Fri, 12 Aug 2011 23:30:59 GMT
For at least the last 10 years, growth rates and margins for many Western owned businesses in China have increased at a pace that masked systemic strategic and operational issues in China,
While some global executives would confide that they were concerned about both strategic and operating problems, managing growth and reaping good margins was considered good enough.
As a result of increased labor and commodity costs without any commensurate pricing strength, growth rates appear to be slipping and margins are diminishing bringing leadership strength and organizational models under critical analysis.
Recently, we have been asked for our thoughts and observations on organizational and executive effectiveness in China. What works in China? Is it different? Is there a right organization for China? What is the right mix?
As a result of recent work for a valued client expanding in China, a team of Taplow partners and Directors led by Sheldon Zhou and Steve Schrenzel investigated “Leadership Lessons” from China. A thought leadership document outlines the following key themes. This piece can be found Here.
- What are the general principles for leading in China?
- Organizational structures?
- Executive leadership practices?
- CEO lessons?
China presents the mysteries and dichotomies of a civilization that has had nearly 4,000 years of continuous history and the world’s oldest civilization. No wonder that China’s business and organizational structure requires close examination and an acute awareness for success. Having skilled and perceptive Taplow consultants on the ground in China gives us the ability to provide the insights necessary for our clients to be successful and responsive to the marketplace.
As we examined key issues, consistent patterns for executive effectiveness, leadership behaviors, and organizational structure became apparent. As well, common miss-steps were evident.
Perhaps one of the most consistent observations was the attempt to design an organization around the strength, or more often weakness, of an executive leader who was part of starting what appeared to be a successful China strategy. Scale does matter and the leader who can get a business off the ground by apparently doing all the right things may not have planned or developed strategies to keep the business growing after the initial take off period.
Western organizations seem to place too much emphasis on the mix of expats and local employees rather than looking at the skills and experience of possible leaders. Remembering that prior success does not always equal future success, dealing with similar prior situations can give confidence of proven ability to lead to new outcomes.
Western companies also tend to hire executives for China who look like their currently successful executives without considering the unique challenges of the multiple levels of relationships that have to be managed in Chinese business culture.
Understanding the nuances of Chinese business culture and how to adapt takes time and thoughtful effort to assure effectiveness. The hierarchical nature of business relationships in China often resembles traditional family relationships. Top down – bottom up management is not being routinely practiced. “Face” is still a huge issue and may not change for many generations.
In preparation for our project we reviewed “Sun Tzu and the Art of Business”. One key point that resonated with us when we did this research was the following:
Develop your character as a leader to maximize the potential of your employees.
“When one treats people with benevolence, justice and righteousness, and reposes confidence in them, the army will be united in mind and all will be happy to serve their leaders.”
It takes a special kind of leader to implement these strategic concepts and maximize the tremendous potential of employees. Sun Tzu describes the many traits of the preferred type of leader. The leader should be wise, sincere, humane, courageous, and strict. Leaders must also always be “first in the toils and fatigues of the army”, putting their needs behind those of their troops. It is leaders with character that get the most out of their employees.
A few closing thoughts and observations:
a) Starting, turning around or enhancing performance in a China operation takes a combination of experience and skills usually only acquired by working in the market and most often appears to be a combination of local and international talent
b) Organizations need to be structured around providing excellence in customer care, not around the strengths and more often weaknesses of a leader or leadership team.
c) The differing views of multiple audiences and constituencies in China are inherently complex and need to be managed on an integrated basis.
d) Similar complexities exist in many markets and experience in China can be a framework for training of other leadership roles in emerging markets.
Perhaps one reason why our efforts in China (and elsewhere) are successful is that we have learned how to bring Eastern and Western cultures together. Some of our associates have over 30 years of experience helping companies grow in China. We stand ready to assist you with your local or international talent needs.
Click Here to review our presentation on this subject.
Copyright ©2011 Editor