Calypso Consulting

(A version of this article is published in CHO Magazine in May 2009)
Chinese employees are often accused of not being willing to take risks and therefore fail to be innovative.  And yet, many firms in China are trying to do new things and therefore require innovation.  In my view, risk-taking behavior in China is quite similar to other countries.  I believe the reason that China has the reputation of not taking risks is because of a few cultural patterns.  One is the fact that Chinese employees are generally not very quick to speak up.  Westerners often see this behavior as a sign of fear.  I think however, it is more about caution and a very strong desire to get something “just right.”  Getting something right is more important to most Chinese than being first.
The following two sayings are often used to show an apparent difference between Westerners and Chinese.  “The early bird gets the worm” is a Western proverb that is taught to Western children from a very young age.  The idea is that you are better off in life if you try something early.  On the other hand, the Chinese proverb “Qiang da chu tou niao” (“The first bird out gets shot.”) implies a need to be cautious.  But as noted, this does not mean that being early is unimportant.  Rather, in my opinion, being early is secondary to being right.  Furthermore, as I have written in earlier columns, Chinese employees tend to be deep thinkers and will do more preparation than Westerners before stating a position or taking a risk.  Chinese also tend to see some Westerners as too fast-talking and too fast-acting.  Most people in the world, including Americans, believe the current world economic crisis is the result of American investment bankers taking risks that they should not have.   
Next to consider is the Chinese concept of tao guang yang hui, (hiding your capabilities) especially in State Owned Enterprises.  While we do not see this often in private firms today, it is still quite common in SOEs.  The more you show of yourself, the more likelihood that there will be a mistake.  While this is a very old Chinese concept, it is still sometimes seen today as an example of why Chinese employees will not take risks.
 
During the past ten years or so, a sub-culture has arisen in China businesses, especially in multi-national firms.  These people, mostly the younger population of workers, have become very Westernized in their thinking.  These people see the need for more innovation and risk-taking.  Not encumbered by past history, but rather encouraged by their Western-thinking bosses to take risks, they are less afraid of failure than their predecessors.  This is a good sign for China. 
           
What Can be Done to Improve Innovation and Risk-Taking in Your Firm?
 
China is becoming more innovative than before.  But leaders cannot allow too much time to pass before innovation and risk-taking are a significant part of the business culture.  Here are a few best practices that will work in China.

• Make it clear that innovation is a requirement.  Put innovation and risk-taking competencies as part of everyone’s development plans.
• Hire people who are risk-takers.  Train your human resources staff to look for examples of innovation and risk-taking in the new hire interview. The presence of these competencies for a high tech firm is more important than the school that the candidate attended or the companies he or she worked for before.
• Reward people for innovations.  I am not only talking about payments for patents of royalty payments.  I am referring to a special program that empowers managers to grant bonuses to employees who take calculated risks, whether or not they bear fruit.
• Comfort people to know that there is no penalty for a mistake if made while trying to be innovative.
• Encourage the newest employees to take risks and to not feel shame if they do something wrong.

I have no doubt that the perceived lack of innovativeness in China will soon be a thing of the past.  I remember very clearly when, forty years ago, as Japan was rebuilding its country and on the road to becoming an economic superpower, the idea of something with the label “Made in Japan” was a joke.  It meant that the produce was probably cheap, poorly made, and copied from somewhere else.  Today, Japan is among the leaders in innovation from automobiles to appliances to high tech gadgetry.  There is no question that the same fate will hold true for China.  Until we are there however, it is the job of the business leader to prompt employees with the right programs and incentives to get there as quickly as possible.  This will only help your company to be more successful and will guarantee your success as a leader.