Stratagem 8:The Stratagem of Sowing Discord.
“I Use the enemy’s spies to work for you and you will win without any loss inflicted on your side.”
—From The Thirty-Six Stratagems
As companies lean less on factories and machinery for their competitive advantage and more on people, the talent battlefront is becoming more important. Your ability to compete increasingly
depends on how well you develop, retain, and recruit employees. Of these three, the last offers a dual opportunity because when you aim your recruitment efforts at your competition, your success not only strengthens your advantage, it weakens your opposition.
In the high-tech sector competing through recruitment is commonplace. In January 2002, for example, after database software maker Informix Software lost eleven employees to Oracle, it launched a legal defense attempting to secure a temporary restraining order that would prevent Oracle from recruiting more Informix employees. The tactic failed. That same year, another software firm, Borland International, launched a similar effort against Microsoft.
The company had lost thirty-four programmers to Microsoft over a thirty-month period. The company was struggling to emerge from financial trouble and the loss of key employees was, in the words of Informix’s CEO, “like we’re in the desert, and Microsoft is stealing our water bottle.”16
In the competition for talent, momentum is more important than size. When Google picked up speed in 2005, programmers began switching their loyalties. In July of that year, the head of Microsoft’s Interactive Services division, Kai-Fu Lee, left Microsoft for Google, setting off a well-publicized volley of lawsuits between the companies. Microsoft sued Google, claiming Lee was in violation of a one-year non-compete agreement. It wanted to restrict Lee from setting budgets, salaries, or guiding research for Google in China because Lee had headed Microsoft’s China research initiatives. Google countersued.
The two companies eventually negotiated an agreement with undisclosed terms and called off their suits. But Google continues its strategy of luring away Microsoft talent. It established an office in Kirkland, Washington (six miles from Microsoft headquarters) to court discontented Microsoft talent. The strategy seems to be working. Steve Berkowitz, the head of Microsoft’s online unit, sees the talent threat as a top priority. “Microsoft is no longer the primary place for technical talent,” he said in a New York Times interview, “If there is a superstar, Google will be on their minds.”17
Coca-Cola Sows Discord in Venezuela
In 1996 Coca-Cola outsold Pepsi in almost every market in the world. In Latin America, Venezuela was the one country in which Pepsi enjoyed a lead. Venezuela was a particular source of pride for
Pepsi. Pepsi had outsold Coca-Cola in the country for almost fifty years. Its sales were approaching four times that of Coca-Cola’s. But in August of that year, Coca-Cola turned this situation around overnight by applying the stratagem of sowing discord.
Pepsi’s Achilles’ heel was Embotelladoros Hit de Venezuela (EHV), the sole Pepsi bottler and distributor in the country. Despite its long history, Pepsi’s relationship with EHV was tenuous.
Contrary to industry practices, Pepsi held no equity in EHV. Previous requests by EHV for additional investment from Pepsi went nowhere. So Coca-Cola embarked on a campaign to achieve
two things:
- To induce its adversary’s agent (EHV) to work in its favor.
- To use the relationship with EHV to topple Pepsi’s dependence on EHV.
Fifteen hundred years earlier, Zhou Yu, a warlord, achieved the first goal through manipulation (by planting a false letter) and the second goal indirectly (by tricking his opponent to destroy his own critical dependence—his generals). Coca-Cola’s method was simpler yet equally effective. Coca-Cola planned to turn Pepsi’s agent not through trickery but through entering secret talks with EHV
aimed at convincing that company to switch its allegiance. In late August 1996, Coca-Cola and EHV reached an agreement under which Coca-Cola would buy 50 percent of EHV and invest additional
money into building its Venezuelan business. The talks were so well hidden that Pepsi was taken by surprise upon hearing that a fifty-year relationship had come to an abrupt end—that Pepsi’s
only bottler, in the only Latin American country in which Pepsi held a lead, had suddenly switched sides.
Pepsi fought to hold on to its 45 percent market share. It said it would “exhaust all legal remedies in Venezuela and in the U.S.”18 It scrambled to find a new partner. But almost overnight, eighteen bottling plants switched over to Coca-Cola, and 4,000 blue Pepsi trucks were painted over with Coca-Cola’s red logo. Pepsi’s market share dropped to almost zero, and Coca-Cola’s 10 percent share shot up to 50 percent.
Sowing Discord in Cao Cao’s Camp
During the Three Kingdoms period (220–591 ce), the warlord of Wei kingdom, a famous poet turned general named Cao Cao, was hunting down a rival warlord, Zhou Yu. Cao Cao was a powerful leader and a highly regarded strategist; he commanded an army superior to Zhou Yu’s. Cao Cao’s advantages were sound, and he should have easily defeated Zhou Yu. But he had one critical dependence, which Zhou Yu toppled using the stratagem of sowing discord.
Cao Cao’s critical dependence derived from having grown up on the central plains of China. He and his army were unfamiliar with water and incompetent at waging war in it. Although they consistently routed Zhou Yu’s army on dry land, their success ended at the rivers and riverbanks of a wetland area in which Zhou Yu had established his last defense.
Cao Cao had Zhou Yu cornered but was incapable of delivering the final blow. To turn this stalemate in his favor, Cao Cao hired two generals experienced in water-based warfare to train and lead his troops. In a short time, Cao Cao’s men would learn enough about swimming through rivers and navigating marshes to complete their victory. The generals became Cao Cao’s critical dependence. With them, he would succeed. Without them, success was unlikely.
While his men trained, Cao Cao decided simultaneously to pursue a diplomatic solution. One of his advisors happened to be an old friend of Zhou Yu. So Cao Cao ordered this advisor to visit
the enemy and try to convince Zhou Yu to surrender.
After trekking to Zhou Yu’s camp, the advisor received a warm welcome from his old friend. Zhou Yu ordered a banquet served with large quantities of food, wine, and laughter. He refused to talk of politics, only old times, giving the advisor no opportunity to discuss surrender.
At the end of the night, Zhou Yu invited the advisor to sleep in his tent. The two settled into bed, closed their eyes, and calmed their breathing. But neither fell asleep. After some time the advisor, believing Zhou Yu actually had fallen asleep and hoping to salvage something of his trip, quietly searched for something of value to bring back to Cao Cao.
He found a letter on Zhou Yu’s desk with shocking information. The letter appeared to be from the two generals Cao Cao had hired to train his troops in water-based warfare. In the letter, the generals affirmed their allegiance to Zhou Yu and their intentions to capture Cao Cao and sabotage his siege. The letter, of course, was a forgery planted by Zhou Yu to sow discord in Cao Cao’s camp.
The next day the advisor reported the news to Cao Cao, who ordered the two generals executed. With them died Cao Cao’s only chance of victory.
