Is China Innovating? Innovation Semantics
+8* ABL Column China Featured QQ ThoughtsPublished March 30, 2010 at 1:17 pm No CommentsIs China innovating? Are there entrepreneurs in Asia? I have been hearing those questions for a long time, but it seems that now the buzz is louder than ever. In this column, I will look into the meaning of those words, and how old views are getting in the way of understanding what is happening.
The Map is Not the Territory
In a previous column, I have talked about “the myths of innovation”, including the “lone inventor”, the “wiz kid” and the fact that the successes we see today have often evolved and changed since the initial idea. In another, I talked about the “5C’s of innovation”: Copy, Combination, Competition, Constraints and Country, which influence how services and products evolve and diverge from an initial idea due to the influence of their environment.
You might have heard this expression “the map is not the territory” – certainly valid when the Chinese explorer Zheng He possibly sailed up to America in the 15th Century. The meaning is that the name of an object, the word for an idea or the opinion about someone is not the same as the object, the idea or the person itself.
I found that deciding to call something “innovation” or someone “entrepreneur” has a lot to do with:
(1) who is talking (the speaker’s personal knowledge and bias)
(2) who else is saying that (this is also called “social proof”)
Now the questions to tackle are: When can you call something an “innovation”? When can you call someone an “entrepreneur”?
What is innovation?
1. First issue: Finding signal
I am in the business of selling ideas from Asia and I keep hearing that “China is not innovating”. Am I in the wrong business? In fact, we continually identify interesting service concepts, business models, marketing strategies in China, and explain them to our clients. We consider them to be “innovations”, so why is China’s image still so much about “copy”? The short answer is that the “signal” is hard to find when there is a lot of “noise”.
2. Second issue: unknown prior art and dual citizenship
Innovation does not have a nationality, and it is very possible for something to be invented more than once. I was told at school that Gutenberg invented the printing press in the 15th century, but I found out later that it had been around in China since the 11th. Didn’t Gutemberg invent it? I think he did, but he did not know somebody else did it too, earlier. Is the printing press “Chinese”? I am not sure about the nationality but I do hope that possible patents – there was none at the time – have expired!
3. Third issue: incremental innovations
Another issue with innovation is that if you make a tiny change to something, most people would not call it an innovation. But if you make one tiny change every day, then over a few years the result will be radically different from where you started. When did “innovation” happen then? The answer is probably: every day.
I believe this incremental aspect of innovation is what makes it difficult to understand what is innovative in China. If you use Western references to describe local services you will simply miss out on what is different, original and really important.
Call Taobao “China’s eBay” and you will fail to recognize that Taobao implemented many services that eBay doesn’t have (IM, ad exchange, service platform, micro-retail service) and a business model that destroyed eBay in China.
Call Tencent “China’s Facebook” and you will not see that not only Tencent is making about 3 times more revenue than Facebook, but that it is far more profitable and has a very different service offering. Also, Tencent’s customers are its users, while Facebook’s customers are still for 90% its advertisers. If Tencent started as a “ICQ of China” and Taobao as “eBay of China”, they are certainly very different now.
Did they innovate? They would probably not be where they are if they did not.
4. Fourth issue: innovation does not always turn into a business
Of course, not all innovations end up becoming billion dollar companies. Most innovations never turn into profitable businesses. Even great ideas can take years to find a suitable environment to prosper: group buying is becoming hot in the US with a site named Groupon. “Tuangou” group buying in China has been very popular for years, combining online gathering and online/offline purchases, even for large things like cars!
So if you want to find innovation: put aside what you think innovation “should be” and focus on understanding the differences and paying attention to emerging signs. Innovation is right there, every time something is done a bit differently that it used to.
What is an entrepreneur?
Earlier this month I came across another instance of s never-ending debate about entrepreneurs: do you have to be born an entrepreneur to become one? I will try and show that first, this question has a massive logic flaw and second, that just like innovation, entrepreneurs are everywhere. It is all a point of view.
So are you born an entrepreneur? Well the problem with this idea is it is too easy to self-prove: his/her grandfather was an entrepreneur / he has friends who are / he had the drive because he was bored with his previous job, etc. Basically, there is always something I can find to justify this. Convenient, isn’t it?
If even the most socially awkward can be trained…
To show how this idea makes little sense let me make a parallel with a TV show I watched recently. It is a reality TV series named “The Pickup Artist” where a group of men who have extreme difficulties finding a girlfriend – they can be shy, unfashionable, awkward – enroll on a training that will equip them with the skills to approach women confidently.
Some people are “naturals” – born with high social skills, while others are not and might want to do something about it. The instructors in the show are experts who, for some, make a living teaching those skills, and were initially awkward and shy themselves. Along the episodes, participants receiving instruction and techniques and are faced with increasingly difficult challenges (the winner walks away with the title of “Master Pickup Artist” and 50,000 USD).
…then why not entrepreneurs?
The show demonstrates quite effectively that you can take pretty much anyone who is willing to change and help him do that. I would say that the same applies to entrepreneurs. The media only remembers big successes and dramatic failures (see “people love heroes” in my previous column), but most entrepreneurs are not there for the big media splash.
They are in it because they want something to change.
They are not satisfied with the present; they see an opportunity (they often overestimate it) and decide to do something about it. There is something glamorous about being called an entrepreneur – maybe something like being an adventurer of the 21st century. Would “Social Entrepreneurs” be the equivalent of “enlightened philosophers” of the 18th century? Being called an entrepreneur is also a convenient “license to fail” – and at least it was romantic to try. This actually leads us to another important point: what is failure? And what is success?
Failure and Success
Again it is largely a matter of perception. Each culture has its “models” and each person has its own set of values. While success is often described with a dollar value, many creators are more interested in creation and change than in fame and wealth, which come as pleasant side effects, at least while they last.
In a sense, Western companies have both succeeded and failed in China: Facebook has no presence but local evolutions are doing well. MSN and eBay failed but Tencent and Alibaba took their concept and changed it to succeed. I know of numerous small startups with creative approaches, concepts and sometimes technologies, but most of them lack the market-building capabilities, and almost all have little interest in getting known outside of China. Some are doing very well and keeping under the radar intentionally. Some have failed but have had the ride of their life. All have earned experience.
So which ones think of themselves as successes, which ones think of themselves as failures? Their peers and society at large might have an opinion, but eventually, it’s up to them to decide what they make of it. And as the song goes “You come from nothing – you’re going back to nothing. What have you lost? Nothing!”
Note: This is a guest column written for the Chinese business magazine “China Electronic Business”, invested by Jack Ma of Alibaba, and IT news site Interfax. Syndication inquiries are welcome!
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