Romance of the Three Kingdoms
A Book of Constant Influence
Sun Tzu’s Art of War may be the title that most commonly comes to mind when talking about Chinese classic strategy treatises, but there is another book far more relevant to the modern business environment due both to its complexity and to the relativity of its moral approach.
The Romance of the Three Kingdoms is one of the four classic Chinese literary works (the others are the romantic Dream of the Red Chamber, the swashbuckling The Water Margin, and the adventurous Travel to the West) and was written by Luo Guanzhong between the years 1350 and 1400.
Its influence in Chinese culture cannot be sufficiently emphasized; paintings of the loyalty oath performed by the three main characters hang in the offices of CEOs and media tycoons. In 1938, Mao Zedong, future chairman of the Chinese Communist Party, made a rather grandiose statement to his ragtag group of guerrilla fighters, where he declared that the three-way conflict that engulfed China between him, the nationalist army of Chiang Kai-shek, and the invading Japanese imperial army was “like that of the Three Kingdoms.”
While the Art of War is a dry and exhaustive listing of military strategies, addressing each possible situation a general may face, Luo Guanzhong’s work takes a less obvious approach and disguises its martial lessons within a narrative context where they can be analyzed in detail, together with their consequences.
The book itself is a historical novel of great complexity with over one hundred and twenty chapters, almost one million words, and about one thousand characters. It describes in dramatized form events that took place during the period of Chinese history known as The Three Kingdoms, between the years of 220 and 265 AD.
Set during the reign of the Han dynasty, imperial power is waning and corruption and political instability prompt the rise of local warlords and different military factions. Some are aimed at maintaining the imperial status quo, some others try to replace it, while yet others plan to use the chaotic circumstances to establish new centers of power through the kingdom. At the turning point of the novel, the weakness of Han military power is made evident when it fails to repress the Yellow Turban religious sect uprising. In a desperate attempt to restore order, the emperor recruits a large number of warlords, but when commanded to disband after the war by the weakened central government, several of the mercenary armies pay no heed.
Eventually, three different kingdoms emerge from the remains of the Han Empire and become the main actors in the ongoing fight for power, engulfed in a narrative that spans decades.
- The kingdom of Wu, which is under the leadership of Sun Quan.
- The kingdom of Shu, which is governed by Liu Bei. Liu Bei is arguably the main character in the novel; an archetypical Chinese folk hero, he is learned, intelligent, and has a personality deeply rooted in a type of humanism that is ruled by the traditional Confucian doctrines. He precipitates the events of the novel by forming a brotherhood in the famous Peach Tree Garden ceremony with the other two main characters of the book: Guan Yu, the moral adviser, and Zang Fei, the legendary warrior. Liu Bei’s objective is to restore the Han Dynasty, with which he has blood ties, to its former power, and he strives to do so throughout the novel. He boasts outstanding skills in managing human resources and often succeeds in putting the right person in the right position, developing, in turn, his power base.
- The kingdom of Wei, which is ruled by Cao Cao. Originally, Cao Cao emerges as the main antagonist to Liu Bei and as the villain of the story: a political animal of tyrannical behavior. But his natural abilities (courage, discipline) and personality make him a more complex and admirable character as the narrative progresses. His impact on Chinese culture has extended outside literature to become an archetypical persona that appears even on the stage of Chinese opera performances, where the Cao character wears a distinctive white mask to suggest treacherousness and cunning. Cao Cao is ultimately in the defeated party of the Red Cliff battle, one of the most famous military conflicts in Chinese history.
Once all three rulers have declared themselves kings, there follows a series of struggles, where the borders of the territory held by each of the warring factions weave back and forth for years among personal and political intrigues.
The period of the Three Kingdoms eventually ends, not with the triumph of Liu Bei and his supporters, but with the unification of China under the new Jin dynasty: a pattern that reinforces the cyclical character of Chinese history and highlights the importance of the opening sentence of the book: “The Empire, long divided, must unite; long united, must divide. Thus it has ever been.”
