China-Europe Business Review Editor's Note: Looking to the East and learning from China is an emerging concept in the West. Mike Wenderos, a professor at Spain's IE Business School, believes that Chinese companies practice "design concepts with Chinese characteristics" and recommends that Western companies learn from it. The intended audience for this article is Western corporate executives. For us, it is also of great reference significance to understand the Western understanding and views on the rapid development of Chinese enterprises in the Internet era.

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In the West, the surefire way to solve problems is "innovation." However, McKinsey's 2015 China CEO Survey shows that Chinese executives believe that the key to their success is first the credibility of the headquarters and local teams, followed by human resource management, and innovation ranks the lowest. Considering the speed of market development, I believe that in China, innovation should not be the ultimate goal, but the process of opening up money-making business opportunities.

Western business executives should build an organizational operation mentality, improve execution capabilities, quickly detect customer trends, create valuable solutions, and learn from local Chinese competitors. To achieve this goal, I recommend that Western companies practice "design concepts with Chinese characteristics" - a not-so-new methodology for introducing innovative products to the market.

The design concept consists of five steps, the core of which is rapid iteration and development of customers and products:

1. Empathize with customers, usually observing them in situations;

2. Define (or redefine) the problem/real problem;

3. Imagine and brainstorm solutions;

4. The concept takes shape quickly;

5. Test those concepts quickly, get feedback, and iterate.

It has become increasingly important to have a clearer understanding of what is going on with your customers.

Principle 1: Think like an anthropologist

Anthropology is distinguished from other social sciences in that it emphasizes background examination, the importance of participant observation, empirical observation and cross-comparison in research.

Although industry reports are good, they lack the richness of perspectives. Traditional research relies on the fact that customers understand and can clearly identify their own behaviors, attitudes, and needs. Interviews and focus groups are slightly better because an expert researcher can read or probe participants, but also rely on people accurately reporting their actual behavior. Social media has become an insightful and less expensive method, but online and offline behavior can vary widely.

Strategy consulting firms like InterChina have long integrated design philosophy methods into their work to see the big picture. Companies with limited budgets can do this with "mystery shoppers," who ask customers to be observed (they often forget they are being observed after 15 minutes), or with a sales representative who visits the customer. The best approach is to engage employees in observation and learn observation skills, and they will embrace and spread this mindset, but many Western companies mistakenly view observation as a one-time activity at the beginning of the process rather than an ongoing process.

Principle 2: Welcome and “copy” Chinese competitors

The time for mocking Chinese companies and Chinese products is over. Western companies need to wake up and think about what “Management with Chinese characteristics." There are several aspects of Chinese companies that Western managers can learn from.

First of all, Chinese companies are very sensitive to the role of the government and the changing regulatory environment, which makes them naturally focus on non-market strategies. When Chinese legal counsel for a large U.S. machinery manufacturer discovered that the tracking features of their equipment could violate local regulations, the government relations team took a humble approach and looked for ways to make the vague policy more favorable to them.

Second, Chinese companies, especially small startups, are looking for ways to launch products quickly, albeit often on slim margins. When an American manufacturer of complex dental equipment entered the Chinese market for the first time, it was surprised to find such a variety of competitors. Rather than dismissing Chinese competitors as copycats, they took a step back and took a closer look at how they succeeded. The China head of one of the world's top healthcare companies received questions one after another such as "What should I do if a Chinese company has copied or tampered with the company's trademark and brand image?" His reply was "We never intend to eliminate all imitations, and I encourage the team to learn from what they have done." ”

One Western company placed their and their Chinese competitors' social media sites on monitors near the tea room so employees could see how customers interacted with local and foreign brands. In addition, Western companies typically review competition in management meetings on a regular basis. The Beijing office of an American technology company dedicates 15 minutes every day to discussing what their main Chinese competitors (who have 75% of the market to their 8%) are doing.

Principle 3: Focus on improving customer service

For multinational companies, it is very time-consuming to only use headquarters resources and support to develop a product for China. Unless the CEO or senior management team is determined to invest in China, Chinese business that contributes less than 5% to the company's profits must be given special consideration. For today's executives—especially those working for U.S. public companies—quarterly sales tasks are stressful, and "quick wins" through service innovation or service improvement should be highly valued.

In China, speed means everything. Refactoring products, localizing packaging, repricing or bundling, rethinking sales/marketing/service, and working with local partners will all have an impact and should be done quickly.

One Western medical company has successfully used this principle. The company provided customer service and treatment recommendations to doctors, initially using a toll-free number. However, by observing clinicians at a local plastic surgery center, we found that the doctors did not have many clinical skills, but they were very good at selling to patients. Sales representatives and doctors often communicate via WeChat. At a semi-annual roundtable on user feedback, key customers also boasted about how the local company instantly updates doctor status rankings via WeChat. Seeing the power of WeChat, the company decided to set up a pilot that would allow doctors to submit photos through a mobile app and ask questions through voice messages. In doing so, the team won the Regional Innovation Award.

Principle 4: Do less market research and more marketing

Last year I heard a European gourmet CEO lamenting the tortuous development of his company in China. Later, he emphasized that we should do less market research and more marketing. He's referring to the way you quickly test ideas and iterate.

A Chinese general manager told me that he uses venture capital methods: spending at least 20% of his budget to invest in 5 to 10 new and more risky startups every year. He laid out some "design guidelines": Ideas should not violate the company's ethical standards, marketing campaigns should integrate sales forces, and there must be data to measure success. He gave his team some freedom and then let it go.

Although no Western company executive will admit it, they do actively persuade local entrepreneurs to ignore the parent company, as the old Chinese saying goes, the mountains are high and the emperor is far away. Quick execution is critical because the window for success in China is very short.

Principle 5: Beyond Sino-American or Sino-European structures

Most of the Western company executives I work for are from the United States or Europe. However, the vast majority are global citizens, speak multiple languages, and work around the world. The most interesting twist is that many of them are starting to look beyond America and Europe for inspiration.

“I found myself trying to squeeze into our FSU national team to learn how to navigate political uncertainty. Americans and Nordics had no discernment,” said one general manager. Others go to learn from general managers in Latin America, where complex territories and diverse dealers must be managed. One dental company found that China is more like Spain than other Western countries: lower customer margins, regional differences and local languages, greater reliance on guanxi, a lot of gray market behavior, and the rise of a college student market not found in the United States or Northern Europe.

The two general managers are in direct contact, benefiting immediately from the conversation and receiving strategic advice from each other. Indeed, through such communication, Western business executives improve their ability to view issues in similar areas.

The West still has a lot of experience worth learning, and no country or company is arbitrary in its ideas. But the tide is changing, and the West's arrogance and slow approach to decision-making is coming to an end.

(The author Mike Wenderos is a professor at IE Business School in Spain.)