Taoism presents an advanced leadership model that revolves around Wu Wei (the non-action principle). Instead of exerting pressure, Taoism wants to clear up the path; instead of aiming at precise targets, it wants to make things run more smoothly, expecting that higher quality, revenue and profits will ensue.
In Chapter 17 of the Tao Te Ching, Lao-Tzu formulates his key insight on leadership: that great leaders speak little, do not draw attention upon themselves, and give the impression that it is all running smoothly on its own.
Taoism opposes management practices that primarily serve to glorify the managers themselves; unfortunately, there are too many examples in history of managers who, in order to extract advantages for themselves, have boosted the profitability of an organization in the short term by cutting maintenance, research and development, and training costs.
In doing so, they have undermined the organisation’s future, and harmed its shareholders and employees. Such a short-term orientation is tantamount to consuming one’s lifetime’s savings to fund a conspicuous, overindulgent lifestyle. More often than not, such a behaviour will prove detrimental.
Taoist leadership and Emperor Shun
What management practices does Taoism favour? All those that help organizations produce and sell their goods or services more smoothly. At the same time, Taoism opposes all practices that generate hiccups, delays, conflicts, unfairness, or abuse.
A few examples will illustrate these aspects better than one hundred pages of theory. I am going to use examples from old and recent times to show that a Taoist leadership style draws its strength from human psychology, not just from technology.
Chinese history presents emperor Shun (23rd century BC) as the archetype of Taoist leadership. Shun possessed a great deal of wisdom and humility, which showed in his ability to govern smoothly. It’s said that the people respected and followed Shun because he created harmony.
Instead of enacting constraints and exactions, Shun created conditions that enabled peacefulness and prosperity to develop.
He did not produce peacefulness and wealth himself, but he let them emerge, naturally and freely. That’s the way of the Tao.
Taoist, Zen, and Christian leadership
In Chapter 25 of the Tao Te Ching, Lao-Tzu affirms that the Tao makes life on earth and human beings great. He means that social cooperation tends to work out beautifully if we just let it take place without encumbrances.
To a great extent, the Zen Buddhist conception of leadership overlaps the Taoist conception. For instance, Eihei Dogen (13th century) is regarded as a great leader because of his wisdom, not because he had conquered land or amassed great wealth.
Dogen employed metaphors to show what leadership entails for an organization or group. Leaders, he said, should resemble trees that, without asking for anything in exchange, give shade for everybody.
When Dogen used the water metaphor, he did it in the sense of Chapter 8 of the Tao Te Ching, that is, praising water for its ability to freely benefit everybody and everything. Leadership is presented, from this perspective, as nourishing.
Great leaders like Dogen embody virtues that are shared by Taoism, Christianity and other philosophies and religions. For instance, humility and preaching by example frequently come up as essential in effective leadership.
In the Gospels, John 13:4-5 recounts the scene where Jesus washes his disciples’ feet. Zen Buddhists use a similar story in which a master, when he sees his disciples fighting about who has to do which chore, he refrains from reprimanding them and instead, he quietly starts to do the chore himself.
Taoism places more emphasis on inconspicuousness than on preaching by example. A Taoist leader, instead of spending his time doing little chores, he would have put in place a system to prevent fights amongst his disciples. In Taoist leadership, it all boils down to smoothness.
Taoist leadership and the cup metaphor
What other leadership insights can we gain from great Zen Buddhist masters like Dogen? The practice of Wu Wei should come on top, that is, avoiding physical, intellectual, emotional, or any other type of excess.
Chapter 29 of the Tao Te Ching enunciates that wise people have no need for the excessive, immoderate, or unreasonable. I see this principle embodied by Dogen and other Zen masters in their ascetic lifestyle.
Zen stories present overflow (for instance, filling one’s cup beyond the brim) as wasteful and detrimental. Taoism also uses metaphors against overflow, but when it comes to leadership, smoothness is more important than merely avoiding overflow.
From a Taoist leadership perspective, the goal is to enable the organisation, enterprise or group to operate more smoothly. Nevertheless, Taoists tend to be forgiving about the occasional mistakes and waste resulting from improvement experiments carried out with good intentions.
Taoist leadership and Jakob Fugger
Jakob Fugger (1459-1525), a financier and industrialist who had probably never heard of Taoism, constitutes my favourite example of Taoist leadership. Why? Because his life embodies Lao-Tzu’s smoothness principle.
In Chapter 64 of the Tao Te Ching, Lao-Tzu recommends us to deal with small problems before they grow large, that is, to prevent disruptions and ensure that things run smoothly. In the history of management, few individuals have put this principle into practice as masterfully as Jakob Fugger.
I’ll just mention a few aspects of Fugger’s life that show his dedication to smooth leadership. His family had been involved in the textile business for two generations, but he realized that, sooner or later, their business would face major disruptions.
Instead of waiting for risks to materialize, Fugger started to diversify, initially in finance, later in copper and silver mining, and finally in trade expeditions to India. He correctly predicted that economic and political changes would place his businesses at risk, and that it was safer to diversify.
Fugger was also the first entrepreneurial leader in history to engage in vast international diversification. At a certain point, he had mining interests in Hungary, Tirol, and Spain, and was shipping copper through Venice, Trier, Antwerp and Lisbon.
Similarly, Fugger was the first financier in history to lend to public and private borrowers across a whole continent. His risk diversification, although massive, could not prevent situations in which he was unable to collect his claims.
Fugger ended up losing large sums in Spanish bankruptcies, but his other business interests kept him afloat. I do not think that Lao-Tzu would have managed those more smoothly than Jakob Fugger himself.
In our century of instant messaging, intercontinental flights, and multi-currency accounts, it is hard to conceive that Jakob Fugger was able to lead highly complex enterprises by writing with feather and ink, travelling on horse carriages, and making calculations by hand.
In Chapter 4 of the Tao Te Ching, Lao-Tzu had noted that, when our actions are aligned with the Tao, abruptness becomes smoothness, and things fall into place. That’s the core principle of Taoist leadership, but a careful study of Jakob Fugger’s life can help us grasp all the implementation details.
If you are interested in putting effective insights into daily practice, I recommend my book titled “Rational living, rational working.”