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Fortune Makers: The Leaders Creating China's Great Global Companies
Fortune Makers analyzes and brings to light the distinctive practices of business leaders who are the future of the Chinese economy. These leaders oversee not the old state-owned enterprises, but private companies that have had to invent their way forward out of the wreckage of an economy in tatters following the Cultural Revolution.
Outside of brand names such as Alibaba and Lenovo, little is known, even by the Chinese themselves, about the people present at the creation of these innovative businesses. Fortune Makers provides sharp insights into their unique styles -- a distinctive blend of the entrepreneur, the street fighter, and practices developed by the Communist Party -- and their distinctive ways of leading and managing their organizations that are unlike anything the West is familiar with.
When Peter Drucker published Concept of the Corporation in 1946, he revealed what made large American corporations tick. Similarly, when Japanese companies emerged as a global force in the 1980s, insightful analysts explained the practices that brought Japan's economy out of the ashes -- and what managers elsewhere could learn to compete with them. Now, based on unprecedented access, Fortune Makers allows business leaders in the United States and the rest of the West to understand the essential character and style of Chinese corporate life and its dominant players, whose businesses are the foundation of the domestic Chinese market and are now making their mark globally.
Outside of brand names such as Alibaba and Lenovo, little is known, even by the Chinese themselves, about the people present at the creation of these innovative businesses. Fortune Makers provides sharp insights into their unique styles -- a distinctive blend of the entrepreneur, the street fighter, and practices developed by the Communist Party -- and their distinctive ways of leading and managing their organizations that are unlike anything the West is familiar with.
When Peter Drucker published Concept of the Corporation in 1946, he revealed what made large American corporations tick. Similarly, when Japanese companies emerged as a global force in the 1980s, insightful analysts explained the practices that brought Japan's economy out of the ashes -- and what managers elsewhere could learn to compete with them. Now, based on unprecedented access, Fortune Makers allows business leaders in the United States and the rest of the West to understand the essential character and style of Chinese corporate life and its dominant players, whose businesses are the foundation of the domestic Chinese market and are now making their mark globally.
288 pages, Hardcover
First published March 14, 2017
13 people are currently reading
122 people want to read
About the author
Michael Useem
47 books27 followersMichael Useem is a professor in the Management Department and Faculty Director of the Center for Leadership and Change Management and McNulty Leadership Program at The Wharton School of the University of Pennsylvania. His university teaching includes MBA and executive-MBA courses on management and leadership, and he offers programs on leadership and governance for managers in the United States, Asia, Europe, and Latin America. He works on leadership development with many companies and organizations in the private, public and nonprofit sectors.
He is co-anchor for a weekly program “Leadership in Action” on SiriusXM Radio Channel 132 and co-director of the annual CEO Academy. He is the author of The Leader’s Checklist, The Strategic Leader’s Roadmap (with Harbir Singh), The Edge: How Ten CEOs Learned to Lead—And the Lessons for Us All, Go Long: Why Long-Term Thinking Is Your Best Short-Term Strategy (with Dennis Carey, Brian Dumaine, and Rodney Zemmel). Mastering Catastrophic Risk (with Howard Kunreuther), Fortune Makers: The Leaders Creating China’s Great Global Companies (with Harbir Singh, Neng Liang, and Peter Cappelli), The India Way (with Peter Cappelli, Harbir Singh, and Jitendra Singh), and Boards That Lead (with Ram Charan and Dennis Carey).
He is co-anchor for a weekly program “Leadership in Action” on SiriusXM Radio Channel 132 and co-director of the annual CEO Academy. He is the author of The Leader’s Checklist, The Strategic Leader’s Roadmap (with Harbir Singh), The Edge: How Ten CEOs Learned to Lead—And the Lessons for Us All, Go Long: Why Long-Term Thinking Is Your Best Short-Term Strategy (with Dennis Carey, Brian Dumaine, and Rodney Zemmel). Mastering Catastrophic Risk (with Howard Kunreuther), Fortune Makers: The Leaders Creating China’s Great Global Companies (with Harbir Singh, Neng Liang, and Peter Cappelli), The India Way (with Peter Cappelli, Harbir Singh, and Jitendra Singh), and Boards That Lead (with Ram Charan and Dennis Carey).
