Can Asian Companies Be Innovative Leaders?

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How can Asia-based organisations increase their innovation capabilities? This was the key question that Dr. Quy Huy, Associate Professor of Strategy at INSEAD, discussed during his lecture at The HEAD Foundation on 18 June. Dr. Huy presented a case study in leadership at Longfor, a China property developer and a top Forbes Global 2000 company that grew from a start-up into a national billion dollar enterprise. He explained that it was through the ground-breaking and visionary leadership of former CEO Madam Wu that Longfor was able to implement innovative management practices.

Traditional Chinese companies tend to focus on lowering costs and maximising efficiency. However, in his research, Dr. Huy found that Longfor follows unconventional human capital practices. For example, unlike other China companies, Longfor has a very clear criteria for who gets promoted and the criteria is based on meritocracy and customer’s feedback. In addition, employees are evaluated based on their potential as well as their actual contribution, and their performance is evaluated qualitatively rather than quantitatively. In terms of compensation, employees are assured that as long as they are good workers, they should be able to achieve a sustainable middle-class lifestyle.

Finally, unlike most other Chinese companies which focus on hierarchy and guanxi, Longfor has a unique company culture that emphasizes equality and professionalism. For example, subordinates are forbidden to carry bags and open car doors for their bosses, and they are not allowed to arrange tables according to the ranking of positions during company dinners. This sense of equality incubates a sense of trust and openness amongst those working in the company. Dr. Huy also highlighted that Longfor offers employees five critical things that are able to motivate them beyond promises of a good salary and a middle-class life – respectful authenticity, deserved pride, realistic hope, thoughtful passion and actionable discontent. Dr. Huy further described these five ingredients as universal human aspirations.

“Longfor provides a different mental model from many other state-run companies in China,” Dr. Huy reiterated. However, he also readily admitted that the human capital practices identified in his case study of Longfor are not a panacea and acknowledged that not all companies in Asia can or should adopt Longfor’s model. Nonetheless, Longfor presents an extraordinary example of successful innovative leadership in Asia and other countries in the region have a lot to learn from this case study.