Prof. Ji-Ren Lee:
New Blood Needed to Effect Change
In the age of mobile devices, the sun no longer shines on the once mighty PC makers of Taiwan. In this exclusive interview, National Taiwan University professor of management Ji-Ren Lee ponders how Taiwan's high-tech sector can achieve another revolution.
New Blood Needed to Effect ChangeBy Elaine Huang
From CommonWealth Magazine (vol. 535 )
In 2010 and 2011 the situation was already clear, yet Acer failed to change. That's the key problem!
When tablet computers came out, they caused a paradigm shift in the industry that starkly differs from past ones.
The previous paradigm shift happened in 2000, when the dot.com bubble burst. Back then, excessive investment led to the recession in 2001, but that did not constitute a huge change for the industry as such.
But this time, it's the first time I've heard [Acer founder] Stan Shih say that Wintel won't be able to hold on.
Break-even Mentality Hinders Change
Two years ago, everyone still placed their last hope in Wintel, and Acer released its Ultrabook. But how far can Wintel go? If it truly doesn't work anymore, what is the answer? What terrifies me the most is hearing that no one has a solution. This means that companies are hoping their existing products will prove sufficient to cover costs. If they're busy trying to cover costs, how can they possibly effect change?
Genuine paradigm shifts are not continuous. The less you are able to let go of the past, the less likely you are to catch up.
The wakeup call from the Acer case is that if Wintel cannot be saved, if it declines, if it doesn't stand a chance, do we have a new solution then? If not, what are we waiting for? We need to quickly find a new way forward.
If we cling to the stuff we have, we will only slow down the pace of change.
Taiwanese companies have always been good at mass production scale efficiency and at supply chain management. But changing the management team is something only a handful of companies are able to get done.
If this group of people [at the top] are the same as those in the past, except that [just retired Acer Chairman and CEO] J.T. Wang is gone, can the problems be solved? If you don't hire people from outside to change some of the people inside, you won't stand a chance.
I am convinced there is a remedy for Acer. But any change can't be a minor change, since the recession this time differs from that in 2000.
Such change must be truly memorable. That's exactly where Mr. Shih's greatest challenge lies.
In the past Taiwan's electronics industry had a formula for success. Everyone grew up with this success formula.
Now the same people need to find the next success formula. In so doing, they will have to forget about past successes, or else they won't be able to find a formula for success in the future.
This is quite illogical!
Genuine paradigm shifts are not continuous. So is it right to tackle non-continuous problems with a continuous method?
I believe the most important issue is who can serve as an agent for change.
A Longer Timeframe
Taiwan has a severe succession problem. The people who are on the stage now will definitely not be the leaders in the coming decade.
Those who take the baton still have to the second half of their careers to work hard, and they must be more able to live up to the requirements of the new generation and more willing to accept things under the new paradigm, too. Therefore, it is now very important to figure out how companies can achieve a rapid leadership transition.
I'll use a metaphor. Rookie pitchers often perform very well in the Major League Baseball playoffs. The starting pitchers who pitch very well for the first three innings have their energy more or less exhausted, and the other team has figured out their tricks. If you want to stage an astounding victory, you will probably have to pass over the generation out there on the field and look one generation further down.
Anyhow, if you want change, you need one or two years' time to work for it in any case. Using a longer time frame is very important. The companies that are implementing change now are all in a rush to see results within half a year or one year. With this approach you will always be only doing cost improvements.
But when you want to hand the baton to the next generation you need to look for talent, but you also need to face the problem that Taiwan's top-level management talent market is not as vibrant as the talent market in the United States.
A possible road to a solution is for the company founder to use his authority to empower capable people to carry out change.
Because transformational change requires a legal basis. As long as all the company founders are still active, legitimacy is still in their hands. In Taiwan, the boards of directors have not played a significant role because as long as authority remains in the hands of the company founders, it cannot be transferred to the boards. These are issues corporate founders will have to think about.
Translated from the Chinese by Susanne Ganz