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Displaying 1 - 4 of 4 reviews
June 12, 2017
Fortune Makers: The Leaders Creating China's Great Global Companies, by Michael Useem, is an examination of Chinese business managers and the strategies and styles they utilize to create successful companies in the modern world. This book is an interesting look at the different priorities Chinese business managers use in comparison to established Western companies, and how these priorities have improved their market share, and allowed them to become extremely successful both in domestic Chinese markets and abroad. Specific companies and business leaders are examined, including Jack Ma of Alibaba, Wang Shi of Vanke, and an assortment of other companies and executives, some named, and some anonymous.
Useem has identified a number of differences between Chinese and Western companies. The most interesting, in my opinion, is the focus on growing market share over shareholder value. Most Western companies uphold shareholder value as the number one driver of corporate stability, but in China, shareholder value is often a bottom-rung priority. Instead, the company focuses on maintaining and growing its market share, and ensuring the markets it engages with remain profitable. If the products the company is selling go out of style, then the company will often switch into new markets quickly. For example, Wang Shi's Vanke started out as a trading house, moving corn south to the Guangdong region to fuel the burgeoning chicken industry in the area, and trading for meats and eggs and other manufactured goods. Vanke made good money acting as a middle man for tradeable goods in China in the 1980's and 1990's, as industry demanded increased inputs from domestic suppliers, but transportation and logistical deficiencies made finding the right products difficult. However, after it became clear China had transcended these requirements as the new millennium began, Vanke did an about face, becoming a real estate firm instead. Although it cost a lost of money, and staff had to be replaced, Vanke stil became one of the largest real estate firms in the world.
Useem also examines other details of Chinese management structures and priorities. Chinese companies are often "big leader" focused. Instead of having a powerful group of middle managers or a board of directors, like many Western companies, the CEO in a Chinese firm is often more powerful, and this persons ideas and personality often drive corporate culture forward and encourage workers to put in more effort. This has obvious downsides, such as succession issues, but has worked surprisingly well for Chinese companies that need to remain nimble to survive. It is easier to change tack if you only have to convince one person. Chinese companies are also concerned with education of their workforce. Many large Chinese companies have on sight University campuses to encourage learning, and many Chinese managers praise the learning initiatives their country took to train managers overseas. Under Deng Xiaoping, China began to send business leaders overseas to see how far behind they were technologically in comparison to Western companies. This is a trend that continues, as China constantly looks to learn new processes and business tactics to remain on top of the market.
Other examples persist. This was an interesting book on a subject that is particularly important, as more and more companies in the world are dealing with and buying from Chinese companies. China has many large and powerful companies currently, and their high growth rate and nimble attitude toward change make them a powerhouse economically, one that is difficult for many established companies to compete with. It is important to examine Chinese management practices to see why they are so successful, and Useem has done an excellent job chronicling the main differences between Chinese and Western managers. This book is excellent both as a strategic examination of these principles, or as a read on business and management practices for those interested in the topic. I can easily recommend this book to those interested in the subject matter above, and for people interested in modern Chinese current events.
Useem has identified a number of differences between Chinese and Western companies. The most interesting, in my opinion, is the focus on growing market share over shareholder value. Most Western companies uphold shareholder value as the number one driver of corporate stability, but in China, shareholder value is often a bottom-rung priority. Instead, the company focuses on maintaining and growing its market share, and ensuring the markets it engages with remain profitable. If the products the company is selling go out of style, then the company will often switch into new markets quickly. For example, Wang Shi's Vanke started out as a trading house, moving corn south to the Guangdong region to fuel the burgeoning chicken industry in the area, and trading for meats and eggs and other manufactured goods. Vanke made good money acting as a middle man for tradeable goods in China in the 1980's and 1990's, as industry demanded increased inputs from domestic suppliers, but transportation and logistical deficiencies made finding the right products difficult. However, after it became clear China had transcended these requirements as the new millennium began, Vanke did an about face, becoming a real estate firm instead. Although it cost a lost of money, and staff had to be replaced, Vanke stil became one of the largest real estate firms in the world.
