BOOK
REVIEW Moving
beyond
relationships Guanxi (The
Art of Relationships) by Robert
Buderi and Gregory T Huang
Reviewed by Benjamin A Shobert
Most globally savvy business people who
have worked in China have their favorite "aha"
moment when they see China as it really is. For
many, this realization is nestled inside an
encounter with a Chinese national competitor whose
business infrastructure you see for yourself, and
whose capabilities go beyond the pedestrian
competencies expected.
Many ashen-faced business owners have
departed factory tours of their Chinese
counterparts with their expectations dashed of
seeing innumerable
spidery fingers darting over anonymous part bins
sorting and sifting, instead seeing automated
machine-part sorters that are as new as - if not
newer than - what they themselves had in place
back in the United States.
For those whose
vague sense of perceived opportunity in China
needs refinement and direction, Robert Buderi's
and Gregory T Huang's book Guanxi provides
a case study for how one company tapped into the
creative potential of the Chinese people.
Guanxi records Microsoft's "aha"
moment, followed by the attentive execution plans
stemming from the initial insight on the part of
both Bill Gates individually and Microsoft
corporately. The company has worked to see more
deeply than most the innovative potential of the
Chinese economy. This attempt is best evidenced by
its investment in Microsoft Research Asia. The
appreciation for the story the authors weave is
peculiar to Microsoft's efforts in China, but also
offers insights into how business people should
begin changing their view on what China can
deliver to their business.
The book's
title is a Mandarin word that Western business
people experienced in China have become familiar
with. Guanxi is commonly perceived as
partnering and understood to focus the attention
of Westerners on the great importance that the
Chinese put on relationships. To most Westerners
guanxi emphasizes personal relationships in
contrast to the contractual, non-relational
business practices common in America.
While a portion of the word's meaning can
be simply be seen as stressing relationships, the
authors emphasize that a better understanding of
the word is to emphasize four things: trust,
favor, dependence and adaptation - the last what
the authors call "patience and cultivation". (p 7)
It should also be understood that
guanxi is a cultural reaction to the
experience of the Chinese people, whose history
suggests foreigners are not to be trusted, because
foreigners only seek means to exploit instead of
mechanisms to create mutually advantageous
relationships. Folded into this word is much
meaning and history - a history the West would do
well to understand.
Early in the book, the
authors discuss how Microsoft's efforts to find a
place for China in its corporate strategy evolved,
including the bad assumptions and cultural faux
pas that occurred. The book's early emphasis
on how to understand guanxi conceptually
recedes as the book unfolds the story of
guanxi in action - specifically how
Microsoft went from concept to actualized
potential through its investment in the Beijing
lab.
Among this book's most sustaining
contributions is to wrest from free-trade
advocates the idea that the only sustainable
predicate of an economic relationship between the
US and China is low-cost exports. Guanxi
makes the point, using Microsoft's China Research
Lab as the example, that while China's advantage
may have initially come from exports, its ultimate
potential is that which is uniquely its own - its
own culture tied to technologic insights that it
develops on its own, and perhaps not only for
exports, but for its own burgeoning economy.
At times very much a chronological history
of the development and personalities behind the
Microsoft China Research Lab, Guanxi
deserves respect in North America because of
the generous attempt it makes to ask people
quietly yet directly to stop taking a monolithic
and one-dimensional view of China as either a
job-stealing threat or a low-cost-driven
opportunity. To interject this insight, Buderi and
Huang use Microsoft's ongoing efforts to reinvent
its core business by the company's attempt to tap
China's unique talent for its corporate renewal.
One portion of the book is particularly
noteworthy: the significance of Microsoft's
attempt to use China as part of its internal "fix"
for avoiding the same fate that has fallen on many
of the companies Microsoft's initial success was
based upon - Xerox as a primary example. The irony
will be lost on very few readers that Microsoft
believes it can tap into the creative potential of
its Beijing lab (a competency few think of when
stereotyping China) with the commercialization
capabilities in its Redmond, Washington, corporate
headquarters.
