Lesson from Chinese Management Approach

In general business in asia really a challange from western prospective. There are multiple reasons and I am sure you might aware of it. Due to cultural and histrorical background every country in Asia having their own style of doing business. 

Due to economic success of china I was interested in discovering their strategy of business and tried to understand how does it differ from Western countries. I learnt that China appear to have differnt management thinking compare to western management style. Its state owned enterprises are regulated giants that are experimenting with Western management pratices.

I agree that, china's best private companies are not yet pioneering new management approach like some Japanees company 50 years ago such as Toyota. Chinese strategy tought me

• Responsiveness
• Improvisation
• Flexibility
• Speed

These ability give them a critical edge. They have learned to manage the business differently in state captalism, runway growth, massive urbanization, fierce competition and endemic curruption.

Chinese manage the team differently. Culturely they see the members of their organizations as family but in return management demand lot from them. If we see the begining of all big chinese brand, they started from no or minor business background such as many of the leader was previous trader, teachers and clerks etc. although growth strategy is seems pretty clear 

• Build alliances constantly
• Develop new product prolifically
• Venture into unrelated business all the time

Businesss leader in china also having two different approach. One view that they have to create their own ecosystem and they will have to build everything such as give basic skills in recruts, suppliers, govt ties, capital sources, school for employees kids etc. Best example is Hai Di lao

Their second view is, they have to be as adept as managing the state as they are at managing operations. Because they knew that they have to tap officials to get licences to operate, lease space, find workers, import materials, and raise capital. However they learned to make the system work for them

Unique management practice
I have learnt that chinese management display trading mentality, confucian preference for simple organisational structures  with everyone reporting to top and fear within team. However most often they have high aspiration and opennes to experimenting with different technics.

Simple organisational structure: Generally leadership are notorious for controlling company from top but in the same time they are highly dicentralized not interm of heirachy but inform of autonomy and accountability. For example Midea (second largest home applince maker) and Haier (dominant home appliance maker). There are thousands of minicompanies directly reporting to Chairman of Haier unlikely to western management beleive that multiple reporting lines protect them from risks and uneven product standard.

Companies in China operates in two time frames (present and future) and appoint seperate autonomous and responsible manager for both the objectives.

1) Management insure that they are executing today business and 
2) Preparing for double in size, between 3 to 5 years


Chinese executives make decisions in an ad hoc manner and are micro managers. Employees are entrepreneurial and ready for rough and tumble which lead the companies for high employee turn over.

Localizing value propositions: Business preferences goes locally for example Sany who build low end construction machine and acquired German Putzmeister. 

They hire the manager base on their local networking in the business sector to develop the business. Which make them stay ahead in competition and gave them economy of escale to go abroad. Another example, construction company ready to pay premium price for the cement which dries quickly rather choosing durability of cement.

Developing product quickly: Skills of chinese companies rely mainly on downstream industrial competences. They dont involve the upstream creation of technology, original designs, selection of materials and design of equipment, customer knowledge or market suvvy. 

Ability of chinese company to launch new offering with exisiting technology is impressive for example Midea, Wanxiang (making bicycle part), KFC China and Goodbaby. Goodbaby produce 100 new product on average each quarter which helps them to beat rivals.

Chinese companies generally keep engineering and manufacturing close, often colocating them(smes). They trend to acquire new technologies either throught formal licensing deal or by reverse -engineering. They keep physical work of experimentation and production in house. 

Nonmarket strategies: Building relationship with govt and its institutions is critical in china; it takes more partners to get anything done there than anywhere else in the world. Smat companies work to understand state agency charts and the underlying power structures in every provice. The trick is in knowing which officials to approach for what and where their interests lie so that mutually beneficial deal can be put together

In general its looks like bribe or curruption but in country context its not the same, it is about helping govt to achieve their goal in return getting other benefits such as market, tax solution etc. There are plenty of companies as an example, Neusoft, Wanxiang, Alibaba etc.

Asian business is all about adaptation to the context, china is one example. In contrast western management work hard to stay lean, methodical and nimble. Hence, in International business todays managers has to know how to balance top-down approach to bottom-up strategic approach.

