A balanced management seesaw

If in the early days of reform and opening up, business management in China was a blank sheet of paper, then twenty years after the rapid development of the market economy, this blank sheet of paper is filled with answers. In 2002, the tenth anniversary of the founding of "CEConline" magazine, a series of special topics on "Top Ten Management Practices Affecting Chinese Enterprises" were launched. After that, the annual inventory of "Top Ten Management Practices in China" was carried out every year, which has continued to the ninth year. Twenty years after its establishment, "CEConline" magazine has accompanied Chinese managers to grow together, and time and space have changed. Whether it is the high-level management vision required by leaders, or the down-to-earth spirit of hard work required by entrepreneurs, they are all in line with the company. Years grow with each other, and harvest quietly between cultivation.

After reviewing the list over the years, what I have witnessed is the answer sheet handed over by Chinese managers. Although it is a little complicated, three types of management practice development in China can still be extracted from it. The first is to introduce mature management tools or theories from the West into China, with the West serving China, aiming to establish a standardized and modern enterprise management system, such as EVA Value Management, Six Sigma, Balanced Scorecard, Cost Management, Customer Loyalty Management, etc.; second, the changes in the market ecological environment in which the enterprise is located, and the response requirements for managers, such as crisis management, emotional intelligence management, brand reconstruction, social responsibility, establishing a market-oriented corporate culture, creating a learning organization, etc. The third is the proactive and proactive adjustment by managers, such as overseas mergers and acquisitions, development of emerging markets, various innovations and organizational changes, etc., to create new opportunities for the next development of the enterprise.

From 2003 to 2011, in the change of the list of "Top Ten Management Practices", the development context of three types is vaguely visible: the first type, that is, the type of practice related to the introduction of management tools, has gradually faded out; The third category, the type of practice related to actively exploring new opportunities, is increasingly occupying the list; and the second category is the part of management that constantly adjusts its own decision-making in response to the market environment. practice.

This context emerges from the list, reflecting that Chinese companies have gone through the process of becoming obsessed with Western management tools, immersing themselves in the application and execution level, to comprehensive decision-making with a greater overall view and market awareness, and then to learning to climb higher and higher Three management evolution stages of looking into the distance and seeking development.

This also happens to verify the "Three Variables Theory of Management" by American management scientist Harold.J.Leavitt. In his famous book "Management Psychology", Levitt pointed out incisively that all management practices can be summarized as the interaction between three variables. These three variables are exactly: development, decision-making and execution.

The three variables of management are also the three elements that managers should possess. As an excellent manager, one must possess the steadfastness and meticulousness of an executor, the decisiveness and rationality of a decision maker, and the broad vision and rich imagination of a pioneer. The three are intertwined and complement each other. Therefore, the changes in management practices over the past two decades have reflected the trajectory of Chinese enterprises and their managers from growth to maturity. Although the road is winding, it has always moved forward.

Executive management practice - from blind introduction to original and clear source

China is undoubtedly very backward in terms of theoretical research on management disciplines. From Frederick Taylor, the father of classical scientific management, to Peter Drucker, the father of modern management, to management geek Henry Mintzberg, and management pope Tom Peters (Tom Peters) and so on, these books are equal, the famous management masters are all from the West, especially developed countries in North America. Their theoretical research was accompanied by the commercial civilization of the industrial age.

Liu Lan, the former editor-in-chief of "CEConline", pointed out in 2006: "Most management knowledge comes from the West, and knowledge flows from high to low like water." Before opening the gate of reform and opening up, various Western management theories and knowledge developed for nearly a hundred years are like a tide, rushing down from a high place, irrigating the barren land that has been arid for many years.

How did this management knowledge come about? In addition to the theoretical teaching in business school classrooms, more importantly, it is introduced subtly through various management practices of multinational companies conducting business in China. Someone once made an interesting and appropriate analogy: China is a "manager of the United Nations" that integrates all kinds of global management.

Overseas business seniors are also the most convincing and leading teachers of local managers. Most of the managers in China may not have read the theoretical tome of "Principles of Scientific Management" or "The Practice of Management", but a few of them have not bought GE Jack Welch's "Win", Intel Security Dee Grove's "Only the Paranoid Can Survive", IBM Gerstner's "Who Said Elephants Can't Dance", and "Panasonic on Business", until recently Apple's "Jobs Biography", etc., condense the business world Leader's Wisdom Management Bible? Most of them, including some Chinese management pioneers such as Zhang Ruimin and Liu Chuanzhi, directly regard Jack Welch, Konosuke Matsushita and others as life idols.

In the 1990s, the management foundation of Chinese enterprises was very weak. For a long time, the management decision-making model of "slap on the head" and "one word" has hidden the biggest problem behind extensive management and lack of quantitative analysis. Even the most basic sales budget and cost control are often confused accounts, not to mention the quantitative management of employee performance and customer relations. Therefore, when EVA value management system, ERP process management system, CRM customer relationship management system, and balanced scorecard for performance management, these advanced management tools that are synchronized with the world have been introduced into the Chinese market one after another. It constitutes a strong attraction, and it has set off waves of popular trends.

