HEXAGRAM 06: ORIGINAL, INTERPRETATION AND CASES

HEXAGRAM 06 – Sung - Conflict

Above CH'IEN THE CREATIVE, HEAVEN

Below K'AN THE ABYSMAL, WATER

1. The upper trigram, whose image is heaven, has an upward movement;

the lower trigram, water, in accordance with its nature, tends downward.

Thus the two halves move away from each other, giving rise to the idea of conflict.

2. The attribute of the Creative is strength

that of the abysmal is danger, guile.

Where cunning has force before it, there is conflict.

3. A third indication of conflict, in terms of character, is presented by the combination of

deep cunning within and

fixed determination outwardly.

A person of this character will certainly be quarrelsome.

THE JUDGMENT

CONFLICT.

· You are sincere And

· are being obstructed.

A cautious halt halfway brings good fortune.

Going through to the end brings misfortune.

It furthers one to see the great man.

It does not further one to cross the great water.

Conflict develops when one

· feels himself to be in the right and

· runs into opposition.

If one is not convinced of being in the right, opposition leads

· to craftiness or high-handed encroachment but

· not to open conflict.

If a man is entangled in a conflict,

his only salvation lies in being so

· clear-headed and

· inwardly strong

that he is always ready to come to terms by meeting the opponent halfway.

To carry on the conflict to the bitter end has evil effects even when one is in the right,

because the enmity is then perpetuated.

It is important to see the great man,

that is, an impartial man whose authority is great enough to

· terminate the conflict amicably or

· assure a just decision.

In times of strife, crossing the great water is to be avoided, that is,

dangerous enterprises are not to be begun,

because in order to be successful they require concerted unity of forces.

Conflict within weakens the power to conquer danger without.

THE IMAGE

Heaven and water go their opposite ways: The image of Conflict.

Thus in all his transactions the superior man

Carefully considers the beginning.

The image indicates that

the causes of conflict are latent in the opposing tendencies of the two trigram.

Once these opposing tendencies appear, conflict is inevitable.

To avoid it, therefore, everything must be taken carefully into consideration in the very beginning.

· If rights and duties are exactly defined, or

· if, in a group, the spiritual trends of the individuals harmonize,

the cause of conflict is removed in advance.

THE LINES

Six at the beginning means:

If one does not perpetuate the affair,

There is a little gossip.

In the end, good fortune comes.

While a conflict is in the incipient stage, the best thing to do is to drop the issue.

Especially when the adversary is stronger,

it is not advisable to risk pushing the conflict to a decision.

It may come to a slight dispute, but in the end all goes well.

Nine in the second place means:

One cannot engage in conflict;

One returns home, gives way.

The people of his town,

Three hundred households,

Remain free of guilt.

In a struggle with an enemy of superior strength, retreat is no disgrace.

Timely withdrawal prevents bad consequences.

If, out of a false sense of honor, a man allowed himself to be tempted into an unequal conflict,

he would be drawing down disaster upon himself.

In such a case a wise and conciliatory attitude benefits the whole community,

which will then not be drawn into the conflict.

Six in the third place means:

To nourish oneself on ancient virtue induces perseverance.

Danger.

In the end, good fortune comes.

If by chance you are in the service of a king,

Seek not works.

This is a warning of the danger that goes with an expansive disposition.

Only that which has been honestly acquired through merit remains a permanent possession.

It can happen that such a possession may be contested,

but since it is really one's own,

one cannot be robbed of it.

Whatever a man possesses through the strength of his own nature cannot be lost.

one enters the service of a superior,

one can avoid conflict only by not seeking works for the sake of prestige.

It is enough if the work is done: let the honor go to the other.

Nine in the fourth place means:

One cannot engage in conflict.

One turns back and submits to fate,

Changes one's attitude,

And finds peace in perseverance.

Good fortune.

This refers to a person whose inner attitude at first lacks peace.

· does not feel content with his situation and

· would like to improve it through conflict.

In contrast to the situation of the nine in the second place,

he is dealing with a weaker opponent and might therefore succeed. But

he cannot carry on the fight,

because, since right is not on his side,

he cannot justify the conflict to his conscience.

