The 36 stratagems - 5 - Loot a burning house

The stratagem I’m going to present to you is from the book The 36 stratagems, a Chinese masterpiece that can be of interest to anyone involved in conflict situations: in business, politics and private life.

Literal translation

When the enemy is in danger, take advantage of the opportunity to attack to win.

Interpretation of the stratagem

The stratagem suggests taking advantage of the opponent’s weak position to attack him and seize his assets with limited risk and without major resource deployment.

If the opponent is prepared for the attack and his forces are firmly united, the offensive will not be easily successful; on the other hand, if the opponent is distressed by internal struggles or concerned about external pressures and people’s morale is low, then the situation is favourable for an offensive.

But what can you do when you cannot discover weak points from which to take advantage? Then there are two possible directions: the first is to wait patiently for the opponent to expose a vulnerable side, and the other is to induce him to reveal his weakness.

More in detail, the stratagem can be interpreted from two, very different points of view: when it’s your opponent facing trouble or when you are coping with the fire, and want to find out if there is a chance to take advantage of the situation.

In the first case, the stratagem is to take advantage of the chaos in the enemy ranks to gain substantial advantages. The difficulties that the opponent might face are generally of three types:

1. Internal difficulties, are when there are conflict situations and/or people act for interests other than the general ones. The situation must be analyzed carefully, for when the rot is outside the fish one can smell it, but if it is inside detecting it can be complicated;
2. External difficulties, when the opponent is concerned about a threat that diverts attention and energy. An external attack may be hostile action by another state (or a competitor): if the enemy strikes while inside there is no adequate defence the double assault is unlikely to be sustained;
3. Difficulties are due to internal turmoil and external threats. Then it is possible to gain dominance by employing limited resources and taking moderate risks.

When YOU are facing the fire, the stratagem is to cope with the adverse situation with a mindset geared toward turning the crisis into an opportunity, capitalizing on your resilience (see below Strategies for coping with the stratagem).

Type of stratagem according to the original classification

The stratagem is included among those employed to achieve victory when circumstances are already favourable and/or when one is stronger than the opponent, limiting the energy employed to prevail.

The one who adopts this stratagem does not only intend to win but is determined to capitalize on all the advantages of the situation, putting the opponent definitively out of the game.

Historical examples of application

Springs and Autumns represent an era in Chinese history that extends from 770 BC to 476 BC.

During this period, local military leaders in the service of the Zhou dynasty engaged in internal warfare to assert their hegemony: seven major states emerged from the struggle, which remained in conflict with each other for a long time.

In this scenario unfolds the story I am going to recount, in which the states of Wu and Yue fought each other for long until the king of Yue, Gou Jian, was defeated by the king of Wu, Fu Chai; the latter wanted to humiliate his opponent and, for this reason, spared his life and forced him to work as a cleaner in the royal stables.

After three long years, during which he was forced to “sleep on wood and chew gall,” Gou Jian was allowed to return to lead his country as Wu’s vassal; in the seven years that followed, the economy of the Yue state flourished again despite the heavy tribute paid to Wu, and they could prepare their revenge and avenge the defeat they had suffered ten years earlier.

The favourable time came years later, when the murder of Wu Zixu (Wu’s valiant general) was followed by a drought in which even “crabs and straw were dried up”; discontent was spreading and the people’s morale was also plagued by Fun Chai indulging in dissolute court life despite the famine.

Gou Jian, who had corrupted the king’s minister with women and money, was no stranger to the severity of the situation.

Turmoil and riots were not long in coming, which further weakened the state and created the conditions for a final attack; the favourable moment came when Fu Chai went north at the head of his army to ally with the powerful states of the Central Plains.

The defence was reduced to a meagre garrison, and when Gou Jian unleashed a mighty offensive the State of Wu was quickly annihilated.

On his return home Fun Chai asked for clemency, but the alternative Gou Jian left him was a death sentence or suicide: he chose the latter.

Modern examples of application

Before we look at some examples of application, I invite you to read the chapter that Master Sun Tzu devotes in the Art of War to assault with fire. Here is a passage from it that will help you as you go on:

There are five types of assault with fire: throwing it against people, against supplies, against equipping, against stores, against weapons.

