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How the acceptance of opposites feeds innovation in China Laurence Van Elegem - May 29, 2018

China Opposite

Day After Tomorrow Tour China - Day 2

One of the things I love the most about China is its natural acceptance of opposites as not being contradictory, and this view lying at the very basis of its leading position in innovation. This is something that struck me again on this second day of our Day After Tomorrow Tour China, and with two specific cases.

Collaboration and competition are the same

Western companies are absolutely smitten with the word collaboration. We want our employees to complement each other, help each other and preferably even like each other. We strive for harmony in a world that’s completely chaotic and complex, because we believe that this will make our employees feel and work better. The Chinese couldn’t care less about that. Zhang Ruimin from Haier once told a journalist that “We don’t need to balance! An unsteady and dynamic environment is the best way to keep everyone flexible.” His strategy to keep his team innovating on a permanent level is to copy the dynamics of the outside market within his company and to create an internal network of micro-companies that compete against each other. 

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Today, and yesterday, we saw the exact same approach. DJI for instance - the biggest drone producer in the world – is well known for launching one product in two versions, executed and lead by two competing teams. And it does so without fault. There is only one winner in this game and that’s DJI. The same goes for Tencent: it encourages different departments to come up with different strategies and then they end up choosing the best working ones. Two of its biggest products – QQ and WeChat – even have overlapping and competing functionalities, but they keep both to keep the company fresh and on its toes.

I’m pretty sure that a lot of companies over here will feel quite uncomfortable about this. But if you think about it, it’s only logical to copy the dynamics of the market inside your company. If the market moves fast, so should you, right? So why would you try to strive for balance and gentle collaboration inside when the outside is highly competitive? Of course the Chinese collaborate too, but they do understand the power of combining and accepting opposites like no other.

That’s exactly the reason why IP is losing its value in China, and fast. “When a product life cycle only lasts for 6 to 12 months”, as Jingwei Kang from Ingdan told us, why ever would you put time and money in protecting it? Open source is big in China, as we learned from David Li of Shenzhen Open Innovation Lab, because the market moves so fast that transparency and collaboration with competitors are needed to keep up the pace.

If you want to make a lot of money, offer your services for free

Another seeming contradiction feeding China’s innovation machine, is to ask nothing if you want to cash in big. If you want to sell a lot, you need scale and one of the most efficient ways to achieve that is to attract an ecosystem with a free offering. Ecosystems are big in China, because every last player is integrated into them, not just the ‘collaborative’ and non-competing ones. We learned from Ingdan’s Jingwei Kang that the best way to create a service is by gathering a crowd first with free online and offline events, collecting their data to get to know them better and only then, try to sell them something. That’s why 95% of Ingdan’s services are free and only 5% are monetized. True, with the size of the market of China, 5% can still be an enormous part.

Build a market first (but call it a community), and only after that, a product or a service that can be monetized. It’s true, the Chinese have not been the only ones to excel at this approach. I remember Jonas Kjellberg telling the UNLEASH audience that they needed to innovate in zeros: Skype started with a free service and was comfortable with the fact that they would figure out the business model later. But the Chinese seem to have taken this to further extremes. Tencent for instance started out with messenger service QQ and had no idea how to make money from that. Until they started to offer and monetize games via that social media – which is still one of its most successful business models today.

So market building before product building. We’ve seen this type of reversed thinking yesterday too, where UBTECH is preparing a market for the acceptance of a product that they are still developing, by creating robotic natives. Chinese logic is a lot different from ours, but we stand to learn a lot from how it’s so much more in touch with the market.      

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Laurence
Laurence Van Elegem

Laurence has more than 10 years of experience in marketing, communications and disruptive innovation. Passionately curious, she is fascinated by the impact of technology and...

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