Useem also examines other details of Chinese management structures and priorities. Chinese companies are often "big leader" focused. Instead of having a powerful group of middle managers or a board of directors, like many Western companies, the CEO in a Chinese firm is often more powerful, and this persons ideas and personality often drive corporate culture forward and encourage workers to put in more effort. This has obvious downsides, such as succession issues, but has worked surprisingly well for Chinese companies that need to remain nimble to survive. It is easier to change tack if you only have to convince one person. Chinese companies are also concerned with education of their workforce. Many large Chinese companies have on sight University campuses to encourage learning, and many Chinese managers praise the learning initiatives their country took to train managers overseas. Under Deng Xiaoping, China began to send business leaders overseas to see how far behind they were technologically in comparison to Western companies. This is a trend that continues, as China constantly looks to learn new processes and business tactics to remain on top of the market.
Other examples persist. This was an interesting book on a subject that is particularly important, as more and more companies in the world are dealing with and buying from Chinese companies. China has many large and powerful companies currently, and their high growth rate and nimble attitude toward change make them a powerhouse economically, one that is difficult for many established companies to compete with. It is important to examine Chinese management practices to see why they are so successful, and Useem has done an excellent job chronicling the main differences between Chinese and Western managers. This book is excellent both as a strategic examination of these principles, or as a read on business and management practices for those interested in the topic. I can easily recommend this book to those interested in the subject matter above, and for people interested in modern Chinese current events.
July 21, 2017
This is a book by some top professors at Wharton, summarizing their experiences with business leaders in China since its shift towards a more capitalist orientation and its growth to catch and surpass the US as the major world economy. The intent is to identify a "China Way" of doing business and show how that way differs from the national approaches taken by the US and European nations and by Japan or India. The basis for the book comes from a series of interviews with over 70 top Chinese executives and supplemented by public and archival data. The perspective is a top management perspective rather than a financial one.
So what do they find? Well, they do find a distinctive Chinese approach to business. What works in China must be tailored to Chinese situations (is this Deng's "socialism with Chinese characteristics"?). Chinese firms seek out large markets with lots of scale opportunities. (You would never find that among western businesses, nope not one bit - not with GM or USS or Standard Oil, etc.). Chinese firms tend to be dominated by the "big boss" who owns lots of stock, has built the company up from its inception, and continues to exercise a huge impact on his firm, even after becoming a billionaire several times over. (Again, there is nothing like that in the west, with its small businesses and shy and retiring underpaid CEOs -- Jack Welch and Henry Ford and Larry Ellison??). Chinese businesses are focused on customers and employees and do not devote the same attention to shareholder rights and shareholder value that western and especially American firms do. ...and so why did Alibaba do its IPO in New York rather than Shanghai or Hong Kong? Chinese firms are more interested in finding out the right way to manage in China rather than borrowing oversimplified models from the west. (The authors appear to have found this out from their Chinese students in the executive education programs in West Philadelphia. Sometimes the profs fly to Beijing instead so that the west comes to China. These programs are big money makers for all major business schools these days.)
Where to begin in talking about this? The idea that there is a "national" way in business is not at all obvious if you give any thought to it. Business is complex, industries differ widely among themselves (even within themselves), and government regulations can affect businesses in conflicting ways and also change rapidly. So while there are certain ways to talk about differences in business between Europe, America, Japan, India, or China, it is not clear at all how much additional information you get from the effort. Should I talk about a Chicago versus New York versus Dallas style of management? That works for pizza and hot dogs. This is the stuff of supporting materials to assign for classes or to make into cases that can be sold, but I have to wonder what is new here.
Another way to think about it is to start from the assumption that there is really little new under the sun and then see what a book does to disprove that. For example, some of the authors are sociologists and many references to Max Weber are mentioned. A careful reading of Weber's "Economy and Society", especially the sections on the routinization of charisma, will make it clear that the different organizational species discussed in the book were all covered by Weber a long time ago and that differences between Chinese and western CEOs are not that important. Lots of management scholars, such as Taylor, Deming, Porter, and others are mentioned. They are easily assimilated into an Asian perspective. (They were frequently brought out in accounts of Japanese management that were popular before the Japanese economy froze in the early 1990s. When all is said and done, by looking at national styles of management, you are sure to get a rough profile of somewhat correlated characteristics that may or may not have had anything to do with the success of the firms following the profile.
