Imperatives for Chinese CEOs in the Year of the Ox

Welcome to another edition of Inside the Chinese boardroom, my brand-new newsletter on LinkedIn where I share my thoughts on managing in today's rapidly changing China. My goal with this newsletter is to kick-off discussions around topics that matter to business leaders today, so I encourage you to leave comments and share your views! Please hit the subscribe button so you can be the first to get my latest insights.

In China we are particularly blessed because we get to celebrate two new year holidays. There’s the Gregorian calendar New Year, which of course starts on the first of January. And then there’s the Chinese New Year, which is pegged to the lunar calendar, and is named after one of the 12 animals of the Chinese zodiac. The coming year on the Chinese lunar calendar is considered the Year of the Ox, and it starts on Friday, February 12th.

For most of us, this weeklong break is a much anticipated time to unplug, relax, and recharge (and eat!) So, during these slower, quieter days, when the pinging of your smartphone notifications goes silent, and your email inbox gets refreshingly empty, take some time to reflect on the year to come. What will you do differently? What new opportunities will you pursue? Where do you see yourself—and your company—12 months from now?

To get you in the right frame of mind, I collected a few of my own reflections and thought I’d share them here with you. As always, I want to hear what you think, so please leave a comment or two below.

Take a strategic reset. COVID-19 has been a real wakeup call for many of us. It has helped us focus more on what will make us successful in the next 10 years, what opportunities we should pursue, and the capabilities we’ll need to develop (or acquire) to get there. I’ve seen more friends decide to quit jobs, take on new opportunities, and try new hobbies. For companies, this is a good time for renewal. Making that long over-due call to discontinue low-performing businesses, reshaping management to unleash the potential of your younger staff, and acquiring new avenues of growth can be excellent ways to rejuvenate your organization. Take this opportunity to cleanse your mind, rest your body, and do a strategic reset.

There’s no more ‘digital versus non-digital.’ We are soon getting to a world in China where there are no more ‘digital initiatives.’ Today, everything is digital. It reminds me of a few years ago when companies were scrambling to recruit a ‘Chief Digital Officer’ or ‘Chief Innovation Officer.’ While there is a context and role for these executives, especially in traditional organizations that are typically slow at embracing the digital world, it is now clear that all executives need to be digitally savvy and should be innovating all the time. And even more so in China than anywhere else in the world.

Agility and adaptability. I have had more discussions on agility in the past six months than at any other time in my career. Agility has become a core theme during COVID-19. It takes on a different meaning depending on who you are. For some, agility is about reorganizing into flatter and more customer-facing structures, and for others, it is around eliminating fixed costs and heavy assets. This has led to much faster time-to-market, much lower cost-to-serve, and in general, less bureaucracy and higher morale. It took COVID-19 for many companies to realize that making important decisions do not need multiple layers of meetings and people. Applications like Zoom and Teams have taught us that many meetings simply aren’t needed. And if they are, they should be much shorter.

The productivity imperative. COVID-19 has been ruthless in exposing non-productive, non-profitable parts of your business. There’s a huge drive for productivity. The most talked-about trend has probably been the whole work from home phenomenon. When employees are working from home and physical space is no longer a constraint, it becomes starkly clear what is helpful and what is not, who is important--and who is not. It’s pretty clear that who you call will be the people who actually make a difference. How will you think differently about productivity?

Risk and resilience. COVID-19 exposed the challenge of those underprepared for shocks. No one was prepared for COVID-19, but people had vastly different responses to it. Many leadership teams find it difficult to deal with large dislocation. A colleague of mine tells me that the greatest failure in a crisis is a failure of imagination, because things can get much worse. As CEOs and top executives, we are born optimists (well most of us). In fact, my colleagues sometimes call CEOs, “Chief Eternal Optimist”. While that attitude can be extremely energizing in normal times, how do you anticipate and plan for low-probability, but significant-impact events?

Renewal. Growth has become the number one topic in China. Pre-COVID-19, it was around how to build the structures and institutionalization to deal with growth; post-COVID-19, it is about how to build new growth engines. What are you doing to incubate and design new businesses? How do you think about building businesses at scale? By the end of this year, you should ask yourself: What percentage of your business didn’t exist last year? If by the end of the Year of the Ox, 95 percent of your business is the same as last year, you’re probably not innovating fast enough. What if you were to set a target that says 25 percent of your business next year will be derived from new business lines, new products, and new services? What will be your ‘velocity of business renewal’ in the Year of the Ox?

What’s your social mission? COVID-19 reminded the world that there is more to business than making money. What is the driving mission of your company and why does it need to exist? ESG initiatives (Environment, Social and Corporate Governance) have become much talked about in the last twelve months, but we have to go beyond ESG. In this Chinese New Year, we celebrate the traits of the Ox, which include such things as strength and reliability. But it also symbolizes other values that we cherish in society, like fairness, humility, and family. In this Year of the Ox, find your inspiration, and pursue your dreams.

Gong Xi Fa Cai 恭喜发财 (Happy New Year)!

What do you think? Share your ideas and recommendations in the comments below, and let’s have a conversation around this important topic!

I’m the Managing Partner of McKinsey’s Greater China Region. Please reach out and connect or follow me on LinkedIn. I welcome you to subscribe to my brand-new newsletter, Inside the Chinese boardroom, by clicking the subscribe button. Download a new report that takes a close look at China's reskilling challenge, published by my colleagues from McKinsey's Greater China Region and the McKinsey Global Institute: https://www.mckinsey.com/reskilling-china