Crystal Ball Glazing - eZendir

In transforming China, policymakers are shifting away from a labor-intensive, export-oriented economic model to higher value added revenue-generating models. Consequently, wages are expected to rise ... Foreign investments are encouraged to move to sectors involving transfer of high technology ( automobile, information technology, healthcare ). With a well-educated workforce, it is par to this task and the middle class will grow, with it also domestic consumption. The push factors are higher labor costs and a huge market.
To ensure a sustainable, balanced growth - and real growth, it will need to ensure that productivity gain outpaces inflation rate. Thus it must invest in education in order to nurture better managers. It will need to groom a pool of local managers that can leverage on domain knowledge, information technology and relationship skills to forge a formidable competitive strategy. It will need managers who understand the market-oriented economy where supply and demand are dictated by market forces. To gain such skills in strategy roadmappng ( competitive advantages ), understanding value creation, risk management and creating innovative products and services, it will need its managers to be bilingual in order to articulate, communicate and execute ( ACE ) in an increasing globalised eco-system.

While shifting factories further inland can mitigate escalating wage cost concerns and exchange rate issue in the short-term, real solutions must be found to achieve sustainable growth.

Since 2007, labor cost in percentage term has been climbing in the teens and this can be seen as a determined policy to transform the economy. Taking a leaf off the Singapore experience where it embarked on this course in the 80s, the transformation is real and tangible. Can this occur for China?

By focusing on education - train, train and train. Chinese managers in order to be effective need to be bilingual so that they can absorb new ideas quickly and hasten the transformation process. Foreign managers, likewise, need to learn Chinese to order to stay engage while the great shift gain momentum.

It may well be that China can reach full employment sooner than later, and in that scenario, the tipping point will be reached. A new paradigm kicks in where the only effective managers are those that are bilingual in English and Chinese - lingua francas for commerce.

Replicating the success of Singapore and India combined, China can and will leapfrog to a higher dimension - with a dynamic private sector competing domestically and internationally. The outcome is a win-win for all like-minded stakeholders.

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Rainbow And Colour of It All! Be Happy

Chasing rainbow and hoping to find a pot of gold at the end of it ...so romantic, so enticing...When we were more youthful and hopeful, we must have been memerised by such thoughts.

What is it that we are chasing? Riches or happiness. Will we be happy when we attain material wealth? Maybe .... perhaps not. So if we pursue happiness, if ever that is achievable, do we need material wealth? Taking a step back, we need to ask ourselves what is happiness? What does it mean to be happy?

We need to remember that life is a journey, and happiness our companion. What better option can we make? We can liken happiness to a transaction where we experience for a fleeting moment of ~ truth. In a transaction, we come into contact with a stimulus and how we response defines whether the experience is quality ( happiness ) or otherwise.


How is it that we feel more often than not that life remains unfulfilled? Could be that we lack quality experiences. Maybe it is the lack of empathy that prevents us from such experiences.

First movers fear it is against their interest to initiate a discussion and the end result is that we miss an opportunity to co-operate. This can be categorised as a co-ordination issue. When there is a break-down in co-ordination, there will be no meaningful progress, and any underlying issue will be allowed to fester and there would be risk of a disorderly outcome. The likely scenario is a stimulus that is likely to attract a zero-sum gain, a positive response at the expense of someone's negative response. Is it possible to have a win-win outcome, where happiness can be shared? Can people really sit down and negotiate according to a set of rules , unwritten but underpinned by a set of common beliefs. If no, why not?
Again it is back to the coordination issue .... what is the driver when a certain course of action is selected? More often than not, we use price as the basis to find the equilibrium between supply and demand. We may have taken the short-term view that the best result will come .... from everyone in the group doing what is best for himself . However, John Nash has added a caveat "and the group". According to him, " if we go for the best ( by definition scarce )... we block each other. Not a single one of us is gonna get it. So then we go for her friends, but they will all give us the cold shoulder because nobody likes to be second choice. Well, what if none goes for the best? We don't get in each other's way, and we don't insult the others. That's the only way we win. "
The following questions can help us understand better what is preventing us from feeling happy?

a)when you are NOT achieving what you set out to do, would you feel upset?

b)can you work around the setback and find an acceptable alternative?

c) why is it so important to achieve your goal?

Goal setting is process-driven and you need to understand what are the steps you require to take to reach from here to there. Too often, we make quick and unsubstantiated assumptions, and as a result we are not able to get to our goal. There is no short cut and when you analyse your mis-steps you will realise what are the stimuli that trigger the negative response.

Dealing with human emotion is one of the most challenging and difficult tasks. There are myriad of moving components at play and we cannot control the outcome as interests are not completely aligned. Again we can identify the stimuli that trigger the negative response.

