Two antelope locking horns

What kind of war are you fighting: cold, warm or hot?

planning risk strategy Feb 01, 2022

It is an unfortunate truth that we spend our lives in conflict. Think about it. Unless someone is standing outside waiting to give us everything we ever likely to want, then we have to struggle to achieve our goals. We must strive to overcome all the obstacles that fate throws in our path. Struggle is what makes us and the experience of living interesting. As Robert McKee, the screenwriting guru, says, ‘a protagonist and his story can only be as intellectually fascinating and emotionally compelling as the forces of antagonism make them.’ We’d be bored without it.

In stories and in business, a lot of conflict comes from forces of antagonism. Villains, enemies, rivals or competitors. They seem bent on seeking your demise and thwarting your every move. In reality they are pursuing their own heroic goals, but this pursuit brings them into conflict with you. Many founders convince themselves they are not in conflict because they have no direct competition. Nothing winds up potential investors more than saying this. Don’t do it. There are nearly always competitors, alternatives or substitutes. And if you can’t find one right now, be sure there will be some very soon when other companies spot what you are up to.

It really helps to know what kind of conflict you are involved in because it shapes both goals and the strategy for victory. Broadly there are three kinds of conflict: cold, warm and hot.

Cold wars are distinguished by covert conflict. The greatest cold war was between the USA and the USSR. It lasted fifty years and thankfully never erupted into open conflict, as that would have triggered mutually assured destruction. Now the USA is engaging in a new kind of cold war with China, while Russia is trying to replay the last one.

The struggle between Google, Apple, Facebook and Amazon can also be classed as cold war. None of the major contenders have yet tried to take out a rival. Their core divisions (search/hardware/social media/retail) have not been seriously threatened. They compete, but at the periphery. Their strategies are one of containment (keeping rivals away from the core) and making life difficult for the opposition. We see this in the development of ecosystems to lock in and leverage customer bases; acquisitions and alliances; new product innovation and aggressive pricing strategies. They try to distract opponents, influence the way their resources are deployed, and bring pressure through proxies, such as regulators. Do we think Apple would be quite so concerned about privacy if it wasn’t Facebook’s Achilles heel?

If this is the type of war you are fighting, you need to win through strategy. Picking where and how you are going to compete. If you need inspiration, read George F Kennan’s classic article, The Sources of Soviet Conduct. It shaped US policy for decades.

The second type of conflict is warm wars. Conflict is open but limited. Limits are determined by goals, the amount of resources invested, and the duration of conflict. Most of the wars in history have been limited, fought to resolve certain grievances and to secure specific outcomes. One or both parties can choose to disengage when their aims are achieved or the logic of conflict no longer makes sense.

Most start-ups begin by fighting warm wars. They look to take on sector incumbents indirectly, by finding uncontested marketspace, ‘blue ocean.’ Like Netflix competing against Blockbuster. For the start-up this is an unlimited conflict, a struggle for survival. It is also a good stealth strategy: start small and then start eating the elephants in chunks when you are big enough to do so. But for incumbents the conflict is limited. They may ignore the new entrant or make changes to pricing, products or business models to counter the challenge. They don’t see it as an existential threat. If the start-up grows to pose such a threat, then the conflict will escalate.

The key to victory in warm wars is intelligence and cunning. Winning without fighting. Using the bigger adversary’s strengths against them. Fighting and winning carefully selected battles. The only way to maintain your blue ocean and scale is to keep predators at bay until you are ready to take them on. As such, you need to be excellent at tactics. Read Sun Tzu’s Art of War to boost your street fighting skills.

The final form of conflict is hot war. This is unlimited: a fight to the death to see who the last one standing will be. The aim is total victory for yourself and total capitulation or destruction of incumbents. Like Rome wiping Carthage from the map after the Third Punic War. Hotly contested sectors like fintech are engaged in this mode of conflict. They are competing directly against multiple opponents for the same business, and not everyone can survive.

You win in hot wars by destroying either the opponent’s capacity or will to fight. You exert maximum pressure for as long as you can. You seek battle with the aim of not just victory, but total annihilation. To do this you need resources, resilience to deal with setbacks, and an unmatchable determination to succeed. You need to want it more and be able to take the financial and emotional punishment required. You know you are in a hot war if all companies are slashing prices and reducing the value in the market. They are doing this because they know it will squeeze margins to the point where some firms can’t survive.

The key to winning hot wars is operational excellence. Being able to repeatedly orchestrate all your powers and bring them to bear where they will achieve your goals and cause maximum damage to opponents. Do this enough times and eventually someone will run out of resources or willpower. To make sure that is you, read Clausewitz’s On War.

Having clarity over the form of conflict is vital for your future success. You don’t want to fight a hot war if you can avoid it. And you really don’t want to fight cold or warm wars in the same way you would a hot one, as the strategies are different.

One of the unexpected challenges founders face is multiple forms of simultaneous conflict. They start out fighting incumbents to create blue ocean on one flank, only to find other new entrants fighting them in an unlimited war on another. They may also be caught up in the cold war being fought by Big Tech. Such wars are total, requiring mastery of what the military calls ‘grand strategy’. This is the point at which you need to employ a dedicated strategist or strategic advisor. Don’t despair. Conflict is a metaphor for life, and you are already an expert in dealing with it…


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