Cho-yun Hsu is the University Professor Emeritus of History and Sociology at the University of Pittsburgh. Before he began his teaching career there in 1970, he was Chairman of the Department of History at the National Taiwan University. One of the most distinguished Chinese historians in the academic world, he is the author of more than 40 books and 100 articles in Chinese and English, including Ancient China in Transition: An Analysis of Social Mobility, 722-222 B.C. (1965), The Han Agriculture: The Formation of Early Chinese Agrarian Economy, 206 B.C.-A.D. 220 (1982), and History of the Western Chou Civilization (co-author, 1988).

Liu: As a distinguished historian, you are known in the academic world for having “revolutionized the field of Chinese agrarian history.” But you also have an audience, especially in China, who know you as a speaker or writer on management and leadership from a historical perspective. How are these two things connected?

Hsu: My study on management and leadership was derived from my own historical observations. I especially emphasize Chinese history because in Chinese history there’s 2,000 years of bureaucracy. I regard two features in Chinese bureaucracy as deserving of our attention as references for our discussion of modern organizations. One is a meticulous procedure to recruit capable persons by means of open contest, and a system to check the performance of incumbent officials. Another feature was a relatively independent body of the “censorial board” to serve the role of watchdog and whistleblower. We may revisit these issues later in our discussion.

Liu: So is leadership one side, and organization or management the other side, of the same coin?

Hsu: To me organization is the institutional side, and leadership is the personnel side. Leadership is the control of personnel. Organization is the institutionalized structure in which to place all those individuals, the slots for a particular set of people. But each set of people has its own personalities, cultural background, and behavioral patterns. No two sets are alike. Hence we have to face both, the structural, functional side, as well as the personal, individual side.

Liu: David McCullough, an American historian who specializes in American presidents, thinks it is very important for a leader to have a sense of history. Do you agree with him?

Hsu: Sure, even the history of the American presidency itself is little more than 200 years old. The United States is a man-made corporate body with a Constitution as the source of its governing authority. Every president has certain roles and functions defined by the Constitution, yet each faces a totally different scenario and a set of different problems, which are not static, but dynamic. Without history you cannot understand the backdrop to a certain scenario. Without this, you cannot understand why George Washington and Thomas Jefferson behaved so differently from Abraham Lincoln, and Lincoln behaved so differently from Franklin Roosevelt, and why Barack Obama and George W. Bush are different.

Liu: You are saying that we should understand history to understand public leaders. But should leaders themselves understand the history to perform better?

Hsu: Sure, and for the same reason. It holds true for business leaders too. A business leader, say the CEO of General Motors or Bank of America, also must take note that he himself is located in the middle of the American scenario of his time. Each of these organizations has a history going back almost 100 years; they have their own histories, legacies, traditions, burdens of the past, and current issues which they must deal with, and they need to foresee what may happen tomorrow or next year.

Liu: Harvard Business School has conducted a study on great American business leaders in the twentieth century, a major finding of which is that their success depended tremendously on contextual intelligence. And from what you said, the historical context should be a major contextual aspect.

Hsu: Yes, and a very complicated part. These contextual situations involve not only the public history or the corporate history, but also the particular actors’ own life history.

Liu: The current US president might be said to have a sense of history. In January 2008, when asked which book he would take with him to the White House if elected, Obama, singled out Team of Rivals. It’s a book about Abraham Lincoln’s leadership during the Civil War authored by another historian, Doris Kearns Goodwin.

Hsu: You’ve hit a very important point. Obama projects himself as another Lincoln. Lincoln completed the first step toward Civil Rights by engaging in the Civil War and liberating the slaves. Being an African-American himself, Obama envisions his mission as completing the work started by Lincoln, which means bringing everybody into security, equal privilege, and equal duty. He purposely shapes himself as a successor to Abraham Lincoln.

Liu: And to what extent they control it.

Hsu: That’s right. Now, in the middle of the current economic crisis, Obama and his generation envision that we are facing another crisis of free-market economy or capitalism, and this is more serious than the previous one. Hence, he vowed that he would dedicate his time to make health insurance and social security better. This has become his mission, for which the people gave him a mandate.

Liu: I was wondering whether a sense of history falls into two kinds: one is healthy and helpful, and the other is unhealthy and destructive. For example, Mao Tse-tung had a great sense of history but did terrible things.

Hsu: Mao Tse-tung mastered tactics and control, to overcome others, to win people over to fulfill his personal ambition, but I doubt he ever had a sense of the value of humanity, or the sense of the meaning of human life. He might not even have understood Karl Marx. The young Marx was full of compassion.

Liu: So actually you are saying that a sense of purpose is more important than a sense of history.

