ChinnovationChapter 4: Star Innovators Choose the Right People for the Right Jobs

Star Innovators Choose the Right People for the Right Jobs

Hire two people who are paid the salary of three people to do the work of four people

—Wayne Dai, founder, chairman, president, and CEO of Verisilicon Holdings

Star Innovators Choose the Right People for the Right Jobs

Your rivals may copy all of your competitive edges except one. So, top companies in the world are now aware that no matter what

business they are in, their real business is to develop leaders!—Fortune, October 1, 2007

How Do You Expand in China When You Cannot Find and Keep Top People?Talent is becoming more and more critical to corporate performance

High turnover of qualified local talent is a major obstacle in the goal of growing in China

In China, HR managers for IT firms are finding it difficult to know who among a pool of local graduates would be best for an available position;

ditto for talented people who want to know what opportunities exist around the company and where to find others they might like to work with.

The unclear pathway of communication leads to hiring bottlenecks, and is a thorn in the flesh for IT companies in China trying to grow big.

Talent-Centered Strategy for Sustainable GrowthFounded in 1991, by December 2010, Neusoft employed over 18,000 employees

Neusoft has an employee relations center in the human resource department, responsible for providing some social events and entertainment, organizing sports teams, and a comprehensive employee website for the company's geographically dispersed workforce.

For those who do, it's good reason to work there.

Neusoft employees have a strong bond with the company.

Neusoft's stated values of transparency, directness, and trust reinforce the way that software engineers work together to develop superior products

Liu Jiren, founder of Neusoft, puts it this way:As a university professor from an academic background, I attached great importance particularly to basic research and long-term development.

So in the past 19 years, we have remained an open and simple culture with the spirit of innovation, and continuously made long-term investments to build capabilities to tackle challenges and embrace opportunities.

Therefore, we can say that we grasped an appropriate opportunity at the very beginning and stayed on the right route in the following years, which has well aligned our abilities with our goals.

Jiang Xipei of Far East puts it this way:Choose a supportive partner. You are not alone; rather, you are building a team.

You cannot do everything by yourself.

Your partner should have complementary skillsets and competencies to support you.

To do that, you need to nurture a fine corporate culture.

Although it is not always necessary for a good leader to have a specific set of skills, he cannot work alone.

He needs to be able to attract and bond talents in order to create a dynamic team for his business.

Wayne Dai, founder, chairman, president, and CEO of Verisilicon Holdings, has a simple rule:How do you retain people in Shanghai?

I tell people if you come, I will give you a down payment for an apartment.

We don't hire fresh graduates. They don't know what they are doing.

You must have changed jobs once but not many times.

I will only hire someone if everyone likes him/her.

Wayne Dai, founder, chairman, president, and CEO of Verisilicon Holdings, has a simple rule:You have to make the person think more about a career path.

It's working, since everyone volunteers to put in overtime [which you cannot compel in China].

Turnover is less than 5 percent.

We financed an eight-day trip to Hong Kong and Taiwan, which is cheaper than paying for overtime.

We hold a party every month for whoever has a birthday. Little things matter a lot.

The CEO's role is to keep the whole staff excited and happy. Dai elaborates:Culture is very important.

For example, we sponsor a string orchestra and invite all our customers plus the CEOs from the foundries. People say we are a high-tech company that sponsors concerts.

We sponsor a ping pong tournament. Ping pong is cheap and a match is over fast—every start-up should have a table for employees to play.

We did a competition among 100 top artists in China and picked 12 [images] for a nice calendar, with a customized version for the Japanese.

We have a sculpture park in front of our building.

IC design is an art, not a science, because two different people will create two different designs, so we emphasize art.

Retention is not just a function of culture. Dai further advises:Clean rest rooms are a big problem in China. One sign a company's management is good is if it can keep the rest rooms clean.

People at Verisilicon decorate their cubicles. Their chairs are the same as mine, since we spend so much time in our chair.

These little things are noticed.

The first thing I look at in a Shanghai company is the quality of the cafeteria. Without a good lunch, there is no productivity.

Retention is not just a function of culture. Dai further advises:Little things create loyalty,

Dai points out: “

I do small things like showing students how to shop and cook Chinese food if they are in the U.S.