The use of fire demands precise instruments and suitable weather, i.e., dry and windy; generally, in an assault by fire it is imperative to follow closely the situation provoked.

It is essential to keep in mind that fire is meant to cause confusion and disorder in the opposing ranks, not to destroy what can later be looted.

Organizational context

In the Rome branch of a leading provider of ERP software to businesses, the main figures were the sales manager, Mario, and the customer service manager, Luigi; both had territorial responsibility for central and southern Italy and reported hierarchically to their homologues based in the Milan headquarters (Paolo and Carlo, respectively).

The relations between the four were quite nuanced:

• Mario accused Luigi of a lack of customer focus and argued that this was a constraint on the growth of an all-too-healthy business;
• Luigi often found himself in trouble because of the highly innovative software that had been hastily launched two years earlier, and seemed to produce more bugs than turnover;
• relations between Paul and Mario were not so good, since Paul had always considered Mario a competitor more than a valuable member of his staff;
• Carlo had been occupying the Italy customer service manager position for ten years now and staying in the same role he had no opportunities for growth. He had long wanted to gain experience in sales as well, so he worked alongside Giovanni, the country manager, to create the position of business manager in Rome, which he aspired to fill;
• Carlo viewed the tensions between Mario and Luigi and the existing technical difficulties as excellent fuel for his ambitions; and for this reason, he never really worked to help Luigi overcome the problems.

The situation came to a head when the country manager travelled to Rome to meet a key account, who complained about the poor quality of technical support and confidentially told him over lunch about evident conflicts between Mario and Luigi.

A week after the Rome visit, the company was notified of the new organizational chart, which included the creation of the position of business manager for the Rome office:

• Mario was relocated to Milan to manage sales in a specific minor market segment;
• Paolo felt assured by Mario’s new role;
• Carlo moved to Rome to occupy the new position, reaping the benefits of the fire he had actively helped keep alive.

Partnership/Alliances

In 2013, the financial press followed extensively the acquisition of a controlling stake in Telecom Italia, the main national phone operator (now TIM after the merger by incorporation with its mobile phone subsidiary of the same name), by Telefonica, its Iberian competitor.

Telecom Italia had high debts, eroding margins and an evident difficulty in reconciling shareholder remuneration with the investments required by market competitiveness.

Telefonica had taken advantage of the trouble of the prey to launch its attack; the Spanish were aware of conflicts between the shareholders and part of the board, since the Chairman of Telecom Italia had publicly stated that he had learned of the transaction from the press: a clear sign of distrust and imminent turnover, which occurred in the following days.

It is interesting to remark that Telefonica had successfully led the attack despite a debt level that was higher than Telecom Italia’s: backed by the support of its country’s banking system and the Spanish government, the Iberian company had been able to carry out the acquisition despite its financial difficulties.

This is an example that shows how market difficulties are often accompanied by internal conflicts or a management team behaviour let’s say “not completely focused on business.”

Business management

We see now a rather common behaviour in companies that hold prominent or even dominant positions when changes (usually technological, in other cases strategic) occur in the market to weaken their leadership.

In this case, the stages that organizations go through seem to follow an established pattern, which I summarize below:

• the company lives the market leadership in serenity, running the show;
• technological and/or strategic changes occur, induced either by a competitor or by market demand, in any case by an external driver;
• two parties are established within the organization: those who want to embrace change and ride it out are opposed by those who think that nothing will change and do not want to lose market share;
• in the meantime, competitors harvest their early successes and gain market shares that are not mind-boggling but are, nevertheless, thought-provoking. Margins begin to decline but not to an extent that generates an alarm. Shareholders continue to collect dividends (perhaps not so generous, but you can’t have everything…), and happily go along still thinking it risky to challenge the status quo;
• employees who work in contact with the market (salespeople, product managers, service technicians, customer service, etc.) send louder and louder signals, heard only when a product/service’s turnover falls to alarming levels or margins are reduced to zero;
• at this point, internal conflicts erupt.

Now the company is vulnerable to attack, because it is weaker in the market and victim of internal tearing; this is the stage at which the “partner” can intervene, looting valuable assets with limited resources.