So fundamentally, we need to identify like-minded people with shared values to begin with. So how can we convince people that cooperation is better than competition?

When it comes to co-operation, we need to think big but act in baby steps. This helps to breakdown complex issues into simpler elements. We need to underpin the efficacy of our assumptions and execute the steps in logical sequence. Every successful step reinforces trust and with trust it is possible to overcome the coordination issue. Once collaborators are comfortable and confident that cooperation can result in a win-win outcome, the end-to-end processes can then take on a life of its own with its own ecosystem of checks and balances - and we can sit back and enjoy the ride and have happiness as our companion.

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Innovation Through The Lens of Art Part IV - 勿以恶小而为之, 勿以善小而不为

Society can either opt to stand still or seek to change for the better through innovation. The choice is clear. The question is where do we seek inspiration to change for the better? Art... for it " removes irrelevant concepts from people's minds, encourages the living. It provides confidence to people. It does not deal out dreams. It does not teach. It awakens. " Art in its more controversial forms need not titillate our senses to extremity, but to awaken us to the beauty of living reality instead, and not merely indulge in empty idealism. [ paraphrase Mao Yuhui ]. Therefore, artists and intellectuals play a key role in fermenting innovation and creativity. Their works play a pivotal role in defining individual expression first and foremost before propagating to all and sundry.

Examples abound of the pioneering spirit that is within us. Controversial mural in airport depicting naked tribal women bathing in celebration of a water festivity is but one such example. To revive ( nourish ) an instinct that resides in the deep recess of our brains, we need to up the "degree of empowerment" by many notches.


So is innovation more art than science? The short answer being, art is the foundation and science its fittings.

We need to accentuate the human-ness in us in order to satisfy our ever evolving needs. We must uncover the building blocks that permit us to realise the potential in us, generate the momentum that will nurture our fertile imagination and turn it into functional forms.

We ought to have the discipline to apply our mind to the task on hand for after all, famous artists do not become top guns merely putting a few splashes here and there. It is a practised hand that makes it looks so easy and graceful - such artful manifestation awakens us, the audience and finally as participants, to the possibilities rather than dealing out our dreams.

Through empowerment, we seek out partners to collaborate with, and assemble the building blocks to competently realise our potential in coming up with outstanding pieces of work, in the true commercial sense exploit it and turn it into money spinners.

The discipline comes in figuring out the end goal. And to develop a framework in how to reach that end goal. Take learning Chinese language as an example. How many of you desire to master the Chinese language ( putonghua ). What are the milestones you set for yourself to reach that goal. Typically it is to increase the vocabulary i.e. 2,000 words, 6,000 words or 40,000 words! How much investment are you prepared to put in to realise that goal ( and of course under what time frame? ) and what do you expect to get in return ( e.g. return on invested capital ). There are many paths to reach that goal. If it is too rigid and unrealistic, you will find the going tough or next to impossible. However, if you do think it through and create a framework to undertake the journey, the execution will be extremely smooth.

So you can either set the goals yourself or let the teacher sets the goals for you.
You need to feel comfortable that your teacher empathises with your situation as well for you to take ownership of the approach adopted.

Often times, people end up making decisions without understanding the whole picture.
This is because we are used to making decisions without the benefit of complete information and guess what is the result? You either are lucky to get the result you want; or fall short of your expectation and allow someone to exploit that vulnerability to your detriment.

Back to the workplace. There are situations where organisations prefer to only want order takers. They will use enforcers to get the job done. As a contributor and empowered with choices, you can ensure that your set of beliefs is in alignment with those that you are collaborating with thereby avoiding a scenario where you may be exploited on. To benefit from the environment that promotes harmony, creativity and innovation, you must also be an active participant. Proper value system is a vital element and in large organisations it is rather difficult to establish common values and beliefs. When collaborators are at cross-purposes, negatives cancel out positives resulting is dismal return on investment. Be mindful of the adage: 勿以恶小而为之, 勿以善小而不为. Putting it to practice, is more art than science. Relationship is so fragile that you can liken it to a mirror reflecting exactly the energy it receives. It gives as much as it takes. To enjoy what we strive most for, one must take the initiative in nurturing and nourishing LIFE values i.e. EMPATHY, TRUST, FAIRNESS, APPRECIATION, RELIABILITY.

Now, we go figure ....

