Seminar, Plymouth Business School,

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Professor Richard Li-Hua Founder and current
President of China Association for Management of
Technology Director of International Centre for
Research, Innovation, Sustainability and
Entrepreneurship (RISE) Sunderland Business
School University of Sunderland, UK
Integration of Western Management with Chinese
Philosophy

• Seminar, Plymouth Business School,
• 27th April, 2012

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• Robert Morrison
• 5 January 1782 in Bullers Green, near Morpeth,
  Northumberland 1 August 1834 in Guangzhou) was
  an Anglo -Scottish evangelist and the first
  Christian Protestant missionary in China.

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• Sun Tzu, also known as Sun Tze or Sun Wu in other
  translations, was a historical figure whose
  authenticity is questioned by historians.
  Traditional accounts place him in the Spring and
  Autumn Period of China (722481 BC) as a military
  general serving under King Helü of Wu, who lived
  c. 544496 BC.

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This presentation covers

• Sharp contrast
• Chinas innovation and innovation strategy
• Ancient Chinese Philosophy
• Art of War by Sun Tzu Ancient Strategic
  Management

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• Section ONE
• Sharp Contrast between West and China in the last
  30 years

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• China has been regarded as a learning society
  while West has been a talking society
• - John Naisbitt, Author of Chinas Megatrends

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In the West

• The political and economic consensus
• The New Right and economic liberation
• The watchwords privatization, liberation and
  deregulation
• Minimizing the state activities
• Maximizing private sector activities
• The irrational sphere becomes stronger while
  the rational sphere become weaker
• the flowed business model

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In the West (continued)

• 2012 is still eventful after Libya issue now
  Syria issue
• Government incapability deepened
• Two party systems/three parties difficult to
  have agreement on strategic decision
• Downgrade of credits rating, in US, some
  countries in Europe makes the economy even worse
• Debt crises in Europe threaten very future of
  Euro
• 99 against 1 and occupation of Wall Street
• Un-employment rate increase is a big issue

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In China

• After 30 years of class struggle, it has been a
  period of 30 years of harmonious society
• It does not matter if the cat is black or white
  as long as it catches mice.
• Cross the river with a stone
• No argument of socialism or capitalism a
  contrast to We would like to have socialist
  grass rather than capitalist crops 30 years ago
• Integration of prescriptive and emergent
  strategic approach - Pragmatic approach

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In China (continued)

• Market economy with Chinese characteristics
• Unwavering government commitment
• A political counter model to Western modern
  democracy
• Central command economy
• Integration of western technology and Chinese
  soft capacity
• Learning anything better and more advanced from
  west for Chinas technology capacity building
• Market in exchange of technology
• Technology transfer based innovation
• Indigenous/home grown innovation
• Innovation with Chinese characteristics

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• Section TWO
• Chinas innovation and innovation strategy

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Chinas secret Sharing Wisdom between West and
East

• Chinese Premier, Wenjiabao
• Keynote speech at Cambridge
• Two invisible hands
• Adam Smith
• Moral Sentiments
• The Wealth of Nations

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Chinas High-speed Train
Innovation Leads to the Future
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Chinas Innovation Facts

• In contrast to the financial bubbles, Chinese are
  innovating in a uniquely Chinese manner and a
  formidable challenge to western countries, i.e.
  high-speed train system and megliv rail-way
• However, China has been seeking innovation
  framework and implementation strategy for
  sustaining and up-grading its economy
• China took 12.3 of the world total RD spending
  in 2010, second only to the US
• China had 200,300 patent applications in 2008
  alone, which ranks the 3rd next to US and Japan

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Chinas Ambition

• Chinas ambition is to become innovation-oriented
  society by 2020
• A science and technology power by 2050
• From 3I pattern of innovation strategy to
  indigenous innovation
• Innovation with Chinese characteristics

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Features of Chinese Innovation at Enterprise Level

• Technology transfer based innovation
• Innovation on site, not in the laboratory
• Innovation with a focus on costs
• Product features and function tailored to local
  requirement
• Haiers washing-machine sold to Sichuan
• Rapid product innovation

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The Challenges

• Chinas research environment is detrimental to
  individual creativity, too political charged
• Science and technology policy-makers have been
  regarded as overbearing
• Education system in China is based on rote
  learning, tend not to be critical thinkers and
  not to develop independent thinking
• Chinese tradition of deferring to authority is
  not conducive to innovation

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Strategic Steps

• RD has been increased substaintialy
• 2005 1.3 of the GDP
• 2010 2.0 of the GDP
• 2020 2.5 of the GDP, which means the same
  level of several countries of Organization of
  Economic Cooperation and Development (OECD)

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Major Concerns from West

• Interview with Nature from US
• Chinas pro-active acquisition strategy and
  technology purchasing
• From green technology to renewable technology in
  the US
• From air bus technology to manufacturing
  technology in Europe
• Fear of loosing competitive advantages

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• Section THREE
• Ancient Chinese Philosophy

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Western Management vs Chinese Philosophy Perspecti
ve of 21st Century

• Management is an activity with well established
  theories and practice in the history in the
  mankind
• 21st Century problems vs 20th Century methods
• Modern theories of management were developed in
  19th and 20th centuries in the west
• 1st MBA was awarded 100 year ago at Pennsylvania
  University
• Plymouth EMBA Technology Strategy - Featured MBA
• The Arts of War by Sun Tze has a significant
  conceptual influence to modern management

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American Management vs Chinese Philosophy

• American style is embedded in the process of
  self-actualization
• Self-achievement
• Management by objectives and driven by result
• Chinese philosophy is embedded in harmonious
• Environment
• Discipline yourself first and then manage others

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Chinese and West Value Comparison

