Which leadership models are coming out of China? Decoding China's leadership models in business.
Welcome to this week's Pascal's China Lens. And one of the most interesting topics today, in my view, is the leadership models in business coming out of China. But very few people talk about it or write about it because it's not always clear. And despite the fact that there's lots of case studies and I could
probably talk an hour or two about Huawei and Haier and Pingan and companies like Lenovo and Tencent and Alibaba. And each of them has a very interesting model to look at. And this is something we could learn a lot from in the West, but somehow very few people talk about it.
So I'm going to start this series now. This is a first, very simple, high level view of the four business or leadership models that I see in China. And then over time, I might dive into one specific, if you're interested.
If not, just let me know in the comments. If you haven't subscribed yet, do subscribe now because there's going to be a lot more about leadership, about technology, about innovation coming up on my channel. When we think about leadership models in business, we often think about Western models.
I mean, typically in MBA schools and universities, we learn about Western models like General Electric, maybe Amazon, Google, Microsoft, lots of these models, sometimes even in Japan or Toyota or maybe Samsung in Korea, South Korea. But too seldom do we actually look at case studies of Chinese leadership models. And how is that possible? Why are we not doing that, knowing that many of their of these brands have become the number one globally in their own industry? And so why aren't we talking to the leadership models of Alibaba, Tencent, Meituan and Pinduoduo and all these others? And I think the reason has to do with the fact that we're so used that our Western business model have created global companies, that we forget that China is actually its own leadership model. And so in my book I've written in the book, Can We Trust China? I've written a third chapter, complete chapter on company and and teams and how we can trust and how Chinese trust the company and the environment around them.
And I talk a lot about leadership in that chapter. So if you want to get more in depth and understanding about leadership, my view on it, then you can definitely read the third chapter of my latest book. But to give you a little bit of perspective or I'll give you a little bit an insight of how I see it, is that Western models have really prevailed because they have had successes, enormous successes for some of the biggest companies around. And typically it's a transactional leadership model like Microsoft, more transformational, like General Electric. We talk about charismatic leaders like Richard Branson or maybe even Warren Buffett, which has a very much hands off, laissez faire leadership model.
And so we've looked at these cases. We understand how they lead and how that leading of their company, of their staff has led to this company become one of the biggest in the world. And so actually, there's more than just these four, but these are the four biggest one that we constantly see coming back. There's a whole list of them. I mean, there's even servants and charismatic and coaching and lots of soft leadership skills that we have to learn these days to put the human central. But when we think about China, we think more about a number of other things. We think about more autocratic leadership like one boss decides all.
And very often that is also the truth, that the boss has a lot to decide in China and makes a lot of decisions. We see it also as very bureaucratic, the Chinese leadership model. So we're not inclined to learn much from an autocratic, bureaucratic leadership model because that is how we perceive the Chinese leadership model. Of course, very transactional, pragmatic.
It's all about money. That's how we look at it very often. And if we look to business leaders, they're often very formal, except for Jack Ma and a few exceptions. It's really something we don't really understand. So the perception that most people have outside of China, specifically in the West, towards Chinese leadership in business is actually very rigid.
It's not something we want to learn because it looks like an army just being led by a general. And so why would we want to learn from that? Now, what we're forgetting there, in my view, is that China has had 2500 years of culture and civilization, where actually the leadership has been central to how China has been created and grown over time, over 2500 years of history. And once upon a time, more than 2000 years ago, we're talking about the 100 schools of philosophy.
And so there was a lot of schools of thought. And so. Schools actually created the ideas, the insights, the philosophies of how leadership should be. And so we often talk about sensor and the art of war, but that's probably the only one we know.
The reality is there's actually a lot of thought or schools that have changed the leadership over time, both politically, but also in business. And the biggest ones are the ones that we could say are remaining today, are still very influential, is mostly Confucianism. There's Moism and legalism, specifically legalism. And then you see everything which we know as Daoism as well, and a little bit of naturalism that is part of that.
