At first glance, China, which is known for large, often inefficient state-owned enterprises, might appear an unlikely source of fresh management thinking. Yet Chinese companies have a lot to teach the world about today's business imperatives: responsiveness, improvisation, flexibility, and speed. To cope with their turbulent environment, the Chinese have developed those capabilities and learned to build everything--from skilled recruits to suppliers to capital sources--from scratch. They manage very differently, too: Eschewing Western-style matrix organizations, they favor flat, loose structures that allow them to jump on new opportunities and expand quickly. They roll out new products constantly and localize offerings with a vengeance. They're also adept at nonmarket strategies, particularly navigating local politics and relationships with the state. Indeed, China's entrepreneurial companies may well be the vanguard of an era in which the ability to adapt quickly, navigate messy environments, and use unproven talent yields a global competitive advantage.
No longer content with being the world's factory for low-value products, China has quietly opened a new front in its campaign to become the globe's most powerful economy: It's on a quest for high-tech dominance. In pursuit of this goal, the Chinese government has ensured that it will be both buyer and seller in certain key industries by retaining ownership of customers and suppliers alike. It has consolidated manufacturers in those industries into a few national champions to generate economies of scale and concentrate learning. And it is co-opting, cajoling, and coercing multi-national corporations to part with their latest technologies, imposing regulations that put those companies in a terrible bind: They can either comply with the rules and share their technologies with would-be Chinese competitors or refuse and miss out on the world's fastest-growing market. Foreign companies doing business in China cannot wait for balancing macroeconomic forces or multilateral solutions; if they wish to survive as global technology leaders, they must bring greater imagination to bear on the problem. Above all, China's maneuvers cast into doubt the optimistic premise that engagement and interdependence with the West would cause capitalism and socialism to converge quickly, reducing international tensions. Storm clouds are gathering over China and the U.S. in particular. Can two economies with such radically different structures and objectives peacefully coexist? Most people expect that the systems will eventually become more similar. However, the authors argue, this will happen only when China becomes as rich-and as technologically advanced-as the U.S.
Founded in 1881, Seiko gained prominence for introducing the world's first quartz watch in 1969 and is often associated with the "quartz revolution" of the 1970s that threatened to destroy the Swiss watchmaking industry. Competition from inexpensive Chinese watch producers, a resurgent Swiss watch industry, domestic rivals, and a profusion of new fashion brands have led the company to reconsider its sales-oriented strategy of offering numerous products at various price points. Having become nearly obsolete in the face of quartz technology, the mechanical watch business was thriving once more, as a number of predominantly Swiss firms attracted luxury watch buyers. Since the 1960s, Seiko has produced luxury and complex mechanical watches for the domestic market under the brands "Grand Seiko" and "Credor." In 2003, Shinji Hattori, a great grandson of Seiko's founder became Seiko Watch Company's president and CEO and felt that Seiko should raise its perceived image outside Japan. In management's view, Seiko could claim distinction as the only "mechatronic manufacturer" in the world--a vertically integrated watchmaker that excelled in both mechanical watchmaking and micro-electronics. The launch of an innovative new watch movement--the Spring Drive--presented an opportunity for Seiko to make a timely foray into high-price segments in the international watch market. Examines the legacy of Seiko's watch business and provides a basic overview of the world watch industry. Considers the manner in which watches have evolved as a product category, and how a company like Seiko has attempted to reconcile its competitive advantage with its brand positioning in a highly crowded market.
Haier, the first Chinese consumer durable brand in the United States, succeeded in the compact refrigerator, freezer, and air conditioner markets and then built a U.S. factory to enter the full-size market. Issues include the value of a local entrepreneur to the Asian manufacturer entering the United States; brand building and price positioning; the sourcing location decision trade-off between production costs and logistics costs; the role of change in the U.S. appliance distribution channels; global and regional competitive analysis; the response of U.S. competitors to the global sourcing evolution; and the time horizons of Chinese company management.
