Leadership and Management Challenges Driving Innovation in China

By David De Cremer

If innovation is defining what drives success in demanding, volatile and uncertain markets, then China can be seen as a situation where all these forces meet. A Chinese company that is known for having created a leadership culture with a focus on innovation and in doing this became a world class player concerns Huawei. The article examines how the right management and leadership culture drives China into being an innovative and sustainable country.  

 

If asked which country wants to be the most innovative country in the world, many observers would likely vote for China. Evidence abound that the country is taking innovation more seriously than any other country at the moment. As a matter of fact, if innovation is defining what drives success in demanding, volatile and uncertain markets, then China can be seen as a situation where all these forces meet. Look, for example, at the following innovation targets: China has set forward the ambition to be the world leader (a) in AI by 2030, (b) in being the most innovative-driven society by 2035, and (c) in science and technology by 2050. 

Innovation is the driving force behind a prosperous society and thriving businesses, and this fact has especially been recognised by China when they entered the era of the new economy. An era where a clear shift from the traditional manufacturing economy that defined China for many years (i.e. China being regarded as the factory of the world) took place to a focus on a service-oriented economy where quality, adding value and the use of sustainable business models became key words. In addition, the implementation of a service-driven economic system also added new layers of complexity when it comes down to building a business that is competitive and able to survive. The Chinese government has indeed made clear that with the era of the new economy, the entire Chinese society needs to take on some important duties to make the country grow. And, in that mission of growth, innovation plays a key role. 

Although innovation as the primary target to pursue has become an important guideline in Chinese government strategies, for a long time, Chinese companies have not been recognised for being good at it.

However, although innovation as the primary target to pursue has become an important guideline in Chinese government strategies, for a long time, Chinese companies have not been recognised for being good at it. As Frynas, Mol, and Mellahi (2018, p. 75) note, “innovative firms in China are said to excel at cost reduction, accelerated product development and networked production”. In the past, Chinese companies lagged behind in their focus on the right management approach that installs the leadership to create the right conditions to support creativity and management innovation. Has this situation in the meantime improved and why is such a leadership focus important?

The spirit of innovation means that we continue to plan, invest in, and create the future, while seeking continuous self-improvement and development. This is an interesting challenge. Companies can encourage and foster such a drive of innovation only if they succeed in building the right type of leadership culture to motivate people and help translate the goals and purpose of the company into a strategy that thrives in highly volatile and uncertain market environments. In the present article, I refer to leadership culture as the leadership abilities enacted to ensure innovation is the outcome of the work culture. This can be achieved by making the right decisions to ensure the growth and adaptability of the company in pursuit of innovation.

 
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About the Author

David De Cremer is Provost Chair, Professor of Management and Organisation at National University of Singapore (NUS) Business School, a fellow at the University of Cambridge, and a fellow at the Hoover Institution at Stanford University. Before moving to NUS he was the KPMG endowed Professor in Management Studies at Cambridge Judge Business School. He has published over more than 250 academic articles and book chapters and is the author of the book Pro-active Leadership: How to overcome procrastination and be a bold decision-maker and co-author of “Huawei: Leadership, culture and connectivity”.

References
1. De Cremer, D. (2018). On the joy of not being a listed company. The World Financial Review, March-April, 26-29.
2. Frynas, J.G., Mol, M.J., & Mellahi, K. (2018). Management innovation in China: Haier’s Rendanheyi. California Management Review, 61(1), 71-93.
3. Grant, A. (2017). Originals. Ebury Publishing: London.
4. Tao, T., De Cremer, D., & Chunbo, W. (2017). Huawei: Leadership, culture and connectivity. Sage Publishing.