Practices of Best Managed Companies 2020: Chinese Resilient Companies
The COVID-19 outbreak has asked a key question of all Chinese businesses: how will emerging trends, structural changes, and uncertainties redefine how your company and industry maintain their adaptability and resilience? HBRC interviewed BMC team and BMC winners in early April to published Practices of Best Managed Companies 2020: Chinese Resilient Companies.
Corporate resilience from survival to thrival
BMC (Best Managed Companies) is launched by Deloitte, Bank of Singapore, HKUST Business School and Harvard Business Review (HBRC). The global BMC program has a history of 27 years. Its purpose is to find companies with systematic & excellent management capabilities. In global selection for the BMC program, we comprehensively evaluate a company's management ability based on its strategy, capabilities, commitment and financial strength. The significance of resilience in excellent management systems has never been greater.
Deloitte found that highly resilient companies have the common characteristics of 'strategic resilience' and 'organizational invulnerability', as well as extraordinary competency in innovation, leadership, organization and risk management.
Rosa Yang, partner of Deloitte National Markets and Global Network says, "Deloitte had research on the global Best Managed Companies, showing how they are equipped with the quality of resilience. This fundamental quality is an adaptability that enables organizations to survive in the face of challenges and uncertain risks. Deloitte Global recently published a professional view on how to deal with the COVID-19 and build resilience leadership. A resilient company is able to achieve sustainability, emerging from economic downturns and remaining steadfast while facing growing uncertainty."
Rosa Yang, says "As can be seen from many similar practices of international enterprises, uncertainty is an important growth driver for scale-leading companies. The development of technology has lowered the entry barriers and created opportunities for emerging start-ups. This requires companies to respond sensitively. In addition, the strategy formulation and implementation require greater flexibility to seize fleeting opportunities and maintain long-term competitive advantage. It is foreseeable that uncertainty will become the norm. Chinese enterprises generally have a good understanding of "tangible ability", but lack training and cultivation of 'intangible ability'. A Best Managed Company must constantly transmit its values internally and externally, and always 'do the right thing'. Employees also attach great importance to a company's sense of mission. They will be more passionate and feel more valued when working for a company with a social mission. Meanwhile, if clients feel an enterprise has a social mission and responsibility, they will also feel relieved to choose its products and services."
Practices of Best Managed Companies
Zhao Jian, BMC managing partner, says resilience creates sustainable value for enterprises. Long-lasting businesses and first-class enterprises have experienced several economic cycles, and will have more comprehensive and sophisticated strategies. The greater an enterprise's long-term mission, the greater its vitality. "Highly resilient enterprises" have developed strong immunity.
Chinese Practices of Best Managed Companies
"Change, determination and action" of Longfor Group
Longfor Group has adhered to a sound, clear business strategy since its establishment. Longfor formulated its strategic approach and improved operation systems based on customer needs. It also actively adjusted in reaction to changes in its external environment, and constantly improved its organizational adaptability. In recent years, Longfor has been exploring "platform and efficient regional business units" model, aiming to improve the sensitivity and execution of its operations in a fluctuating market. This is a typical approach among highly resilient enterprises. Longfor adopted an approach based on "change, determination and action" to start 2020. Change means embracing new developments; determination means firm strategy; and action means putting knowledge into practice. It could be interpreted as Longfor Group's mindset and exemplifies the qualities of a highly resilient enterprise.
"No industry can thrive all the time, but there will always be dynamic enterprises. The key lies in finding a pivot point in strategy and embracing change, as well as effectively empowering the organization's front line." Zhao Yi, CFO of Longfor Group, says the long-term implementation of its corporate culture and adherence to a sound financial approach are the foundations for its thriving through multiple cycles. At the same time, the strategic efficacy of its organization, data background, use of space and customer stickiness are well balanced. Longfor has realized a resilient management approach that balances stability and innovation.
Chinese Practices of Best Managed Companies
"Continues to grow through the cycle "of Fosun Group
In the article one formula, four dimensions, winning the next 10 years, Guo Guangchang, founder and chairman of Fosun Group, believes that "height × speed × time × (1 deviation)" approach to identify those hidden "sustainable enterprises" which can survive from global economic cycle and industrial cycle is one of Fosun's core competitiveness. Height refers to the twin engines of global and Chinese operations; speed refers to accelerating supply chain capacity building and digitalization; time refers to ingenuity and innovation; and reducing deviation refers to sticking to the right path. Height, speed and time are the three drivers of Fosun's future growth, but reducing deviation is of even greater importance. To reduce deviation, in addition to constant introspection, Fosun is also encourage cooperation-competition theory. Cooperation-competition theory means the fear to uncertainty.
Helen Gui, BMC director, explained how the program team analysed BMC winners and candidates, finding that several private enterprises in China have some of the characteristics of "highly resilient enterprises". However, for most enterprises, how to build "long-term thinking" and "systematic organization and management ability" is still a huge challenge. There are four cornerstone criteria in the BMC program: strategy, ability, commitment and financial performance. Chinese enterprises perform well in every aspect except commitment. In terms of their commitment, they are still falling some way short of management excellence. The main elements of commitment are corporate culture, sustainable investment in talent development and having a complete corporate social responsibility management system.
Zhao Jian, says the Best Managed Companies are those able to adhere to their corporate missions and core values. Their "unique positioning" is not limited to business value; they are also committed to having an indelible influence on the world. At the same time, they know how to highlight their unique advantages and what they do best in the world. They are "stable and sustainable", work according to flexible strategies and organizational design adjustments, and maintain a constant mission and consistent positioning, creating responsive strategic and operating models. First class enterprises generally have "strategic patience" and "organizational resilience", enabling them to generate lasting internal strength so they can constantly reinvent themselves and thrive into the future.
Join the BMC Whitepaper Research
BMC program publishes the Whitepaper on China Best Managed Companies every year to summarize the insights and shares views on the management of China's private companies. We sincerely invite executives of Chinese private companies to participate in the questionnaire survey of enterprise management. You are welcome to share this link or QR code below with relevant.