Gives an account of how an entrepreneur was able to seize an opportunity to start a new business and to manage a low-cost, but effective sales operation. Khalid Gibran exhibited the hallmarks of entrepreneurial style--he viewed rules as guidelines only and was willing to adjust his organization's priorities to make the most of changing circumstances. In less than three years, he spearheaded two organizations, but in so doing, he had to make a number of important trade-offs. OneCard--his latest and most ambitious venture--was launched just before Hong Kong was beset by the mysterious SARS virus. As retail sales plummeted and Hong Kong residents avoided eating out, many businesses were bracing for more uncertainty. Gibran, however, saw a marketing opportunity amid the many challenges and a chance to grow his merchant and subscriber bases.
The theory of complexity, which began as a way to understand complicated natural phenomena, has attracted growing attention in business circles interested in the new economy. In Open Boundaries, Howard Sherman and Ron Schultz of the Santa Fe Center for Emerging Strategies see many parallels between complex natural systems and markets. Both involve so many intricate interactions that outcomes cannot be predicted. The authors advise managers to stop trying to plan and prepare for change and instead build companies into self-organizing teams ready to adapt to whatever opportunities emerge. Thomas Hout of the Boston Consulting Group finds much that is useful in complexity theory, particularly for turbulent industries. But there are limits to the pursuit of flexibility and self-organization, he argues. Flexible, information-driven companies may be too quick to jump at superficially attractive market opportunities that their seasoned rivals wisely shun. And teams, for all their virtues, can't entirely manage themselves. The combination of fast-growing entrepreneurial companies and smart, mobile, ambitious workers creates a workplace that may actually be more fragile than its industrial predecessors. Solutions to workplace problems are more likely to come from good managers than from the teams themselves. Hout also points out that most businesses do not move so fast that foresight, commitment, preemption, deterrence, and other traditional strategic elements no longer build business value. Even in the fastest industries, good managers can still add value by creating the right working conditions to spur creativity. In other words, management still matters a lot, Hout says, even in the new economy.
A decade of process improvements has transformed the way most corporations operate and, at the same time, the job of the senior executive. Top-down autocrats are out and bottom-up teams are in. The message seems to be: Get the processes right, and the company will manage itself. But this message belies a simple truth: Managers, not processes, run companies. In fact, process-focused companies need more top-down management, not less. However, given the complexities of modern business competition, no single individual can do all that it takes to achieve success for a company. Success depends on the willingness and ability of the entire senior executive group to address not just their individual functional or divisional responsibilities but also their collective responsibility for the company as a whole.
Many large manufacturing companies are finding themselves at a cost disadvantage in markets they have dominated for years. This is because of excessive overhead structures and the emergence of the "robust" competitor, comparable in size and product scope but able to produce at a lower unit overhead cost. High-overhead companies should not cut overhead by outsourcing or downsizing. If they expect to retain their size and also become more cost competitive, they must rethink their manufacturing systems.
Today time is a source of competitive advantage. Through new organization practices and design, companies can take time out of operations and provide customers with better products and services and lower costs. Fast-cycle companies: 1) organize as much work as possible around small, self-managing, multifunctional teams; 2) track cycle times for individual activities and for the delivery system as a whole; and 3) build learning loops to inform everyone about customers, competitors, and the company's operations.
Some manufacturers hold and even increase profitability against international competitors because they change from a multidomestic strategy, which allows individual subsidiaries to compete independently in different domestic markets, to a global one, which pits the company's entire worldwide system of product and market position against the competition. Before forging a global strategy, a company that recognizes its business as potentially global should consider the following: what kind of strategic innovation might trigger global competition, what is the best position to establish among all competitors to defend the advantages of global strategy, and what kind of long-term resources will be required to establish the leading position? The examples of three companies (Caterpillar, L.M. Ericsson, and Honda) that successfully forged global strategies illustrate how companies can change the rules of international competition to their favor.