Outwit your Competition with these 36 Business Stratagems

In OutThink the Competition (read our online summary here), Kaihan Krippendorf refers to the “36 Strategems of Ancient China”, and shows how you can integrate them into your business strategy and planning, to outwit your competition. These strategems are essentially 36 Chinese proverbs, relating to 36 battle scenarios in Chinese history and folklore, predominantly of the Warring States period and the Three Kingdoms Period.

Here’s a overview of the 36 strategems. Some of the strategies may not seem noble, but a wise general avoids direct conflict if possible, and deploys a range of principles, strategies and tactics, including deception of one’s own forces and allies.

Winning Strategies

1: Fool the Sky to Cross the Sea (瞒天过海)

Mask your real goals, under the ruse of a fake goal, until the real goal is achieved. Use a deceptive strategy that will mask your real goals, and eventually mislead your competition. The key is to appear “non threatening” until it’s too late for your enemy to respond.

2 : Besiege Wei to rescue Zhao (围魏救赵)

Distract then destroy. Sometimes, competitors are so strong, they seem impossible to defeat. However, there’s always a gap in the armour, or a weakness that can be attacked instead. Indirectly attack something that he holds dear, or go where the competition is not present.

3 : Kill with a borrowed knife (借刀杀人)

Use someone else’s resources or strengths to defeat your competitor. You can trick an ally into attacking your enemy, collaborate with a third party, or use the enemy’s own strength against him. The idea here is to cause damage to the enemy by getting a third party to do the deed.

4 : Relax while the enemy exhausts himself (以逸待劳)

Never let your competitor dictate where the battlefield is. Let your enemy come to you, by choosing the time and place of battle yourself. Encourage your enemy to expend his energy in futile quests, while you conserve your strength. The idea is to have your troops well-prepared for battle; when the enemy is exhausted and confused, you attack with energy and purpose.

5: Loot a burning house (趁火打劫)

When the enemy is weakened (by internal conflict or troubles), attack it without mercy and totally destroy it to prevent future troubles. Be on the look out for companies who are in trouble, then turn their misfortune to your advantage. You can also sow dissent in their ranks, feed them false information or use other means to distract them, before attacking. Corporate takeovers and acquisitions use this strategy, buying corporations when they are weak. In effect the acquiring company gets a good buy. Most loan sharks, pawn shops are aware of this principles. Buying repossessed properties is another good example.

A word of caution – be careful with this “burning” house strategy, because by going into the fire you might get trapped inside and suffer the same problems as your enemy.

6: Clamor in the east, then attack in the west (声东击西)

In any battle, the element of surprise can provide a huge advantage. The idea is to create a diversion, get the enemy to focus his forces in a location, and then attack elsewhere where his defenses are weak. For example, you can make them believe that you are penetrating a market which is of little interest to you. When they focus on that market, launch a new product in your true target market.

Confrontation Strategies

7: Create something from nothing (无中生有).

In short, lie, or create an illusion of something’s existence. For example, fake attacks twice or thrice, and when your competition no longer perceives this as a threat, execute your “real” attack, follow through and conquer. In 756, a General named Ling Hu Chao of Qin was attacking the Yonqui, and the latter was running out of arrows. General Chang Sun, who was defending the fortress, ordered straw mannequins to be lowered. General Chao’s troops fired thousands of arrows to these mannequins, and the arrows were duly collected by Chang Sun’s troops. When this was repeated a second time, the enemy ignored the mannequins. The third time, real warriors were lowered, and launched a successful attack against the enemies.

8 : Pretend to take one path, while sneaking down another (明修栈道,暗渡陈仓)

Deceive the enemy with an obvious, “standard” approach that takes a long time, then surprise him by taking a shortcut and sneaking up to him. This is an extension of Strategy 6 above; but using convincing, physical baits as a decoy to draw the enemy’s attention. Many martial arts fighters do this by faking a strike at the body, but hitting the head of the opponent at the last minute.

9: Watch the fires burning across rivers (隔岸观火)

When your opponents are fighting in the same battle field, monitor the situation but delay joining the fight.  If you are the “small player”, never join the fight of “market leaders”. Wait until your competitors have exhausted themselves, then move in and pick up the pieces.

10 : Hide a knife behind a smile (笑里藏刀)

Never appear competitive, but project an image of neutrality or even friendliness. Charm your competitors to gain their trust, and strike when a favorable opportunity presents itself. Before the Soviets took over Afghanistan in 1979, they give Afghanistan military aid and even sent military advisors to train their army. The Soviets learned about and gained control of the Afghan military, and eventually invaded Afghanistan.

11: Sacrifice the plum tree to gain the peach tree (李代桃僵)

Be ready to accept a small loss (or sacrifice a scapegoat) to achieve a better gain. Many companies lose money in the introductory stage of a product, with the hope that when the product takes off, the profits will be greater than the initial losses.