So there's a number of them with Confucius, Kongzi, the first one, the most important philosopher today, because he 2500 years ago was really setting the whole regulation and rights and formulation of how to lead a moral life and so how people should behave. And then you have Mengzi and who actually said pretty much that people are good by nature. And so that is Confucianism is really about being good and behaving in a correct way. And then Xunzi, he really added to that to make the difference between nurture and nature, where it's really about you are born good, but you also have to educate. Then later on with Mozi, it really became much more about a different way of looking at Confucianism.
Well, people are good in itself, but actually having much more focus on the religious teaching and what he calls or what we call later on, meritocracy, reward people for the good things that they do. And then if you look at legalism, it's very clear that's the opposite. That's where you really see a change. And this was the first emperor, Qin Shi Huang. It was really about unifying the whole country and that meant that you needed rules and regulation and people were actually evil by nature, and so they needed these rules and regulation. This is about carrot and stick.
And so you see an evolution happening, but this is all happening at the same time and there are competing philosophies. And then one of the big ones that started was the naturalism. But being young and, you know, the five elements like water and fire and and wood and so on, and that got into the Daoism where it's really about naturalism and letting go with the flow, going with the flow and following everything, which is natural in action. Wu Wei and so on. So all these philosophies actually have created a basic some basis in the leadership model that China has. So we should look at that to understand how Chinese leaders are behaving and what their model is.
And so if we look at the first one, which I consider Confucian, is influenced leadership, we really see that with Confucian, Confucius. It's really it's really about family morals, it's about loyalty, it's about justice, respect. It's all these things that you feel like you're a family, your part, you have to respect each other both respect the elderly, respect the bosses, but they also have to behave, behave good towards their employees. And this is a lot about harmony, about sincerity.
You hear the politicians in China very often reuse some of these words. To me, I framed this or I call this The Godfather leadership. And of course, the concept is a little bit different because Confucius, it's all about people being good. And so they believe in humans being good by nature with The Godfather is a little bit different. But if you look at the way that The Godfather is actually ruling his family and is leading his family to become bigger and bigger and stronger and stronger, there's a lot of the same methods.
And so this is really about survival, in my view. The confusion of leadership that we see today is some of the companies like Gree, the Dong Mingzu, the leader, a woman that actually has never taken a day off in 30 years time. She's really tough. Lenovo, you see also Huawei which Ren Zhenfei and so on. People that really believe that what they've created is a family. And the interesting thing about this confusion, this leadership model, is that this is all about team driven.
I mean, you don't need to explain to these leaders what a team needs to do. And the reason you don't need to explain it is because they feel like a family. This is all about relations or Guanxi, like they say in Chinese. So they trust each other blindly and because they trust each other blindly, they're actually achieving each one of them in part as part of a team that makes one big hole.
And so this is a lot to do with respect. And once you enter the family, basically you're part of it and then you have to fight together for survival. And so a lot of these Confucian leadership models, which are very. Strong still specifically with the older companies, because this is very close to the Chinese culture, you actually see that this is really about fighting to survive and they are, in their respect, very customer centric because they see in their leadership model that the customer is actually the one that is going to make them survive. And even though these companies are technology companies, very often they actually don't trust the technology as much as they trust the relationship.
And that has to do with the fact that they really believe that the relationship is the glue of their future. The company that we all know, Huawei, is a very good example of a constructionist or godfather leadership model because this is all about survival. And if you think about it, I mean, the way that they are surviving in an age where the whole world is trying to kill them specifically when it's 5G or it's the Android and so on, that they can't use or chips they can't get. I mean, the only way and the only reason they're surviving, in my view, is because they're so much customer focused, trying to understand what customers need and trying to offer the best and at the same time doing it all together as if they're in the trenches having to survive together.
One of the good examples is that this company is is actually not is a shareholder company, meaning that every employee can buy shares at certain points. And so they are owned by the employees. And so when you leave the company, you have to sell your shares. And so you have a vested interest to make this company survive. This is very, very strong.