Therefore he

· turns back and

· accepts his fate.

· changes his mind and

· finds lasting peace in being at one with eternal law.

This brings good fortune.

0 Nine in the fifth place means:

To contend before him

Brings supreme good fortune.

This refers to an arbiter in a conflict who is

· powerful and just, and

· strong enough

to lend weight to the right side.

A dispute can be turned over to him with confidence.

· one is in the right,

· one attains great good fortune.

Nine at the top means:

Even if by chance a leather belt is bestowed on one,

By the end of a morning

It will have been snatched away three times.

Here we have someone who has carried a conflict to the bitter end and has triumphed.

He is granted a decoration, but his happiness does not last.

He is attacked again and again, and the result is conflict without end.

06 - CONFLICT

MANAGERIAL ISSUE:

The CEO – The CEO – managing under conflict (internal or external such as litigations)

Hexagram 6 describes a CEO whose corporation will soon find itself in the middle of a great conflict such as a litigation. Here we have a Conflict created by two parties pulling in opposite directions - one using deception and the other using brute force. The CEO knows his cause is just and fair; yet, the I Ching would suggest there are two ways to approach this Conflict:

· When the CEO is arrogant, the fact that his cause is just only nourishes his pride, his worst enemy. And it is this same pride, which will lead him to an open conflict whenever he faces opposition. When the righteous CEO faces opposition he will tend to strike. In the end, he will be RIGHT – DEAD RIGHT.

· When the humble CEO faces opposition, he will tend to negotiate. To him, being right is not as important as saving the corporation to fight another day.

Was Apple right when it sued Microsoft over patents rights? It took years to reach an outcome and little was gained. The costs involved were only a minor part. The worst part was the shifting of the focus which robbed Apple of its strength. Is Apple right in fighting Samsung and Google to the death?

MANAGERIAL LESSON:

The Superior CEO:

a) Is lucid. Lucidity will make him humble. And humility is the proper attitude that will allow him to meet his opponent in the middle. In the case of litigation, such as the case of patent rights, this would mean reaching for an out of court settlement. To fight to the bitter end could be an alternative, but one that would be fatal to the corporation even if the CEO were in the right. A fight to the bitter end would be no solution to any conflict, as the hatred would last forever. An ideal solution could be to find an impartial arbiter. One who would seek an impartial solution to the conflict. An arbiter both parties would find acceptable. To do so the CEO would have to be very clear about his position.

b) Avoids initiating grand schemes because nothing grand can be accomplished in the middle of a fight. This was a great lesson for Bill Gates. It would have been of no use to try and implement grand schemes while in the middle of a fight with the US Department of Justice and so many states.

The I Ching says:

In times of strife, crossing the great water is to be avoided, that is, dangerous enterprises are not to be begun, because in order to be successful they require concerted unity of forces. Conflict within weakens the power to conquer danger without.

c) Faces conflict the same way he should face evil – avoid it from its very beginning.

In the case of one corporation stealing another corporation’s ideas, such as in the case of browsers war, Microsoft knew from the very beginning that they were doing something wrong even if perhaps not something illegal. They probably found resistance from Dell and Compaq and IBM and other software vendors when Microsoft “encouraged” them to install Microsoft Explorer rather than Netscape’s Navigator, the original consumers’ choice. They must have known, based on the same opposition they found from its clients, not matter how weak this opposition was, that this was the beginning of a conflict which would end in litigation. Had they paid attention to this conflict, they would have avoided the suit from the Department of Justice.

In the case of a corporation taking over another corporation, such as in the case of ATT taking over NCR, ATT should have known that it was not possible to merge two corporations that had nothing in common. Such knowledge would have surely avoided conflicts that always arise when forcing the union of two separate corporate cultures.

INVESTMENT ADVICE:

For the investor, the Conflict is an unfavorable Time-Space to invest. The name Conflict points to the difficulties the CEO and his corporation will face.

