of factories. Chinese companies have imposed the same disrup-
tive approach upon their foreign competitors. They always try
to offer products at a lower cost per unit. They squeeze produc-
tion costs, reduce the cost of materials, and make goods with
only the functions or features their buyers really need. At a later
stage, and only once they have consolidated their position within
a given market, will they start to upgrade their products.
This is how Huawei built its worldwide leadership position.
Over the past two decades, the company has become the world’s
biggest manufacturer of telecom-network equipment, rivaled
only by Ericsson and Cisco. Huawei started off just a little more
than 20 years ago by becoming a provider for the poorer inland
provinces in China. Then, step by step, Huawei spread out to
the international market, initially targeting smaller businesses in
Jack Ma
53
the least prosperous countries. It found ways to develop versions
of its products specially adapted to secondary-market players. It
exported its Chinese business model—starting by the low end
of the market, and then progressively upgrading—rather than
taking the European and American competition head on. Then,
steadily, it bridged the technological gap that separated itself
from its western rivals, and finally became installed in the devel-
oped markets. And so, to quote Edward Tse, “Huawei has grad-
ually transformed the world’s telecom-equipment market into
something resembling China.”15
More recently, China has made remarkable progress in terms
of technology. In a market where consumer demand for inno-
vation is higher than anywhere, Chinese companies are increas-
ingly at the forefront. In this country, entrepreneurs seem to have
President Xi Jinping in mind. When asked what would be crit-
ical for the long-term future of China, he replied, “Innovation,
innovation, innovation.”16 His voice was heard. China is now the
world champion in new patents. In 2017 alone, they registered
more new patents than the United States, South Korea, Japan,
and Europe combined. Often unjustly accused of being a mere
imitator, China is determined to overturn this stereotype.
More and more, Chinese companies are shaping entire
sectors of the global economy, from mobile software to electronic
devices, from health care to entertainment. As Fast Company
put it, “With more than half of its 1.37 billion citizens online,
90 percent of them via smartphone, China has seen an explosion
of tech behemoths and upstarts driving innovation hubs like
Beijing and Shenzhen to become more hypercompetitive than
even Silicon Valley.”17
Size is obviously an asset. For the past two decades, China has
been experiencing the benefits of this competitive advantage that
the United States has enjoyed for over a century. Both countries
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are so vast that costs involved in developing and launching new
products are practically amortized by the time they come to
launch abroad. I’ve often observed how perilous it is for com-
panies born in Europe to try to attack the American or Chinese
markets. To succeed worldwide, to win in the United States and
in China, they have to take more risks than companies coming
from either of those countries. In any case, Chinese companies
have already moved on to the next phase. According to Connie
Chan, a partner at Andreessen Horowitz: “For any one company
in the U.S., there might be 10 equivalents in China. In order to
survive, you have to iterate that much faster.”18
We have been witness to two contrasting periods. In the first,
which I would describe as U.S. in, Chinese businessmen copied
American business models, then transformed them to become
more appropriate for Chinese needs. Time has moved on. In
2014, Haier’s CEO told Edward Tse:
In the past, the management of Chinese companies was
really simple. All we had to do was learn from Japanese
or American companies. But now, we have no example to
reference, especially in the reform of large companies. 19
The Chinese way of doing things is showing itself to be
increasingly competitive on a worldwide basis. Chinese
companies have traced their own paths. We have entered a new
era, one of China out.
Chinese businesses no longer seek answers to the turbulent
world we live in. Instead, they are looking to actually contribute
to the turbulence. The Chinese compulsion to drive companies
from one transformation to the next is unique. In the West, the
drive for transformation is typically reserved for technology com-
panies, start-ups, and small firms. In China it’s true for everyone,
even the most traditional of enterprises.
Jack Ma
55
Jack Ma is the incarnation of this evolution. In the 1980s he
devoured books on American management methods, in search of
inspiration. But he maintained a certain critical distance toward
them. He had this interesting phrase about the language he
used to teach in school: “English helps me a lot. . . . It makes
me understand the distance between China and the world.”20
His decades of experience help him understand the difference
between Western imports that are useful and those that are not
worthwhile. Perhaps unintentionally, he and his fellow Chinese
CEOs have traced the outline of what could be called one day
“the Chinese way.” The world of American business has led the
thinking of corporate leaders for the last half-century, but now
it’s quite possible that Chinese entrepreneurs will step into the
spotlight. They will have a hand in rewriting the rules.
