Organization design and development are relatively new fields in China. But, as leaders of local companies become more sophisticated in their strategies and expand outside of their domestic markets, they are facing the same issues we see elsewhere: legacy companies eager to innovate new business models, start-ups trying to scale, and everyone trying to attract talent, reduce costs, and manage change.
I spent three days during December 2018 in Beijing, speaking at the ISODC conference and running an org design workshop for HR and OD leaders from a range of local and global companies. A few observations:
- Organization development and organization design may be new, but like everything else in China, it is getting big fast. 700 people were at this conference to learn about organization development. The demand for practical skills to guide complex organization change is significant.
- Real innovation is growing. Chinese business leaders are no longer just copying others or content to be a fast followers. I heard about fintech start-ups, digital start-ups, and sophisticated incubators in established companies as vigorous as any I have seen elsewhere. Haier, which is known in the United States as a purveyor of cheap refrigerators, is a leader in the “internet of things” in China (Fortune, Nov 2018).
Haier has built an innovation incubator with 20 platforms, relationships with over 100 universities, and an ecosystem of 5,000 companies. They provide venture capital, physical space, and technical advice to nurture dozens of internal and external start-up efforts. It is all part of a strategy to move from a white-box manufacturer to a company of connected machines.
Discussion of stronger intellectual property protection was encouraging to hear. What was largely a concern for western firms is now of increasing interest for local firms that are investing in innovations. The sense is that the IP regulatory framework is still weak, but that domestic pressure will help lead to change.
- I also heard a serious focus on organization culture. Again, the talk was not so different than we hear in other companies. How can we better motivate and foster innovation? How can we create more empowerment at the manager and employee levels? How can we incorporate an “agile” mindset in our ways of work?
For sure, there are some general “east/west” cultural differences in management practices, and the role of state in the ownership and management of enterprises certainly impacts the way that businesses have to be run. However, at an organization level, I heard tremendous interest in two of the cultural issues that are on leaders’ minds around the world: how to increase speed of decision-making and how to incent true entrepreneurial behavior.
Organization design frameworks translate. The simplicity and holistic nature of the Star Model resonated with the range of leaders and HR professionals I spoke with. There is a lot of eagerness to adopt and adapt proven models and tools. While a participative design process is certainly a new and challenging idea, I heard quite a bit of recognition that an autocratic approach is no longer effective in the complex environments of today.
Just like the shiny skyscrapers, new roads, and rail lines, organization development and design is going to be big in China. There will be plenty of demand for culturally-savvy external and internal OD consultants in the coming years. I look forward to being back soon. Meanwhile, you can find me on WeChat.