If the company is capable of
doing this, it will have broken the paradigm of
size and slowness Microsoft founder Bill Gates has
feared will afflict it, with the fix coming from a
part of the toolbox that can be uniquely
attributed to China. Cynics will look at
Microsoft's China strategy and believe that it is
consistent with the company's cultural tendency to
copy rather than create, with few better cultures
accommodating this mindset than does the Chinese.
Such a statement would be a misanthropic
interpretation of Microsoft's past success and
future strategy: Microsoft has always been quick
to seek out innovation, and has perhaps been less
interested in being the pater familias of
the technology - adaptation and commercialization
have always garnered higher praise at Microsoft
than have invention and pioneering
conceptualization. The business strategy
illustrated in Guanxi is classic Microsoft
- savvy, insightful, and quick to find efficient
ways to incorporate adaptive innovation.
This efficiency may not always follow the
classic product-development process, but it is
effective. More important, the innovative process
Guanxi explores has much to teach other businesses
- those within the technology sector as well as
more conventional companies whose reliance on
China would do well to expand beyond the cost-play
and emphasize the innovative potential inherent in
the Chinese people.
Predominant criticisms
of Microsoft range from its heavy-handed business
practices to the fact that its history of
innovation seems to be more responsive to the
leadership and innovation of others, as opposed to
innovation that comes from within. As Microsoft
attempted to energize its Beijing lab, it
encountered a number of difficulties that any
corporation engaging China in the hopes of finding
innovation must keep in mind.
Two
predominant factors are developed by the authors:
The unusual (at least by Western standards)
sensitivity subordinates have toward the opinions
of their managers and the closely related
difficulty in encouraging researchers to emphasize
breaking from the norm and allowing their thoughts
to go afield of accepted development paths,
established technologies, standards and
expectations.
As the authors show, these
factors had to be understood by Microsoft with
systems put into place designed to foster the
appropriate type of innovative pursuits. Thus far
in Microsoft's endeavors, what Buderi and Huang
have discovered suggests the company has been
uniquely successful in the process of encouraging
adaptation, creativity and even breaking out of
the corporate parent's expectations within a
culture that could easily have become risk-averse
and prone to following instead of leading.
Stocked with genuinely unique and
sophisticated management, the Beijing research
lab's success undoubtedly shows the importance of
leadership for creating such an atypical Chinese
business culture.
The latter portion of
Guanxi necessarily follows the story of
Kai-Fu Lee, one of the key founders of Microsoft's
efforts in China, and his departure to work for
Google. In doing so, it is inevitable to ask what
guanxi left with Lee, and what
guanxi remains with the other leaders who
have been with Microsoft's Beijing lab since the
beginning. The authors make clear that
guanxi is a fickle and fluid concept; easy
to communicate, but easier to lose just when it
seems within grasp.
The extent to which
Microsoft can continue to foster a pipeline of
true innovation from within its Beijing research
lab may prove to be symbolic of whether the
company, as one of the great success stories of
the 20th century, has been able to learn from
other tech behemoths and find a way both to
pioneer new ideas, while also implementing them
into their business and product lines.
How
fascinating that a part of the answer to
Microsoft's challenge may come from within an
economy many view as only being worthy of copying
others. Guanxi does a superb job of not
only telling us the story of Microsoft's China
strategy but, in doing so, arguing that more
business executives should look to China for
innovation to shape their business, not simply
settle for a cost advantage to exploit mature
markets, products and technologies.
Guanxi (The Art of Relationships):
Microsoft, China, and Bill Gates' Plan to Win the
Road Ahead by Robert Buderi and Gregory T
Huang. Simon & Schuster (May 9, 2006). ISBN:
0743273222. Price US$26, 320 pages.
Benjamin Shobert is the managing
director of Teleos Inc (www.teleos-inc.com), a
consulting firm dedicated to helping Asian
businesses bring innovative technologies into the
North American market.
(Copyright 2006
Asia Times Online Ltd. All rights reserved. Please
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seeing innumerable
spidery fingers darting over anonymous part bins
sorting and sifting, instead seeing automated
machine-part sorters that are as new as - if not
newer than - what they themselves had in place
back in the United States. 