You cannot get loyalty without trust, so I trust people and care about them. Listen to the people around you and trust them.

Taiwan companies don't know how to retain people.”

Talent-Centered Strategy for Sustainable Growth

Create a nurturing and humming culture where people are challenged, excited, and—most important—bonded to the

company. This takes trust and paying attention to small details.

Education for Life

To retain talent, teach and impart skillsets. Talent stay if they feel they are learning and increasing in net worth.

Education for LifeAll Innovators place a strong emphasis on continuous lifelong education

Wu Jianguang of Really Sports has launched his “Really University” to transfer his business knowledge, methods, and philosophies to the younger generations

Wu Jianguang of Really Sports explainsWe cannot just depend on foreign education and trainings.

We actually go through our own “Really Universities” and we break down big issues and situations to smaller simpler issues and situations which can be applied to smaller circumstances.

This will be easier to apply and to understand.

There is also a mentorship type of model where we will actually come in and teach and guide the students along the way.

In China, there is really a severe shortage of such trainings and programs.

Most Chinese do not know of the importance.

Case of MetersbonweZhou Chengjian, a former tailorturned Zhejiang entrepreneur, created a trendy fashion brand retailer, Metersbonwe.

The retailer successfully targets China's masses (especially the 18-to-25-year-old set), thanks in part to savvy marketing that includes hiring pop stars as spokespeople and fashion consultants.

Case of MetersbonweZhou adopts the strategy of constantly refreshing the store's products, launching 3,000 designs in a year.

He opened his first store in 1995 and now has 2,200 stores.

Metersbonwe's market share is the champion among 12 domestic casual garment companies.

When it went public in August 2008, the company raised $200 million and emerged as one of China's most successful public offerings of the year, rising 51.82 percent from the first day of its IPO.

Case of MetersbonweZhou Chengjian is an exemplary figure in Wenzhou. Nearly all Wenzhou citizens dream of entrepreneurship, hoping to succeed like Zhou. There are three secrets to the success of Wenzhou entrepreneurs, he says:

Tireless in starting up

Restless in development

Relentless in innovation

In their eyes, there is only a weak management, never a weak market.

Case of MetersbonweThe core innovation of Metersbonwe is its novel management model:

the company focuses on high-value-added links such as R&D, channels, and logistics, and outsources low-value-added functions such as manufacturing and sales (via franchising and bringing in professional consulting firms).

Five Ms of Zhejiang EntrepreneursMarkets

Masses

Mobility

Management

Meshing

Choose large growing markets, find good management, mesh best practices from other industries, be mobile, and gather

strength in masses

Wenzhou's Collective Model of Entrepreneurship

The Wenzhou way of making money is to set up businesses and drop those that don't make money.

No one puts all their eggs in one basket.

“In Wenzhou, every single person deals with real estate,” Wu Jianguang says. “Everyone is pushing up the prices of buildings. We dare to do stuff. We're not scared. And everyone wants to be his/her own boss.”

Black SwansChinese innovators react rapidly to “black swans,” a term coined by Nassim Nicholas Taleb to explain the existence and occurrence of high-impact, hard-to-predict, and rare events that are beyond the realm of normal expectations.

When Michael Jackson passed away in June 2009, the world saw an outpouring of grief and unprecedented global eulogy as people took to the streets in mourning.

Four days later, Qiu Xuefan and a few quick-thinking business friends were making plans to build a Neverland Ranch in China.

They began to collect Jackson's heritage items, working through both public auctions and private channels.

Black SwansQiu elaborates:

My liking for Michael Jackson prompted me to initiate this business idea. I am a fanof his and his creativity. Without the help of the commercial hand to help extendand preserve it, it will come to a naught.In the 21st century, it is not enough to just have the money; you need a legendarycareer and new creations.Culture is the precursor to creation; the absence of culture will mean the absenceof one's roots. In order to make changes or to create things, we must all be awareof our cultural roots.It is important to know how to view and maintain your wealth. Wealth maydisappear with you when your time is up; what remains is your creation or culturethat you leave behind.

Wenzhou's Collective Model of Entrepreneurship

Success in this world is always a matter of individual effort, yet you will only be deceiving yourself if you believe that you can

succeed without the cooperation of other people.