And we don't see a lot of companies in the West that have the survival leadership model. But this is what makes companies like Huawei really become the leader in the world in their domain, something we can really learn a lot from now. The second leadership model, in my view, is the legalistic leadership model, and I'd like to put Moism in there with models because it's all about reward and punishment, it's about rules and regulation. It's a lot to do with meritocracy. So basically you get up to the ladder if you do well and you have to prove to your to the elders or to the the leaders that you're actually doing well and then you become a leader yourself. I call this the martial leadership model and say it's martial because the martial is the one that has to set all the rules and has to make sure everybody abides according to the rules.
And so this is typically what you see in state owned enterprises in China. It's, of course, very merit driven, so meritocracy. So a leader in Chinese politics, they need 20, 30 years to really to go to the top. The same in many of these big companies, a company like Pingan, the biggest insurance company in the world, or a company like Meituan, the delivery of China, you really see to have like a million employees, almost 100 thousands of them. And they all need that structure. They need that structure, and they need to be led by rules and regulations.
And the interesting thing about this leadership model, which you could call legalistic or martial leadership model, it's like an army. And so it's a lot of structure. Everybody knows exactly what to do and they do it together and have one direction and they trust the data, the analytics, they trust the information they get to make these decisions. And this is very much typical for state owned enterprises, of course, because that's how we know them. But many companies in China actually have this this model. Now, one of the interesting model there is that Maoism, for example, it's very equal, it's very impartial, meaning that people it's not about one being more important than the other.
Everybody has to be part of this whole structure. Otherwise the structure doesn't exist. And so one of the companies, Pingan, which is really very good at that model, in my view, is what I would call a scrutiny leadership. It means that everything gets analyzed, monitor, checked, double checked, and that gives them this is like a KPI on steroids. And so companies like Pingan, what they do is they will monitor all of their agents. They have like almost a million agents and employees running around
trying to sell insurances or helping people with insurance. And they will monitor their cell phones and trying to figure out who does the best job not to punish them, but actually to help them to learn from others who are doing it different or better. And so they can actually coach them and help people that could improve in the way they're selling, for example, insurance.
But there's many more aspects of that. And so the scrutiny leadership is really about trusting technology, trusting the data, so their trust in technology more than their trust, the human or people. And the reason behind that is because in Chinese culture, human, it's a lot about relationship and relations means it could be some kind of way to actually help people unfairly.
I mean, there could be corruption, there could be lots of things happening that you can't control. So the data is there to control everything, but it's quite equality scrutiny regime where actually everybody has their own chances and if you want to go up you just have to be successful. And so it's up to you whether you're successful in this organization, you don't need friends, but actually you need to abide according to the system. Now, the third one, in my view, is what we could call Taoist or Daoist leadership model.
And this with Lao Tzu and Zhuangzi and Zou Yan; and Zhuangzi is actually my favorite writer. I really love reading things from zhuangzi, but that's another story. But this is all about the natural world. It's about wisdom, it's about longevity. It's about yin yang.
We know that that comes from naturalism. Then it's about the Dao departure. So this is a lot about just following the natural flow and see where it ends up. But do the actions when you need to do the actions, when there's no actions needed? Well, don't try to force things.
This is against strategy. It's like very agile and constantly changing. And I call this the fairy godmother leadership models.
The reason I call it like that is because it's like magic. Everybody can do whatever they want, like whether it's Cinderella or with Peter Pan. I mean, the fairy godmother only is there when there's a need to get some magic. But besides that, everybody in the organization can actually drive the organization as they wish themself.
And so this is a very hands on, laissez faire type of leadership, but with a Chinese characteristics. And so if you look at that leadership, typical companies are higher, the wide good company like washing machines and air conditioners, of course, Alibaba, Tencent. And so typically for these type of leadership models is that they're very change driven. So they love change, they crave for change. They constantly want to do new things and they want to create new things.
But on top of that, they trust the network. And this is not about trusting the relationships, like in confucian leadership, but it's more about trusting the network as a whole. Then all the nodes in the network are part of this network. And so that means that it becomes a network of entrepreneurs where most, most departments have to decide on themselves. They have maybe their own pal, and they really need to be successful and help each other within the network. And even the customers are often involved in that network.
