Chinese management reform: shunned by the West - Bill Fischer

Bill Fischer

When Western companies discovered new management systems in Japan like Just-In-Time in the 1980s, they applied it fast,despite initial misgivings.But when they see now new ways of decentralizing corporate structures in Tencent and Haier, they are reluctant to take it serious, says Haier-watcher and IMD professor Bill Fischer, co-author of Reinventing Giants: How Chinese Global Competitor Haier Has Changed the Way Big Companies Transform at AP.

AP:

Haier has tried to speed up product development by using the internet to ask potential customers for suggestions and feedback, an approach taken by Chinese smartphone brands. The company says a new appliance can go from drawing board to market in as little as one year, down from more than three. 

Zhang (Ruimin)'s management changes "are more impressive than we see anywhere," said William A. Fischer, a professor at the IMD business school in Switzerland who has followed the company for a decade. He co-wrote the 2013 book, "Reinventing Giants: How Chinese Global Competitor Haier Has Changed the Way Big Companies Transform." 

"He trusts his employees to play more of a leadership role," said Fischer. 

Fischer said a group of European executives he took to Haier headquarters two years ago refused to believe its decentralized style could work. 

"I was struck by how daring Haier was in their thinking. And the people I was working with were hostages to very traditional ways of working," said Fischer. 

The strategy appears to be paying off. Last year's profit rose 12.8 percent from 2015 to 20.3 billion yuan ($2.9 billion) on revenue that increased 6. 8 percent to 201.6 billion yuan ($29.3 billion). Transaction volume on its business-to-business and consumer-oriented internet platforms rose 73 percent to 272.7 billion yuan ($39.6 billion).

More on Haier at AP.

Bill Fischer is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

Are you looking for more experts on innovation at the China Speaker Bureau? Do check out this list.

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How Haier reinvented itself four times - Bill Fischer

Bill Fischer

Haier is for years the largest white-good manufacturer, not only in China, but worldwide. IMD professor Bill Fischer explains how the first Chinese company to go global did so by unconditional focussing on their customers, in Strategy Business. How Haier reinvented itself four times in 30 years.

Bill Fischer:

Much of the credit for Haier’s success accrues directly to Zhang Ruimin, the company’s CEO since 1984. Throughout the 30 years of his tenure, his sharp focus on customer service leadership has given the company consistency even as it propels Haier through dramatic changes. Zhang was the leader who proposed that Haier should never see itself as just a manufacturer of products, but instead as a provider of solutions to its customers’ problems. In the earliest years, that meant bringing new levels of quality and reliability to Chinese products. Later, it involved increasingly sophisticated forms of customization and new types of services. Through its simplicity and continuity, this principle has given all employees a reliable compass with which to make decisions, even in the face of disruptive market challenges such as new technologies or new competitors. 

To accomplish its goal, Haier has consistently cultivated and rewarded high-quality talent; the company has been a magnet for many of China’s most capable engineers and businesspeople. This approach is especially noteworthy within China’s cultural and social context. In a country that was just beginning to emerge from a Maoist mind-set when Zhang took the helm, the idea that success depended on the entrepreneurial efforts of individuals, recognized for their differences and rewarded for their achievements, was relatively unfamiliar. Haier has thus invested a great deal, especially for a Chinese company, in training its employees and demanding innovative ideas. 

Despite the success it has achieved, and its willingness to stick to one core value proposition (and one CEO) since the 1980s, the company has never become complacent. Zhang established early on that changes would be a way of life, not soon-to-be-completed episodes that must be traversed. “The only thing that we know is that we know nothing,” he says. “If you don’t overcome yourself, you will be overcome by others.” 

Indeed, Haier has reinvented itself at least four times. The first reinvention, in the 1980s, was the decision to differentiate the company by the quality of its products. The second, in the 1990s, was the adoption of consumer-responsive innovation, starting with (but not limited to) products for particular customer needs. The third, which took place in the 2000s, was the reorganization into a bottom-up structure, in which self-managing teams led decision making. The fourth, going on today, is the reinvention of Haier as a truly Internet-based company, open to the world in a way that few other companies have attempted, let alone realized.