Much has been said about China’s GDP having been the
highest in the world at the end of the 18th century. Perhaps the
trajectory of Chinese business is putting things back in their
right place. Chinese chief executives share the dream of seeing
their country reclaim its position as one of the world’s great-
est hubs for scientific ideas and technological advances. If not
the greatest. But this goes way beyond merely contributing to
China’s renaissance. As creators of many of the fastest-growing
enterprises in the world, they are aware of their huge potential
influence. Chinese CEOs know that they are riding a historic
wave of economic activity. They are changing the geopolitics of
business.
The ambitions of Chinese chief executives are not lowly.
“We don’t want to be number one in China. We want to be
number one in the world,”21 Jack Ma once told the South China
Morning Post newspaper. That was at the very beginning, when
Alibaba company had fewer than 20 employees. Today, even if
his company employs some 50,000 people, Jack Ma continues to
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THANK YOU FOR DISRUPTING
strongly believe that the company’s Chinese mind-set is the key
to its success
.
Meg Whitman, eBay’s chief executive, learned this the hard
way. After being forced to abandon the Chinese market, con-
fronted with the ferocious resistance of Alibaba, she exclaimed
one day, “Whoever wins China will win the world.”22
PART
Two
DISRUPTIVE
BUSINESS THINKING
I have often wondered how Chinese businessmen, now in their
sixties and brought up outside the market economy, learned
to run companies. How did they understand the business world?
By devouring, as we’ve seen, American books. They knew how
to transport academic thought into real life. Business literature
opened the eyes of Zhang Ruimin and Jack Ma, whose parents
had spent a lifetime ignoring everything related to free enterprise.
U.S. business literature is a discipline in itself, a subset of the
social sciences, a specific area of thought from the country with
the largest number of major companies in the world. Authors
have forged central ideas. Concepts such as core competencies,
quality circles, reengineering, portfolio management, value
migration, sustainable competitive advantage, and also contin-
gency planning, knowledge workers, the balanced scorecard, the
value chain—the list is quite long. Their personal theories shed
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new light on what goes on in the world of business. They reveal
new trends and allow readers to see companies’ successes or fail-
ures through a new prism.
Among the best known of these authors are Peter Drucker,
Gary Hamel, Michael Hammer, Charles Handy, Michael Porter,
Tom Peters, and Jim Collins. I’ve met two of them, Gary Hamel
and Tom Peters. Gary Hamel became world-famous when he
published Leading the Revolution and he was the keynote speaker
of a symposium on breakthrough strategies we organized with
the Conference Board in 1992. The goal of this event was to
launch our Disruption methodology. I have also met Tom
Peters, the author of In Search of Excellence, several times . He has been a big supporter of our methodology, and even contributed to the cover of one of my books by being the first to say,
“Disrupt or die.”1
In this part, I talk about three business writers who are
uncontestably disruptive thinkers. The first is Jim Collins, who
led the world of business thinking from 1980 to 2000. One of his
books, Good to Great, is still among the bestselling business books
of all time. The second is Clayton Christensen, today’s most
famous Harvard professor, thanks to The Innovator’s Dilemma,
his work on the subject of disruptive innovation. The third is
Jedidiah Yueh, a start-up entrepreneur who has a profound
understanding of the digital world. Yueh’s essay, Disrupt or Die 2,
is very knowledgeable about what drives Silicon Valley’s entre-
preneurs. And he should know; he is one of them—and a very
successful one at that.
Chapter 7
Jim Collins
ON THE SEARCH FOR EXCELLENCE AND
THE MANAGEMENT OF ALTERNATIVES
Jim Collins’s books are full of common sense. Even if he col-
lects masses of facts and data in his quest to define excellent
companies, his work is never overly academic. It is quite empiri-
cal and provides readers with really useful inspiration.
The title of his bestseller Good to Great 1 gives a good clue as to
its theme: how companies and individuals can strive to approach
excellence. Millions of copies have been sold. Collins’s first book,
Built to Last, has also stood the test of time and one of its chapters
has become particularly famous. That chapter deals with the dif-
ficulty of deciding between two options posed as alternatives. It’s
about what he calls the “Tyranny of the Or.”2
The world has obviously changed a lot since Collins wrote
these two books, but they both remain as relevant as ever.
Collins’s thinking has not aged.
