Eureka! Zero-degree Innovation Helps Chinese Companies Survive Financial Crisis

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• USA - English
• USA - English

BEIJING, April 26 /PRNewswire-Asia/ -- What factors are helping Chinese companies emerge successfully from the shadow of the financial crisis?

Over the past 12 months, China's most influential business magazine, Sino-manager has tracked and interviewed nearly 100 Chinese growth enterprises. By studying how each of them responded to the crisis and analyzing their performance before and after the crisis, we have found that the growth and development of these Chinese enterprises is being driven by a powerful force from within, i.e. innovation. Such innovation, born in a state of freedom, is not only able to create new things independently, but can make liberal use of and draw upon various external elements.

Sino-manager has found that such innovative behavior has demonstrated extraordinary vitality which has not only helped Chinese companies weather the crisis, but has also become the essential driving force behind their next round of growth.

Sino-manager has summarized these management ideas and solutions as Zero-degree Innovation, and compiled the Annual Report on China Management Innovation 2009-2010. On April 23, it released the Zero-degree Innovation White Book at the China World Hotel in Beijing.

Building Momentum of Profitability with Zero-degree Innovation Philosophy

"It is a sustainable innovation philosophy and methodology that fits the new growth stage for Chinese enterprises," said Lisa Zeng, Executive Chief Editor of Sino-manager. "This innovation does not require lots of external resources--it can be created by business leaders, but is more likely a result of the participation and support from ordinary staff within the organization."

According to Sino-manager, Zero-degree Innovation represents a breaking force that changes existing states and rules. It is about having a state of innovation featured with the greatest vitality and rationality, maintaining calm independence and simultaneous creation as well as flexible freedom. Thus, even without abundant external resources, incentives or challenges, the company can still remain strongly innovative.

The philosophy of Zero-degree Innovation has been widely recognized among the business community and management experts.

"Both outside and inside the company, it seems that we are under too much pressure for innovation. We crave for performance and results," said Dr. Duan Lei from School of Government Peking University. "While this is not wrong in itself, the obsession makes it even more difficult to unleash innovation. Instead, we should grant more freedom to innovation. In fact, Zero-degree Innovation is also about a mental attitude. Companies should keep patient as it takes a long time and a gradual process to develop innovation capabilities and culture."

Mr. Guo Teli, President of Optoma Asia Pacific: "In just 5 years, our business has grown by 100 fold, which has turned from an obscure projector brand name into one that holds the second largest global market share," he said. "When people are curious how we have made it, we know that we have relied on innovation, especially in early stages of development when we were short of resources. Instead of constraining their minds, we supported our people in all kinds of innovation attempts, particularly in marketing and distribution. This perfectly matches the idea promoted in Zero-degree Innovation."

How to Construct Zero-degree Innovation Companies?

In our research over more than 12 months, Sino-manager has found that many Zero-degree Innovation benchmarks, such as Vanke, Haier, COFCO, Huawei, BYD, Tencent, Kaixin.com and Sinovac, come at different sizes and are spread over a range of industries. While smaller companies have won true respect from their competitors and grown fast in size thanks to their Zero-degree Innovation, larger players have gained sustainable competitiveness and established new industrial benchmarks as a result. Such Zero-degree Innovation companies have several features in common. Firstly, they have all performed particularly well in the financial crisis with their key financial indicators way above the industrial average. Secondly, their innovative actions can generate significant additional revenue which translates into profits.

Then how to make your own company "zero-degree innovative"?

We believe that Zero-degree Innovation companies can achieve breakthroughs in various aspects including zero-degree innovative management thoughts, zero-degree innovative strategies, zero-degree organizational innovation, zero-degree marketing innovation and zero-degree innovative management models.

Zero-degree innovative management thoughts, as a source of innovation, are a mental breaking force to change existing states and rules. Examples include Wang Shi's proposal for property developers to build "green competitiveness" and the call of Ren Zhengfei, CEO of Huawei, to "let those who hear gunshots make battle decisions". The breaking force of such innovative thinking which comes from business leaders can bring fundamental changes to their organizations. When innovative thinking is derived from grass-roots employees and when they are inspired to engage in innovation, a company can receive an incessant stream of innovative ideas, such as those generated by the innovation contest launched at Tencent.

Zero-degree innovative strategies are intended to build on existing businesses to seek breakthroughs in corporate positioning, business models and M&As. For example, after 30 years of rapid growth, UFIDA is now in its 7th year as the No.1 provider of management software in the Chinese market. In 2009, UFIDA shifted its strategic focus toward "building a world-class company". Looking back at its vision of "riding the bull" at the early stage of the company's growth, UFIDA's experience in strategic development can be best summarized as "responsive and precise strategic decision driven by entrepreneurs".

Zero-degree organizational innovation is for the organization to encourage more frontline people to become innovators. Such innovation should not be limited to particular inventive individuals or teams. Priority should be given to teamwork rather than individual heroic endeavor. As a genuine innovative company, the Beijing-based Sinovac produced the world's first vaccine against H1N1. In an interview with Sino-manager, Yin Weidong, CEO of Sinovac said that most of the company's innovative ideas were contributed by frontline employees. For example, during peak production seasons when the company needed to procure large quantities of raw materials, its purchasing managers proposed a strategy to offer higher, not lower prices, in a bid to avoid quality risks as a result of price reductions. Similarly during such peak seasons when people were supposed to work around the clock to fulfill orders, the company's HR manager proposed mandatory leaves which were intended to provide employees with a desired degree of relaxation. These helpful ideas were adopted and their owners were awarded by the company which benefited from them.

Zero-degree marketing innovation includes a few highly effective innovative marketing models which focus more on efficiency, flexibility, considerateness and customers. Ultimately, they can meet customer needs and create customer value better. In 2009, Aokang launched its "fruit marketing" strategy across over 3000 outlets in China by introducing new shoe models in 8 "seasons" each year. It means new arrivals on shelves every 45 days instead of the 4-season traditional practice in the industry. The result was a 20% increase in overall revenue for the year.

Zero-degree innovative management models include several transformations, for example, from working alone to resource integration, from a complex hierarchy to a simple structure, and from an onerous operating model to an agile one. It has provided many Chinese enterprises with wings to fly. The Shenzhen-based Eternal Asia Supply Chain Management Ltd. has established a resource-sharing platform to integrate operating teams with different functions, such as the logistics center, business centre, financial centre, information system and purchase execution, into a centralized operation. By building on horizontal integration, vertical standardization and professional management organizations, the company has effectively enhanced management and defined responsibilities along the industrial chain, reduced various costs and achieved overall cost leadership. It still maintains a rapid growth rate of 40% even in the financial crisis.

SOURCE Sino-manager