Much more in Strategy Business.

Bill Fischer is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers´ request form.

Are you looking for more experts on branding at the China Speakers Bureau. Do check out this list.

Bill Fischer is also the author of Reinventing Giants: How Chinese Global Competitor Haier Has Changed the Way Big Companies Transform
 

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China's innovation is lagging - Bill Fischer

Bill Fischer

China's innovating power is not really moving forward, tells IMD-professor and author Bill Fischer in the Shanghai Daily. "You need also the ability to commercialize ideas as well."

Bill Fischer:

 My sense is that, if I was to do the ranking myself, what I would say is that China's ranking in innovation has pretty much remained unchanged over the past few years. 

What that means is that China certainly has the inventive capacity to be one of the frontrunners and leaders in innovation. But more inventive capacity isn't really enough. You need not only the ability to create new ideas, but the ability to commercialize those ideas as well. 

And the reason I think China remains steady in terms of its innovative performance is that we have yet to see a real breakout in terms of large global organizations which have brands and channels of distribution to be able to really commercialize the inventions that can be made here... 

And if you look at the science and PhD students, a lot of research in the West relies on these Chinese graduate students. They are doing it in the United States and Europe. 

So by every indication, we know there's incredibly creative talent in this country. There always has been. China's history as an inventor is legendary. And you just don't lose that. It doesn't go away. That's one thing. 

But the reform has been going on for 33 years. When we look at who are the big global players, we see Haier, Huawei, Lenovo, maybe two or three others you could speculate about, depending on what your perspective is.

More in the Shanghai Daily.

Bill Fischer is a speaker at the China Speakers Bureau. Do you need him at your meeting of conference? Do get in touch or fill in our speakers' request form.

Bill Fischer is the author of a recent book on innnovation,The Idea Hunter: How to Find the Best Ideas and Make them Happen.

How to become successful in executive education - Bill Fischer

Bill Fischer

IMD-professor (and formet CEIBS dean) Bill Fischer wrote up on his weblogwhat makes him successful in executive education, answers on questions from CEIBS professor Ellie Weldon. "One of the few advantages that I have found to be associated with aging,  however,  is that sometimes people ask for your opinions, and then actually listen."

Bill Fischer, on one of the key factors that made him succeed:

A belief that my role is no longer to be the “purveyor of truth” but rather, instead, to serve as a “smart person facilitating smarter people.” This is not easy. It defies decades of professorial prerogatives and requires a willingness to cede control over the classroom experience to the participants, but it is a sober and realistic admission that the people in our executive education classrooms know a lot, are smart people, and should own the experience. My role, then, is to put them into a position where it is their program and not my own.That is not to say that I abdicate my responsibilities as an "instructor" or as someone whose job it is to observe many different managers and businesses, and to draw opinions from these experiences, but the emphasis should be on applying this knowledge to move the participants' conversations forward, rather than "dazzling" them with what I think that I know.

Much more on Bill Fischer's weblog.

Bill Fischer is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch, or fill in our speakers' request form.

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Can China become a leading global innovator? - Bill Fischer

Bill Fischer

After becoming the shop floor of the world, China is now focusing on its position as global innovator. IMD-professor Bill Fischer examines in Forbes whether those ambitions can become true. Counting patents is certainly not the way.

There is a big difference between creating new ideas [creating value] and capturing the value associated with these new ideas.FT.com/alphaville reports that many of the Chinese patents counted are utility patents, and do not represent significant new contributions to knowledge [in other words, not value creation]. Furthermore, at least one observer on the scene has reported that Chinese government authorities are encouraging the disaggregation of patent applications in order to boost the numbers of patents being produced. This month, INSEAD’s Global Innovation Index for 2011 ranked China just 29th overall in innovation [Switzerland #1, U.S.A. # 7]. According to this analysis, although China’s innovation benefits from growing market and business sophistication (for a middle-income economy) and a lively financial sector, there are disadvantages associated with social infrastructure deficiencies relating to innovation-related institutions and human-capital development. It would appear that while China might be becoming more productive in generating patents, these may not necessarily translate into economic impact. On the other hand, China ranks #1 as the world’s top “importer of R&D,” which would be appropriate for innovation strategies based on value-capture...

