companies using 'accelerated innovation' to keep pace with fast-changing consumer market

Peter Williamson believes the Chinese are emerging at the cutting edge of global management practices.

One of the world's leading management experts, he argues managers in China are now taking a lead in the way the Japanese did in the 1980s with their ideas of Just in Time and Total Quality Control that revolutionized manufacturing and customer care.

He argues China's contribution is in building management systems that can deliver "accelerated innovation" that can keep pace with a fast-changing domestic consumer market.

"What we are seeing in China is a lot of this accelerated innovation and different ways of speeding things up as well as reducing costs that hasn't yet quite coalesced into something recognizable like what came from Japan such as Just In Time but it is heading in that direction.

"It is building toward a Chinese management style and a Chinese way of doing things."

Williamson, 57, who is professor of international management at Cambridge University's Judge Business School and travels to China six times a year, was the co-author with his colleague Eden Yin of an article, Accelerated Innovation: the New Challenge from China, which appeared in the influential MIT Sloan Management Review.

The article has prompted a debate in the business media and among management academic institutions globally as to whether management practices in China will soon become a template for Europe and the United States.

"I think that is a very interesting question and something I debate a lot with Western companies. I believe the answer will be 'yes' because it actually fits in with the demands of modern society to reduce lead times and have faster product development cycles.

"What the Chinese are able to do is to take a new technology and rather than it taking 10 or 15 years to produce a mass market product, as is currently the case, to actually come up with one in one to two years. I believe this will become more common and that in order to compete established Western companies and, indeed, Japanese ones will need to learn it."

Williamson and Yin's recent research was the result of interviewing 50 representatives of some 23 companies over a period of three years.

What they found was Chinese companies taking advantage of a vast supply of engineers that enables them to industrialize the innovation process, much in the same way as they did producing cheap goods, which enabled the country to become the manufacturing workshop of the world.

"What China has is a lot of midlevel engineers who are relatively low cost in terms of salaries. They also have a lot of people trained in technical colleges.

"Such people are very useful in industries such as in making PCs or in pharmaceuticals where the process is very well-defined. There is a lot of work that is basically routine and what the Chinese are doing is speeding up the innovation process dramatically, often cutting the time needed in half and reducing the cost."

One of the companies that Williamson interviewed was WuXi App Tec, a pharmaceutical, biopharmaceutical and medical-device research and development outsourcing company with operations in both China and the United States.

It recently came up with a new drug for chronic hepatitis C. Instead of having a small team of top PhD scientists working in a laboratory as in the West, the innovation process was split into eight teams of about a dozen people each and while some had top degrees, others were just technicians.

"People think pharma companies are super-high-tech and that they are coming up with potential new molecules but that is only one aspect of it. A lot of the work is fairly routine and therefore mass industrial techniques can be used."

Williamson also argues the Chinese are now combining the vertical management structures that are common in many of their companies, where a big boss sends down his edicts down the line, with a flexible horizontal management team underneath.

This horizontal structure is not compartmentalized as in the West between, for example, marketing, product development and sales, but has an interdisciplinary approach and is simply charged with carrying out the tasks given it from above.

"People at the top and even in companies like Huawei (the China telecommunications giant) this might only be 12 or 14 people determining the direction of the company and then the people underneath are put under enormous pressure to deliver the projects quickly, whether it is a new product, factory or marketing campaign.

"They will, however, come together as a team, discuss things over meals and really break down the boundaries between functions within the company so they can move ahead much quicker. In a Western company, there would be a lot of circulating of reports between various departments, which really slows things down. The weakness with the Chinese system is that nobody questions what those at the top say and so they have to be right for any of this to work."

Williamson, the son of a British entrepreneur, was raised in Australia, where he took a first class degree in economics from Macquarie University in New South Wales.

"It was the somewhat grim 1970s in Britain and not a very exciting prospect so I decided to stay in Australia," he says.

He then went on to work for Merrill Lynch in London, New York and Singapore before winning a Fulbright scholarship to Harvard.

After Harvard, he embarked on a career in management consultancy with the Boston Consulting Group in the 1980s when he went to China for the first time assisting a UK textile company expand its operations in Tianjin.

"I remember taking the train from Beijing, which used to take about two hours then and the cleaners coming in to wash the floors while you were sitting on board. You had to move your feet. Your own comfort was secondary," he recalls.

He decided to return to academia in 1987, taking up a lectureship at London Business School. He kept close links with business, holding a directorship among others with Glenmorangie whisky.

"I felt that if I was to return to academia it had to be then because it is not something you can enter later if you haven't published things," he says.

After London, he moved back to Harvard in 1993 to be visiting professor of global management.

Two years later he moved to INSEAD in Fontainebleau, where eventually became involved in setting up a campus in Singapore.

He also further cemented his links with China being visiting professor of strategy at the Cheung Kong Graduate School of Business in Beijing between 2003 and 2007, after which he joined Cambridge University's Judge Business School, where he has been for the past seven years.

He has written no fewer than nine books, including Dragons at Your Door: How Chinese Cost Innovation is Disrupting the Rules of Global Competition with Ming Zeng, chief strategy officer of Alibaba.

One of the big debates in management circles is whether Chinese management practices will become recognized in the same way as JIT or TQM.

One of the barriers is that Western scientists and research and development teams are paid well and do not want to do mundane tasks so they would find it hard to adapt to a Chinese management approach.

"If you went to them and said that you wanted them to do a whole series of changes to something very quickly or re-engineer this technology so that it comes down in price, they would kind of yawn and say it is not interesting."

Williamson predicts what many Western companies will do is form partnerships with Chinese companies so they can take advantage of these new management techniques, particularly in the innovation field.

"I think a number of UK companies are already doing this. What used to happen was that a UK company would come up with an innovation and sell it to America where they would be turned into mass market products.

"Now they are going to China, finding a Chinese company that has got this product design engine and the ability to build a big plant fast and I think we are going to get these interesting new alliances emerging."

Williamson thinks there should be nothing surprising about new management ideas emerging out of China because of the sheer speed of the development of its economy.

"I think it is important to say that we are not saying that Chinese organizations have sat down in a room and come up with a new strategy called accelerated innovation. You have an environment, however, where things are moving fast, people are willing to try new things and where there is hypercompetition."

andrewmoody@chinadaily.com.cn

Peter Williamson, professor of international management at Cambridge University's Judge Business School, believes new management ideas are emerging out of China. Nick J. B. Moore / for China Daily

(China Daily European Weekly 12/05/2014 page8)