Seminar, Plymouth Business School, 27th April, 2012

Professor Richard Li-HuaFounder and current President of China Association for Management of TechnologyDirector of International Centre for Research, Innovation, Sustainability and Entrepreneurship (RISE) Sunderland Business School University of Sunderland, UK

Integration of Western Management with Chinese Philosophy

Robert Morrison5 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.

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 (722–481 BC) as a military general serving under King Helü of Wu, who lived c. 544–496 BC.

CAMOT 2010, Shanghai, China

Sharp contrast China’s innovation and innovation

strategy Ancient Chinese Philosophy Art of War by Sun Tzu – Ancient

Strategic Management

This presentation covers:

CAMOT 2010, Shanghai, China

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

CAMOT 2010, Shanghai, China

China has been regarded as “a learning society” while West has been a “talking society”- John Naisbitt, Author of China’s

Megatrends

The political and economic consensusThe New Right and economic liberationThe watchwords – privatization, liberation and deregulationMinimizing the state activitiesMaximizing private sector activitiesThe “irrational” sphere becomes stronger while the “rational” sphere become weaker“the flowed business model”

In the West

2012 is still eventful – after Libya issue now Syria issue Government incapability deepened Two party systems/three parties – difficult to have agreement on strategic decisionDowngrade of credits rating, in US, some countries in Europe makes the economy even worseDebt crises in Europe threaten very future of Euro99% against 1% and occupation of Wall StreetUn-employment rate increase is a big issue

In the West (continued)

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

In China:

Market economy with Chinese characteristicsUnwavering government commitment“A political counter model” to “Western modern democracy”Central command economyIntegration of western technology and Chinese soft capacity Learning anything better and more advanced from west for China’s technology capacity building “Market in exchange of technology” Technology transfer based innovation Indigenous/home grown innovationInnovation with Chinese characteristics

In China (continued):

CAMOT 2010, Shanghai, China

Section TWO:China’s innovation and innovation strategy

Chinese Premier, WenjiabaoKeynote speech at Cambridge“Two invisible hands”Adam SmithMoral SentimentsThe Wealth of Nations

China’s secret: Sharing Wisdom between West and East

China’s High-speed Train

Innovation Leads to the Future

CAMOT 2010, Shanghai, China

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 R&D 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

China’s Innovation Facts

CAMOT 2010, Shanghai, China

China’s 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

China’s Ambition

CAMOT 2010, Shanghai, China

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 “Haier’s washing-machine sold to Sichuan” Rapid product innovation

Features of Chinese Innovation at Enterprise Level

CAMOT 2010, Shanghai, China

China’s 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

The Challenges

CAMOT 2010, Shanghai, China

R&D 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)

Strategic Steps

CAMOT 2010, Shanghai, China

Interview with “Nature” from US China’s 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

Major Concerns from West

CAMOT 2010, Shanghai, China

Section THREE:Ancient Chinese Philosophy

Management is an activity with well established theories and practice in the history in the mankind21st Century problems vs 20th Century methodsModern 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 MBAThe Arts of War by Sun Tze has a significant conceptual influence to modern management

Western Management vs Chinese PhilosophyPerspective of 21st Century

American style is embedded in the process of self-actualization Self-achievementManagement by objectives and driven by result

Chinese philosophy is embedded in harmonious Environment Discipline yourself first and then manage others

American Management vs Chinese Philosophy

Chinese and West Value Comparison

Chinese WestKnowledge 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 thinkingA perception of interrelatednessIntuition, emotionHarmony, moderation and balanceRelationships are keyObjective information is less important

Think in logical and linear patternsMeasurementAccountabilityLine of reasoningScientific method

Individual/Group

Value and recognition of group performanceFocus on a sense of contribution to group effort

Value individual performanceFocus on task accomplishment and competence

Managerial attitude

Internal orientation External orientation

Not a single homogeneous workIt draws wisdom from many philosophers, some even contradictoryThe classical period of Chinese philosophy extends from earliest time through Confucius to the end of Qin DynastyIt was the period of great originality and creativity in China

Chinese Philosophy – Hundred Schools

Chinese management concentratesPersonal and governmental moralityCorrectness of the social relationshipJustice 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”

Leading Schools and Strategic Value of Ancient Chinese Philosophy

Confucius is one of the most influencing figures in ancient Chinese philosophySelf-disciplinary first and then manage people Qiji, anren, zhiguo, pingtianxiaFocus on educating people rather than managing peopleGreat impact on behavior of Chinese peopleAnalects 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 civilizationIt has become mottos

Confucius Philosophy

He developed his philosophical idea of personal development by following natureHe recommended its application to politicsDao Te Ching – 81 chapters (37+44), explaining his theory of natural thinking, natural laws, social phenomena and Wu Wei philosophyWu 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”.

Wu Wei Philosophy by Lao Tzu

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 otherEverything has both yin and yang aspectsThere 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

The Value of the Yin-yang Philosophy

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

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).

“Let’s Win without Fighting”“Art of War”

First Chapter: Designing a Strategy

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

By the way (dao)

I mean the effects of night and day, of good and bad weather, of winter’s cold and summer’s 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.

By haven (tian)

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

By earth (di)

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

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

By command (jiang)

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

1. Rules and regulations, ethics, culture and history,

2. Technology, HR, finance, 3. Corporate governance, CSR

By rule and regulations (fa)

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.

Win over your enemy/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.

Compete against your rivals

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

Winner in the 21st Century

The Carpenter and the Oak Tree

Integration of West Management with Chinese Philosophy

@2009 CUALA RLH

Dr Richard Li-HuaSalford Business School

Salford University

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