Hsu: That’s right. However, if you have purpose only, you can be bookish or a big dreamer and not able to achieve your goals. In the real world you have to deal with all kinds of irrational problems, and you have to deal with so many different walks of life. You need some skills to be able to handle people, but that should not be an excuse for you to forget or betray cherished human values.

Liu: Yes, but I don’t think “a sense of history” just means learning tactics from history.

Hsu: You can do both.

Liu: Research on business executives shows that the further back you look, the further ahead you can see.

Hsu: There are two things. One is vision. One is lesson. You studied at Harvard, and you know Harvard Business School is well known for its case studies of corporations that succeed or fail. But here is the problem: more often than not, they study the successes. But, to me, the best lesson is learning from failure.

Liu: Do you see a lot of great corporate leaders?

Hsu: Unfortunately, no. Nowadays, shareholders’ stocks are so much more fragmented that nobody can take from a general shareholder meeting a real meaningful discussion. CEOs don’t need to report to their shareholders. Hence the CEO only needs to concern himself with his own annual report; he can then jump from this boat to another to double his salary or get a big bonus which comes from fabricated earnings. This kind of uncontrollable CEO is the basic problem of the current crisis.

Liu: How far ahead should great business leaders be able to see? Why do you choose to say 10 or 20 years?

Hsu: The best leader should be able to see at least one generation into the future. A big corporation like General Motors should be able to look one-quarter of a century into the future. Unfortunately, they didn’t do that.

Liu: As you have observed, CEOs face huge pressures from competitors, Wall Street analysts, stockholders, and so on. So to what extent can they play their role as a leader?

Hsu: There are many kinds of public leaders, political leaders, corporate leaders, and intellectual leaders working and interacting together. They sometimes reinforce one another, sometimes cancel one another out. Foreseeing ongoing change should be the job of intellectual leaders, because political and corporate leaders are busy with how to keep the government running, or how to make the best profit. Looking into the future is not really their full responsibility. Public leaders should assume the task, but they are not trained to do it.

Liu: What is Karl Jaspers’ main message we should pay attention to?

Hsu: In his book The Origin and Goal of History (1953), Jaspers noted that in each of the great cultures, a cultural breakdown had led to a great breakthrough that ushered in what he refers to as the “Axial Age” (that is, the age in which transcendental values were initiated as crucial premises of these cultures). He predicted that there would be a breakthrough into the era of scientific-technological culture within the next century. His insight is meaningful today. The crisis we are facing currently is indeed the writing on the wall that the modern world, which started at the time of Enlightenment, is facing a cultural breakdown.

Liu: Is it like the Club of Rome?

Hsu: We don’t have a name. We meet; we disperse. We try to teach our students, try to speak at public lectures, try to write books, and try to influence. But you know, the American general public does not read. Corporate leaders do not read. George Bush and his men did not read either.

Liu: But Obama reads.

Hsu: Yes, Obama reads.

Liu: If you had the chance to recommend a Chinese book to Obama and other world leaders, which one would you pick?

Hsu: The Analects.

Liu: In your writings, though, you always mention Han Feizi.

Hsu: That’s right. Han Fei, the author of Han Feizi, predated Machiavelli by 1,700 years. Han Fei’s time was the Warring States Period on the eve of unification, resembling what we have today. Han Feizi made the most sophisticated discussion on how to organize bureaucracy, and that is exactly what we are facing now. He tried to persuade leaders to organize a rational machinery for governing the world, instead of governance by individual groups, regardless of whether they were aristocrats, warriors, or rich people.

Liu: So you think Han Feizi is very timely given the current global context. Then why do you recommend the Analects instead?

Hsu: Because in the Analects the main theme is the discussion of human values. Confucius and his students spoke of the principle of interaction between individuals: “Don’t impose on others what you don’t want others to impose on you.” This Golden Rule is about tolerance and coexistence.

Liu: The Confucian Golden Rule is different from its Christian counterpart: “Do unto others as you would have them do unto you.”

Hsu: It is good that you take other people’s positions and want them to do whatever you like, but that means that you may impose your way upon others. That is precisely the American problem. The Americans have been leading the world for such a long time, but nobody has thanked them for it. Their attitude is “My way is the better way. You follow me.” The Chinese believe in not doing unto others what you don’t want others to do unto you. This prevents you from imposing yourself; it’s for toleration.

Liu: It is also interesting that it was in the Song Dynasty that the famous saying: “One can lead a country with half a volume of the Analects” began.

Hsu: That was an anecdote attributed to Zhao Pu, the first prime minister of that dynasty and a bureaucrat, rather than a well-educated scholar. The Analects is a collection of many short statements, and you cannot separate this part from that. What he meant was, if you put only a small portion of ideas of the Analects into practice, you can unify one country in peace.