10/10 Principle of Business Success

I know that business transformation is not so easy. It’s important for an organization to embrace the change as per market demand. There are many companies this day that has fall into the pit of stubbornness. And, modern managers like you know that if business does not mold as per market demand then it’s easier to lose competitiveness & market share which may resulted to slow death.

So I thought to talk about 10/10 theory which may help you in organissational development

10 principles

These are from the Deming key principles for transforming business effectiveness. The points were first presented in his book Out of the Crisis

1. Purpose to grow: Create constancy of purpose toward improvement of product and service, with the aim to become competitive, to stay in business and to provide jobs.
2. Leadership to change: Adopt the new philosophy. We are in a new economic age. Management must awaken to the challenge, must learn their responsibilities, and take on leadership for change. Eliminate management by objective, numbers and numerical goals. Instead substitute with leadership.
3. Quality product: Cease dependence on inspection to achieve quality. Eliminate the need for massive inspection by building quality into the product in the first place.
4. Minimum cost: End the practice of awarding business on the basis of a price tag. Instead, minimize total cost. Move towards a single supplier for any one item, on a long-term relationship of loyalty and trust.
5. Continuous improvement: Improve constantly and forever the system of production and service, to improve quality and productivity, and thus constantly decrease costs.
6. Training. This is required due many reason, quality purpose, productivity purpose and HR purpose. Institute a vigorous program of education and self-improvement.
7. Team work: The aim of supervision should be to help people and machines and gadgets do a better job. Supervision of management is in need of overhaul, as well as supervision of team. Drive out fear, so that everyone may work effectively for the company. 
8. Healthy work ambiance: Break down barriers between departments. People in research, design, sales, service and production or procurement must work as a team, in order to foresee problems of production and usage that may be encountered with the product or service. Eliminate work standards on the factory floor. Substitute with leadership.
9. Zero defects: Eliminate slogans, exhortations, and targets for the work force asking for zero defects and new levels of productivity. Such exhortations only create adversarial relationships, as the bulk of the causes of low quality and low productivity belong to the system and thus lie beyond the power of the workforce.
10. Remove barrier: Remove barriers that rob the hourly worker of his right to pride of workmanship. The responsibility of team leader must be changed from sheer numbers to quality. Remove barriers that rob people in management and in engineering of their right to pride of workmanship. This means, inter alia, abolishment of the annual or merit rating and of management by objectives.

Massive training is required to install the courage to break with tradition. Every activity and every job is a part of the process. Lots of effort required for successful transformation.

10 Business Diseases

The "Ten Business Diseases" which may prevent you from being completely transformed, include:

1. Lack of constancy of purpose (proper vision) and method to achieve
2. Dimmed curiosity toward continuous improvement or growth
3. Emphasis on short-term profits and neglecting long range planning (max-3 year)
4. Evaluation by performance, merit rating, or annual review of performance and relying on only technology to solve problems
5. Unstable workforce or management & lack of their skills or market knowledge
6. Management decision based on opinion rather than facts & tested opinion or lack of proper data or team work
7. Running a company on visible figures alone and excessive costs/lack of fund
8. Seeking examples to follow rather than developing solutions & Excuses, such as "our problems are different"
9. Just reliance on end user for quality rather than process & management decisions. Waiting for complaint to resolve rather than improving service/product quality
10. Placing blame on workforces who are only responsible for 15% of mistakes where the system designed by management is responsible for 85% of the unintended consequences

To conclude

These are 10/10 business transformational theory which may help you to prepare for successful transformation. Moreover, I am passionate about helping business towards success so if you need any further help please feel free to contact me. I am just a click away at jpauljha@gmail.com

5 Important Tips to Boost Your Business

Every business owner or management team of a company, large and small are focusing on one thing commonly - increasing the value of their business. Don’t you think? 

So in my opinion, you should focus on implementing strategies that best seize opportunities for growth and determine whether or not it makes sense to take on a partner in pursuit of that growth.

