It’s hard to escape the non-stop press about China-U.S. trade relations these days and certainly there are many valid concerns for all parties. Notwithstanding that, the opportunities for companies on both sides of the Pacific are immense and I thought it useful to reflect on some thoughts, as I have traveled for VANTIQ to China a number of times over the last year and for other tech companies prior to that.
First, it’s important to understand the immensity of opportunity in China. To get a sense of this, check out my past article, The Surprisingly Incredible Chinese Tech Market. The even more amazing thing about this 18-month-old article is that the facts and statistics are already wildly out of date! Things are changing that fast.
One of the biggest questions on my mind is: why are Chinese companies capable of moving so quickly with new technologies (something I observe every time I am there)? Why do enterprise deal cycles take six months in the U.S. and only six weeks (or sometimes, six days) in China? And can American companies overcome this challenge and actually drive their digital transformations at the speed of China?
First, here is my take on why Chinese companies can move so fast with technology-based initiatives:
- Legacy: Fewer legacy applications and systems to be backwards-compatible with, and more willing to start from a clean slate if necessary.
- Alignment: Greater alignment within the organization regarding purpose, values, and culture.
- Urgency: Tremendous sense of urgency – the current state of things is clearly not good enough and the opportunity is tremendous for all that can grab it.
- Long-Term Outlook: Not managing for the next quarter, but for the next decade and beyond.
So can U.S. companies respond? I think the answer is “Yes” but some mindset adjustments need to be made:
- Legacy: Don’t allow yourself to be slowed down by over-valuing sunk costs. By that I mean not just the cost sunk into building legacy applications but also the costs sunk into training on old technologies and platforms. What’s important is how quickly you can get to the future, not how much you spent on the past.
- Alignment: Some U.S. observers criticize Chinese organizations for being “top-down” cultures but, in my experience, it is much more about alignment of purpose than hierarchy. Build that alignment from the top-down to enable faster results.
- Urgency: The alignment effort is not only about the ‘how’ but it is about the ‘why’. Agreeing on the ‘why’ builds urgency around the ‘when’ (which usually can’t happen fast enough).
- Long-Term Outlook: Virtually no employees get excited about hitting a quarterly corporate goal or even a personal MBO. What gets people excited is a long-term vision and a clear (enough) path to get there. Paint the picture, don’t just push another initiative or project through the pipeline.
It always boggles my mind to see companies looking for platforms to dramatically speed up their development processes, and then take six or nine months to do the deal! As with most transformation initiatives, culture is ultimately the key. Most American companies still have an entrepreneurial culture at heart, and absolutely have the potential to compete with the best Chinese companies. They just have to want to.
Postscript: For those that actually read my Surprisingly Incredible Chinese Tech Market article, you will have seen my announcement of bringing on Philip Zhao to my former management consulting firm. The great news (for VANTIQ) is he is now our GM for Greater China. We are very glad to have him helping us take the Chinese market by storm!
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