Chinese West
Knowledge Simultaneous validity of contradictory circumstances embodied in the Tao experience There is no greater truth than what can be objectively measured and tested. The opposite of that shown to be true must be false
Process of thinking Holistic thinking A perception of interrelatedness Intuition, emotion Harmony, moderation and balance Relationships are key Objective information is less important Think in logical and linear patterns Measurement Accountability Line of reasoning Scientific method
Individual/ Group Value and recognition of group performance Focus on a sense of contribution to group effort Value individual performance Focus on task accomplishment and competence
Managerial attitude Internal orientation External orientation
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Chinese Philosophy Hundred Schools

• Not a single homogeneous work
• It draws wisdom from many philosophers, some even
  contradictory
• The classical period of Chinese philosophy
  extends from earliest time through Confucius to
  the end of Qin Dynasty
• It was the period of great originality and
  creativity in China

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Leading Schools and Strategic Value of Ancient
Chinese Philosophy

• Chinese management concentrates
• Personal and governmental morality
• Correctness of the social relationship
• Justice and sincerity
• Chinese philosophy is not a homogeneous work but
  draws wisdom from many philosophers, some even
  contradictory
• Hundred Schools Hundred flowers in bloom and
  numerous philosophers

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Confucius Philosophy

• Confucius is one of the most influencing figures
  in ancient Chinese philosophy
• Self-disciplinary first and then manage people
• Qiji, anren, zhiguo, pingtianxia
• Focus on educating people rather than managing
  people
• Great impact on behavior of Chinese people
• Analects of Confucius (or the Analects), the
  deeds and speeches of Confucius with only 20,000
  words, has been a shining gem in Chinese culture
  and civilization
• It has become mottos

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Wu Wei Philosophy by Lao Tzu

• He developed his philosophical idea of personal
  development by following nature
• He recommended its application to politics
• Dao Te Ching 81 chapters (3744), explaining
  his theory of natural thinking, natural laws,
  social phenomena and Wu Wei philosophy
• Wu Wei Action without Action
• Being soft can conquer the hard
• Resigning before achieving the top of a
  successful career Seek for opening to stick in
  a pin, To be the second best, Stop at the
  right time.

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The Value of the Yin-yang Philosophy

• Yin and yang is used to describe how polar
  opposites or seemingly contrary forces are
  interconnected and interdependent in the natural
  world and how they give rise to each other
• Everything has both yin and yang aspects
• There is a perception in the West that yin and
  yang correspond to evil and good
• Yin and yang way of thinking resembles the
  holistic view

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• Section FOUR
• The Arts of War by Sun Tzu Ancient Strategic
  Management

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Lets Win without Fighting Art of War First
Chapter Designing a Strategy

• To design a strategy of a war, we need to examine
  the belligerent parties and compare them in terms
  of the five fundamental factors
• The first is the way (dao)
• the second, haven (tian)
• the third, earth (di)
• the fourth, command (jiang)
• and the fifth, rules and regulations (fa).

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By the way (dao)

• I mean the moral influence, or that causes the
  people to think in line with their sovereign so
  that they will follow him through every
  vicissitude, whether to live or to die, without
  fear of mortal peril
• To compare with strategic management, this may
  mean the vision, and/or mission statement

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By haven (tian)

• I mean the effects of night and day, of good and
  bad weather, of winters cold and summers heat
  in short, the conduct of military operations in
  accordance with the changes of natural forces.
• To compare with strategic management, this may
  mean external environment, PEST-EL, 5 forces
  analyses, the diamond theory.

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By earth (di)

• I mean distance, whether it is great or small
  the terrain, whether it is treacherous or secure
  the land, whether it is open or constricted and
  the place, whether is portends life or death.
• To compare with strategic management, this may
  mean internal environment, SWOT and/or RBV

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By command (jiang)

• I mean the wisdom, trustworthiness, benevolence,
  courage and firmness of the commander.
• To compare with strategic management, this may
  mean leadership, commitment of senior management
  team, core competence

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By command (jiang)

• I mean the wisdom, trustworthiness, benevolence,
  courage and firmness of the commander.
• To compare with strategic management, this may
  mean leadership, commitment of senior management
  team, core competence

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By rule and regulations (fa)

• I mean the principles guiding the organizations
  of arm units, the appointment and administration
  of officers and the management of military
  supplies and expenditures.
• To compare with strategic management, this may
  mean
• Rules and regulations, ethics, culture and
  history,
• Technology, HR, finance,
• Corporate governance, CSR

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Win over your enemy/ Compete against your rivals

• There is no general/CEO who has not heard of
  these 5 factors. Yet it is he who masters them
  that wins and he who does not that loses.
  Therefore, when assessing the outcome of a
  war/business in a global environment, compare the
  two sides/compete against your rivals in terms of
  the above factors and appraise the situation
  accordingly.

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Compete against your rivals

• Find out which sovereign/firm possesses more
  moral influence/a clear vision, which general/CEO
  is more capable, which side/firm has the
  advantages of heaven/external environment and
  earth/internal environment, which army/department
  is better disciplined, whose troops/teams are
  better armed and trained, which command/manager
  is more is more impartial in meting out rewards
  and punishments and I will be able to forecast
  which side will be victorious.

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Winner in the 21st Century

• Western management and Chinese management are
  equally important
• Western management will not be replaced by
  Chinese management
• Integration of Western management and Chinese
  philosophy
• Those who neglect these two factors will be lame
  ducks

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• The Carpenter and the Oak Tree

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Integration of West Management with Chinese
Philosophy

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Integration of Western Management and Chinese
Philosophy in the Current Economic
Recession Keynote Speech delivered at Cambridge
University Asia Law and Business Annual
Conference on 28th February, 2009

• Dr Richard Li-Hua
• Salford Business School
• Salford University