Of course diplomacy is key. But even if you're talking to a CEO there is value in being diplomatically truthful.

Even a CEO can't bend physics for example. If they want you to make you transmit information between two sites faster then the limit is still light speed no matter who asks or how great your team is. Other situations are often a bit more flexible, e.g. how long a team will take to do a thing, but also not infinitely flexible. If you know at the best time it took your team 5 days to do a thing, but usually it takes 8, then promising your CEO to do it 2 is both ridiculous and a lie. Telling them that the best you ever did when all the stars aligned was 5 days, and then telling them how the company could help to make the stars align even better is probably the better route.