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Good to Great
Our Los Angeles agency, TBWAChiatDay, is where Apple’s
great advertising campaigns have been born since we started
working for Apple, in 1983. The agency’s founder, Jay Chiat,
used to love to say “Good enough is not enough.”3 This credo
had such an impact that it has been progressively taken up by
the entire TBWA organization. It may not seem like much, but
referring to it constantly—whether while developing a strategy
or imagining a campaign—makes it a constant challenge. In to-
day’s marketing world, where the motto is often “Cheap, fast,
and good enough,” this is especially true.
Chiat and Collins developed their signature mindsets at the
end of the last century. You could say that the world has moved
on since then. When Collins wrote his bestsellers, the word
disruption had not yet made its way into the business lexicon. In
fact, the popular theory of the day, the concept of constant qual-
ity improvement (CQI), contradicted the idea of rupturing with
what came before.
At the time, Collins was already being criticized for under-
estimating the impact of the technological revolution and we
were only at the very beginning of the Internet age. Despite
this, in today’s world of turbulence, volatility, and complexity,
one of Collins’s principles remains more valid than ever. It can
be summarized as follows: The primary quality of a leader lies
not just in strategic intelligence or management aptitude, but in
the capacity to bring clarity. Without clarity, everything slows
down, becomes eroded, and eventually dissipates. Clarity pro-
vides sense and points of reference.
According to Collins, great leaders clarify what is vital and
what is less so. They are able to formulate this in such a way that
the entire company becomes aligned. Jim Burke, one of Johnson
Jim Collins
61
and Johnson’s great chief executives, devoted over a third of his
time explaining to employees the company’s credo and the con-
sequences in their work. The same goes for Jack Ma, who is just
as passionate about sharing knowledge now as he was at the start
of his career, 25 years ago, when he was a teacher. He spends
much of his time communicating what he believes in and telling
how Alibaba has to constantly reinvent itself. He loves to say
that, for him, CEO stands for chief education officer.
It is necessary to clarify the difference between what a com-
pany can potentially do better than any other and, equally
important, what it cannot. For Collins, this is the first step on
the path that brings companies from good to great. Collins says:
It is not a goal to be the best, a strategy to be the best, an
intention to be the best, a plan to be the best. It is an under-
standing of what you can be the best at. The distinction is
absolutely crucial.4
The right words must be found to express what a company
&n
bsp; is best at. For this to be well said, it must be written down. At
a recent TBWA Executive Committee meeting, Nancy Koehn,
a professor at the Harvard Business School and at Omnicom
University, underlined the importance of committing words to
paper. The written words will eventually be spoken by people in
the company and will create the essential cultural cement. She
went as far as stating this paradox: “Writing helps you under-
stand your own thoughts.”5
A great way to bring clarity is to define the company’s reason
for being, to formulate its purpose. Purpose is not a new concept;
Peter Drucker was talking about it back in the fifties. When a
company gives itself an engaging and relevant purpose, it obtains
a competitive advantage. Purpose is the reason for a company to
exist, over and above just making money. The purpose must be
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written down and nurtured for years—even decades—to come.
It’s never fully realized, just as a horizon cannot be reached.
Some brands and companies have given great clarity to their
purpose. Pampers, P&G’s $10 billion brand, is not just about
selling better-performing diapers and providing parents with
better comfort for their babies. The purpose the brand has given
itself is to “care for all babies’ happy, healthy development, and
for young mothers’ welfare.”6 This has led the company to take a
number of useful initiatives not just for babies, but also for preg-
nant women and those who have just given birth.
Dove is another example. Since its creation in 1955, the brand
has claimed that it doesn’t sell simple soap, but beauty bars. It
has always embraced the concept of beauty. And 10 years ago,
it worked to integrate the idea that there is beauty in everyone.
Dove’s purpose is to help women establish greater self-esteem.
The brand says so itself, “We believe beauty should be a source
of confidence, and not anxiety.”7
Companies born in the digital era are no less ambitious. Airbnb
wants us to discover a world where everyone can belong every-
where: a world with no strangers. This is a very worthwhile purpose.
Collins believes that, above all, a purpose should be profoundly
sincere. For him, authenticity prevails over uniqueness. This is
why he often uses examples of purpose that, at first sight, might
appear somewhat simplistic, even banal. For instance, consider
Thank You for Disrupting Page 7