Modern-Day Relevance of Romance
of the Three Kingdoms
The novel is, at its heart, a compendium of Confucian values, and it is the adherence to these, or lack thereof, that serves to distinguish between heroes and villains in the story. Each character is identified with one or several Confucian virtues or morally repudiated vices.
- Cao Cao = Ambition, decisiveness, talent
- Liu Bei = Tolerance and humanism
- Zhuge Liang = Loyalty and diligence
- Lü Bu = Betrayal and lust
But beyond classical values, the book holds immense learnings for the business world and serves as a model for developing professional and leadership skills. Particularly relevant are the questions posed around the following areas:
a) The planning of strategic action
Which action should I take? What is my value proposition?
b) The management of human resources
Who can I rely on? How can I attract talent?
c) The development of personal relationships
Who should I ally myself with? Who can I support and who can support me?
The chaotic and destructive environment that serves as a background in Romance of the Three Kingdoms can be compared to the confusion of the business world, and the behavior of the different antagonists in the novel offers keys to understand the actions of business partners and rivals in real life.
Three strategies appear again and again as the most effective in addressing the questions of strategic action, resource management, and relationship building:
Strategies to Survive in a Turbulent Environment
(“Fishing in Troubled Waters”)
Complex business environments tend to generate a great amount of frustration for business leaders. This can happen in any country and in any industry, but developing markets (Southeast Asia, Latin America, Africa), in general, and China, in particular, have been a particularly good example in the last decade and a half because of the large revenue opportunity they represent.
The market in China is a convoluted mix of local small firms, overseas conglomerates looking for a foothold, and domestic juggernauts steamrolling their resources into a particular opportunity. Numerous foreign companies with a large amount of overseas presence look to capitalize on the business opening and, in doing so, collide with strong local companies engaged in rapid growth. For the foreign businessperson, this may seem like a chaotic situation, and many cannot help but wonder how much of this is by accident and how much is by design.
In Romance of the Three Kingdoms, this scenario is the norm; different factions seek to alter the normal social status and, in the ensuing confusion, gain positions of advantage against major rivals, a principle they define under the name “fishing in troubled waters.” Chinese companies apply the “create disorder to survive” mentality in the business arena for the same reason, and as a result, the market becomes unpredictable both in the actions of companies and in the reaction of consumers (price wars, irregular behavior, sudden expansions, etc.). The situation is further aggravated by institutional influence and poor or changing state regulations.
Fortunately, one solution to this is also offered in the pages of the novel. Romance of the Three Kingdoms explains that everything is cyclical: if a situation of stability starts to deteriorate, it will be followed by one of unbalance. But as soon as the confusion climaxes, an opposite effect gets under way. Any unbalanced status quo is resolved when it naturally forces the chaotic and weak elements out of the process, and what results is a renewed stable state headed by new factions and players.
The creation of a turbulent environment for an enterprise does not depend only on external factors. Companies have to make fundamental decisions that deal with their identity, how they approach their growth, and how they invest in resources. Hiroshi Mikitani, founder of the Internet Japanese giant Rakuten, often refers to the “War model” versus the “Combat model” when doing business, and he uses a Romance of the Three Kingdoms analogy to explain his theory:
The overall strategy that I formulated was to expand the company’s performance in this manner. Through a gradual accumulation of victories, we eventually reached a critical point, and then we switched the strategy over to the war business model.
If we wanted to sound cool, perhaps we could call it the style of Liu Bei, a character in the Three Kingdoms Saga. It is an old story set in ancient China. The formation of Liu Bei’s army began when a pledge of brotherhood was made between his friends, Guan Yu and Zhang Fei. This meant that their “army” consisted of only three people at first.
By going to war in China during its period of conflict, and getting more and more victories under their belts (although they were defeated many times), they were able in a short period of time to build up a considerable military force, and ultimately establish a single, united country, called Shuhan.