Now this is about leading by flux because this network constantly is moving, it's constantly changing. They go in different industries, they go in different expertises, have different talent, and it's constantly in move or in flux. And so this is about leading by flux. And so for me, the most important there is that this is typically something that is very much adapted to the change of China and the future of China.
So Daoist companies are very apt to how China is moving forward. While legalistic, it's much more about efficiency, which is also very important in a country with 1.4 billion people while Confucianism. It's a lot about relationship, which is more closer to the culture of China. And so they all have their strengths and their own focus. Now, one of the companies that I really like in that leadership model, and you could call it a network leadership model or fairy godmother leadership model is Haier because they have like 8000 departments and each of these departments has their own pal and they all have to work together and they constantly change. And so there's very little middle managers and everybody has its own accountability, its own responsibility, direct contact with the customers, taking the information from the customers, adapting when it's needed, looking at the market very closely.
This is a leadership model that many in the West like because it shows agility and change and entrepreneurship. But that doesn't mean that the other leadership models aren't interesting as well. And so this is like the third one big one that you see. Now, one thing to know is that all these three leadership models, I just explain, none of them is 100% one style. They actually incorporate all three of them and then they put that as a mix. But typically the owner will actually set the tone for which is the main leadership model in itself.
Now if we look at more global leadership models in China or call it global, which means Western leadership models with Chinese characteristics, that's how you could call it. You typically have the more modern, younger companies like Bytedance, Didi, so all these young new companies, but you also have some older companies like Ctrip. I mean, old I mean, 20 years in China is already an old company. But reality is that it doesn't matter if they're young or they're old. Most of their managers, their leaders have actually been educated overseas or they have a lot of. International business and they're actually global companies or start ups from day one. Think about tick tock from Bytedance.
I mean, it was a global company from day one. Didi The Uber of China is a global company almost from day one. cTrip, a travel company by definition is a global company. And this is a lot about Western models.
Think about empowerment, think about trusting people. It's about having the human, the employee centered in the organization. And we have to help that person and we have to be inclusive and at everybody by diverse. Also men, women.
I mean, it has to be a diverse environment and an inclusive environment where nobody feels threatened. Most important with that model is that it's very strategic. Sometimes they don't want to make money for two or three years because they first want to have customers very different from like a Huawei company that wants to make money quickly or other companies, because that is how they see that their their customers actually can grow and they can actually survive. But this is very much about strategy.
This is about the people at the center. Now, one company I really like there is Ctrip, the number one travel company in China and number two in the world after Booking.com, very inclusive leadership model, where specifically for women, it's really great to work at Ctrip, but also for the travelers going everywhere in the world.
They've really understand how culture is so central to their DNA of the company and how they actually have to deal with that culture and that inclusivity or diversity to make things happen. And so this are a real great case studies and I've written more about it in my book, but these are, I would call Western leadership models with Chinese characteristics, or you could call it global leadership models from China. And so all four of them, in my view, are interesting. Now, if you put that in a diagram, what you have is that on the top you have the Godfather model. The typical model, which is the Huawei company, is Confucian leadership model, where it's really lead by example, lead by respect, it's team driven, it's family driven.
And this is really top down, but everybody is part of that family. Think about the Godfather environment. And when you think about pinger, this is more like a marshal company. This is on on one side where you really are more equal in the organization. It's up to you to be successful.
And so you have to lead basically by rules and by regulations. And if you are successful, you will get through the ranks pretty quickly. And so this is very data driven, KPI driven, and so this is a horizontal model. When you look at Haier, this is bottom up. This is not top down like like you would say with the Godfather model and this is the fairy godmother model, the Daoist model. This is really about companies like Haier that have created a network and that rely on that network and have a flux leadership that constantly changes and is much more data enabling the people to actually become successful. And so this is really the difference.