What can we learn from this?

A company that does not face change can hardly survive, because market difficulties are inevitably accompanied by internal conflicts; and because the illusion that dominant positions can last forever has never been beneficial to competitiveness.

Negotiation

The negotiation arena is a territory where it is quite common to ” loot a burning house.”

It happens quite frequently that one party negotiates from an unfavourable position; for example, when it comes to concluding a sale rapidly for liquidity needs or to obtain a professional assignment under highly competitive conditions.

In such cases the other party, after gathering information about the vulnerabilities and defining its strategy, can manage the negotiation by employing limited resources to plunder the opponent’s territory (as is the case of the cartoon strip).

Conflict among nations

The stratagem is widely used to weaken rival nations by employing different tools: i.e. spying, funding opposition or extremist political parties, disinformation, influencing economic choices.

An example is given by the Soviet Union’s invasion of Afghanistan, in December 1979.

Afghanistan was a politically unstable country; only in 1973 a coup had overthrown the monarchy, and in 1978 a putsch led Nur Mohammad Taraki to power.

Taraki’s presidency was marked by conflicts related to his attempt to transform Afghanistan into a communist country; riots occurred throughout the country and much of the army deserted.

In April 1979, the president was overthrown and killed by a rival within the same party, Hafizullah Amin; in this context, mainly generated by Soviet meddling, the U.R.S.S. staged a Blitzkrieg, an attack that led to a very rapid and conclusive military action.

In a scenario of great instability in the whole region, the U.R.S.S. surprisingly conveyed about ten thousand soldiers with two hundred and fifty aeroplanes to Afghanistan under the pretext of helping Afghanistan suppress guerrilla warfare and defend the capital’s security; they deployed them in Kabul and quickly brought the whole country under control.

Extraordinary events and financial markets

As it happened, for example, with the Russian Federation’s invasion of Ukraine in 2022 or with the renewed demand for goods and services when the Covid-19 pandemic gave a reprieve to economies around the world, there can be an unusually high demand for raw materials and energy; a demand that market supply can often meet but that speculation rides on, generating extraordinary profits for the companies involved.

Other interesting cases are the profits recorded by pharmaceutical companies in the development of vaccines used to fight the pandemic from Covid-19 or pharmaceuticals to fight AIDS; cases in which the looting of state treasuries was evident.

To conclude, the financial markets provide an emblematic example of the application of the stratagem; in “bear” periods, that is, when stock or commodity prices turn downward, trading firms sell short (that is, without having material availability of the asset in question), pushing prices to lows to then buy again.

You have understood that speculation does not seem to be sensitive to blood.

In love

Can courtship escape the stratagem? Is it possible to loot, by taking advantage of the fire, in the case of a love affair?

One of the two persons concerned can be the object of the desires of a third person, who decides to actively work to take advantage of existing divergences in the couple or help create them; the purpose is to slip in when much energy has now been consumed in the conflict and the object of desire, exhausted, can finally find peace in arms ready to welcome him/her.

In general, it is important to remember that people facing difficult situations are more fragile and vulnerable; taking advantage of this can be easy.

Key factors in the implementation of the stratagem

The execution of the stratagem always requires a careful analysis of the situation; understanding the roles of the players and the relationships between them is vital for deciding ways and timing to generate or feed the fire: and when to plunder.

Once again, patience rather than speed of action seems to be rewarding; as we will see in the next paragraph, timing also plays a key role, because the fire can reach those who feed it and embroil them.

The emotional factor also plays a crucial role, because the person who decides to apply the stratagem must tolerate the idea to act to damage others; although it is always possible to find very good reasons to justify looting, living with the idea of yourself as a person who sets or takes advantage of a fire may not be comfortable.

The Risks

We have seen that in the Art of War, Master Sun Tzu recommends following the triggered situation closely. He adds:

Setting fire to the opposing camp, be ready to act immediately; but if the enemy troops remain calm in the midst of the fire, do not rush in and wait.

When the flames have reached maximum vigour, take advantage of them; if you cannot, hold back.

Much of the risk involved in applying the stratagem lies precisely in this proximity to the fire; keeping a close eye on the situation while simultaneously maintaining a safe distance can be quite complex.