Under the war business model—the model where from the beginning you make large investments and have a big army at your disposal—the return for success is great, but the risk of failure is equally great. With the combat business model, like Liu Bei, you can easily pick yourself up again, even if you fail, because there is nothing much to lose.
The reason why we were able to meet the challenge of the Internet shopping business—a model, it was believed, that would never succeed in Japan—was because from the outset, we employed the combat business model. Because I had the psychological fallback of knowing that we could always do things over again, I was able to make bold and decisive decisions.1
Strategies to Solve the Apparent Contradiction in Fundamental Values and Real Tactical Behavior2
In Romance of the Three Kingdoms, characters from different factions betray each other and shift alliances in a way that seems Machiavellian to the reader and particularly deplorable to Western mentalities. Even when professing feelings of loyalty and duty, the warlords of the novel don’t hesitate to attach each other’s armies, pillage resources, and, right after, go back to lofty declamations about brotherly devotion and fealty.
Any human interaction, be it between individuals or groups, can be the victim of a fundamental flaw: the need for practicality. Often, principles of correct behavior held by all participants suddenly disappear when it comes to the reality of their actions and the need to make moral concessions. This dichotomy, when present in the business process, produces the following pairings:
An in-depth reading of Romance of the Three Kingdoms offers an internal logic to these actions, which is dictated by the warring landscape where the relationships take place. The novel explains the apparent contradiction between fundamental values and their external expression by way of the “buffer zone” theory. It assumes that every actor protects himself or herself from harm by establishing an area of security that keeps unknown newcomers at arm’s length. While the core behavior of the actor is regulated by a set of morally correct traditional values, these stay tucked away at the center of the buffer zone. The zone itself acts as protective measure and is set in place to (a) identify allies and (b) to protect the actor from more powerful enemies. A newcomer can end up establishing a relationship of trust with the actor, one that is ruled by humanistic values, but, to achieve this, he or she must first sort through the filtering system of the buffer zone that can take different shapes, including duplicity, disinformation, and ambiguity.
There are two specific examples of how this theory of the buffer zone works in the novel:
- Guan Yu was one of the generals serving under the hero Liu Bei. When captured by his enemy, Cao Cao, out of respect for his skills, he was offered the opportunity to work for Cao Cao’s banner in exchange for his life. Guan Yu accepted under strict conditions, which included the right to return to his liege lord if the opportunity presented itself. When this finally happened, Cao Cao allowed him to leave as promised and Guan joined Liu Bei’s army again.
- None of the two leaders, Liu Bei or Cao Cao, saw the general’s behavior as traitorous. In fact, Cao Cao managed to push through Guan Yu’s buffer zone and reached a state of “cordial opposition” where balance could be achieved.
- It can be argued that Guan Yu acted as bridge between the two factions and helped, in the long term, to reduce chaos in the country.
- The young general Lu Xun besieged the city of Jingzhou, which was defended by Guan Yu. In order to establish negotiations, Lu Xun wrote a letter of great humility, which praised his opponent. But while doing so, Lu Xun had ordered his soldiers to dress up as merchants and take the city. Lu Xun’s maneuver worked well but debased him in the eyes of Guan Yu, creating a long-term relationship of animosity.
- Although militarily speaking the tactic was correct, it resulted in a short-term gain, which lowered Lu Xun’s standing with his opponent, Guan Yu.
- Lu Xun’s behavior failed to pass the buffer zone established by Guan Yu, and both actors remained in violent opposition, which, in turn, extended the conflict and increased chaos in the country.
In China’s current business environment, such ambiguity is constantly present. Many foreign companies find frustrating what they consider the untrustworthiness of the local players and the duplicitousness of their word compared to their actions. But seen from the filter of the learnings in Romance of the Three Kingdoms, such local companies are merely adopting the buffer zone strategy, perhaps by design, perhaps in an unconscious manner, to protect themselves from overseas actors.
