The Olympics - Inspiring Change

16th September 2008 – Shanghai

Wow! What a surreal life. I sit in my hotel room overlooking the unstoppable growth of Shanghai; the complex mix of massive construction and modern life, juxtaposed with people still pulling hand carts, whilst watching the global news of significant, some might say tectonic shifts in the American financial markets.

As someone who worked for an American Investment bank in the late 1980’s (one of the first “big names” to be bought by a “normal” bank), I have to say that I am neither shocked, startled nor amazed.

But back to the interesting stuff – China! This is my fourth trip to China and my first to Shanghai. Each time that I have been here, I have been impressed and amazed by the pace of change and the apparent lack of real awareness in the “west” as to the impact that this change will have on our businesses.

On this trip however I have learnt something fascinating, and yes it is linked to the Olympics. As we in the UK watched both the Olympics and the Para-Olympics and were rightly impressed by the incredible efforts and results from our competitors, the Chinese were experiencing something quite different.

I asked several local people what they enjoyed most about the Olympics and there answers were consistent. No it wasn’t a sense of pride that they won so many medals, it was a sense of confidence!
A sense of confidence that China could not just stage the Olympics but that they could now truly compete on the Global stage. A sense that they could earn the respect of the rest of the world.

Now there’s an interesting lesson in Inspiring Change. For several years now the rest of the world has grown increasingly nervous about the potential power of the Chinese Economy but their own people were not yet confident that they could actually make it happen. Now they are!

It is seldom the logic that makes change happen; it is the faith that is actually possible. What are you as leaders doing to ensure that your people have that level of faith that the changes that you are promoting are actually possible? What demonstrations can you create to show just what is possible? How can you create a sense of hope for your people?

The Chinese economy is a fascinating example of change at pace. For several years now the main engine of growth has been the perception that China was a low cost economy.

That is now changing, not only has the cost of living steadily increased in China which has raised employment costs, but the rapid increase in the price of oil – hence shipping – has motivated several businesses in the US, for example, to “repatriate” manufacturing. Many European businesses are still looking East but closer to home in Central and Eastern Europe. So China can no longer compete purely on a cost basis, they have to master quality and customer service at a world class level.

If you think about it, the Chinese economy has, in just a few short decades or even years gone through a cycle that lasted for a century or more in Europe and at many decades in the USA.

So how are they going to cope?

Well according to many of the people that I have spoken to they see the need to Leapfrog. This means that they are not happy to train their people with the ideas, approaches and technology that sufficed in the “west” 20, 10 or even 5 years ago. After all why learn how successful businesses were run in an age and environment that does not reflect your own?

Since this is your competition that we are talking about, how modern are your development processes? How are you trying to “Leapfrog” your competition by investing in your people?

Equally, talent is a major problem in this market. Such incredible growth puts great pressure on the talent bank. In 2005, McKinsey and Company laid out the need that from an existing base of about 3,000 leaders, the Chinese had to develop 75,000 new leaders in the next 10-15 years.

Why? Because they realise that they cannot simply continue to “buy it in”, employing from outside the region or head hunting from competitors is not just expensive, it is totally unsustainable.

How sustainable is your talent pipeline? How many leaders do you need to be preparing for the future? Who are they and what are you doing to actively develop them?

The final comment on the TV before I finally decided that the time had come to turn it off was “and the US is still borrowing money from China to buy oil from the Middle East”. HMMM how much longer will debt-fuelled economies lead the world? Something has to change!