By itself, (no lines), the Hexagram points to good fortune if the CEO stops halfway:

CONFLICT. You are sincere

And are being obstructed.

A cautious halt halfway brings good fortune.

Going through to the end brings misfortune.

It furthers one to see the great man.

It does not further one to cross the great water.

Conflict develops when one feels himself to be in the right and runs into opposition. If one is not convinced of being in the right, opposition leads to craftiness or high-handed encroachment but not to open conflict.

If a man is entangled in a conflict, his only salvation lies in being so clear-headed and inwardly strong that he is always ready to come to terms by meeting the opponent halfway. To carry on the conflict to the bitter end has evil effects even when one is in the right, because the enmity is then perpetuated. It is important to see the great man, that is, an impartial man whose authority is great enough to terminate the conflict amicably or assure a just decision.

For the investor, a period of protracted conflict is not easy to handle. This is a long term investment.

He should be careful and stay with those investments that are favorable such as lines 1, 3, 4 and specially line 5.

The following two examples are those of corporations under the Conflict Time-Space.

· Netflix, Inc. NFLX under CEO Reed Hastings

· Staples, Inc. SPLS under CEO Ron Sargent

THE LINES

SIX IN THE FIRST PLACE

Managerial Issue: The CEO – managing under conflict (internal or external such as litigation) when it is about to begin.

Managerial Lesson: Be conciliatory.

Managerial Warning: At the first stage of the Conflict Time-Space, the CEO faces conflict (such as litigation) with a stronger adversary at its very beginning.

Managerial Advice: The Superior CEO finds the proper settlement quickly even before the suit begins, especially when the other party has greater economic resources. In this way the CEO saves the corporation from a sure loss of resources. The Superior CEO knows a conciliatory attitude will minimize losses and avoid much damage.

Investment Advice: Invest.

NINE IN THE SECOND PLACE

Managerial Issue: The CEO – managing under conflict (internal or external such as litigation) - in its initial stages.

Managerial Lesson: Be flexible.

Managerial Warning: At the second stage of the Conflict Time-Space, the CEO is about to continue a conflict such as a litigation, against a stronger corporation out of pride or out of poor advice. Worst still, he may find himself dragged into a conflict by hot headed executives who are spoiling for a fight.

Managerial Advice: The Superior CEO knows that to hold on to a given position out of stubbornness, obstinacy or righteousness will surely cause his corporation heavy losses. Pride is the end of all CEOs. He knows that to be flexible rather than to act out of a sense of hurt pride is the best course of action. This is particularly the case when the opposing forces are stronger and the damage would extend to the corporation’s employees. The corporation can still withdraw strategically without loss of honor.

Investment Advice: Do not invest

SIX IN THE THIRD PLACE

Managerial Issue: The CEO – managing under conflict (internal or external such as litigation) – managing an all-out conflict.

Managerial Lesson: Be righteous.

Managerial Warning: At the third stage of the Conflict Time-Space, the CEO decides to fight openly or to proceed fully with the litigation process.

Managerial Advice: The Superior CEO knows that should he intend to fight his way out of a conflict, he must make sure he is in the right position. In the case of litigation over a patent, if the corporation developed the product and it is truly original and not a copy of another corporation’s product, then surely the corporation will win this litigation and any other future litigation. But if the CEO enters into a litigation to take away someone else’s work, then surely Heaven will eventually punish him even if the law does not – such was the case of Microsoft for harming Netscape.

Investment Advice: Invest.

NINE IN THE FOURTH PLACE

Managerial Issue: The CEO – managing under conflict (internal or external such as litigation) – making his move on a smaller opponent for corporate gain.

Managerial Lesson: Be honest.

Managerial Warning: At the fourth stage of the Conflict Time-Space, the CEO sometimes will feel restless because his ego will lead him to believe his corporation is too small for him to manage. The danger lies in that he will be tempted to look for a smaller opponent to raise a conflict with, one with fewer resources.

