Tuesday, November 20, 2007

Discontinuities & Paradoxes

Discontinuities & Paradoxes: An Investor’s Perspective

What is happening in China is a global phenomenon – all the good, bad, and the ugly aspects. This global economy is, in many ways, a new, organic entity, with its own needs for growth, making up new rules for its participants. How are we to figure out what we are supposed to do? China alone cannot provide a complete solution for sustainable growth, nor can any other single country. Yet, China is a sovereign nation, and must take responsibility for its own actions. The value chain of economic growth today is more complicated in many more dimensions that we have been familiar with in the past. What are all those polluting factories in China making? For whom? Who benefits? The products are certainly not for the average citizens in China but the creation of jobs and wealth are.

How is China positioning itself in the world? How do Chinese companies position themselves in the global ecosystems of their industries? What are the ramifications of growing international competition? Every issue being addressed in China stretches out through multiple threads in other countries, other industries all over the world. Complexity is raised exponentially, through the network effect.

China is a land of metaphors – because of the evolution of language and thought, China’s growth can be seen as a series of metaphors. The Chinese language is remarkably weak at expressing abstract concepts concisely and clearly. It is, however, extraordinarily rich in descriptive detail and metaphors, which provide essential contextual insight. Stories in Chinese are rarely simple morality plays, of good versus evil. How good is good and how evil is evil? For whom and in what relationships? These are deeper and more intriguing questions.

China is the only major country in the world whose philosophy and culture is not based on a specific religion, but rather a tradition of civil relationships, i.e., Confucian principles. This insight has huge implications in terms of value systems on an individual as well as a social level. Value does not have the same abstract definition, e.g., of material wealth, as the concept typically has in the West. Value is defined contextually and dynamically, by multiple relationships with deceased ancestors as well as living people. By definition, relationships evolve and change as we grow, so the level of complexity can only increase.

The Chinese people are considered extremely entrepreneurial. Actually, a more accurate description might be self-reliant and adaptable, skills learned from thousands of years of natural selection. Survival skills in China are finely honed, a reflection of the extreme competitiveness in virtually every arena and every stage of life, from the earliest age. A young person starts off understanding that life’s challenges require practical actions: preparation, persistence, and patience. Given the long cultural history, there’s no lack of fantasy, legends, myths, stories that inspire dreams. Perhaps there is less confusion between dreams and “reality” because Chinese people think more in terms of practical actions rather than abstract concepts? Might this also be a limitation to creative innovation?

Tuesday, November 6, 2007

Questions Unasked? - Another point of view on China


– Another point of view on China

Curiosity may be occasionally unwise, but it is never stupid. I believe the judgment whether a question is stupid resides in the interpretation, not the content.

In all the books on China, what is the most common and universal theme? We don’t know what we don’t know, especially about the context. How do we frame our questions about China to get useful and meaningful answers? In any given situation, what are the most effective questions to ask? Misunderstandings typically result from mismatched contextual assumptions, i.e., different points of view.

To me, thinking about uncertainty in China, about the dramatic rate of change occurring within China and how that affects the rest of the world, is like looking at everything through a new kind of mental filter, where the mix and the shading of colors appears slightly different. In my mind, this raises all kinds of questions, at multiple levels of awareness. What is really going on? How do we perceive and interpret what we see? How much does our interpretation depend on our point of view, the context we bring, some of which may be unconscious? What are we not seeing clearly? Am I asking “useful questions”?

What questions are unasked?

As far as we know, humans are the only life forms on Earth that seek inspiration, or are aware of the need for some force or energy that motivates change. We want to believe in something. Everything else, animal or plant, seems to follow the fundamental law of Nature: either it is growing, i.e., changing, or it is dead. For humans, one question we keep asking is: How are we growing? As individuals, as a society? As subunits of society, such as companies, associations, industries?

Inspiration can come in many different forms, depending on points of view and circumstances: need for physical survival (in Nature), competition with Nature, competition with other humans (physical, emotional, intellectual), spiritual or religious, philosophy (organized thought-principles), music, dance, artistic impulses in general (recording and sharing one’s perceptions), random associations, even boredom. Humans are capable of simultaneously maintaining multiple points of view, sometimes even contradictory ones, because they are literally held in different parts of the brain – intellectual thoughts, emotions, instinctive reactions. People who cannot maintain a healthy balance in their lives may find these conflicts can create debilitating physical and emotional conditions.

For most of us, every challenge faced by the Chinese in China seems magnified, as if we are incapable of fully understanding the scope of the problem and the consequences, positive and negative. How unique is China’s situation? Are we seeing another cycle in history? How can we apply our existing knowledge to this next step in China’s evolution? How can we encourage the creativity and courage to move changes in directions that will be positive for China and for the world?

To imagine truly innovative approaches to challenges that have not been addressed before, we have to be open to a new kind of design process which may be more dialectical than deductive reasoning. What kind of a process might be based on dynamic pattern recognition, rather than a theoretical framework based on linear, logical sequences of thought?

Practical Wisdom

If Confucius and Einstein could have a conversation about the current and future conditions in China, what would they say?

Albert Einstein: Learn from yesterday, live for today, hope for tomorrow. The important thing is not to stop questioning.

Confucius: Learning without thought is labor lost; thought without learning is perilous.

If you could speak to them what would you ask?