So here are the 5 tips to boost your business which you should endeavor to implement in its process:

Customer diversification

Win recurring revenues

Find your niche

Budget

Be capital efficient

Be replaceable

Investors, acquirers, and Bank

Diversify your customer base

* Businesses with many customers are worth more than businesses with customer concentration issues. Your biggest customer shouldn't account for more than about 20% of your revenues --with sub 10% being ideal

Win stable revenues

* Businesses with stable or recurring revenues and long-term contracts are worth more than businesses with lumpy or hard-to-forecast sales. It may require offering new products or services, but migrating to recurring revenues will pay off in the long run

Find your niche

* Seek to build out your offerings that are complex, differentiated or consumable. Products or services that are difficult to replicate, IP protected or require engineered specifications create a defensible position, thus increasing the value

Budget

* It is important to keep solid financial statements, forecast an annual budget and return to that budget monthly. Devise and follow a short, medium and long-term strategic plan in coordination with your budgets

Be capital efficient

* All companies strive for capital efficiency in tough times in order to survive. Great companies are capital efficient at all times. Actively manage your payables, receivables, and capital structure

Be replaceable

* One who have gathered and mentored a complete and sophisticated team always comes out ahead. If the success of the business is tied to the owner's activity or presence in the industry, the risk profile changes and will be reflected in the valuation.

Investors, acquirers, and Bank

This will reward you to tackle some specific situations. As you might have realized growth and acquisition need capital hence Investors and Banks are important for any business.

Good companies get stronger in times like these by taking advantage of the environment to grow organically, by acquisition or both. However, growth takes capital so it's important to identify which approach makes the most sense for your business.

A bank loan to expand a facility, make a small acquisition, or increase your working capital could make good sense. Even with all the talk surrounding the impending rate increases, banks are always lending to good companies, but there are several actions to take to generate a favorable outcome.

Start building relationships with potential lenders and/or equity partners now, before you need them. Take the time to build a relationship- invite them to your facility, present them a short overview of your company and the success that you intend to have.

To conclude

These are the some specific strategies that you should consider, in order to maximize the value of your business. However if you need any further help please feel free to contact me. I am just a click away at jpauljha@gmail.com J

Secret Strategy of Business Success

While brainstorming on customer experience development and cost reduction, I came to think about business strategy or business strategic planning. And my curiosity to solve the problem brings into the research world to discover more about it.

I went through the some research articles of Porter (1980) which gave me detail understanding to solve the problem hence I thought to share my discovery with you, hope it may save your time, effort and enhance your understanding on your business strategy.

In order to link customer service and cost reduction with business strategy, I landed on the choice of business strategy, portrait by Porter which are:-

Overall Cost Leadership

Differentiation Strategy

Time-Based Strategy

 As you know that business and strategic planning are very critical in the success or failure of any firm. This is something which can give direction to any organization and de. It is the process of specifying the organization's mission, vision and objectives, developing policies and plans, often in terms of projects and programs, which are designed to achieve the objectives and then allocating resources to implement the policies, and plans, projects, and programs.

Overall Cost Leadership

You got it correctly it’s all about low cost. The goal of the overall cost leadership strategy is known as a low-cost strategy is to gain sales by offering products and/or services at a price that is lower than that of competitors.

To achieve overall cost leadership, you must strive to reduce and control costs at every possible point within the business. And as you know cost is a hinder in "value chain" of a firm that is broadly speaking procurement, operation and distribution or in other terms Input, process, and output.

To successfully implement a low-cost strategy you must provide a product or service that satisfies customers without either charging more than competitors or without charging a price above the level customers are willing to pay.

This requires the careful containment of costs throughout the entire value chain, including raw materials, inventory and manufacturing processes, human resources, marketing and sales techniques, and channels of distribution. The successful implementation of a low-cost strategy can enable you to earn above-average returns, even when competing in a relatively competitive industry.

Differentiation Strategy

The goal of a differentiation, or benefits, the strategy is to gain sales by offering products and/or services that are superior to those offered by your competitors. The benefits offered to customers might include a greater array of product or service features and/or a higher level of quality in workmanship or materials.

A focus on quality you can enhance a product's performance and reliability and/or create additional differentiated features that customer’s value. Quality involves meeting or exceeding customer expectations in the goods or services provided.