Talent-centered strategy for sustainable growth. Create a nurturing and humming culture where people are challenged, excited, and—most important—bonded to the company. This takes trust and paying attention to small details.

Education for life. To retain talent, teach and impart skillsets. Talent stay if they feel they are learning and increasing in net worth.

Manage Differently in the East and WestFirst, Chinese companies have no mission statements or goals. You just tell them what to do.

Second, you cannot empower employees or each one thinks he is the emperor—each of your staff will form a little fiefdom of his own.

Forget checks and balances—delegate nothing. In China, the boss should have absolute power.

No one can have any authority except you, because people will abuse any authority you delegate to them.

Manage Differently in the East and West

Third, teamwork is hard, because every member of the staff will lobby you for favors and they all second-guess one another.

Fourth, efficiency and lack of redundancy is a Western concept.

Redundancy is much better in China—redundant people are crucial.

You can't let any staff member [feel] irreplaceable. You lose control of your company when this happens.

Manage Differently in the East and WestLeading people in China means being a caretaker for employees.

On having faith from the start that one could build an organization and lead people, Jane Yan elaborates,

“I have never asked myself that question. I think leadership in China means more things than it does in other countries.

Leadership in China, besides all the requirements that you see for entrepreneurs in Western countries, leadership in China means taking care of your employees; your subordinates.”

Manage Differently in the East and West

In China, spend time to communicate with the staff and understand the use of carrots and sticks. Retain absolute power.

Magnet for TalentLee Kaifu is no stranger to innovation.

During his tenure at Google, Lee built a 700-person organization with many successes.

He now runs Innovation Works, a business creation platform funded by an elite group of venture capital groups and investors including WI Harper Group, Steve Chen (co-founder of YouTube), Foxconn Technology Group, Lenovo Group, and New Oriental Education & Technology Group.

Magnet for TalentInnovation Works looks for young talent with engineering prowess and some entrepreneurial-minded talent from China.

Lee prides himself on his doggedness in chasing after talent.

One year while at Google, he made offers to several graduates, one of whom initially rejected the offer.

He called the student, found out that his girlfriend thought Google, was a bit of a start-up, then asked for his girlfriend's number and called her up.

That year, he achieved a 100 percent offer acceptance rate.

Magnet for TalentOn nurturing human capital, Wu Chihfeng says:

“I did relatively well in innovation but did not nurture human capital sufficiently.

If I can do it again, I would like to recruit some university graduates or specialized workers every year and nurture them from the start.

On hindsight, if I had done this five years ago, I would have accumulated a pool of talent by now.

It is still worthwhile even if only two out of four talented executives remain in the company every year.”

Magnet for Talent

Be a magnet for talent and be doggedly persistent in attracting talent. Treat talent as though they are family.

People Over ProductMake a list of the attributes of your team. Then, make a list of the

best-selling products in your industry.

Model the behavior of the team who made that and you are in the right direction.

To keep abreast of competition, make a list of the attributes of the team of your competitors.

(Do they have more desirable attributes and are they outperforming you?)

Build a Complementary Team

Find partners with complementary skillsets. Companies at different stages of growth require different mixes of talent—

regardless, choose people who can provide the best service to customers.

Soldiers who do not want to be generals are not good soldiers; those who are not good soldiers can never be generals.

Winning the Hearts and Minds of StaffSuccessful entrepreneurs treasure innovators who build from the base.

Wu Jianguang explains that he does not lack basic financial, technical, or sales staff, but he never has enough of the talent who can help to innovate and change the business model.

Winning the Hearts and Minds of StaffHe says:

Most of the people tend to follow the prescribed business model and do not have the mind-set for innovation and change.

For the past few years, by working with the two big branded companies, we have established a very strong base.

But now I think it is time for us to take a further step instead of relying on other brands. We should lead the market by ourselves.

Winning the Hearts and Minds of StaffHe says:

For the past 20 years, the branded companies have been leading the business of retailers. I hope in next 20 years, retailers in China can lead the business of those branded companies.

That's why you need to have strong capabilities to innovate, plus a good team and a viable business model to capture your consumers.

Whoever can capture the consumers will be the leader the next 20 years.

