What the Tao Te Ching Teaches About Leadership and Negotiation (and What Current Research Confirms)

Sun Tzu has his own aisle in every business bookstore. Lao Tzu doesn’t, and that’s a shame: the Tao Te Ching says more about how to lead without wearing yourself out than most of those books put together.

Its eighty-one short chapters, traditionally attributed to Lao Tzu (6th century BCE), although many scholars date the writing to around the 4th century BCE, describe the same pattern of power over and over: power exercised without imposing itself gains more ground, and holds it longer, than power exercised by force.

Current research in leadership and negotiation, by a completely different route, has arrived somewhere similar.

A note on the quotations: all of them come from Jonathan Star’s English translation (2001), and the numbers refer to the chapters of the text.

Water overcomes what’s hard

The most recurring image in the text is water:

“Nothing in this world / is as soft and yielding as water / Yet for attacking the hard and strong / none can triumph so easily.” (chapter 78)

“The best way to live / is to be like water / For water benefits all things / and goes against none of them.” (chapter 8)

Water doesn’t compete with stone. It goes around it, seeps into its cracks, and over time wears it down without ever having forced anything.

It’s a precise description of a kind of power almost never taught in a management manual, because it doesn’t look like the power we default to associating with “leading”: the kind that imposes, that decides from above, that wins arguments.

Leading from behind

On leadership specifically, the text is even more direct:

“He who wishes to lead the people / must walk as if behind them.” (chapter 66)

“The Sage stays low / so the world never tires of exalting him.” (chapter 66)

This is the postulate that pushes hardest against Western intuitions about leadership, where visibility and authority tend to go hand in hand. The Tao Te Ching argues the opposite: the leader who stays behind, who doesn’t claim center stage, is the one the group holds up the strongest.

Organizational psychology has a name for this, and it’s not a metaphor: humble leadership.

What the research on humble leadership confirms

Bradley Owens and David Hekman, in a study published in the Academy of Management Journal (2012), identified, through interviews with leaders, a behavioral pattern made up of three elements:

• Openly acknowledging their own limitations, instead of projecting artificial confidence.
• Publicly crediting others’ contributions, even when they overshadow their own.
• Showing they’re teachable, chasing credit for the idea over credit for having proposed it.

Jim Collins reached a similar conclusion by a different route.

In Good to Great (2001), after a comparative analysis of companies with sustained standout stock performance over years, he described what he called Level 5 Leadership: an unusual combination of extreme personal humility and fierce professional resolve.

Executives with this profile, according to Collins, attributed the company’s success to outside factors and the team, and took personal responsibility for its failures.

The exact opposite of what insecure leadership tends to do.

Collins’s book does have a well-known limitation. Phil Rosenzweig, in The Halo Effect (2007), pointed out that the method of picking companies for their success and then looking for what they had in common carries survivorship and halo bias: the traits are described from an outcome that is already known. Several of the companies Collins highlighted, such as Circuit City and Fannie Mae, collapsed a few years later. Owens and Hekman’s study, which starts from interviews with leaders rather than from companies chosen for their results, offers more cautious support for the same idea.

The best warrior doesn’t fight in anger

The text also describes how power behaves when confrontation is unavoidable:

“The best warrior / leads without haste / fights without anger / overcomes without confrontation.” (chapter 68)

This isn’t passivity in the face of conflict. It’s a concrete way of managing it that researcher Amy Edmondson, of Harvard Business School, has studied under the name psychological safety: the shared certainty within a team that you can voice disagreement, admit a mistake, or propose a risky idea without paying a price for it.

In her foundational study (Administrative Science Quarterly, 1999), Edmondson found that psychological safety was associated with more team learning behavior (asking for help, discussing errors, seeking feedback), and that this behavior was associated with better performance.

The result wasn’t lower performance from “not confronting”, but more collective learning.

It’s the same logic as chapter 68, applied to a real team: overcoming without confrontation isn’t avoiding the problem, it’s solving it without letting it become a battle of egos.

Don’t compete, and no one can compete with you

On negotiation, the most useful postulate is phrased almost as a paradox:

“The Sage does not compete / so no one under Heaven can compete with him.” (chapter 22)

This connects directly with what Roger Fisher and William Ury formalized in Getting to Yes (1981), the reference book on principled negotiation: when two parties negotiate trying to “win” at the other’s expense, the outcome is usually worse for both than when they negotiate looking for an agreement that serves the real interests of each side.

The authors sum it up with a distinction very close to chapter 22: separate the people from the problem, and negotiate on interests rather than opposing positions.

When no one is “competing” to win the argument, there’s no longer a competition to win, and the space that opens up tends to produce better agreements than either side would have reached alone.

How this translates to your own style

None of these postulates ask you to give up making decisions, negotiating firmly, or leading with clear direction. What they describe is where to put the effort:

• In leadership: less on occupying the center of the conversation, more on giving the team room to contribute and get things wrong without fear.
• In negotiation: less on winning the specific point, more on understanding what the other side actually needs.
• In conflict: less on forcing your own position through, more on letting disagreement resolve without escalating into something personal.
• In credit: less on claiming it for yourself, more on making sure others’ contributions are seen.

If you recognize yourself more in the side that yields than the side that competes, the accommodating negotiator profile goes deeper into when that tendency is a strength and when it becomes a cost.

If leading quietly is more your style, the hands-off leader profile follows this same line.

And if you’d rather see the full picture of how you handle disagreement, our negotiation style quiz sums it up in a few minutes.

Sources

• Lao Tzu (trans. Jonathan Star, 2001). Tao Te Ching: The Definitive Edition. Tarcher/Penguin.
• Owens, B. P., & Hekman, D. R. (2012). Modeling how to grow: An inductive examination of humble leader behaviors, contingencies, and outcomes. Academy of Management Journal, 55(4), 787-818. doi:10.5465/amj.2010.0441
• Collins, J. (2001). Good to Great: Why Some Companies Make the Leap… and Others Don’t. HarperBusiness.
• Edmondson, A. C. (1999). Psychological safety and learning behavior in work teams. Administrative Science Quarterly, 44(2), 350-383. doi:10.2307/2666999
• Fisher, R., & Ury, W. (1981). Getting to Yes: Negotiating Agreement Without Giving In. Houghton Mifflin.
• Rosenzweig, P. (2007). The Halo Effect… and the Eight Other Business Delusions That Deceive Managers. Free Press.