The management has not been activated, and the system will take the lead. For a time, the ethos of managers "speaking of the system" was rampant, and management consulting companies that made systems and sold tools became popular. Of course, this is not a bad thing - after all, launching various management systems can first build a basic platform for modern management for enterprises. However, the use of management tools often gives managers the illusion that they are among the world's advanced ranks, while ignoring the polishing of enterprise management details and the construction of management culture.

Take the EVA value management system as an example. Economic Value Added, is the company's adjusted net operating profit after tax, minus the opportunity cost of the economic value of the company's existing assets. This system creatively links a company's accounting data to stock market returns, and its basic concept is to enable shareholders to earn returns at least equivalent to similar risky investments in the capital markets.

It is not only a financial system, but also a strategic management system covering the whole company. Most of the companies that first launched this system are looking forward to using EVA value management to solve some urgent needs, such as using EVA to motivate sales staff and so on. This kind of thinking is unlikely to achieve good results, because EVA management, in addition to sales indicators, also involves other departments in the value chain such as product research and development, production and manufacturing, and must be combined with the overall strategy of the enterprise. On the other hand, under the premise that the financial system of local enterprises is generally not detailed enough and the transparency is not high, it is impossible to make scientific management decisions accordingly. Therefore, in order to run a successful EVA management system, it is possible to achieve success only by refining and improving financial management, and secondly, having a strategic vision of the overall situation.

Similar to EVA, a management system that seems to have local functions but is actually a global strategy, also includes a customer relationship management CRM system, a performance management balanced scorecard system, etc., are not problems that can be solved by a certain department, but It must be implemented across the enterprise and strategically supported by senior management to be successful.

After 20 years of baptism, most Chinese enterprises have come out of the misunderstanding of blindly launching management systems. They have begun to clarify the source of Western management theories and tools, and realize Western learning as the body and middle school as the application according to the actual situation of their own enterprises. . Therefore, aside from the lack of originality of management theory, in terms of the richness of executive management practice, in the past two decades, Chinese enterprises with strong learning ability are catching up at a rapid speed in the market environment where opportunities are bursting. Today, in some outstanding local enterprises, such as Lenovo, Haier, Huawei, advanced management tools such as CRM, ERP, etc. have become the meaning of the problem, and they have been relatively proficient in operation.

Decision-based management practice—rationality, objectivity, and initiative become the key words

In Levitt's three management variables, execution, decision-making and development are interrelated and interlocked. Decision-making is one of the abilities that managers must have, and its content includes many aspects. For example, when the market environment changes, should the corporate culture be adjusted accordingly? In the face of sudden product quality crisis and brand reputation crisis, how should managers respond? In order to avoid the risk of losing key talents, how to retain and motivate them from the system? How to choose suitable suppliers to build a complete supply chain? How to rebrand when the brand is no longer appealing in the target group?

In the past, Chinese companies often lagged behind in decision-making, and corporate managers only took stressful measures in response to changes in the market ecological environment. Therefore, in China, decision-making used to be a passive management practice. The reason is that the rationality and boldness required by decision-makers are very scarce qualities in a bureaucratic management culture that has long pursued vague decision-making and buck-passing. Because the top leaders of state-owned enterprises were appointed by higher-level authorities in the era of planned economy, most of them knew politics but not enterprises, and they had no technical background, let alone management concepts. Managers are mostly "firefighters" who make up for problems after they have arisen. We are no strangers to such diligent and dedicated managers. This kind of figure can be seen in almost every Chinese enterprise that is under the pressure of survival. For them, it is too early to talk about moving from excellence to excellence, and to talk about everlasting foundations, because the biggest pressure in their eyes is "survival".

Looking around the world, we will find that the number of passive decision-making managers is equal to the number of passive decision-making managers in Western companies or Chinese companies, traditional manufacturing companies, service-oriented companies, high-tech companies, or emerging Internet companies. the largest group. What this group has in common is the pursuit of economies of scale, the reliance on accurate portfolio data, the emphasis on optimal allocation of resources, and the priority of reducing costs rather than expanding revenue (Peters believes that open source is more important than throttling), denying Innovative experiments that can be costly, strict penalties for mistakes at work, etc.

This kind of strict rationalist management practice was once regarded as the highest state of management by Chinese enterprise managers because of its precise and rigorous scientific nature; but now it is considered to be stifling because of its rigid short-sightedness and lack of humanistic color. The biggest drawback of new opportunities for business development.

Fortunately, in the past ten years, following the growth of Chinese enterprises, more and more managers with decision-making ability have emerged: a number of old local enterprises have grown, including Vanke, Huawei, Lenovo, Haier And so on, a group of outstanding local entrepreneurs such as Wang Shi, Ren Zhengfei, Liu Chuanzhi, Zhang Ruimin, etc.; another group of new Internet companies such as Tencent, Baidu, Alibaba, etc. The rise of the new generation of entrepreneurs such as Ma Huateng, Robin Li, Jack Ma and so on was born leader. At the same time, due to the emphasis on and training of leadership and related management qualities, a large number of backbones have emerged in the middle and senior management positions of various enterprises, forming a management echelon that is sufficient for each of them to go forward, which is the future of local enterprises. Sustained development has laid the most valuable talent foundation.

