The China wave

Two CJBS faculty members recently wrote a paper on how Chinese companies were innovating faster than their Western competitors by focusing on the speed of R&D instead of quality. Their paper has gained considerable attention and was featured in a recent Economist article.

I attended a recent alumni dinner in Hong Kong where Eden Yin, one of the authors of the paper, and the Director of CJBS, Christoph Loch, spoke to CJBS alumni about these findings. In short, Chinese companies are industrialising the R&D process by modularising it, and then using larger numbers of less qualified technicians or researchers to work on each part. In comparison, Western companies would use a small number of very highly qualified Phds to tackle the same issue. In this way, Chinese companies are able to quickly scale up or down their R&D efforts. Chinese companies are also more willing to push through their beta products to market, gather customer feedback and make rapid changes. For example xiaomi, the largest Chinese smartphone company, can make updates to their OS every few weeks, compared to Apple who only updates iOS annually. Chinese companies are also willing to take more risks in their product launches by using fewer tests, e.g. xiaomi only uses 200 tests compared to Nokia’s 2000 tests of each product.

The alumni discussion was fascinating but I will only focus on two aspects. The first was a question on whether Chinese companies could get away with this approach because they are able to experiment in a large, easily segmented and forgiving Chinese market that had lower expectations of a Chinese product. Eden felt this was definitely the case where Apple could not afford anything less than a near-perfect product launch because it focused on the high-end premium market. Xiaomi could easily launch a product in one city to poor feedback and make rapid changes before a more large-scale launch.

The second aspect was about organisation. Eden and Christoph made the point that while Western companies were flatter organisations, they were still very hierarchical and split by functional areas which hindered rapid innovation. In contrast, Chinese companies resembled a network with the CEO at the centre. There was a stronger social glue within many Chinese companies that allowed them to innovate across functions once a problem had been identified.

These two aspects got me thinking about the Cambridge MBA. The MBA is a premium product and our position is more similar to Apple than Xiaomi in that we have to be more careful in rolling out product launches. This is a point that I feel explains why full-time MBAs seem slower to innovate compared to MOOCs. On the other hand, with the benefit of a suite of programmes in the school, we are able to learn from the experiences of our colleagues and roll out innovations that have been tried out in other programmes. On the other hand, we are in the midst of a programme review that will roll out changes to the Cambridge MBA over the next few years.

The Cambridge MBA has always emphasised collaborative leadership as a pillar of our students’ learning. At the risk of succumbing to confirmation bias, Eden’s findings does suggest that we are on the right track in emphasising collaboration in the Cambridge MBA.

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