In contrast, to the low-cost strategy if you pursuing a differentiation strategy then you need to recognize that the customer's purchase decision is generally made based on the benefits or quality that is offered by the product, rather than solely on the cost of the product.

Implementing a high-quality strategy can be high performing firms, partially because of improved customer satisfaction. Further contributions to performance may be seen through increased sales because of consumer purchasing preferences, reductions in complaints and returned products, and lower repair and warranty costs etc.

The successful implementation of a differentiation strategy can enable a firm to earn above-average returns, even when competing in a relatively competitive industry.

Time-Based Strategy

I call it survival strategy. A time-based strategy may also contribute to firm performance. Often it’s more suitable for a small enterprise. This strategy gains its advantage through good timing in seizing marketplace opportunities quickly. A turbulent environment it was important to move quickly in making and implementing strategic decisions.

The ability to move swiftly in a rapidly changing environment may be the hallmark of many successful firms today. Four techniques for implementing a time-based strategy I discover. You can be:

• First to market
• An early follower
• In step with majority of competitors; and
• A late follower

If you are first to market may earn above-average returns by being the exclusive provider of the product or service before competitors enters the market. You may also enjoy strong consumer preferences for products or services because of early identification with the new product.

However, this strategy may be restrained by high research and development and marketing costs for the new product or service. Some enterprise may find it difficult to endure these high levels of risk.

Firms that are early followers may enjoy some of the benefits of entering the market early, while avoiding some of the initial risk and cost. Further, an early follower firm may have the opportunity to learn from the response of the market to the products or services when they were first marketed.

Although firms which follow a strategy of being "in step with competitors" also known as a competitive parity strategy and "late followers" may avoid high R&D and marketing costs, their performance may suffer from competitive pressures on pricing and being unable to differentiate products or services from those of competitors. A strategy of competitive parity may not result in high performance for firms competing in today's rapidly changing environment.

To conclude

Focus and implementation of the strategy on the ground to the top level is the key. And most often mix strategy work well, depending on organization resource, competence and the industry you cater.Moreover, I am passionate about helping business towards success by strategic planning so if you need any further help please feel free to contact me. I am just a click away at jpauljha@gmail.com :)

One vision for the group or each business should have a vision?

The Business group is a great way to meet your business to business target market. I have observed 3 common reasons for why so many groups fail. 

Number One: Bad leadership is probably the primary reason for the failure of a group. Unless the leadership is ethical and results driven, the group will eventually wither away and die. Number two: clique formation within a management team. Number three: Conflict or lack of vision within businesses. These business group are formed to increase sales and grow rapidly but unfortunately on a majority it’s not the case.

Your vision for your company should not be so restrictive that it limits your team’s imagination.

Often after the success of start-up many companies failed in establishing a successful group of companies. You do need to develop an overall vision for your company -- one that is strongly supported by a more targeted strategy at each business that falls under your umbrella. The two things are not mutually exclusive, but complementary: One should not override the other.

 Starting up a business is always an adventure, and not everything comes together for every entrepreneur in the same way. As you face the challenges of keeping your business going, you may find that your vision for the company needs to be adjusted as you go.

Looking back, your goals should change and expand over time, but there is a key element that should be common to all of those businesses. The strategy varies in most instances - by offering better prices, improved products, great service or by raising awareness of key issues -- but ultimately businesses should bound together by this common purpose.

The fundamental to achieve continuous success is to remain extremely focused on your vision.

When you are establishing a group of businesses, you must avoid imposing control from the top. I experienced that If you will stifle your management teams, preventing them from establishing truly differentiated businesses, each with its own strong sense of purpose and distinctive vision.

 Instead, you must learn to delegate since there is no way you will be able to keep on top of each business’s particular challenges. During my work tenure, I learned to delegate some control to teams. If you delegate some control this has enabled you to focus on the bigger picture while teams ensure that they maintain focus on providing great quality service and achieve results.

Key Note

* Need to develop an overall share vision for your Group

* Differentiate businesses, each with its own strong sense of purpose and distinctive vision