Winning the Hearts and Minds of StaffWu adds:

On the surface, you see progress, but people may not care about that in their hearts.

Everyone wants to just make money and they do not care about anything else.

If you do not have a strong and principled mentality, it will be easy for you to lose your way.

Like the Japanese, they are very serious and task oriented and they are very disciplined. Some Chinese are very obsessed with getting rich—”get rich overnight”—and so we dabble in the stock markets and speculate mindlessly.

Unifying the Thought of PeopleWu stresses the principle of winning the hearts and minds of the people, that is, aligning their goals with ours.

Asked how to do this, Wu replied:

“I think we have to have a united vision and approach. Our mission has to be clear and we have to work together.”

Unifying the Thought of PeopleWhat sparks innovation?

People.

What sparks people?

Inspiring ideas that meet a need.

Unifying the Thought of PeopleThe CEO of a venture-backed hardware company explains that he looks for entrepreneurial employees. He defines the differences between an entrepreneur and an employee in these terms:

Entrepreneur

A person who trades time for growth and freedom

A person with a positive attitude even if he/she fails. (A never-say-die attitude)

A courageous person

A person with takes ownership

A person with high business drive

A person who has passion for what he/she does

A person who stays focused and believes in himself/herself

A risk-taker

Unifying the Thought of PeopleEmployee

A person who trades time for money and security

A person who calculates the odds

A cautious person who is unable to perform to the max of his/her capabilities

A person who does not feel a need for ownership

A person with low business drive

A person who wants security—a guaranteed stable pay regardless of whether the company makes money

A carefree person

A person who fears taking risks

Unifying the Thought of People

Treasure innovators and excite your staff. Ask yourself: “Why does your organization exist?”

A Blend of New and Old BloodAsked about future expansion plans, Wu confides:

In five years' time, I hope Really can be No. 1. So the first step for us is to establish our business model, distribution channels, and networks well. Second, we need to have a strong team. We also need sufficient capital to support the business. We are to have our IPO in the next three years. We hope to attract more talent to join us with the launch of the IPO, so that we can take a step out of China. I hope Really does not only belong to me but also to the employees of Really. Everyone can take ownership of this company to develop it.

A Blend of New and Old Blood

A mix of old and new blood allows continuity.

Importing Best PracticesNeusoft's talent strategy emphasizes financial rewards, company culture, and the opportunity for growth and learning to hold onto its key employees.

Liu had the company offer upscale housing for young employees on its campus.

This move had the double benefit of attracting and retaining excellent young engineers to work here, while enabling them to spend as little time as possible commuting to work.

Importing Best PracticesLiu is not alone in leveraging on universities.

To recruit talent, Jane Yan went to Tsinghua University and the China Academy of Sciences. She recalls:

I came back formally in 1996. However, I came back earlier to meet with several professors teaching in the computer sciences department and ask them to recommend good students to me. I think that was a better way to hire people. At that time, I had a PhD student from the Academy of Sciences working as an architect and managing the designs of the products. I also had several hires from Tsinghua University. And then in China, there are job fairs where students can submit their applications for jobs.

Importing Best PracticesOn scouting for R&D talent and innovative ideas, Wu Chihfeng says his management style is more about keeping an open mind for ideas, then consolidating and picking the better ones for execution.

“To me,” he says, “there is nothing right or wrong about a strategy. The most important thing is to believe in it, execute it, and see it through.”

Importing Best Practices

The best leaders retain control but create the environment for their staff to apply their talent.

The author with Jane Yan, CEO of Beijing Venus Information Technology, Inc. (Venustech).

Transition to Product-Based InnovationWhen asked about the difficulty of scaling up multiple product lines, Jane Yan explains:

We did not know about the process. Even now, it's not completed; we can do better.

First of all, we started to understand the market.

We knew that intrusion detection [the firm's original product] was insufficient to sustain our growth, so we started to create a team to observe the market.

Based on our research, we started to march into those areas, but still, we did not have complete information.

Transition to Product-Based InnovationAt that time, we paid IBM for consulting services and integrated product development because we knew it was essential for product management.

When you have multiple product lines, you need to balance the resources of the company, and we started to think about it in this way.

Transition to Product-Based Innovation

Focus on the factors you can control. Streamline efforts into areas of high productivity.