Lessons for Business Strategy from Lao Tzu

Lao Tzu, the ancient Chinese philosopher and author of the Tao Te Ching, offers a wealth of insights that can be surprisingly relevant and valuable for modern business strategy. While his teachings are rooted in Taoism and often focus on personal wisdom and spirituality, several principles can be effectively applied to the business world. Let's explore some of these lessons:

The Power of Flexibility and Adaptability

“The supreme good is like water, which nourishes all things without trying to. It is content with the low places that people disdain. Thus it is like the Tao.” (Chapter 8)

"An army that cannot yield will be defeated. A tree that cannot bend will crack in the wind. The hard and stiff will be broken; the soft and supple will prevail."​ (Chapter 76)

Lao Tzu emphasised the value of being like water – adaptable, flexible, and capable of flowing around obstacles. In business, this translates to the importance of being able to pivot strategies, adapt to changing market conditions, and be resilient in the face of challenges. Companies that can quickly respond to changes are more likely to succeed.

This quote underlines the virtue of adaptability and humility, akin to water, suggesting that in business, success often comes from being flexible and adaptable, able to nourish and support various aspects of the operation.

Leading by Example

“A leader is best when people barely know he exists, when his work is done, his aim fulfilled, they will say: we did it ourselves.” (Chapter 17)

Lao Tzu talks about leading without ego, seeking to be a part of the group rather than dominating it. This approach encourages a more inclusive, team-oriented leadership style in business, where leaders empower and inspire their teams without trying to control them, where they lead by example, and encourage collaboration and collective problem-solving.

The Importance of Simplicity

“I have just three things to teach: simplicity, patience, compassion. These three are your greatest treasures.” (Chapter 67)

Lao Tzu advocated for simplicity and living in harmony with the natural world. In business, this can be interpreted as focusing on core competencies, eliminating unnecessary complexities, and striving for clarity in goals and strategies. A simplified, streamlined approach often leads to more efficient operations and clearer decision-making.

Embracing Uncertainty

“The Tao is forever undefined. Small though it is in the unformed state, it cannot be grasped.” (Chapter 14)

Lao Tzu teaches acceptance of uncertainty and the unknown. In a business context, this means recognizing that not all variables can be controlled or predicted. Successful strategies often involve calculated risks and being open to unexpected outcomes, learning, and evolving from them.

Strategic Non-Action (Wu Wei)

"The Master does nothing, yet he leaves nothing undone."

“Do you have the patience to wait till your mud settles and the water is clear? Can you remain unmoving till the right action arises by itself?” (Chapter 15)

This concept involves knowing when to act and when not to. In business, this could mean understanding when to push forward with an initiative and when it's more strategic to hold back, wait, and observe. Sometimes, the best action is inaction, especially in volatile or uncertain situations.

Harmony and Balance

“The Tao is the centre of the universe, the good man's treasure, the bad man's refuge.” (Chapter 62)

Lao Tzu placed great emphasis on balance and harmony. In a business setting, this can mean balancing various aspects of the organization – such as innovation and tradition, risk and caution, or autonomy and control – to create a harmonious and effective operation.

Long-Term Perspective

"A journey of a thousand miles begins with a single step.” (Chapter 64)

Perhaps the most well known quote from the Tao Te Ching, this encourages looking beyond immediate gains to the long-term effects of actions whilst also emphasising the importance of starting now from wherever you are. Businesses can benefit from this by focusing not just on short-term profits but on sustainable growth, long-term value creation, and considering the broader impact of their actions on society and the environment.

Incorporating these principles requires a nuanced understanding of both Lao Tzu's teachings and the specific context of your business. However, when applied thoughtfully, they can offer profound insights and a unique approach to developing and executing business strategies.