What about the interview data from the executives? Isn't that valuable? Sure, I suppose, but it is important to recognize that in the preparation of material like this, the executive has a veto. Nobody wants to alienate a star CEO who will donate money and send his trainees elsewhere and who will hire from other more respectful schools. In such a situation, then go through and interview the CEOs and ask them the secrets to their success and that of their firms. What kind of stories do you expect to get from them? These are tough and capable people and one can expect highly triumphant stories. That is OK, of course, but if a work like these authors have written is to make a contribution, the less flattering aspects of competition also need to be raised. For example, the book recounts the efforts of Alibaba to compete with eBay with its newly created subsidiary TaoBao. The story in the book recounts the popular story that eBay failed to connect with Chinese consumers while TaoBao did. The alternative story is that no fees were collected on auctions by TaoBao, implying that a free service had an advantage over one that required a payment. (BTW this is not unheard of as a way to drive unwanted competitors from a market that is being contested - look at American chemical companies after the Civil War.). There was very little emphasis on the potentially anticompetitive approaches taken to western competitors. A critical consideration of doing business in China would give consideration to these more "strategic" aspects of competition. The authors certainly are aware of this and could have provided more depth.
Other shortcomings of the book could have easily been prevented with a little more thought. For example, a Chinese firm is seen as taking a learning approach by going over a situation faced by the firm to see how it could have been done better. The phrase "after action review" is used, without any acknowledgement that these reviews were very important for the revitalization of the US military forces after the Vietnam War. To see these in historical context, Tom Clancy chronicled these reviews in his books about the different armed services and their performance in the first Gulf War. OK, I get it - the Chinese firms want to be "learning" organizations. There is nothing specifically Chinese about that, however. Indeed, the idea that a firm can "replay" a competitive interaction to critically examine a strategy based on evidence and make adjustments is at the heart of how US business schools have taught corporate strategy since the 1980s. Why is this approach now Chinese?
The book reads well and has lots of information and examples. I would have appreciated if the authors had done a bit more to present their findings and analyze them so that the result would be more useful to readers trying to learn something about China.
So what do they find? Well, they do find a distinctive Chinese approach to business. What works in China must be tailored to Chinese situations (is this Deng's "socialism with Chinese characteristics"?). Chinese firms seek out large markets with lots of scale opportunities. (You would never find that among western businesses, nope not one bit - not with GM or USS or Standard Oil, etc.). Chinese firms tend to be dominated by the "big boss" who owns lots of stock, has built the company up from its inception, and continues to exercise a huge impact on his firm, even after becoming a billionaire several times over. (Again, there is nothing like that in the west, with its small businesses and shy and retiring underpaid CEOs -- Jack Welch and Henry Ford and Larry Ellison??). Chinese businesses are focused on customers and employees and do not devote the same attention to shareholder rights and shareholder value that western and especially American firms do. ...and so why did Alibaba do its IPO in New York rather than Shanghai or Hong Kong? Chinese firms are more interested in finding out the right way to manage in China rather than borrowing oversimplified models from the west. (The authors appear to have found this out from their Chinese students in the executive education programs in West Philadelphia. Sometimes the profs fly to Beijing instead so that the west comes to China. These programs are big money makers for all major business schools these days.)
Where to begin in talking about this? The idea that there is a "national" way in business is not at all obvious if you give any thought to it. Business is complex, industries differ widely among themselves (even within themselves), and government regulations can affect businesses in conflicting ways and also change rapidly. So while there are certain ways to talk about differences in business between Europe, America, Japan, India, or China, it is not clear at all how much additional information you get from the effort. Should I talk about a Chicago versus New York versus Dallas style of management? That works for pizza and hot dogs. This is the stuff of supporting materials to assign for classes or to make into cases that can be sold, but I have to wonder what is new here.
Another way to think about it is to start from the assumption that there is really little new under the sun and then see what a book does to disprove that. For example, some of the authors are sociologists and many references to Max Weber are mentioned. A careful reading of Weber's "Economy and Society", especially the sections on the routinization of charisma, will make it clear that the different organizational species discussed in the book were all covered by Weber a long time ago and that differences between Chinese and western CEOs are not that important. Lots of management scholars, such as Taylor, Deming, Porter, and others are mentioned. They are easily assimilated into an Asian perspective. (They were frequently brought out in accounts of Japanese management that were popular before the Japanese economy froze in the early 1990s. When all is said and done, by looking at national styles of management, you are sure to get a rough profile of somewhat correlated characteristics that may or may not have had anything to do with the success of the firms following the profile.