And then when you look at the more Western influenced leadership models or global leadership models in China with Chinese characteristics, you see this coaching and this equality, like with Bytedance, with TikTok or with Didi, it seems like everybody is almost on the same line and they're all trying to get along. So this is not very hierarchical, but it is in a way very much about helping people to be part of an organization, part of a purpose and be very people driven. And so you see all four models. Now, what's interesting in China, in my view, and this is what I explain a little bit in my book, is that actually all the companies in China that are successful have one main direction, but then they add flavors of the other three. And that makes it very interesting because it depends on these
flavors to see how this company is led by its leaders. And so we should learn all four of them and then see the differences between all of them. But there's none of them that is pure one side or the other side. And so it's pretty complex, but at the same time very enriching if you understand how Chinese leadership works.
Now, the issue with leadership is that you, of course, have employees, and so you need to lead some of these employees. And so the perception we have very often about Chinese employees is that they're very conforming. So it's a collective society. They do whatever the leader does, but they're not real team players.
I mean, they're all for themselves. And and so this is the commons that many Western leaders working in China have about Chinese. They also say they're not very loyal, very pragmatic. It's all about the money. Some other bosses give them a little bit more in
their goal. I mean, these are the ideas, the perceptions that we have about Chinese employees. And in most cases, they're wrong.
They're wrong because it doesn't explain within which leadership model they're actually driving and working. And so if you look at the generations of employees, you have to look at people born in. Areas, different moments of time. If you look at people born before the eighties, that is really much more about conforming. It's very pragmatic. This, yes, it's often about money because many of these people didn't have money at the time.
But if you then look at people after the eighties, born after the eighties, the millennials, I mean, they fit much more in a model where they can be successful if they prove themselves. And this is much more about them really wanting to realize and get an identity for themselves. But specifically, the people after the nineties could call them millennials. This is really about experiences.
They want to be part of something. They want to be part of a purpose. They fit much better. The network model of higher, for example, where everybody is an entrepreneur and then you have the young people, the Generation Z or Z.
These are people that are just now entering the workforce in China. What you see there is that this is all about creativity and it's all about being different and doing something that somebody else doesn't do. It's being unique typically, not something we think about when it comes to China, and they feel much closer to the newer companies, younger companies like TikTok or companies like Ctrip, which is very inclusive and let these creativity fall really to hire higher environments.
So there really can do a lot with it. And so to understand the employees, we shouldn't say Chinese employees are like this or like that or like that. It's actually very complex and it depends depends on where and when they were born. And so based on that, you could say that, yes, some of them are not loyal because it's like Ping An. It's very much about making it in your structure. And if you don't make it, you're going to go somewhere else to try it out somewhere else. Some people like Huawei might have been at the beginning very
much about money because they needed the money, but today it's very much about being part of that family. And so you have to look at all the difference. And of course, most Chinese companies have people that are from every age, but most of them are like ten or 15 years younger on average than many companies in the West. So it's a very young generation. Most of these big successful companies, meaning there are people that are born after the nineties or definitely after the eighties. And what that means is that it's really about experiencing something, being part of something. It's about a new life.
And so leading by respect, leading by example, leading by flux, leading by by rules, everything's possible depending what your priorities are. And so I think it's very interesting to look at all these models because some of the things that they do are really, really interesting to see if we could implement some of that in the West. And we don't think about Huawei as an example very often of leadership because we see them often as copycats in the West. But if you look at their family structure, it's really interesting.
We don't think of Ping An as maybe the greatest example because it's a lot about rules and KPIs and it feels very uninteresting from a human perspective, but they achieve a lot with artificial intelligence and other things. We don't always think about higher with all these entrepreneurs because we don't see how that glue really works. But isn't in the world of change today a need for us to all work together in a network organization because the world constantly changes. So why not learn from Haier? And why not learn from Ctrip? That is a global company that has embraced both the Western and the Chinese leadership model in one model and seems to be doing pretty well because they seem to be headed to become the biggest travel company in the world. So I think we can learn a lot from the Chinese leadership model, but we need to get in there and we need to look at the case studies and we need to go into each of these companies individually and learn what their strengths are, learn what their weaknesses are, and see if there's anything that we can use from it.
And so if we want to be successful in the future, in a world which is constantly changing, and if we want to trust that world, then we need to look at the Chinese leadership models in business.