Pioneering management practice - Chinese enterprises are rising globally

Compared with decision-making management practice, pioneering management practice is more proactive and more forward-looking. In the popular words of management academia, decision-making management practice is "doing the right thing", following and responding to the market, while pioneering management practice is "doing things right", leading and attacking the market.

From the list in the past three to five years, we have seen more and more "do things right" -- managers actively adjust their management strategies and directions according to market development trends, creating opportunities for the next development of the company. new opportunities. Such as Lenovo's acquisition of IBM and Geely's acquisition of Volvo; the development of emerging markets by Huawei, Haier, Galanz and other enterprises; various innovations of various enterprises; To stimulate the potential of talents to a great extent; to talk about management with Chinese-style management ideas, the establishment of management culture, etc., can all be included in the category of pioneering management practices.

Chinese people's ability to imitate is recognized as top-notch, and their innovative ability should not be underestimated. Innovation requires not only abundant material and human resources, but also a kind of graceful attitude to be able to handle market competition, which is actually the most lacking quality of local enterprises. In fact, the most convenient and fastest way to make a living in the face of leading competitors is to follow every step of the way. How can we talk about innovation when we are still too busy to take care of ourselves? However, from the list in the past two years, there have been more and more management practices related to innovation. This is because Chinese enterprises have a more graceful mentality and richer experience after entering the stage of "growth" from "survival". After obtaining resources, seek evidence of breakthroughs in various fields of production, operation and management. Behind these innovative practices, there are actually more refined market positioning and personalized marketing, which will certainly create new profit growth points for enterprises in the near future.

The process from Made in China to Made in China is slow, but it has achieved initial results. Companies in different fields such as BYD, Tencent, Huawei, Vanke, and China Merchants Bank are exploring the road of innovation in terms of products, channels, costs, and incentives. Emerging brands such as Meizu and Xiaomi are also getting rid of the shadow of "shanzhai" and realizing independent innovation in product function and appearance design.

The market also provides more opportunities for development. The 2008 financial crisis brought down a number of local small and medium-sized enterprises, but provided those outstanding Chinese enterprises with a rare opportunity to realize their dreams and become global outstanding enterprises. The global financial turmoil this year has caused the market value of many European and American companies to shrink sharply, and international acquisition opportunities are at hand. Xiang Bing, Dean of Cheung Kong Graduate School of Business, once suggested that Chinese companies can use the capital market to raise funds, enlarge their market value, and then negotiate and integrate with giants; Peer-to-peer exchange to promote the globalization process of the enterprise itself.

In the past two decades, Chinese companies have almost occupied the largest share of the global market in the field of low-end light industrial manufactured goods (such as toys, clothing, footwear, furniture and sporting goods, etc.); with the exception of a few companies such as Huawei , In the field of high-end industrial products with high technical content, local enterprises have few achievements. The objective conditions of the global financial crisis have given these companies the opportunity to fully enter the developed markets and high-end industries that used to be highly barrier-free.

The New York Times columnist Thomas Friedman once argued that the world is flat. He believes that the world business arena is flat and everyone is competing at the same altitude. In 2006, "CEConline" magazine once analyzed and concluded that the world is inclined, and Chinese enterprises are in a relatively disadvantaged position in terms of mastering the theoretical knowledge of management and in the ecological environment of market competition.

Five years later, especially after the 2008 financial crisis and the ongoing financial turmoil in Europe and the United States, Chinese companies that were lagging behind have tried their best to catch up and have achieved initial results. Europeans and Americans, who work an average of only four or five hours a day, spend their days leisurely, while Chinese people go all out with their enthusiasm for work almost 24/7. Like the well-known fable "The Tortoise and the Hare", it is clear that the gap between them is narrowing. And this seesaw, which reflects the competition between the management levels of the two sides, has a flatter angle. In the near future, China may still be equal to or even surpass the West.

For pioneering management practices, the most important thing is height—learning to stand high and have a high-level vision. Managers of Chinese enterprises, who are eager to win globally, must first stand at the height of the global market and look beyond China for development; second, they must stand at the height of the entire industrial chain and seek innovation beyond the enterprise itself. Development is not only the development of external markets and global markets, but also the development of new opportunities in the upstream and downstream of the value chain. For example, domestic home appliance companies have built their own channels in order to gain the right to speak; Jingdong Mall combines e-commerce with logistics to optimize and reengineer the supply chain, etc. These are typical cases of pioneering management practices.

2012 will be a year of opportunities and challenges for Chinese enterprises. In the years following this, managers will surely go through a period of difficult exploration in the "pioneering period", along the management path along the way, in the darkness where only a ray of light can be seen. Going through the past is a free and lofty sea and sky - not only can it create a world in developed markets and high-end industries around the world, but also it is very likely to give birth to a new civilization that leads the wisdom of global business management.

Topics for discussion:

1. What do you think are the characteristics of the top ten management practices this year?

2. What do you think is the most important evolution in the management of Chinese enterprises in the past 20 years? Why is there such an evolution?