Leadership change continued

If your coaching has gotten you nowhere with your Chinese General Manager, there’s really only one answer: fire him. Making sure you understand what constitutes effective coaching (vs. just yelling at him to improve his metrics) is important, but assuming you you did that part right, it’s the only move left. Check out China Law Blog’s comments here.

I’m assuming we’re talking about a WOFE and the GM is Chinese (in general a desirable goal). If you’re dealing with an expat you may have other options. If you’re in a JV the tactics and approach would be quite different.

What happened to my constant conciliatory tone? The problem is you can’t circumvent him and any change of significance will be undermining at best.

You’re going to need various board resolutions to dismiss, change/pass on titles, and so forth, but before you make any move you must be crystal clear on a few things:

– Who is the legal rep, and what degree of authority does the GM have? If your legal rep is the GM you’re trying to dismiss or one of his cronies, you’re in for a rough time.
– Where are the company seals and registration papers? Is the same legal rep/seal listed on everything?
– Who has access to the bank accounts, both in person and online? Again, is the same seal/rep listed on everything? Who has the relationship with the bank?
– Whose side is the head accountant/lawyer on?

Business License. Find it.

More on changing the legal rep here.

Unfortunately if you don’t already know the answers, learning them may tip your hand. However, you still need to get there. Under the guise of some sort of internal audit or other housekeeping is your best shot.

In general, a massive severance with a face-saving narrative should get you most of the way there, but if she senses you don’t have the slightest clue what you’re doing, you have an even heftier payout best case, and at worst, total destruction. I’m serious; I’ve seen companies destroyed at lower than the GM level.

So you need to be as prepared as possible and have mapped out most contingencies before you even start visible moves, never mind have the initial conversation. Riding the balance of a mutually amicable breakup while appearing strong enough to not get steam rolled can be tough. To remind you of how important face is to the GM, let’s take a look at a typical GM’s office:

Huge desk, huge space. More reception than work area.

How do you buy her out? Minimize damage to your accounts, operation, reputation, and morale? What’s the succession plan?

You need a team and/or a ringer even if you have a trusted local #2 who can take over relatively seamlessly. More on that later, but for now, clear the calendar of your legal rep.

 

Divided loyalties and the complex nature of guanxi

Understand where you stand to account for all the information and action you’re missing.

So you’ve read about guanxi 关系, the network of connections and obligations people in Chinese society have to one another.

Besides the colossal mistake of taking an agent at his word, I find the most common error is in overestimating the strength of your relations. A basic milestone is if you’ve met their family and been to their house as the sole guest. If you haven’t got there, don’t expect much that calls for any real sacrifice.

As an outsider we’ll almost never make it to the true inner circle and even if there, it means different things than what we expect. You may have helped their kids get into Harvard, made them millions of dollars, ask Niel Heywood how that turned out.

You have to remember that 90% of your relations are the economic benefits and validity of the business deal.

Since I have a few people asking about leadership change, I’ll frame it in the context of running an operation in China where you know you have to change something, but not entirely sure what.

Probably the most frustrating thing is how no one gives you information on what’s really going on, whether that’s theft, sleeping on the job, making critical errors, or worse. Further, not all of what they ‘know’ is even factual; mix in a healthy dose of rumour and bias, and you may begin to recognize a certain kind of pity in their eyes at your ignorance.

First of all, you can’t take it personally. Part of it is habit; they’re not actively hiding everything so much as exercising the default mode of prudence. Also recall the penchant for accepting shared consequences unless it’s too grievous too absorb.

Secondly, they may have more obligation (guanxi) to the bad seeds than the guy who signs the checks. Until you’ve demonstrated the future is better, they may waffle on compliance to some pretty big directives. If you have to fire some people, expect them to continue to know everything that’s going on, perhaps with continued access to certain resources, with influence gradually tapering off. To get some perspective on this, think about how much information you could get from a former colleague yourself. It’s the foreignness that amplifies the sense of urgency or paranoia.

Managing this, especially if you’re only in country part-time, is a huge undertaking. You’ll need help. (contact me here)

The most important thing to do (after checking your accounts and inventory) is to identify who you can trust and for what. This is a key distinction: there are many honest employees who may eventually tell you what you need when you’re one on one but still don’t have the wherewithal to take any sort of influencer role in the office. So you not only have to identify who’s fundamentally on your side, but who can accomplish what, and how to protect them.