Liu: Can we say, then, that the Analects is the guiding principle and Han Feizi is the tactics?

Hsu: Yes, exactly.

Liu: Let me get to another big question. As a historian, you have studied a lot of leaders in history. What are the great leadership qualities?

Hsu: I single out three things: vision, courage, and knowledge. To acquire knowledge is the easiest part, especially today—you may always have a good team of advisors and helpers. Courage takes personality. Vision takes wisdom. Not everybody can have the same vision. It’s endowed; it’s God-given.

Liu: The bestselling book Leadership Challenge identified four qualities of the best leaders, which are forward-looking, honest, competent, and inspiring. I think competent here equates with knowledge, and forward-looking is what you mean by vision. What do you think about the other qualities honest and inspiring?

Hsu: Today many politicians lie, and many CEOs cheat. They are not honest. So honesty is a cultural problem. This is what we need most. We should remedy it soon.

Liu: By cultural problem, you don’t mean Chinese culture or American culture?

Hsu: No. I mean the general human culture.

Liu: How about inspiring?

Hsu: That is a skill and also a kind of talent. For instance, Franklin Roosevelt, Abraham Lincoln, and Winston Churchill were good orators. They could use language to persuade and convince others. Ronald Reagan, too, had a reputation for being persuasive but I really don’t feel he deserved this. But he was a great communicator. He could convince people, even by misleading them.

Liu: You are touching on another big topic: how can we train a leader?

Hsu: In the Confucian tradition, it starts with nurturing good habits in daily life: “Sasao, Yingdui, Jintui.” Sasao (sprinkle and sweep) is real action, Yingdui (reply and answer) is conversation by discourse, Jintui (advance and recede) is proper manners. The Confucian tradition would train people with these mundane, yet fundamental, behaviors. Also, Confucius said that learning includes language and ethics. Why does language stand alone? It is a good skill to make people know what you think. Most people today don’t have real training in such a skill. In history, people of good cultural background did receive such nurturing; however, I am afraid that few such nurturing processes are available today. In Confucian ideas, it takes a combination of good manners, solid knowledge, and logical argument to constitute proper rhetoric.

Liu: We were talking about leadership qualities. What do you think of being reflective or introspective? Is that important?

Hsu: It is important. A person needs to take a step back to see what he did yesterday and what he did right or wrong. He needs always to reflect. But he cannot do this alone. You need good people to tell you whether you are doing right or you are doing wrong. That’s why, in Chinese history, the relationship between Emperor Taizong of the Tang Dynasty and his loyal advisor Wei Zheng became such an oft-quoted episode as a leader who was willing to listen, and a subordinate who was not afraid to speak the truth. In reality, though, their interactions were not that coherent. Emperor Taizong was not so willing to listen all the time.

Liu: We had that in Chinese history too. Emperor Wu of the Han Dynasty had Dongfang Shuo.

Hsu: That’s right. But in Shakespeare, you see so many of them. In King Lear, for example, the jester has the freedom to speak, and it is often the jester who reveals the truth, the cruel truth.

Liu: But it’s not institutionalized.

Hsu: In ancient Chinese history, we had the institutionalized Jian Guan, the imperial censor, whose responsibility was to tell the emperor “you are wrong” and who could never be punished for doing so. But historically, there were very few such loyal critics. However, the logic behind such an institution is laudable, indeed.

Liu: And in corporations we don’t have that.

Hsu: We have what is called the whistleblower, but this is not a built-in corporate institution.

Liu: And usually whistleblowers don’t end up well.

Hsu: In America today, shareholders have become fragmented, so there are no real general shareholder meetings anymore. No more general meetings, so no more real board. No more real board, so the CEO has a free hand.

Liu: And auditing can be bought, as the Enron case also showed.

Hsu: That’s right. So government supervision is necessary now. But the American and British law is: if no crime is committed, we don’t barge in and prevent it; we can’t assume people are criminals. Hence nobody supervises American corporations.

Liu: When and how did you start to teach leadership and management with an historical approach to business executives?

Hsu: It was all by accident. In the 1970s when the Taiwan economy gradually took off, one former student of mine married into an entrepreneur’s family. She told them: “My teacher often told us a lot of lessons from history. Can’t we learn from him?” So they invited me to give a talk to the department heads and general managers of their family business. They raised questions and I answered them. Gradually it became a routine lecture series. After one year, the lectures were made into a book. That is how it started.

Liu: Like a consultancy.

Hsu: Like a clinic.

Liu: Do you think a historian is suited to the role of a corporate doctor?