Managerial Advice: The Superior CEO does what is right. He knows he could easily win, but he also knows that he would benefit from someone else’s work. He will do the right thing and pay for the patent. This would provide his corporation with enough time to dedicate to production rather than litigation, and that will make it a successful corporation. If the smaller corporation refuses to sell, then the CEO should withdraw. By the doing the right thing, he makes sure Heaven will help him in the future.

This is Microsoft when it moved against Netscape. It was so unfair and created such a bad public opinion that everyone moved against Microsoft: the public opinion, the government and (worst of all) HEAVEN itself. In the last years Microsoft has gone nowhere and its future under Steve Ballmer looks very poor. What goes around comes around. Let this be a warning for Larry Ellison of Oracle. “Be bold, be bold, be not so bold”.

Investment Advice: Invest. Expect good returns. The CEO will do the right thing.

NINE IN THE FIFTH PLACE

Managerial Issue: The CEO – managing under conflict (internal or external such as litigation) - with a fair mediator.

Managerial Lesson: Be trustworthy.

Managerial Warning: At the fifth stage of the Conflict Time-Space, the CEO finds that at this time of conflict, fate intervenes and a mediator appears.

Managerial Advice: The Superior CEO is always open to mediation. He should accept and deal with this mediator. He is trustworthy. This, plus the fact that the corporation’s product is indeed originated by their own research department, creates the circumstances for the corporation to win the litigation and be successful. This mediator carries a lot of weight and the probabilities are high the CEO could win his fight.

Investment Advice: Invest. Expect superior returns.

NINE IN THE SIXTH PLACE

Managerial Issue: The CEO – managing under conflict (internal or external such as litigation) – winning an empty victory.

Managerial Lesson: Be moderate.

Managerial Warning: At the sixth stage of the Conflict Time-Space, the CEO takes his corporation’s litigation efforts to its final consequences and wins; nevertheless, it is an empty (Pyrrhic) victory.

Managerial Advice: The Superior CEO knows that the best fight is the one he avoids. In this case the CEO won the conflict or litigation and walked away with the trophy. But the cost was too high and the corporation was left financially exhausted. It was an empty victory and the worst is still to come. There will be more litigation in other courts and other companies will join in the fight against them.

Could this be the case of Apple and its eternal litigations?

Investment Advice: Do not invest.

MANAGERIAL CASES

Netflix, Inc. NFLX under CEO Reed Hastings

Reed Hastings’s Performance: ROI= 4,016.11% Annualized Return= 50.26%

SPY’s Performance: ROI= 32.31% Annualized Return= 3.11%

Reed Hastings has been CEO and founder since 1998 and took Netflix public on May 2002. Since then, he has been able to outperform the SPY proving his previous Time Space was very favorable.

Because he has been CEO for so long, we asked the Oracle for his future Time Space. It is the Conflict.

Points the investor should consider:

1) THE HEXAGRAM

HEXAGRAM 06 – Sung - Conflict

The upper trigram, whose image is heaven, has an upward movement; the lower trigram, water, in accordance with its nature, tends downward. Thus the two halves move away from each other, giving rise to the idea of conflict.

The attribute of the Creative is strength that of the abysmal is danger, guile. Where cunning has force before it, there is conflict.

A third indication of conflict, in terms of character, is presented by the combination of deep cunning within and fixed determination outwardly. A person of this character will certainly be quarrelsome.

CONFLICT. You are sincere

And are being obstructed.

A cautious halt halfway brings good fortune.

Going through to the end brings misfortune.

It furthers one to see the great man.

It does not further one to cross the great water.

2) THE ADVICE

Heaven and water go their opposite ways: The image of Conflict.

Thus in all his transactions the superior man

Carefully considers the beginning.

The image indicates that the causes of conflict are latent in the opposing tendencies of the two trigram. Once these opposing tendencies appear, conflict is inevitable. To avoid it, therefore, everything must be taken carefully into consideration in the very beginning. If rights and duties are exactly defined, or if, in a group, the spiritual trends of the individuals harmonize, the cause of conflict is removed in advance.

3) THE LINES:

0 Nine in the fifth place means:

To contend before him

Brings supreme good fortune.