12: Take the opportunity to pilfer a goat (顺手牵羊)

Be ready to exploit an opportunity when it presents itself. As you focus on the tasks and goals at hand, maintain a peripheral vision to look out for opportunities and threats along the way. Oftentimes, the window of opportunity is small and specific. Take advantage of any opportunity that presents itself, however small, and avail yourself of any profit, however slight. Likewise, look for your competitor’s mistakes and make them work for you. Look for niche markets that your competitor may have overlooked or neglected.

Direct Attack Strategies

13 : Beat the grass to startle the snake (打草惊蛇)

Frighten and startle the enemy to see how they will react. Do something unusual or unexpected (“beating the grass”) to provoke a response from the enemy (“startle the snake”), so he gives away his plans or position, or is disoriented. For example, you can announce that you are launching a new product or marketing strategy and observe how your competitor reacts.

However, be cautious that this could trigger the fight-or-flight reaction in your competitors – they may retreat, freeze or fight back, so you must be ready if they do fight back.Conversely, an imprudent act will give your position or intentions away to the enemy.

14: Borrow a corpse to resurrect the soul (借尸还魂)

Revive something from the past, and re-invigorate or re-use it for another purpose. This can be an old idea, an old technology or a method that has been forgotten. Adapt them, you can even infuse it with modern technology and make it useful for your own purpose.

Ideas or inventions which may have been too expensive or too risky before, may become viable today with the application of new technology or changes on market economics.

15: Lure the tiger out of the mountains (调虎离山)

Lure your competition away from his position of strength. Never attack when the enemy is uphill and where his position is strong. Entice him to come down to your home territory, to your place of strength. It is always wise to bring your competition out of a situation that favors him, to a position that favors you. In politics, this is often used by inviting diplomats to negotiate in the host country, to get that homeground advantage. Try to get your competition to abandon a market where he has a stronghold, then seize that abandoned market when your competitors loses the stronghold.

16 : To catch something, first learn to let it go (欲擒故纵)

A cornered enemy will often mount a final desperate attack. Instead, give your enemy an option to escape, so he’s focused on escaping rather than fighting you. When his escape plans are foiled, his morale will be further weakened, and it will be easier to defeat him

17: Toss out a brick to attract a jade gem (抛砖引玉)

Use a small bait to catch a big fish. Bait someone by making him believe he can gain something (“toss out a brick”) and obtain something valuable from him in return (“get a jade gem”).  Attract a competitor to move to a position which is advantageous to you, or capture a market by giving away something inexpensive for free.

Many Fastfood companies do this by bundling their products into value meals, where customers are made to think they can save more from the value offers, but in reality they end up buying more. McDonalds’ Happy Meals feature toys of famous movies which appeal to children. Kids want the meal because of the toy, and parents end up buying the toy, the kids’, as well as thier own meals.

18: Defeat the enemy by capturing their chief (擒贼擒王)

Defeat your enemies by capturing their leaders or thinkers. When an army is strong because of a strong general, they will be significantly weakened (or may naturally disperse) once the general is removed. In business, this can be applied by poaching key leaders of your competitors (who may even bring over his key people). This is a better approach than a direct confrontation with your competitors.

Chaos Strategies

19: Remove  the firewood under the cooking pot (釜底抽薪)

Eliminate the source of your enemy’s strength. Whenever you are faced with an enemy who has enormous strength and power, direct engagement becomes impossible. In this situation, find out first the source of his power, then eliminate or undermine them there – Literally take the fuel out of their fire.

20: Fish in troubled waters (混水摸鱼)

Create confusion and use this confusion to further your own goals. Do something unusual, strange or unexpected can distract or disorientate your enemy focus, then attack while he’s confused and vulnerable.

21: Slough off the cicada’s golden shell (金蝉脱壳)

When you think you are at the brink of defeat, and escaping is the only option, create an illusion. Mask yourself – become inconspicuous, or masquerade as something/ someone else. During the Chinese conquest, many generals escaped death or capture by creating false impersonations.

In business, when you think that your business needs to expand or needs to change direction, you can do this by keeping your old company but secretly transferring your assets to expand or form another company. This way, you can quietly amass your resources or rebuild your strength under the radar.

22:  Shut the door to catch the thief (关门捉贼)

Once you have captured your enemy, never allow a chance for them to escape; bring the battle to conclusion and leave no room for your enemy to strike back. Before you move in for the “final kill”, first cut off your enemy’s escape routes, and cut off any routes through which outside help can reach them. For example, a price war may be damaging in the long run, but can be used to bankrupt a competitor that’s running low on resourcesm.

23 : Befriend a distant state while attacking a neighbour (远交近攻)

It’s easier to invade territories that are close to your yours. If you have two battles to fight, make sure you fight the one nearest and if possible befriend the one farthest. Build and use strategic alliances to gain the upper hand. This is very much applicable today. You can observe that countries tend to fight with their nearby neighbors, and countries farther turn out to be great alliances.

24: Obtain safe passage to conquer the Kingdom of Guo (假道伐虢)

Borrow the resources of an ally to attack a common enemy. During the Vietnam War, the Americans used their bases in the Philippines, while the Vietnamese moved to Cambodia to avoid air strikes. In modern times, we establish good relationship with people from whom we need help. Business use alliances, middlemen and networking to access better deals at a lower cost cost.