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创新过程, 化危为机 第三部分-未满足的需要和市场

创新之路必须包括两大要素。其一，解决方案是全新的；其二，能有效解决最终用户的问题。从宏观上看，我们希望找到对企业家的需求尚未得到满足的市场。

全球金融危机提供给了中国一个机遇，成为带动全球经济回稳的主动力。中国庞大的经济刺激计划已经达到了预期的效果。然而，显而易见的是，引发危机的根源仍旧存在于现有的全球经济体系中，解决这些不安定因素，必须让发展重新步上良性轨道。

中国经济必须保持8%的GDP年增长率，且一直依赖出口模式。但美国的过度消费所导致地严重财富创伤使得中国原有的经济模式难以为继。中国与其他相似的经济体一样，将不得不通过拉动国内消费来弥补差距。中国目前国内消费占全国 GDP 总数的35%，而美国同期的这一比重是75%。

中国的出口模式依赖劳动密集型和资源密集型加工产业，因此有其局限性，并且在产业结构平衡、协调性和可持续性等方面存在着问题。在金融危机初期，2,000万中国农民工下岗或面临失业。他们的返乡可能成为政治和经济秩序的不稳定因素，影响巨大.

本着化危为机，中国启动了一揽子经济刺激政策，总投资超过 5,000 亿美元，旨在大力提升国内消费。政策包括有家电下乡、经济适用房补贴、车辆购置税下调等。这些政策不仅保证了工厂的正常运营、工人的就业，也同样提高了人们的生活质量。中国有三大产业，依次分为农业、制造业和服务业，而发展的焦点将集中在提升其制造业的技术水平上。对人们生活质量的提升则从原有的仅着重衣食延伸到了住行。在某种意义上，新生活方式的曙光已经到来。

中国西部开发的预期成长率将达到15%，从而弥补了经济较为成熟的沿海地区及经济特区的低预期成长率。这些举措的成功实施将提高居民生活水平和购买力，并进一步推动中国的贸易流通。与国外机构，尤其是跨国企业的合作将变得频繁，并产生双赢效益。中国对生产力的提升，使得其服务业成为投资的理想市场，资金将被用于职业培训等手段以提高劳动力水平。但由于劳动密集型模式的长期主导地位，使得转型期间的阻力不可避免。勇气与领导力是变革和产生绩效的两大关键，只有具备这样的智慧才能战胜既得利益的固有思想局限，带领人民实现改革的愿景.

把握到创新的脉搏了吗？请用心体会……


aknowledgments:
Ms Renee Yi for editing and support to this post.

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Innovation Process Part III - Unmet Needs and Marketplace

Two key ingredients must be satisfied in the innovation process. The solution must be new and solve a problem for the end users. In taking a macro view, we hope to seek out market place where unmet needs await the entrepreneurs.
The global financial crisis provides China the opportunity to be the main locomotive in driving the global economy back to stability. Its massive economic stimulus package had the intended effect. However it is also clear that the root causes remain embedded within the present global economic system and such instability must be resolved for growth to be back on track.

China requires a sustainable growth rate of 8% annually and has relied on the export model. This cannot carry on indefinitely as the US over-spent consumers have severely depleted their wealth. China as well as other economies with similar model, will need to look from within via increase in domestic consumption, presently at 35% of its GDP ( versus US 75% ) to make up for this gap.

The export model leveraging on labour- and resource-intensive processes has its limit and has created issues with regards to structural balances, coordination and sustainability. At the advent of the crisis, 20 millions migrant workers were laid off or facing layoffs. Their return to their villages could potentially destabilize the political and economic order with dire consequences.

Turning the crisis into opportunity, China initiated an economic stimulus package in excess of US$ 500 billion, jump starting the process of increasing domestic consumption. Subsidies were extended to villagers to buy white appliances, affordable housing and tax reliefs for car purchases. These help to keep the factories running and workers gainfully employed, as well as hoisting the standard of living. China’s 3 key sectors i.e.. agricultural, manufacturing and services in that order, will be the focal point in upgrading its manufacturing base technologically. By raising the standard of living, the emphasis has shifted from merely having adequate clothing and food, to providing affordable housing and transportation. In a sense, the new dawn of lifestyle living has arrived.

China in developing its western provinces which in percentage term can grow in the mid-teens thus compensating for the lower growth rate expected for the more matured coastal areas and special economic zones. The successful implementation of these initiatives will raise standard of living and purchasing power, empowering China to facilitate the trade flow further. Collaboration with foreign entities, and in particular MNCs will come naturally and it can be a win-win outcome. As China seeks to raise productivity level, the service sector is a good area to target as funds will be set aside to upgrade the labour force through vocational training and such other means. During the transition, it is not unusual to meet resistance as labour-intensive model has worked so well thus far. Courage and leadership are required for wisdom to prevail over vested interest to bring about change, and for China to fulfill its vision for its people.

Do you smell opportunity for innovation? Go figure ...




Clues: zero carbon emission, food shortages, standard of living

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Is It In Your DNA To Innovate Successfully?