Another key aspect is the analysis of the situation, which must be conducted free of emotion and without mistaking one’s desire for reality.

What are the risks? Here are a few:

• mistaking as wildfire a straw fire, that exhausts its strength quickly and cannot generate panic;
• underestimating the ability of the opponent to overcome divisions when common interests or their safety are threatened (e.g., when it is an entire organization or nation under attack);
• attracted by the idea of the advantages that looting can provide, conduct a rough analysis of the situation thus getting timing and execution wrong.

Possible strategies for coping with the stratagem

We have seen different applications of the stratagem; several strategies can be employed to cope with them, even simultaneously.

Let’s look at the most immediate ones:

• Do your best to bring together people around you; in the family, in the workplace, in your social environment. There is a passage in the Shijing, the oldest known collection of Chinese poetic texts, that goes like this, “Brothers may fight within the domestic walls, but outside they will defend themselves together from the enemy”. Unfortunately, antagonisms and internal conflicts weaken businesses and nations, giving opponents the side for hostile attacks. It is then useful to recall Jia Lin’s commentary on Master Sun Tzu’s thought, “If governors are human and equitable, sharing prosperity and adversities with the people, the soldiers will be faithful and one-minded with the government’s aims”;
• Dissimulate difficulties and make your opponent unaware of your weaknesses: if you are strong show yourself weak, if brave show yourself fearful, if wise show yourself foolish. Deprived of reference points your opponent will spend energy in identifying strategies to attack, and will lose momentum;
• Do your best to avoid negotiating when you have time constraints or lack of resources: the pressure of your needs may be manifest and lead you inevitably to be plundered;
• Work to get governments to limit the profits that companies make in responding to social problems, as in the case of pharmaceuticals for Covid-19 or AIDS, or as a result of war events that generate wild speculation, as is happening today for energy companies; in such cases providing for extra profit taxation can at least limit an unfair wealth distribution;
• Learn to overcome conflict through cooperative negotiation. Seeking shared solutions will benefit the building of relationships, especially with people we interact with regularly;
• Learn to carefully analyze situations and pay attention to other people’s point of view. You may ask yourself some helpful questions:
  • Who is aware of my difficulties or weaknesses?
  • Who is not aware of them can uncover them?
  • Who can take advantage of the situation and damage me?
  • How and when can they conduct the attack?
  • Who can help me in case of difficulties?
• This last question invokes an aspect that is very close to my heart because it helps to face many stratagems: the building of the network. As you can see from watching everyday life, people, organizations and nations that are intent on enhancing their resilience cannot give up relationship building: because nobody can manage on his own.

Now, a challenging question: what is the best mental attitude when you have to cope with fire?

I will tell you my thinking by recounting a personal experience.

In my professional life, I faced job loss twice, a fire that could have harmed my family’s future. Well, on both occasions I did my best to strengthen my resilience, taking care to turn the crisis into an opportunity and give myself to the plunder by capturing the benefits of the new situation.

How?

Simply by following an unconventional strategy, doing my best to:

• analyze mistakes to find beneficial aspects in them;
• turn a defeat into an energetic desire for revenge;
• welcome disaster as an incentive to improve, seeing difficulties as a time for transformation.

This enabled me to overcome difficulties and change my life, developing my work as a business coach and capitalizing on my management experience.

Something out of the ordinary? Not at all!

I simply adopted with determination a mindset that I later found to be effective in putting out fires and that today is central in my personal and professional life.

A final thought

Between us, we can confess that looting a burning house is not so edifying; especially when the opponent is in a desperate condition and the situation calls for action to put him out of the picture permanently.

We love thinking to be like the Duke of Song, who in 638 B.C. refused to attack the enemy army while was fording the river, because “the ancients did not profit from obstacles and bottlenecks,” but they were fighting loyally.

Consider also that, as Du Mu argues in commenting on the Art of War, “it is allowed to take advantage of the chaos that reigns among the enemy to beat them”; also keeping in mind that leaving the opponent a single opening can prove fatal, because he might reorganize and pose a threat in the future.

Now, one final question: was the Duke of Song absolutely right?