What about the interview data from the executives? Isn't that valuable? Sure, I suppose, but it is important to recognize that in the preparation of material like this, the executive has a veto. Nobody wants to alienate a star CEO who will donate money and send his trainees elsewhere and who will hire from other more respectful schools. In such a situation, then go through and interview the CEOs and ask them the secrets to their success and that of their firms. What kind of stories do you expect to get from them? These are tough and capable people and one can expect highly triumphant stories. That is OK, of course, but if a work like these authors have written is to make a contribution, the less flattering aspects of competition also need to be raised. For example, the book recounts the efforts of Alibaba to compete with eBay with its newly created subsidiary TaoBao. The story in the book recounts the popular story that eBay failed to connect with Chinese consumers while TaoBao did. The alternative story is that no fees were collected on auctions by TaoBao, implying that a free service had an advantage over one that required a payment. (BTW this is not unheard of as a way to drive unwanted competitors from a market that is being contested - look at American chemical companies after the Civil War.). There was very little emphasis on the potentially anticompetitive approaches taken to western competitors. A critical consideration of doing business in China would give consideration to these more "strategic" aspects of competition. The authors certainly are aware of this and could have provided more depth.
Other shortcomings of the book could have easily been prevented with a little more thought. For example, a Chinese firm is seen as taking a learning approach by going over a situation faced by the firm to see how it could have been done better. The phrase "after action review" is used, without any acknowledgement that these reviews were very important for the revitalization of the US military forces after the Vietnam War. To see these in historical context, Tom Clancy chronicled these reviews in his books about the different armed services and their performance in the first Gulf War. OK, I get it - the Chinese firms want to be "learning" organizations. There is nothing specifically Chinese about that, however. Indeed, the idea that a firm can "replay" a competitive interaction to critically examine a strategy based on evidence and make adjustments is at the heart of how US business schools have taught corporate strategy since the 1980s. Why is this approach now Chinese?
The book reads well and has lots of information and examples. I would have appreciated if the authors had done a bit more to present their findings and analyze them so that the result would be more useful to readers trying to learn something about China.
July 27, 2019
A somewhat disappointing book about global Chinese companies and their management style/thinking. The authors were far more descriptive than analytical . Apart from learning about certain companies, the book was just a brief overview of Chinese management style.
March 27, 2017
Emphasis on growth; used to fast growth
Autocratic founder CEO + inner coterie
Learning/cloning mentality. Practical test: does it work or not?
"It doesn't matter whether a cat is white or black, as long as it catches mice." - Deng Xiaoping
Avid readers:
"One hires a student from Peking University every year just to read business books for him and summarize them. Another says that a quarter of his time is spent reading, and not reading things about the company, but just reading in general.
A third requires all the top executives in the operating circle to prepare book reports on the most important books they have read and send them to the CEO. So the idea of the company as a school that actually looks like a university is pretty profound."
Weekly after-action review: We got through a whole week. What did we do right? Where did we blow it this week? And with the answers to those first two questions, let us be better next week.
http://knowledge.wharton.upenn.edu/ar...
http://fortune.com/2017/03/24/jack-ma...
Autocratic founder CEO + inner coterie
Learning/cloning mentality. Practical test: does it work or not?
"It doesn't matter whether a cat is white or black, as long as it catches mice." - Deng Xiaoping
Avid readers:
"One hires a student from Peking University every year just to read business books for him and summarize them. Another says that a quarter of his time is spent reading, and not reading things about the company, but just reading in general.
A third requires all the top executives in the operating circle to prepare book reports on the most important books they have read and send them to the CEO. So the idea of the company as a school that actually looks like a university is pretty profound."
Weekly after-action review: We got through a whole week. What did we do right? Where did we blow it this week? And with the answers to those first two questions, let us be better next week.
http://knowledge.wharton.upenn.edu/ar...
http://fortune.com/2017/03/24/jack-ma...
Displaying 1 - 4 of 4 reviews