We wrote in our earlier post, that you need to leverage on domain knowledge, networking and artificial intelligence (aka technology ) to be successful. So the question is whether it is in your DNA to innovate your way to value creation?Innovation is the bloodline of any business model in sustaining its value creation process. It is important to understand the processes that lead to innovation. The most important being to be able to frame a problem adequately. With keen power of observation and lots of patience, it is possible to develop a pipeline of problems to be solved. With this in place, we are able to ask ourselves why solving each of these problems would help to make our lives better. For sure, the solutions have to be useful and new. Doing this iteratively, we will be able to sharpen our focus on the root problem that requires a solution that will be demanded by the end-users.

To begin, let's take the present credit crisis as an example. 2/3 of US GDP is made up of consumption. And when the consumers have maxed out their spending power, businesses will be faced with business contraction and people will be laid off. Banks will be reluctant to lend as the credit risk increases. A downward spiral will soon gain traction and hurling the US economy and along with it the rest of the world's economy into a deep recession.

We also know that small, medium enterprises provide employment to a significant number of people in the economy and they are been starved of credit. It is this very credit ( or lack of it ) that is constricting and taking the air of the system, and if left unchecked will deflate the economy to a point of no return.

The question will be: how can we channel credit to productive activity, providing solutions that are new and useful towards solving problems?

Although central banks are able to stimulate through quantitative easing, the tools used are too blunt. Recipients of the credit may not be deserving, and the result could lead to another asset bubble been formed.

As such, in order to channel resources to deserving entities, we need to create a framework that will allow credit to be directed to those that can create value.

In order to achieve this, we need to identify the right people for the job. The First Who Then What paradigm. These are people who have the perseverance and tenacity to overcome the odds and succeed. They have a mission to achieve and have the correct values that will ensure their success.

In this connection, it will be critical to set up a centre to advise entrepreneurs on the how to succeed and whether their DNAs are wired up to innovate and sustain value creation.

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Extreme ( Extraordinary ) Value Added or XVA

When you deliver something passionately, with gumption and compelling, it shows that you care and this will definitely move your audience. And when you continuously live by this conviction, people will come to appreciate your sincerity and it is always a winning proposition for people want to experience quality moments in their own journeys. We are referring to Extreme ( Extraordinary ) Value Added or XVA.

As in all things extreme, you need to be so focus in the things that you do in order to be a winner. You have an excellent differentiation - for a winner is unique and this will be great as far as differentiation of value proposition goes.

You will achieve instant "top of the mind message recall". Examples abound. Tiger Woods, world No.1 golfer. That's easy. Try Y.E. Yang - the first player to take down world No. 1 Tiger in a major championship.

People appreciate quality and will seek you out. Only when you are sincere, and have the gumption are you able to execute well with quality outcome.


Let's revisit the critical success factors pertaining to a value proposition i.e. domain knowledge, technology and networking. The ability to leverage on domain knowledge and and technology and to produce innovative results is what differentiate the winners from the crowd. According to David Murray in his book, Borrowing Brilliance - it is a 6-step approach to innovation i.e.

1. Define the problem that you wish to solve ( usually unmet needs in the marketplace )
2. Borrow ideas from scenarios that encounter similar issues,
3. Make the connection between issues and the ideas received,
4. Mull them over until these ideas can be incubated to a probable solution,
5. Assess the outcomes, and
6. Take out the rough edges and fine-tune into a viable solution.

In order to achieve a quality outcome, the above has to be preceded by First Who Then What paradigm. Let's take golf as an example. Golf is interesting as it is a game that fosters transparency and accountability. You cannot game it if you want to excel in it. Every action is subject to the scrutiny of your flight mates, and the slightest infraction will call in question your integrity. To play well, you need to understand the mechanics of the golf swing - that is domain knowledge. Next, you need to acquire the technology in order to play competitively. Golf technology has come a long way and you need to understand how it can help to improve your game. Playing golf socially is an excellent example of collaboration. Through collaboration, you can apply the 6 steps to innovate your game and in this way able to speed up the learning and development process. Everyone should have positive takeaways and make progress. Just the other day, we went down to the golf shops to buy a 'driver' for a friend of mine. He gradually understood that the new technology can help in his game and once he embraces it, he wasted little time to buy a 'driver' of choice. He is now in a position to take his game to the next level.

We know the benefits on XVA and we need to decompose it to its key value drivers i.e. competitive advantage period, return in excess of cost of capital and revenue growth. To achieve XVA, you have to ensure from the onset that you are made of sterner stuff and your value proposition can withstand the stress of competing in the marketplace. The business model must be able to perform under stressful conditions, just like pulling off those crunch shots when it matters.

With a roadmap in place, all you need is to execute it flawlessly. We cannot emphasise enough the need to pay attention to details. At the end of the day, it is about people, people, people. And to always leave behind a positive impression, you need to appreciate the nuances and exercise empathy especially considering the impact your actions have on others.

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