This refers to an arbiter in a conflict who is powerful and just, and strong enough to lend weight to the right side. A dispute can be turned over to him with confidence. If one is in the right, one attains great good fortune.

4) THE MOVING HEXAGRAM

HEXAGRAM 64 - Wei Chi - Before Completion

This hexagram indicates a time when the transition from disorder to order is not yet completed. The change is indeed prepared for, since all the lines in the upper trigram are in relation to those in the lower (1). However, they are not yet in their places. While the preceding hexagram offers an analogy to autumn, which forms the transition from summer to winter, this hexagram presents a parallel to spring, which leads out of winter's stagnation into the fruitful time of summer. With this hopeful outlook the Book of Changes comes to its close.

THE JUDGMENT

BEFORE COMPLETION.

Success.

But if the little fox, after nearly completing the crossing,

Gets his tail in the water,

There is nothing that would further.

The conditions are difficult. The task is great and full of responsibility. It is nothing less than that of leading the world out of confusion back to order. But it is a task that promises success, because there is a goal that can unite the forces now tending in different directions. At first, however, one must move warily, like an old fox walking over ice. The caution of a fox walking over ice is proverbial in China. His ears are constantly alert to the cracking of the ice, as he carefully and circumspectly searches out the safest spots. A young fox who as yet has not acquired this caution goes ahead boldly, and it may happen that he falls in and gets his tail wet when he is almost across the water. Then of course his effort has been all in vain. Accordingly, in times "before completion," deliberation and caution are the prerequisites of success.

Staples, Inc. SPLS under CEO Ron Sargent

Ron Sargent’s Performance: ROI= 43.55% Annualized Return= 3.89%

SPY’s Performance: ROI= 21.77% Annualized Return= 2.10%

Ron Sargent has been CEO since February of 2002. Since then he has been able to outperform the SPY.

Because he has been CEO for almost a decade, we asked the Oracle about his future Time-Space. It is the Conflict.

Points the investor should consider:

1) THE HEXAGRAM

(Same as Above).

2) THE ADVICE

(Same as Above).

3) THE LINES:

Nine in the second place means:

One cannot engage in conflict;

One returns home, gives way.

The people of his town,

Three hundred households,

Remain free of guilt.

In a struggle with an enemy of superior strength, retreat is no disgrace. Timely withdrawal prevents bad consequences. If, out of a false sense of honor, a man allowed himself to be tempted into an unequal conflict, he would be drawing down disaster upon himself. In such a case a wise and conciliatory attitude benefits the whole community, which will then not be drawn into the conflict.

4) THE MOVING HEXAGRAM

HEXAGRAM 12 - P’i - Standstill (Stagnation)

This hexagram is the opposite of the preceding one. Heaven is above, drawing farther and farther away, while the earth below sinks farther into the depths. The creative powers are not in relation. It is a time of standstill and decline. This hexagram is linked with the seventh month (August-September), when the year has passed its zenith and autumnal decay is setting in.

THE JUDGMENT

STANDSTILL.

Evil people do not further

The perseverance of the superior man.

The great departs the small approaches.

Heaven and earth are out of communion and all things are benumbed. What is above has no relation to what is below, and on earth confusion and disorder prevail. The dark power within, the light power is without. Weakness is within, harshness without. Within are the inferior, and without are the superior. The way of inferior people is in ascent; the way of superior people is on the decline. But the superior people do not allow themselves to be turned from their principles. If the possibility of exerting influence is closed to them, they nevertheless remain faithful to their principles and withdraw into seclusion.

THE IMAGE

Heaven and earth do not unite: The image Of STANDSTILL.

Thus the superior man falls back upon his inner worth In order to escape the difficulties.

He does not permit himself to be honored with revenue.

When, owing to the influence of inferior men, mutual mistrust prevails in public life, fruitful activity is rendered impossible, because the fundaments are wrong. Therefore the superior man knows what he must do under such circumstances; he does not allow himself to be tempted by dazzling offers to take part in public activities. This would only expose him to danger, since he cannot assent to the meanness of the others. He therefore hides his worth and withdraws into seclusion.