Advancement Strategies

25: Replace the beams and pillars with rotten timbers (偷梁换柱)

By removing the enemy’s key support, you weaken them and disrupt their battle plans. This could involve disrupting the enemy’s formations, interfering with their methods of operations, changing the rules in which they are used to following etc. To replace the pillars you’ll need manipulation, long term planning or even “intelligence” to penetrate the enemy ranks. Some business have been known to “plant” employees in a competitor company so they gain access to crucial information. Others just woo their competitor’s key people by offering an enticing salary and perks.

26: Point at the mulberry tree while cursing the locust tree (指桑骂槐)

Point at one to scold the other. Sometimes, it’s hard or undesirable to directly discipline, control, or warn someone due to their position or status. Use analogy and innuendo instead.

From the business point of view, sometimes it easier to attack the competitor not by competing head on but by attacking their very powerful leader and destroying his personal worth and credibility. Exposing a scandal, or even spreading rumors against their CEO will hurt the company’s image and reputation.

27: Feign madness but keep your sanity (假痴不癫)

When you are strong, pretend to be weak so your foes will not take you seriously. Hide behind the mask of a fool, a drunk, or a madman to create confusion about your intentions and motivations. Make your enemies underestimate you, so they become lax and unassuming. Once they drop their guard, you may attack.

Many car companies practice this strategy. When a competitor unveils a new car model, the other competing company watches from a distance. The next thing we know, this once “weak” company launches a better model the following year.

28: Remove the ladder when the enemy has ascended to the roof (上屋抽梯)

Burn bridges after crossing them. Lure your enemies to follow you towards a rugged terrain, then trap him by cutting off the escape routes. However this strategy must be used with caution as it can easily backfire. When retreat is difficult, your enemy’s soldiers may fight to the death, making it difficult for you to retaliate. Make sure you have the winning advantage like ample supply of weapons and a stronger contingent. In business, there’s the concept of management by crisis, or using a “burning platform” to force actions that would not otherwise be taken under normal circumstances.

29: Deck the tree with bogus bossoms (树上开花)

By tying silk blossoms to a dead tree, you create the illusion that the tree is healthy. Using artifice and disguise, you can pretend to be more than you really are, and make your enemies assume you are big and powerful.

Companies that appear larger than they are elicits trust, and many marketers practice this strategy by making their products appear more than what they really are, to create an impression of a well established company.

30: Make the host and the guest exchange roles (反客为主)

If you cannot defeat them, join them. Befriend your enemies by working with them and learning from them. Initially, pretend to be a guest to infiltrate your target and be accepted. Study their vulnerabilities from the inside and develop dependency. When you have gained enough strength and control, attack.

Defeat Strategies

31: Use a woman to ensnare a man (美人计)

The “Beauty Trap” is about using a woman to distract the enemy or get valuable information. This can work on three levels. First, the leader becomes so distracted by the beauty that he neglects his duties and lets down his guard. Second, jealousy and conflict can be sowed if the desired women starts courting another men. Third, conflict and strive can spread if other females are become jealous or envious.

32: Fling Open the Gates to the Empty City (空城计)

The “Empty Fort Strategy” is about not showing your fear or concern. Even if you are truly vulnerable, make the enemy think twice about attacking you. Appear willing and ready to fight, in such a way that makes the enemy suspect it’s a trap or ambush. Act calm when your enemy expects you to be tense.

33: Let the Enemy’s own spies sow discord in the enemy camp (反间计)

Use their spies against them. Rather than capture the spies, use the spies to spread misinformation and sow discord. Undermine your enemy’s position by secretly causing discord between him and his friends, allies, advisors, and troops. While he is preoccupied settling internal disputes, his ability to attack or defend is compromised.

34: Pretend to injure yourself to win the enemy’s trust (苦肉计)

Inflicting self-harm is a common way to gain attention and sympathy. First, your enemy may let down its guard, thinking you are no longer an immediate threat. Second, your enemy may actually rush to your aid if they believe the injury was caused by a mutual enemy. In the modern day, companies use this strategy by admitting to a mistake to soften public opinion, or filing bankruptcy to avoid mounting debts and taxes (while collaborating with stronger companies to revive the company).

35: Chain together the enemy’s war ships (连环计)

This is the tactic of combining tactics – have several stratagems operating in tandem, so you can confuse the enemy by combining stratagems, or keep them on their toes by rolling out one after another. However, be careful to ensure that if one strategy fails, it will not cause a chain-reaction to break the whole scheme.

36: If all else fails, retreat (走为上策)

Don’t fight a losing battle. If it becomes clear that your current course of action will end in defeat, choose to retreat and regroup. Escaping may mean a loss of dignity, but unlike surrender or compromise, you’ll still have the chance to strike back when the odds are once again in your favour. In business, it’s sometimes wiser to cut losses and make a comeback later.

Get more powerful ideas on how to apply these strategems in your own business – read the online summary of OutThink the Competition here!  Or, see time-proven battle strategies with Sun Tzu’s Art of War for Managers here.

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