to turn away from mythical superstition and created the foundations of independent thought, trailblazing western philosophy.

Pythagoras, for example, is credited with many of the mathematical and scientific discoveries that would shape the foundation of western thought. He believed that mathematics could break down the true nature of all things; that numbers were endless, unchanging, and the origin of all things. This belief was critical to the formation of natural science and western logic as a whole – that “all things are numbers”, and that such numbers can be used to interpret the surrounding world.

From this foundation, western logic began to build out its core principles. Pursuing precision, in-depth analysis, rationalization, hypothetical verification, western conventions strive for a thorough understanding and optimization of individual components. Western medicine, for example, breaks the body down to individual components and examines each part separately, and doctors will rely on data from scientific methods such as lab tests, MRI scans, etc.

Eastern Wisdom: An Artful Mastery of ‘Aptness’

Chinese philosophy focuses on “survival” rather than rationality, having been forged by action more so than thought, and so highly values “aptness.” Famous philosopher Zehou Li explains aptness as the ability to assess pertinence; not pushing something to its limit, but rather finding its most apt place. It is through aptness that the ancient Chinese found the key to survival of both the individual and the human species. For example, the Rites of Zhou’s “Office of Winter” describes the four conditions for aptness

in manufacturing and craftsmanship: the time right, the location prime, the material fine, and the maker skilled. This overarching concept of aptness would shape and branch into all Chinese schools of thought.

This inherent understanding of “aptness” enables a perception of the world not inherently founded upon rational thought, one revolving around ‘practical aptitude’. A unique line of thinking that draws upon intuition to grasp something’s qualitative essence without relying upon standard quantitative methods such as analysis, logic, and reasoning. Many innovations can be seen as intuition and perception breaking the boundaries of rationality thought; Einstein famously stressed the necessity of intuition in the pursuit of scientific discovery, and himself broke the boundaries of Newtonian models to introduce his theory of relativity, a theory originating neither from a synthesis of data nor from a deduction of logic, but rather his own “intuition”.

Figure 1: Eastern v. Western Thinking – Scope and Impact

Creating Marvels by Fusing the East and West

Western and Eastern rationales applied to companies tend to produce different outcomes due to their inherent differences in focus. Conventionally, Western models drive development from within the company, and so the company’s power is derived from the product. Chinese wisdom drives development from the company’s surroundings, and so the company’s power is derived from its competitive advantage. The Western “data-driven & quantitative” approach has driven our scientific and technological breakthroughs, especially in developing new tools – and using those tools to accelerate further development of new products. This development cycle arms race has led to rapid imitation and copying becoming rampant, leading to homogeneous competition across countless industries. Many companies are left with no clear or controllable points of differentiation beyond price, leading to industry encompassing price wars and stifling any healthy overarching industry development.

The root cause is over-reliance on further development and optimization from within the company to solve a problem of outward differentiation and competition. We have found that the solution lies in the brand: true differentiation happens not at the company or industry level, but at the consumer level. The brand must bridge this gap between company and consumer; its tangible products instruments to shape a singular, intangible, long-lasting, fundamental point of difference within the mind of the consumer.

As the ancient Chinese saying goes, “The one who wins the hearts of the people wins the world.” Brands derive their power from the hearts and minds of consumers. While the Western quantitative approach is integral to a company’s internal productivity (operational efficiency, structural optimization, product R&D, etc.), it is ill-suited to design a strategy to build a brand that resonates with the minds of consumers – an inherently irrational subject, difficult to grasp purely from data and analytics.

With today’s global business landscape being more akin to a warzone of competition, Sun Tzu’s The Art of War finds itself more applicable than ever before, and its wealth of strategic insight will help in discerning the path to emerging victorious, even amongst fiercest competition. From his 5 factors of Morality, Heaven, Earth, the Commander, and Method and Discipline, we can architect a strategy that “render others’ armies helpless without fighting” (Sun Tzu, ca. 500 B.C.E./1988).

Competition will only continue to escalate, and volatility, uncertainty, complexity, and ambiguity are currently at all-time highs. For companies to thrive in this new era of competition, and to tackle emerging and unforeseen challenges, the overarching strategy that dictates their operations and direction must be both practical and flexible. We believe leveraging the Art of War in the formulation of company strategy can achieve twice the results with half the effort by pinpointing “certainty in uncertainty.” By properly assessing factors of circumstance, geography, and people, we can find access points into the hearts and minds of the people, and ultimately gain their trust and favor.

By integrating the backbone of western theory (quantitative analysis, logic, reasoning) with the core principles of eastern wisdom (intuition, practicality, flexibility), we have established a high-order strategic growth cycle. We leverage a company’s inward strengths (i.e., product power) to establish outward competitive advantages, elevating brands to the apex of the industry, akin to America’s Coca-Cola, France’s Chanel, or China’s Huawei.

This strategic elevation of the brand creates a positive chain reaction from the company to the industry, consumers, and society. The company escapes the rut of homogeneous competition, becomes the consumer’s preferred choice, drives their continuous consumption, all the while ushering in an appetite of innovation in an otherwise stagnant industry. The consumers have a clearer understanding of what they’re buying, enjoy a lower decision-making burden and a more diverse set of needs addressed, and an overall higher-quality purchasing experience. The industry is elevated by a strong leading brand, breaking previous production limitations, spawning categorical innovations, and redefining the market. Society benefits from companies being able to properly carve out their unique value proposition and differentiated competitive advantages, as we can avoid the waste of resources and capital usually spawned by homogeneous “me-too” imitation from other companies. This can ultimately bring us to a vast, diverse commercial landscape that can live up to the famous Chinese saying: “Far and wide eagles cleave the blue, up and down fish in shallows glide, all creatures strive for freedom under frosty skies” (Zedong, 1925/1993).

Primed for an Era of Large-Scale Transformation

Although the journey is long, we will nonetheless arrive at our destination. To create a prosperous business landscape of harmonious diversity, we weigh the “form” of the market on one hand, and on the other, we watch the “momentum” of consumers’ hearts and minds – the core foundation of confidence for Chinese companies. If properly leveraged, and integrated with western theory, a new era of large-scale Chinese brands will emerge, and with it, the next generation of corporate strategy.

The Ideal Market to Manifest Large-scale Brands

The Chinese market is known for its massive capacity and potential: its GDP exceeds 114 trillion RMB, its total retail sales of consumer goods exceed 44 trillion RMB, and yet remains in a stage of rapid industrialization, technological development, urbanization, and agricultural modernization. It boasts a population of over 1.4 billion, a labor force of over 900 million, and a 64.7% urban occupancy rate, with 12,000 USD/capita GDP. Despite short-term setbacks, the country’s industrial system has remained intact, maintaining strong production capacity and a large-scale market advantage. China’s digital infrastructure also continues to develop, fueled by 5G Internet, artificial intelligence, and other technologies. In March 2022, The State Council issued the Opinions on Accelerating the Development of a Large Unified National Market, reaffirming strong support for a high-standard market system and a high-level socialist market economy.

China is now the world’s largest trading country, the second largest economy, and the second largest consumer market. For the last 10 years, China has averaged a 38.6% contribution to world economic growth, surpassing the combined contribution of other