Hsu: I wonder about that too. Nevertheless, I tried my best to look into their problems from theories and cases in history, sociology, and management to analyze their real cases. From time to time I still get emails from some of those who had been in my discussion sessions raising new questions for me to ponder.

Liu: You said a country is like a corporation. Could you elaborate?

Hsu: Well, I think you mean a state and a government. They are similar to a corporation and yet they are not quite similar. The similarity is that both governments and corporations are human organizations. However, a government, whether it is a bigger one like China or the United States or a smaller one like Denmark or Switzerland, is a public structure. The power is commissioned by people to have a great enforcing authority. A business is incorporated; it subjugates itself to public law and government interference. A corporation can thus be dissolved and reorganized, but a government cannot be dissolved until the opposition has reached a critical mass to bring about violent change through revolution. An election in a democratic state may change the body and personnel of governance, but not its basic structure. Business corporations are much more susceptible to change—through bankruptcy or a total reorganization, for example.

Liu: Let’s talk about it from a leadership perspective. What’s the similarity between running a country and running a company?

Hsu: Running a company, no matter how large the company is, has much fewer complications than running a government. But there are similarities. You do need a chief who exercises final authority. You do need a number of assistants as department heads, that is, the division of labor. Among the divisions you do need a chief executive, to run all the daily jobs. So in comparison, the chairman of the board is most like the head of state, and the CEO the government head—those are the two most similar things.

Liu: You once said that a corporation is also a tribe.

Hsu: Yes, because I see that any corporation is smaller and less-complicated than a state, and a tribe is normally at a sub-state level. A tribe is also more intimate, where people know each other.

Liu: If we look at a corporation as a tribe, what’s the implication here for the business leader?

Hsu: Well, using the case I just mentioned, Ford could survive the crisis because the Ford family has a direct vested interest in the company. In other words, even though Ford’s shareholders are scattered all over the place, there is still a hard core that is the Ford family.

Liu: I think you’ve said that in a tribe people are treated as people and you thought that this is a lesson for business leaders.

Hsu: That is how people should be treated, but it is not always what happens.

Liu: In some corporations, people are treated as costs, resources, or capital, but not as people.

Hsu: That’s right. They are not instruments. They are people.

Liu: This is like the state-owned enterprise in China 20 or 30 years ago. So I think we cannot say everything now is better than the past.

Hsu: In Japan not so long ago, a corporation, or gaisha, would never lay people off. In times of trouble, the leader could tell workers, “Now we are in a bad year. We all cut our salaries. We cut more, and you cut less because you are a worker and earn less. Let’s pass the crisis together. When the crisis is over, we will give back your bonus.” For a long time, there were no strikes, because the gaisha was a permanent home. It sent wedding gifts and funeral gifts. It took care of orphans and widows. It was a family-centered tribal system.

Liu: People are saying that the world is fundamentally different from 500 years ago, or 50 years ago. If a great leader from 500 years ago were landed here, what would he do differently?

Hsu: Through different kinds of institutionalized or cultural education, even in the underdeveloped countries of today’s world, people have a kind of conscience that human beings should be treated as human beings and not stratified into different castes or classes. This makes everybody want to be his or her own master. This awareness makes people today more inclined to have a free and fluid—rather than an organized, stabilized, or crystallized—organization. This inclination will change what has been taken for granted about organizations, and what they were supposed to be throughout thousand years of human history.

Liu: So leadership is moving from the old command-and-control style to something more collaborative?

Hsu: Collaboration must involve negotiation. Ideally, at every link of the cluster, there should be two or more upstream links to choose from, and two or more downstream links to choose from. At each link, people ought to have the freedom to choose, and be subjected to other people’s choices too. You must compete with other people to please your downstream partners.

Liu: And we need more leaders because we have more segments of smaller size.

Hsu: Yes, many, many leaders. I call this qunlong wushou, which is from the Book of Changes, meaning “many dragons without the leading one.” We always speak of feilong zaitian, “a gigantic, powerful dragon flying augustly in the sky,” which looks very good but actually is no good. It leads to kanglong youhui, “the arrogant, high-flying dragon being shamed by its failure.” The heterarchical structure is a phenomenon of qunlong wushou so that every single dragon flies his or her own way. By having a free selection of collaborators, with more options, the individual participant may enjoy more options and freedoms than a worker in a gigantic bureaucracy of today’s business world.

Liu: Therefore a heterarchy would provide more flexibility?

Hsu: Yes. With the changes in modern science and technology being very rapid, such a heterarchy may easily adopt new technology by making changes only in certain sections rather than restructuring the entire huge system, as modern industries are compelled to do.