Furthermore, large enterprises entering a new market like China often show attitudes that are actually considered aggressive from the local perspective. Approaches such as being interested in immediate benefits without true commitment to the market, arriving with an overwhelming strategic and resource superiority, or even making explicit declarations about the intention to fully dominate an industry will create friction because, from a local company’s perspective, such behavior can be qualified as untrustworthy. Additionally, big foreign corporations trying to consolidate a position of power without respecting the overall balance of the market exhibit a selfish behavior if they don’t try to establish alliances with other companies.
As a result, the relationships between local players and overseas newcomers are stuck in the antagonistic buffer zone, and neither of them gets the opportunity to develop beyond that state of shared mistrust.
Strategies for the Recurrent Usage of Deception Tactics
to Gain Advantage
Tactical behavior is an aggregation of many different skills, and one of them, frequently seen in the novel, is that of deception. Offering “misinformation” or confusing clues and hiding one’s real intentions helps an actor because it:
- Creates time to consider and evaluate the intentions of the other party
- Gives an opportunity to analyze the sincerity of any offer received and filter allies from enemies
- Allows a degree of self-protection by hiding the actor’s own strengths and weaknesses while assessing the other party
The obvious, most simplistic purpose when using deception tactics is to deceive the other party, but at a more elaborate level, they can be a tool that helps, if properly applied, to establish a basis for a relationship of trust.
There are, again, two specific examples of how deception applied to a higher strategic objective works in the novel:
- A good example of this tactic in action is the initial relationship between the two main characters in Romance of the Three Kingdoms. Zhue Liang, the adviser par excellence, puts himself at the service of the hero Liu Bei, but to Liu Bei’s surprise, he initially shows little respect and deference toward his new lord. Liu Bei understands that having Zhue Liang is a great asset and sets aside his personal pride for the sake of his faction. Using great patience and restraint, he shows to the strategist that he is an enlightened leader, working for the good of the land. Thus convinced, Zhue Liang offers his unconditional support, and the kingdom of Shu gains the benefit of his skills.
- Zhue Liang’s attitude was indeed a tactic of deception created for the purpose of testing Liu Bei’s values.
- This approach is in stark contrast to the one the villain Cao Cao uses. When offended by his capable minister, My Heng, Cao Cao reacts by having him promptly executed.
- Cao Cao, unable to put aside personal feelings, does not dig deeper in order to evaluate the reasons behind My Heng’s behavior and reacts impulsively. As a result, he loses the contribution of an efficient adviser, but also, this reaction warns other ministers, who quickly leave him.
Such deception tactics, similar to the use of the buffer zone, are, in the novel, protective measures rather than a sign of malicious behavior, and their objective is to level the field so smaller players can compete with larger ones. The single most effective way to overcome them is by establishing balance and harmony.
The final piece of advice for global companies frustrated by the confusion of local markets, be it in China or somewhere else, would be the same that appears in Romance of the Three Kingdoms:
- Think and behave in terms of commitment, looking to develop long-term relationships.
- Establish effective communication with local players.
- Create social capital (a relationship network) not as an object of transaction or interest but as a compendium of reciprocal obligations.
- Do not hesitate to establish relationships of competitiveness with local entities but make sure they are accompanied with relationships of cooperation.
Although some of these principles may sound vague and even wishful,
the real impact they have should not be overlooked. In 1992, AIG was the first foreign insurance company allowed to develop business in mainland China, while others had to wait until 2000, eight more years, before getting the same treatment. The company attributed this, partially, to the Chinese government’s acknowledgment of its commitment to the country since it was the only overseas insurer to remain in China after the Japanese occupation of 1936.
Liu Bei would have recognized the gesture.
1 H. Mikitani.2007. Principles for Success. Tokyo.
2 L. Yan, and T. Hafsi. 2007. Understand Chinese Business Behavior: A Historical Perspective from Three Kingdoms to Modern China. Montréal, QC: HEC Montreal.