Increasing the “rate” of inventive activity will only get you so far. In order to make it big on the global stage, a nation’s firms need to be able to capture the economic value associated with that activity. This means investment into organizational design on a global scale, establishing brand visibility, building worldwide supply chains and channels of distribution, and all of the rest of the complex set of activities that go into making a successful multinational corporation. Two years ago, Rebecca Chung and I reported that experienced Chinese managers participating in CEIBS’s [the China Europe International Business School] EMBA program appeared considerably less optimistic about China’s prospects as a global innovative leader than did a similar set of their peers in IMD’s EMBA program [66% of the 53 CEIBS' EMBAs saw China's near-term future as "staus-quo", while only 18% of their IMD peers agreed with this assessment]. Perhaps what the Chinese managers saw, that outsiders in their enthusiasm missed, was that increasing inventive activity might well be the easiest part of successful innovation, and that it is indeed a less glamorous and more managerial long march to becoming able to realize the value associated with that increased inventive activity.

More in Forbes.

Bill Fischer is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch.

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Chinese firms listen better than its competitors - Bill Fischer

Bill Fischer

Competitors from China are becoming better, IMD-professor Bill Fischer concludes in Forbes. Cheap labor and competitive pricing are replaced by a far greater asset: listening better to their clients. Fischer zooms in on UnionPay, China's only electronic retail network.

Huawei, Lenovo and Haier are some of the familiar Chinese names in global competition, but more are getting ready, Bill Fischer discovered at the UnionPay headquarters, talking to Mr. Chai Hongfeng, Director and Executive Vice President.

He is an urbane, sophisticated, cosmopolitan executive, who could have stepped off of the cover of Forbes, and he summarized the company’s managerial needs with four words...:

“Study, Standards, Cooperation, and Innovation”: this is not about price. Nor is this the image of the traditional State-Owned Enterprise dinosaur.What this is, instead, is a recipe for learning more and faster than their competitors. This is all about building a smarter organization.

Some 16 years ago, Peter F. Drucker, the management gurus’ guru, predicted that the next big managerial innovation would come out of China, and we’re still waiting. Perhaps, somewhat unexpectedly, it might just be the ability to listen better in an effort to construct faster-learning organizations? In the spirit of that sentiment, my good friend William Keller, the former CEO of Roche China, and a long-time Shanghai resident, has observed that in the competition for learning about how to do business in this brave new world of globalization, Western firms travel the world telling others “how to do it”, while Chinese firms travel the world “listening to the lessons of others.” Keller asks: “Who do you think will learn faster”? Granted “listening” is not necessarily the same as “learning”, nor is either a guarantee for building an effectively “smarter” competitor. But, listening and learning do strike me as excellent starting points for competing in the ideas business.

More about his findings in Forbes.

Bill Fischer is a speaker at the China Speakers Bureau. When you need him at your meeting or conference, do get in touch.

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Idea hunters go to Beijing - Bill Fischer

Bill Fischer

When you are looking for smart ideas in China, go to Beijing, rather than Shanghai or Guangzhou, writes IMD business professor Bill Fischer of technology management in the Business Times, exploring the strategy for idea hunting.

Interested in Web 2.0? Go to Silicon Valley. If you go anywhere else, you are reducing the likelihood of finding a good new idea. Why? Because people with Web 2.0 ideas congregate around Silicon Valley; so, there is a higher probability that you will discover a good new idea there, than, for example, Paris, or Milan, or even Shanghai.
Can't leave China, and still interested in Web 2.0? My suggestion is to go to Beijing's Zhongguancun district. There, you will be more likely to 'bump into' someone from Beida, Tsinghua, or the Chinese Academy of Sciences, or even alumni of Founder, Stone or Lenovo who will be interested in your ideas and might have ideas of their own, or know somebody who does.
You are less likely to find that sort of information in Shanghai or Guangzhou, and certainly not in smaller cities. Good idea hunters know this and they, like any 'big-game' hunter, go where the action is in order to enjoy the best chance of 'hitting their targets'.

