Issue NO. 22
By Josep M. Coll*
Emerging markets are not only opening new doors of business and economic opportunities, but redefining our understanding of the world and its globalization dynamics. Any economic empire is fueled by the culture and soft power that underlie it. This was the case for the West, more broadly, with the renaissance that propelled the industrial revolution. Major advancements in technological and scientific developments spurred a new socioeconomic system that became a global imperative, which we now commonly refer to as capitalism. As the US emerged as the biggest economic power, globalization was fundamentally underwritten by American values.
Thus, the current economic and political order has been shaped intellectually by the West. For instance, the latest science of management has been incubated in the most prestigious American universities, with prominent intellectuals such as Friedman, Porter, Drucker or Kotler having defined the models and conceptual frameworks that still are studied in major business schools. This formula was transplanted across emerging markets in the form of science, industrialization, economic growth and competitiveness.
Once a global leader prior to the current economic order, China grew to embrace capitalism, leaving behind a spiritual approach to life and the universe which could not compete. Today, we can expect many of the vital opportunities and surprising challenges in the future to stem from East Asia as economic and political power is increasingly wrought by Asian multinationals in a shifting global order.
And yet, Asian corporations will bring along with them their own distinctive corporate cultures rooted in their own values. As China reaches new levels of economic development and modernization, the challenge remains not only in terms of innovation for prosperity, but also in building a harmonious society, a long-held national concept.
The Rise of Global East-Asian Management
To date, the East-Asian management approach is largely based on imitating successful practices in the West and speeding up their execution to “catch up.” Sony, Samsung, or Lenovo built empires by Westernizing its management, adapted to its distinctive cultural environments. However, there is an untapped potential for an East-Asian management approach with a global outreach, which may be referred to as Global East-Asian Management. This approach draws on perennial schools of thought like Taoism, Buddhism and Confucianism, which some corporations are drawing on heavily to realize their potential. For instance, Jack Ma, chairman of Alibaba, is adopting a blend of these theories, along with Western management practices, to shape a unique corporate culture. This is enriched by means of incorporating a renewed view of management, transformation, empowerment, teamwork, as well as learning and talent development practices.
It is in Asia’s hands to also take a global leadership role by reconnecting with knowledge indigenous to its region. This can have profound implications: on the one hand, it is likely to empower Asian multinationals and other organizations with the application of value generation processes that stem from their own intellectual background; on the other hand, it can contribute to advancing further systemic thinking rooted in sustainable management. As companies today struggle to adapt to a fast-changing VUCA world amidst the fourth industrial revolution and the crisis of crony capitalism, introducing a sustainable management system is almost an imperative for any organization that aspires to adapt and lead the way towards a new business paradigm.
The Zen Business model
Against this backdrop, Zen Business emerges as a holistic management model that is intellectually born in East Asia. It is both a management philosophy and a method. It is an organic model of management (bio-model) and business transformation for organizations that want to improve their impact in favor of a more harmonic and sustainable path. It is conceptually informed by the two systemic theories of Taoism: 1) Yinyang and 2) the Wu Xing (Five Elements). For centuries they have widely been applied in other fields such as medicine, martial arts or architecture, but not yet in organizational management to date.
Conceptual framework and model dynamics
The application of Yinyang brings a new framework for corporations that embraces change as a constant variable. Adaptation has become the new corporate imperative. Through the concepts of interdependence, paradox and balance, the organization introduces a series of Yin strategies and practices that counterbalance a more traditional Yang approach in business that is associated with more aggressive capitalism. The result is a balanced organization that begins to transcend the classic business paradigm of profit maximization. Rather, it aims at harmonizing the person with the organization as well as society as a system. The organization is a living organism conceived of as a small universe that operates in a complex collaborative system of interaction among stakeholders, including nature. The focus is no longer on isolated business units but rather on the relationship between creative and destructive value processes that shape system dynamics. Sustainable impact becomes the new guiding metric. This purpose-driven company gradually introduces a set of Yin-wise practices, characterized by care for personal development (not just career advancement), decent work, gender balance, work-life conciliation, reflective thinking, creativity-based problem solving, design thinking, intuitive decision-making, work space, self-management, intrinsic motivation and shared value among stakeholders.
Yinyang management is anchored in the Wu Xing systemic model (Hereafter Five Elements), which is translated into five key value generation processes called the Five Corporate Stars: human leadership, stakeholders, marketing and innovation, finance and branding, and corporate culture. These stars correspond to five interrelated, complementary and interdependent processes inspired by the five transforming energies of nature: wood, fire, earth, metal and water.
The first process, human leadership (fire), refers to the need to integrate universal values into the business model of the company. It is about finding and defining a higher purpose that anchors the brand identity and activities of the company in a clear mission that is consistent with the values that allow the company to positively impact society. Shoyeido, a centenarian Kyoto-based company famous for crafting the high quality incense, has achieved a reputation based on the balanced capacity to innovate and to be faithful to a higher purpose. Managing for a higher purpose is key for the company to attract and retain high talent employees and stakeholders.
The second process, stakeholder management (earth) refers to the range of actors that collaborate towards generating value for the customers and society. Huawei, the Chinese tech-giant, has built a value proposition based on its capacity to motivate and empower its stakeholders, especially its employees. Employees own 98.6% of the shares, and its global competitiveness is rendered towards the notion of shared value. Motivated employees uplift the company’s capacity to systematically innovate and market its products in a differentiated way.
The third corporate star, marketing and innovation (metal), encompass the capacity of the company to deliver the value that has previously been created by stakeholders by focusing on maximizing the customer’s needs, wants and experience as a way to achieve the higher purpose. Patanjali, an Indian born FMCG company, has been able to outpace the dominant players such as Unilever and Procter & Gamble, with a marketing strategy centered on distributing natural ayurvedic products made with the idea of proximity, health and accessibility to millions of Indians, including those at the bottom of the income pyramid.
The fourth star, financial management (water), builds on the third through the profit incentive. Economic sustainability is key to corporate success, but in this case, profit serves the higher purpose. Here the company defines the business model (revenue streams and cost structure) based on the optimization of value capturing through an incentive system that benefits not only shareholders but also broader stakeholders too. Kyocera, a Japanese semi-conductor multinational, built her competitive advantage upon a decentralized inclusive business model called amoeba management. Amoebas are interdependent business units of around fifty employees that operate revenue models independently, thereby empowering the whole organization to optimize the value captured by its marketing operations.
The final star corresponds to the brand and corporate culture (wood). It measures the holistic imprint that a company leaves behind socially, economically, environmentally and/or emotionally. Posco, a Korean steelmaker, started a major transformation in 2009 by embracing an innovation system based on sustainability and responsible management. In a few years, it has become the only steel company to be selected in the exclusive Global 100 most sustainable corporations worldwide, and it has turned into one of the best places to work in Korea.
The value generating process among the five corporate stars is constantly evolving in a virtuous circle. Value is like the chi or energy of the company. Harmony is the new metric of success. A successful implementation of the model depends on the flow and harmonization of the five corporate stars that form the whole system.
Managing for Sustainability
Managing for sustainability means internalizing intangible assets, critical to brand value. An empowered and self-aware Asia can emerge as a leading contributor in addressing the most pressing global challenges by bringing a new management paradigm.
*Josep M. Coll, PhD, assoc. professor at EADA Business School Barcelona
The opinions, beliefs and viewpoints expressed by the various authors in this article do not necessarily reflect the opinions, beliefs and viewpoints of Cornell University and the Emerging Markets Institute, or official policies of the Cornell University and the Emerging Markets Institute
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