It’s not that different from a highly political domestic office, except you can’t communicate with 90% of the staff and no one tells the truth.

Now you must accelerate developing your relationship with these people, and that means going out with them to dinner/tea/what-have-you one on one. Don’t publicize it, which means not using company resources such as the driver (great source of intel by the way).

You will hopefully start getting information you suspected was true, but also be surprised at the circus going on behind the scenes. Don’t scare them with anger or exasperation; just listen and digest. It’s been going on this whole time and it’s not rubble yet. Ask them for advice. The trick here is to get maximum benefit, let them know you trust them, but keep them from the temptation of sliding into a role of unwarranted influence. It’s for their own protection as well as yours.

An aside here: there may be staff that you eventually need to let go, but are either critical for now, or you want to give them an honest shot at turning around but will ultimately fall short. Unless they hold critical IP, I recommend working as if you implicitly trust them, off balance them by showing what you know now and again, and just seeing how it plays out. You’ll never win them over if you wall them off, so in that case it’s better to just let them go early.

You not only need to figure out what you can fix and how, but strategize how to stay productive while accommodating for some medium-term deficiencies. If you’ve read this far, you probably already know the truth: you need new leadership. More on this later.

Accererate Product Design with 3D Printing

Improving quality & time to market with “real-time prototyping”

If your supplier does any degree of product design or prototyping, 3D printing will bring you closer together than any midnight Skype call can. Ever leave ergonomic or other non-critical improvements on the table because the project’s behind schedule as is? The one thing Apple’s success has taught us is that it’s almost certainly a terrible tradeoff. So we need a way to compress the design phase to allow for obsessive perfection. Check out how GE realized that “A prototype is worth a thousand meetings.”

Even when the product design is completed before hand off, how many times have there been delays at DFM (Design for Manufacturing) or late tooling adjustments because no one’s sure if the form factor can be touched? The answer: just make it!

Iterate daily if need be with a physical model

Both GrabCAD and MakerBot have done a great job of explaining the benefits of this process by using a desktop-level resource to either complement or supplant industrial rapid prototyping. One or two same-day iterations quickly justifies an investment that can cost less than a workstation or plotter.

Further, once you’re trained your suppliers with this framework, not only will it raise their game because your expectations have increased, it allows you to shift more responsibility to them with confidence that nothing will be lost, freeing your own product team for higher value-add tasks.

As an added note, MakerBot will release new composite materials this year, allowing for short-run production of custom parts that you might otherwise go to the parts bin for. This is of particular application to accessories such as buckles, buttons, fasteners, etc…in the fashion industry where uniqueness is valued for its own sake.

Alfred McCoy on Geopolitics

This was so good I thought I should have a dedicated re-post: The Geopolitics of American Decline

In it he points out that the Euro-Asian landmass is the most compelling physical reality of Earth as it relates to political and economic power. With demographics also on the Asian side, the Chinese strategy of economic interdependence can lead to a political dominance without the scale of military power projection traditional powers have required for similar effect.

I find that articles such as this draw the ire of people who read it as anti-American. He’s doing analysis, not cheering for the ‘other’ side. I enjoyed the cogent exposition and then synthesis.

June 4, 1989 – a date erased from memory

In your travels throughout China, you may be surprised how many educated Chinese, even in private conversation, are either unaware or only vaguely aware of the events at the pro-democracy demonstrations in Tiananmen Square.

The fact that only 20 years after the fact has there been noticeable (I’m measuring as a general China observer, not a human rights specialist) outcry from “80’s babies” overseas for study shows how incredibly successful the censorship campaign has been.

I urge you to be prudently expository without editorializing. Listen instead to their feedback, and don’t dismiss it as the uninformed opinion of the oppressed. They are perfectly aware there is censorship in China. However, they are also quite familiar with how ignorant foreigners are of Chinese reality.

I find phrasing such as, “…our media reported it like this…and it was similar to reports from most of the rest of the world…what do you (or their parents) think? Do you think there was too much control or worry by the Central Government about this news?” to be more engaging than expressions of pity, outrage, or chastising of their government.

By the way, Tiananmen, 天安门， means Gate of Heavenly Peace. Ironic, but recall that for the Chinese, it’s a square outside the Forbidden City of great historical and political significance irrespective of 1989. The average Westerner has only heard of it in the context of the ’89 protests, and that’s only the beginning of our ignorance.

A well-known photo remembering 89-6-4 and AK-47’s.