Read here his full article.

Bill Fischer is a speaker at the China Speakers Bureau. When you need him at your meeting or conference, do get in touch.

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More education not always better - Bill Fischer

Bill Fischer by Fantake via Flickr

Getting more patents and PhD's are not the ways to improve education, writes IMD professor Bill Fischer in Business Week. Getting faculty in with business experience is more important to improve the now lagging education in China.

IMD's 2010 World Competitiveness Yearbook reports that China's education system has been in decline since 2007 in terms of how well it meets the needs of a competitive economy, presently ranking 44th out of 58 countries—below countries such as Greece (43), Kazakhstan (35), and Qatar (14). Finland, on the other hand, which ranks 1st in this category, is a notable reference point that people speak about with respect to how its educational offerings in engineering, technology, and innovation are having a direct impact on the economic vitality of the country. Do you ever hear the same about China?

If pushing out more graduates, patents and PhD's does not help, what is the problem, according to Bill Fischer?

During my sojourn in China as an academic and as president and dean of the China Europe International Business School, I was frequently struck by the thought that China's scarcest resource might just be "practically experienced" university faculty. Far too many of the Chinese professors I observed in other schools (CEIBS insisted that any faculty had the ability to interact competently with executives) had never actually worked for a living; they were lifelong academics, and everything was "theoretical" for them. This simply does not work if the goal is to transform new ideas into practical solutions. And it is particularly devastating if we are speaking about business schools and their role in preparing a "managerial class" for competing on the world stage.

More in Business Week, where Bill Fischer explains this is not only a problem in China.

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Foreign managers increasingly hired in China - Bill Fischer

Bill Fischer by  Fantake via Flickr

The chances of foreign managers to get hired in China, even for Chinese firms, increases, but on the condition they speak Chinese, says IMD-professor Bill Fischer in an interview with CNN.

Bill Fischer, a professor at Switzerland's IMD Business School who has studied China's changing business climate, said that Chinese firms are increasingly interested in hiring foreigners with experience in international financial markets and building global brands.

"The skills that go along with managing on a broad platform -- those are skills that they haven't had to develop in the past. But as they want to build their own brands, they want to do that as well," he told CNN.

"The jobs are there, but they're there for people who not only are experienced, but have some language skills, particularly if you're working for a Chinese corporation," he added.

More on hiring trends in China in CNN.

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Bill Fischer is a speaker at the China Speakers Bureau. When you need him at your meeting or conference, do get in touch.

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2010: the year of shifting gears - Bill Fischer

Bill Fischer by Fantake via Flickr

IMD-professor, and former CEIBS dean, Bill Fischer, describes on his weblog the fast changing speed in China's development. While China has made huge steps forward, at the end Fischer still sees huge barriers to real change in China:

The conundrum underlying all of this is that there is lots of creativity in China today. The art scene; fashion; sculpture; music; cinema. China is awash with creativity. But, if you look closely, what you see is that this innovation is individual innovation, not organizational innovation. What sets the eBays and Amazons and Apples apart is that they are all “organizational” innovation. The iPod experience could not have been designed by one person; it needed a team, and a diverse team at that. Same is true behind most of the big innovations of recent times. Yet, what is it about Chinese organizations that they turn out to be so much less innovative than the sum of the people who are brought together under that organizational structure? Is it that the command & control approach to management which has characterized thousands of years of Chinese history is still hard to break? Or, is it Confucian respect for hierarchy and relational prerogatives? Is it not enough trust; or too much trust? Is it not enough diversity? Or, is it something else?

More at this weblog with a too long name.

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Bill Fischer is a speaker at the China Speakers Bureau. When you need him at your meeting or conference, do get in touch. 

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